The extraterritorial application of U.S. law was a settled issue for a long time. For about sixty years, U.S. law would apply abroad if conduct occurred or effects were felt within U.S. borders. This potentially broad sweep of U.S. law was limited in several ways—most importantly by the doctrine of “reasonableness” grounded in international law and explicated in the Restatement (Third) of Foreign Relations Law of the United States.
This approach had its detractors. In 2010, the U.S. Supreme Court joined the ranks of the critics in dramatic fashion. The Court cast aside the previous sixty years of jurisprudence—dismissing it as uninhibited “judicial lawmaking”—and created a new test. This new approach proceeded in two parts. A court should ask whether the “presumption against extraterritoriality”—a sometimes cited, but oft ignored concept— was rebutted by a “clear indication” in the text or “context” of the statute. If not, a court should then inquire whether the particular case presents a “domestic application” of the statute. But merely “some domestic activity” would not constitute a domestic application of the statute. Rather, the court must define the “objects of the statute’s solicitude” and then determine whether that “focus” is within U.S. borders.
The Court presented this revolution as more predictable, less complex, and more deferential to the legislature. In reality, the Court traded the venerable uncertainties of the conduct-and-effects test for the new, poorly understood, and unanticipated uncertainties of the “Morrison two-step.” Many commentators have attempted to make sense of Morrison’s first step—the reinvigorated presumption against extraterritoriality. But relatively few have examined Morrison’s second step—the question of what it means for a statute to apply domestically in the context of a transnational dispute. In fact, this second question—which the Morrison opinion treats practically as a throw-away line—has caused far more divergence and confusion among the lower courts. It has become a distorted reflection of the extraterritoriality inquiry: the same consequences, but with irrelevant facts or formalisms looming large in the picture. This article attempts to lay out both the current myths and mistakes of the so-called “focus test” and to chart a sensible path forward.
Simowitz, Aaron D., "The Extraterritoriality Formalisms" (2019). Connecticut Law Review. 416.