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Blocking Extraterritorial Jurisdiction: The British Protection of Trading Interests Act, 1980

Published online by Cambridge University Press:  27 February 2017

A. V. Lowe
A. V. Lowe*
Affiliation:
Faculty of Law, University of Manchester, United Kingdom
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Extract

The Protection of Trading Interests Act, passed by the United Kingdom Parliament on March 20, 1980, is one of the most remarkable pieces of legislation to emerge in recent years from that body. It effects a significant shift in British policy relating to the control of international restrictive practices, and is of considerable interest to international lawyers. The aim of the Government in introducing the measure was, in the words of the Secretary of State for Trade, “to reassert and reinforce the defences of the United Kingdom against attempts by other countries to enforce their economic and commercial policies unilaterally on us.” This aim is secured, in general terms, by a combination of three measures. Firstly, an extension of the power of the British Government to forbid compliance by British citizens and businesses with orders of foreign authorities, where those orders have extraterritorial effect and prejudice British trading interests. Secondly, a prohibition on the enforcement by United Kingdom courts of foreign judgments involving the award of multiple damages and of certain other judgments touching upon the control of restrictive practices. Thirdly, the establishment of a right for British citizens or businesses against whom foreign courts have awarded multiple damages to recover the noncompensatory element from the original plaintiff by an action in a United Kingdom court.

Type
Research Article
Information
American Journal of International Law , Volume 75 , Issue 2 , April 1981 , pp. 257 - 282
Copyright
Copyright © The American Society of International Law 1981

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References

1 1980, c. 11; in force March 20, 1980.

2 973 PARL. DEB., H.C. (5th ser.) 1533 (1979).

3 1964, c. 87; repealed by section 8 of the 1980 Act.

4 See Report Of The Committee Of Inquiry Into Shipping, CMND. NO. 4337, at 115-36 (1970).

5 U.S. Dept. Of Justice, The Regulated Ocean Shipping Industry, chs. 2 and 3 (1977); cf. Llorca, Antitrust Exemption of Shipping Conferences, 6 J. MAR. L. & COMM. 287 (1975); Kryvosruka, American Ocean Shipping and the Antitrust Laws Revisited, 11 id. at 67 (1979).

6 Although the assertion of jurisdiction over foreign companies on the basis of American shareholdings has given rise to objections; see, e.g., 973 PARL. DEB., H.C. (5th ser.) 1537 (1979); letter of Sept. 27, 1979, from J. Brian Atwood to Senator Edward M. Kennedy, Dept. of State File No. P79 0150-2322, reprinted in part in 74 AJIL 179 (1980).

7 United States v. Norddeutscher Lloyd, 223 U.S. 512 (1912).

8 United States v. Aluminum Company of America, 148 F.2d 416 (1945). See the penetrating discussion by Raymond, A New Look at the Jurisdiction in Alcoa, 61 AJIL 558 (1967).

9 See, e.g., Sovereign Compulsion Defense in Antitrust Litigation, 72 ASIL PROC. 97 (1978).

10 Reprinted in International Law Association, Report Of The Fifty-First Conference [hereinafter cited as ILA, 51ST REPORT] 569 (1964). Cf. British Practice In International Law [hereinafter cited as BRITISH PRACTICE] 1963, at 13 (ed. E. Lauterpacht).

11 Mann, , Anglo-American Conflict of International Jurisdiction, 13 INT'L & COMP. L.Q. 1460, 1462 (1964).Google Scholar

12 ILA, 51ST Report 404, 579, and 582.

13 Id. at 585-88.

14 Extracts reprinted in id. at 588-92.

15 See, e.g., the statements dated March 6, 1962, quoted in Contemporary Practice Of The United Kingdom In The Field Of International Law—1962, at 15-18 (ed. E. Lauterpacht); Dec. 13, 1963, British PracticE 1963, at 98 (there incorrectly dated Dec. 13, 1962).

16 On this question generally, see May, The Status of Federal Maritime Commission Shipping Regulation under Principles of International Law, 54 GEO. L.J. 794 (1966).

17 See 698 Parl. Deb., H.C. (5th ser.) 1225-26 and 1272-73 (1964); cf. British Practice 1964, at 36 and 146.

18 698 Parl. Deb., H.C. (5th ser.) 1278 (1964).

19 Section 1(1) and (2).

20 Section 1(1).

21 Section 1(2).

22 Section 3(1).

23 See 698 PARL. DEB., H.C. (5th ser.) 1274 (1964); cf. Re Campbell, [1920] 1 Ch. 35.

24 See 698 PARL. DEB., H.C. (5th ser.) 1216 (1964).

25 Section 2(1). No procedure for notifying ministers of relevant requirements by foreign authorities was laid down.

26 Section 2(4).

27 [1927] PCIJ, ser. A, No. 10, at 18 et seq. See, e.g., I. Delupis (née DETTER), International law and the independent State 23-24 (1974).

28 See, e.g., Digest Of United States Practice In International law [hereinafter cited as U.S. DIGEST] 1973, at 197-98; U.S. DIGEST 1975, at 339-40. See also Moore's Report on Extraterritorial Crime and the Cutting Case, Foreign Relations OF THE United States, 1887, at 757.

29 The court based its decision upon an examination of the actual practice of states, and used “objective territoriality” as an alternative ground for that decision; cf. H. lauterpacht, the development of International Law By The International Court 360-62 (1958). France, of course, argued that it was up to Turkey to prove its right to exercise jurisdiction; see, e.g., [1927] PCIJ, ser. C, No. 13-11, at 211, 282. Even Turkey attempted to establish its right by assembling state practice; id. at 230-40 and 312. Turkey also cited the views of a number of jurists, all of whom seemed to assume that novel claims to jurisdiction had to be justified by the claimant state; see id. at 239.

30 Considered in this light, United Nations resolutions have a much more important role in establishing prohibitive rules of law than permissive rules, where some additional activity in the way of state claims might reasonably be expected.

31 The Court in the Lotus case weighed evidence supporting and opposing the Turkish claim and, finding that the former heavily outweighed the latter, decided in favor of Turkey.

32 See I. Brownlie, principles of public international law 10 (3d ed. 1979).

33 The case has been much criticized. See the literature cited in, 2 World Court Reports 20-21 (ed. Hudson, 1935); Fitzmaurice, The Future of Public International Law, in Institut De Droit International, livre du centenaire 1873-1973, at 196, 216 (1973).

34 British practice 1967, at 58, reprinted in I. Brownlie, supra note 32, at 310. The aidemémoire also emphasized the British view that the separate personality of foreign corporate subsidiaries had to be respected when claiming jurisdiction on the basis of nationality.

35 At one point in the 1964 debates, the Attorney-General appeared to countenance “effects” jurisdiction; 698 PARL. DEB., H.C. (5th ser.) 1280 (1964). This was clearly a slip; see Mann, supra note 11, at 1464.

36 Supra note 34.

37 As Norway by its protests precluded the possibility that any 10-mile limit on closing lines in bays would become opposable to it; Fisheries Case (United Kingdom v. Norway), [1951] ICJ REP. 116. Equally, had Britain acquiesced in or otherwise approved the American claims, those claims would have been opposable to it. It is questionable whether alleged “general” rules of international law have any determinative significance in such disputes, or whether international legal relations are not more satisfactorily analyzed in terms of bilateral obligations. For a pioneering application of this latter view, see Z. J. SLOUKA, international custom and the continental shelf (1968). Cf. G. I. tunkin, theory of international law, ch. 4, esp. 125-26 (trans. Butler 1974).

38 698 PARL. DEB., H.C. (5th ser.) 1282 (1964); cf. id. at 1218.

39 State-operated fleets are not subject to the antitrust laws and attendant regulations, although they can achieve the same results as shipping conferences. Thus, shipping policies of states with centrally planned economies are accorded greater respect than those of states adopting a laissez-faire approach. Cf. Victor, Multinational Corporations: Antitrust Extraterritoriality and the Prospect .of Immunity, 8 J. INT'L L. & ECON. 11 (1973); Mannington Mills, Inc. v. Congoleum Corp., 595 F.2d 1287, 1293 (1979). Recent legislation dealing specifically with controlled carriers, however, is bringing U.S. shipping policy to bear on these fleets; see Daschbach, The Evolution of American Maritime Policy and its Implications, 11 J. MAR. L. & COMM. 387, 388-89 (1980).

40 See the remarks of the Attorney-General, 698 PARL. DEB., H.C. (5th ser.) 1277, 1280 (1964).

41 Id. at 1243.

42 M. at 1282-83.

43 Cf. F. A. Mann, Studies in international law 93 (1973).

44 See, e.g., G. Schwarzenberger, International law 119 (3d ed. 1957). This idea is also evident in the concept of self-determination.

45 See the remarks of the British Attorney-General, [1978] A.C. 547, 594-95; the case of John S. Reeves (1953), in 9 M. Whiteman, digest of international law 66 (1968); U.S. DIGEST 1977, at 452. But see Akehurst, Jurisdiction in International Law, 46 BRIT. Y.B. INT’L L. 145, 167-69 (1975).

46 Supra note 34.

47 18 Halsbury's laws of england, para. 1547 (4th ed. 1977).

48 Cf. Trinidad Shipping and Trading Co., Ltd. v. G. R. Alston and Co., [1920] A.C. 888.

49 See, e.g., ILA, 51ST Report 588; British practice 1964, at 37.

50 British practice 1965, at 128.

51 [1968] STAT. INST., NO. 1382. An order was issued in the course of American proceedings involving the British company, Beecham; The Times (London), May 16, 1973, at 26. The order was later revoked at Beecham's request; id., Sept. 17, 1973, at 24.

52 british practice 1964, at 155.

53 OECD, restrictive business practices of multinational enterprises 61, and passim (1977). The OECD recommendations require no more than cooperation in the exercise of intraterritorial jurisdiction.

54 U.S. Digest 1976, at 479. Cf. the Canada-United States Joint Statement Concerning Cooperation in Anti-trust Matters, Nov. 3, 1969, reprinted in 8 ILM 1305 (1969).

55 Timberlane Lumber Co. v. Bank of America, 549 F.2d 597 (1976). Cf. Restatement (second) of the foreign Relations law of the united states §40 (1965), cited in Timberlane.

56 Mills, Mannington, Inc. v. Congoleum Corp., 595 F.2d 1287 (1979), 73 AJIL 691 (1979).Google Scholar

57 American courts have given little sign of actually declining jurisdiction, even when applying these tests.

58 Parl. Deb., H.C., Standing Committee F, Protection of Trading Interests Bill [hereinafter cited as Committee F], Second Sitting 52-53 (Dec. 6, 1979): “because it has special trading interests in the United States, BP [British Petroleum, Ltd.] takes great care that every one of its contracts, whether in the United States or anywhere else … complies wholly with United States anti-trust legislation.“

59 Bell, Griffin B., International Comity and the Extra-territorial Application of Anti-trust Laws, reprinted in 51 AUSTL. L.J. 801 (1977)Google Scholar. It is unclear whether comity is seen here as a rule or rules, a principle, a goal, or an attitude. See also the speech by U.S. Associate Attorney General Michael Egan to the International Bar Association, Atlanta, Georgia, Nov. 3, 1977 (copy supplied by U.S. Information Service).

60 John H. Shenefield, The Extra-Territorial Impact of U.S. Antitrust Laws: Causes and Consequences, remarks to the American Bar Association, New York, Aug. 9, 1978 (copy supplied by U.S. Department of Justice). This curious paper appears almost to equate “effects” jurisdiction with “objective territorial jurisdiction“; such an equation would entail a substantial reduction in U.S. jurisdictional claims.

61 The British Secretary of State remarked: “I note that Westinghouse had not included among the defendants, the French producers that were involved. I cannot regard that as an accident, in view of Westinghouse's interests in France.” 973 PARL. DEB., H.C. (5th ser.) 1540(1979).

62 Id. at 1541.

63 The basic facts are conveniently summarized in [1978] A.C. 547, 606; and 72 ASIL PROC. 105 (1978).

64 In re Westinghouse Uranium Contract, [1978] A.C. 547, 591-92. The Attorney-General's intervention in this case is a most important exposition of British views on jurisdiction; id. at 589-95. For another recent statement of British views, see the Diplomatic Note No. 196, presented to the U.S. Department of State on July 27, 1978, reprinted in 49 BRIT. Y.B. INT'L L. 390 (1979).

65 [1978] A.C. at 616-17 and 650-51.

66 The Attorney-General stated: “Here there are difficulties in the use of section 2(l)(b) of the Act of 1964 [supra note 25] but if at any stage it turned out to be available Her Majesty's Government would not hesitate to use it.” [1978] A.C. at 595.

67 Belgium, Denmark, Finland, France, the Federal Republic of Germany, Greece, Italy, Japan, the Netherlands, Norway, Spain, Sweden, and the United Kingdom.

68 Consultative Shipping Group, United States Policy Towards Regulation of Liner Shipping (January 1978) (copy supplied by UK Department of Trade).

69 Id. at 1.

70 Id. at 2.

71 Id. at 7 and 8.

72 H.R. 9518.

73 [1979] U.S. Code Cong. & AD. News 303. The veto message is dated Nov. 4, 1978. A revised version of this law, giving a power of disapproval on foreign policy grounds to the President, was later adopted as Pub. L. No. 96-25, June 19, 1979, 93 Stat. 71.

74 [1979] U.S. Code Cong. & AD. News 303 and 322.

75 Id. at 323.

76 973 PARL. DEB., H.C. (5th ser.) 1538 (1979).

77 Id. at 1538 and 1547.

78 Id. at 1551 and 1589.

79 Id. at 1589.

80 Id. at 1546.

81 Section 1(1).

82 Section 1(2).

83 Section 1(3).

84 Committee F, supra note 58, First Sitting 11, 14-16 (Dec. 4, 1979). While the Secretary's decision cannot be appealed, it is, of course, subject to judicial review and is liable to be set aside on the grounds of bad faith, etc.; id. at 23.

85 The Government declined to define “measures,” but the term was understood by the Trade Secretary to cover any regulatory provision … made under the law of an overseas country. This would include rules, regulations, directions, orders, licences, permits and consents. Those are a few examples of how we define “measures” in this case. However, it does not cover judgments, arbitration awards or contracts made in pursuance of such overseas regulatory provision. Id. at 22. Were an American court to refuse to accept sovereign compulsion as a defense, the matter would be taken up on the diplomatic plane; cf. 698 PARL. DEB., H.C. (5th ser.) 1277 (1964).

86 “ ‘[T]rade’ includes any activity carried on in the course of a business of any description and ‘trading interests’ shall be construed accordingly.” Section 1(6).

87 973 Parl. Deb., H.C. (5th ser.) 1541 (1979).

88 Supra note 19 and accompanying text.

89 See Allen, The Development of EEC Antitrust Jurisdiction over Alien Undertakings, legal issues in european integration, NO. 2,1974, at 34,43-78. Cf. the remarks of the Attorney-General, [1978] A.C. 547,594. Despite claims to the contrary in the Eighth Report on Community Competition Policy, the European Court has not yet given its blessing to the “effects” doctrine.

90 The Community regards itself as exercising sovereign powers delegated to it by member states. A decision of the European Court declaring the doctrine to be a part of Community law would arguably be tantamount to a declaration in support of the doctrine by an organ of the British state.

91 Section 3(2).

92 Section 2 is supplemented by section 4, which provides that British courts should not make orders under the Evidence (Proceedings in Other Jurisdictions) Act, 1975, c. 34, relating to the provision of evidence requested by foreign tribunals, where the Secretary of State certifies that the request “infringes the jurisdiction of the United Kingdom or is otherwise prejudicial to the sovereignty of the United Kingdom.” The 1975 Act regulates the taking of evidence by British courts on behalf of other courts.

93 Section 2(2).

94 Section 2(3).

95 “[T]he making of a request or demand shall be treated as the imposition of a requirement if it is made in circumstances in which a requirement to the same effect could be or could have been imposed.” Id., §2(5). Only the requirements of a “court, tribunal or authority” of an overseas country are included. Section 2(l)(a).

96 In Diplomatic Note No. 56, at 2-3 (Nov. 9, 1979) [hereinafter cited as U.S. Note] (copy supplied by UK Department of Trade). The U.S. Embassy took the “somewhat novel approach” of asking that the comments in the note be brought to the attention of Parliament during the process of the bill. A copy was placed in the library, and it was referred to on several occasions during debates; Committee F, supra note 58, First Sitting 34 (Dec. 4, 1979).

97 Diplomatic Note No. 225, at 2 (Nov. 27, 1979) [hereinafter cited as UK Note] (copy supplied by UK Department of Trade).

98 Section 3(2).

99 Section 5(4). A move to extend the provisions of the section to judgments for punitive damages, judgments in class actions, judgments in cases where jurisdiction over a UK company was based solely upon foreign shareholdings therein, and judgments relying upon measures for regulating or controlling international trade designated under section 1 was rejected; Committee F, supra note 58, Second Sitting 43-59 (Dec. 6, 1979).

100 973 Parl. Deb., H.C. (5th ser.) 1546, 1548, and 1566 (1979); UK Note at 3.

101 UK Note at 3; 973 Parl. Deb., H.C. (5th ser.) 1546 (1979).

102 UK Note at 3.

103 Section 6(1). Companies incorporated in territories for whose international relations the British Government is responsible are included together with those incorporated in the United Kingdom. Section 6(l)(b).

104 Section 6(6).

105 Section 6(1). The section applies only to judgments and orders given after the passing of the Act. Section 6(8).

106 Section 6(3).

107 Section 6(4).

108 Section 6(5).

109 U.S. Note at 6.

110 UK Note at 4.

111 Committee F, supra note 58, Second Sitting 74 (Dec. 6, 1979).

112 Id. at 71.

113 Id. at 66-68; 976 PARL. DEB., H.C. (5th ser.) 1033 (1979).

114 U.S. Note at 5.

115 Annex to UNGA Res. 2625 (XXV) 1970, reprinted in 65 AJIL 243 (1971), 9 ILM 1292 (1970).

116 See, e.g., 973 PARL. DEB., H.C. (5th ser.) 1541 (1979).

117 Island of Palmas Case (Netherlands, United States, 1928), 2 R. Int’] Arb. Awards 829, 838.

118 See, e.g., the Charter of Economic Rights and Duties of States, GA Res. 3281 (XXIX) 1974, reprinted in 69 AJIL 484 (1975), 14 ILM 251 (1975). Cf. Bowett, , International Law and Economic Coercion, 16 VA.J.INT'L L. 245 (1976).Google Scholar

119 The continuation of the dispute is having serious repercussions. Negotiations concerning the draft Anglo-American Civil Judgments Convention have been abandoned by the British Government, partly because of difficulties over the recognition and enforcement of awards of very high damages in personal injury and product liability cases and partly, it is believed, because of similar difficulties concerning awards in antitrust cases involving claims to excessive jurisdiction. Cessation of negotiations was reported in a Parliamentary Answer on June 26, 1980, 987 Parl. Deb., H.C. (5th ser.) 267 (1980).

120 Other CSG states are reexamining their legislative defenses against American claims to extraterritorial jurisdiction and might follow the British lead in introducing provisions prohibiting enforcement of antitrust awards and introducing a clawback system; cf. 973 Parl. Deb., H.C. (5th ser.) 1583 (1979). Were other states to adopt clawback provisions, section 7 of the 1980 Act would allow for the reciprocal enforcement of clawback judgments. For the recently enacted French law on the communication of documents and information to foreign natural or legal persons, see p. 382 infra.