Opinion ID: 433759
Heading Depth: 2
Heading Rank: 1

Heading: Bases of Concurrent Prescriptive Jurisdiction: Territoriality and Nationality

Text: 36 Territoriality and nationality are the two fundamental jurisdictional bases on which courts of the United States and United Kingdom rely to assert control over the controversy between Laker and the antitrust defendants. 37 The prerogative of a nation to control and regulate activities within its boundaries is an essential, definitional element of sovereignty. Every country has a right to dictate laws governing the conduct of its inhabitants. Consequently, the territoriality base of jurisdiction is universally recognized. It is the most pervasive and basic principle underlying the exercise by nations of prescriptive regulatory power. 19 It is the customary basis of the application of law in virtually every country. 20 38 In the context of remedial legislation, prohibition of effects is usually indivisible from regulation of causes. Consequently, the principles underlying territorial jurisdiction occasionally permit a state to address conduct causing harmful effects across national borders. Territoriality-based jurisdiction thus allows states to regulate the conduct or status of individuals or property physically situated within the territory, even if the effects of the conduct are felt outside the territory. 21 Conversely, conduct outside the territorial boundary which has or is intended to have a substantial effect within the territory may also be regulated by the state. 22 39 Just as the locus of the regulated conduct or harm provides a basis of jurisdiction, the identity of the actor may also confer jurisdiction upon a regulating country. The citizenship of an individual or nationality of a corporation has long been a recognized basis which will support the exercise of jurisdiction by a state over persons. Under this head of jurisdiction a state has jurisdiction to prescribe law governing the conduct of its nationals whether the conduct takes place inside or outside the territory of the state. 23 40 Because two or more states may have legitimate interests in prescribing governing law over a particular controversy, these jurisdictional bases are not mutually exclusive. For example, when the national of one state causes substantial effects in another state, both states may potentially have jurisdiction to prescribe governing law. 24 Thus, under international law, territoriality and nationality often give rise to concurrent jurisdiction. 25 A court faced with assertions of conflicting or inconsistent prescriptive power under facially concurrent jurisdiction must first examine the sufficiency of jurisdictional contacts under each base of jurisdiction to determine whether either claim of jurisdiction is unfounded. If both claims to jurisdiction are legitimately exercised, avenues of conflict resolution must be considered before jurisdiction to prescribe can go forward.
41 The prescriptive application of United States antitrust law to the alleged conspiracies between KLM, Sabena, and the other antitrust defendants is founded upon the harmful effects occurring within the territory of the United States as a direct result of the alleged wrongdoing. Before we examine the nature of those effects and consider whether they support the prescriptive jurisdiction over the claimed conspiracies, we wish to make it clear that this aspect of territorial jurisdiction is entirely consistent with nationally and internationally recognized limits on sovereign authority. 42 It has long been settled law that a country can regulate conduct occurring outside its territory which causes harmful results within its territory. 26 The traditional example of this principle is that of the transnational homicide: when a malefactor in State A shoots a victim across the border in State B, State B can proscribe the harmful conduct. 27 To take a more likely example, embezzlement or unauthorized access to computerized financial accounts can certainly be controlled by the territory where the accounts are located, even though the thief operates by telephone from a distant territory. Other examples are easily multiplied. 28 43 Even if invisible, the radiating consequences of anti-competitive activities cause economic injuries no less tangible than the harmful effects of assassins' bullets or thieves' telephonic impulses. Thus, legislation to protect domestic economic interests can legitimately reach conduct occurring outside the legislating territory intended to damage the protected interests within the territory. As long as the territorial effects are not so inconsequential as to exceed the bounds of reasonableness imposed by international law, 29 prescriptive jurisdiction is legitimately exercised. 44 The territorial effects doctrine is not an extraterritorial assertion of jurisdiction. 30 Jurisdiction exists only when significant effects were intended within the prescribing territory. Prescriptive jurisdiction is activated only when there is personal jurisdiction, often referred to as jurisdiction to adjudicate. A foreign corporation doing business within the United States reasonably expects that its United States operations will be regulated by United States law. The only extraterritoriality about the transactions reached under the territorial effects doctrine is that not all of the causative factors producing the proscribed result may have occurred within the territory. Although some of the business decisions affecting United States operations may be made outside the forum state, the entire transaction is not ordinarily immunized. 45 Certainly the doctrine of territorial sovereignty is not such an artificial limit on the vindication of legitimate sovereign interests that the injured state confronts the wrong side of a one-way glass, powerless to counteract harmful effects originating outside its boundaries which easily pierce its sovereign walls, while its own regulatory efforts are reflected back in its face. 31 Unless one admits that there are certain vital interests that can be affected with impunity by careful selection of the decision-making forum, with the result that a country may be forced to rely entirely on the good offices of a foreign state for vindication of the forum's interests--even when vindication of the forum state's own policies--then availability of territorial effects jurisdiction must be recognized. For these reasons territorial effects jurisdiction has been implemented by several European forums. 32 Indeed, the British have vigorously legislated on this principle in the Protection of Trading Interests Act. 46
47 The circumstances of this litigation suggest numerous American interests that would be vindicated if Laker is permitted to proceed with its antitrust claim. Although some of the alleged anticompetitive actions occurred within the United States, 33 most of the conspiratorial acts took place in other countries. This distinction, however, has no overriding significance, since the economic consequences of the alleged actions gravely impair significant American interests. If the only interest involved were that of Laker, a British corporation, then it may very well be that United States jurisdiction to prescribe would not exist. However, Laker is in liquidation. Therefore its interests are only nominal compared to those claiming through it. 48 A primary objective of antitrust laws is to preserve competition, and thus ultimately protect the interests of American consumers. 34 For decades, a great percentage of passengers on North Atlantic air routes has been United States citizens. 35 The greatest impact of a predatory pricing conspiracy would be to raise fares for United States passengers. No other single nation has nearly the same interest in consumer protection on the particular combination of routes involved in Laker's antitrust claims. Application of antitrust laws would thus directly benefit American consumers. 49 Because Laker is currently being liquidated, the claims of its creditors are even more directly at stake than consumer interests. Laker is now little more than a corporate conduit through which its assets, including any damages owed Laker, will pass to its creditors. Its antitrust action is primarily an effort to satisfy its creditors, who ultimately bear the brunt of the injury allegedly inflicted upon Laker. 50 Although the precipitous actions of the British airline defendants prevented the district court from conducting a thorough inquiry into the underlying facts relevant to this aspect of the litigation, the facts indicate that Laker's principal creditors are Americans. Laker's fleet of American manufactured DC-10 aircraft was largely financed by banks and other lending institutions in the United States. 36 Moreover, a substantial portion of its total debt obligations are likely to have been American, since the bulk of the debts and expenses were payable in American dollars. 37 The actions of the alleged conspirators destroyed the ability of Laker to repay these American creditors; any antitrust recovery will therefore benefit these United States interests. 51 In addition to the protection of American consumers' and creditors' interests, the United States has a substantial interest in regulating the conduct of business within the United States. The landing rights granted to appellants are permits to do business in this country. Foreign airlines fly in the United States on the prerequisite of obeying United States law. 38 They have offices and employees within the United States, and conduct substantial operations here. By engaging in this commercial business they subject themselves to the in personam jurisdiction of the host country's courts. They waive either expressly or implicitly other objections that might otherwise be raised in defense. 39 A major reason for this subjection to business regulation is to place foreign corporations generally in the same position as domestic businesses. 40 Thus, United States creditors are entitled to, and do, rely on their ability to enforce their claims against foreign corporations like the appellants. 52 This equivalency works in both directions. Foreign corporations are privileged to, and do, rely on United States law. 41 Consequently, creditors rely on the ability of foreign corporations, not only to be sued, but to sue in courts. Creditors expect to recover claims derivatively when foreign corporations possess a claim. Foreign corporations thus have the same obligation as domestic corporations--to sue for benefit of creditors when they are financially troubled and need money for satisfaction of creditors' claims. 42 53 The United States has an interest in maintaining open forums for resolution of creditors' claims. Just as the appellants are expected to abide by the United States laws governing those who do business here, so is Laker entitled to the protection of those laws. Permitting Laker to maintain its antitrust suit satisfies the legitimate expectations of Laker and its creditors. 54
55 It is beyond dispute that these contacts support an exercise of jurisdiction under the Sherman and Clayton Acts. Jurisdiction exists under United States antitrust laws whenever conduct is intended to, and results in, substantial effects within the United States. 43 Under the conspiracy alleged by Laker, the intent to affect American commerce is obvious. The asserted predatory pricing of fares and interference with refinancing attempts were designed specifically to drive Laker out of business and eventually to raise the fares paid by transatlantic passengers, the bulk of whom are American. 56 Substantial realization of those intended effects has also been alleged by Laker. Laker was forced into liquidation shortly after its refinancing attempts collapsed. Its creditors have not yet been satisfied. The downward pressure on fares induced by Laker's competition, which previously benefitted transatlantic passengers, has been eliminated. Moreover, providing a forum for Laker's suit would also respect domestic creditors' reliance on the ability of foreign corporations to sue and be sued under the United States laws which ordinarily govern the business operations of foreign corporations within the United States. Thus, significant and long standing American economic interests would be vindicated through a successful antitrust action by Laker.
57 Some of the British jurisdictional contacts are territorial. The plaintiff did business on routes between the United States and United Kingdom. A number of the purported conspiratorial acts took place in Great Britain. The conspiracy allegedly caused bankruptcy of a corporation operating in Great Britain. 58 However, the primary base of jurisdiction is the British nationality of the parties involved in the transactions cited in Laker's complaint. 44 Laker itself is incorporated under Jersey law, and is thus a British national for purposes of this litigation. Two of the named defendants, British Airways and British Caledonian, are also incorporated under British law. In addition, the conspiracy may also tangentially implicate the activities of other British entities such as the Bank of England and the Civil Aviation Authority. 45 59 Regulating the activities of businesses incorporated within a state is one of the oldest and most established examples of prescriptive jurisdiction. 46 We cannot say that these nationality-based jurisdictional contacts would be insufficient to support British jurisdiction over a claim filed by KLM or Sabena, especially when the conspiracy charged does have territorial contacts with the United Kingdom. Thus, existence of British jurisdiction to prescribe is not seriously challenged by Laker.
60 The sufficiency of jurisdictional contacts with both the United States and England results in concurrent jurisdiction to prescribe. Both forums may legitimately exercise this power to regulate the events that allegedly transpired as a result of the asserted conspiracy. 61 Concurrent jurisdiction does not necessarily entail conflicting jurisdiction. The mere existence of dual grounds of prescriptive jurisdiction does not oust either one of the regulating forums. Thus, each forum is ordinarily free to proceed to a judgment. 62 In the current situation, appellants charge that the district court abused its discretion by forbidding them from joining the parallel proceeding in the English courts. They argue that this result is compelled both by principles of comity and by respect for a country's paramount interest in controlling the remedies available to its nationals. Before we can fully consider the extent of appellants' rights based on comity and Laker's nationality to participate in the English proceedings, we examine whether the district court's injunction contravenes the well-established limits on the use of in personam injunctions against litigation in foreign jurisdictions.