Extraterritoriality Of Economic Administrative Law

Legal effects can be divided into two categories, domestic effects and extrateritorial effects. The former indicates binding effects in the territory the lawmaker, the later beyond the limits of a nation which made it. If the territory is explained to include 'legal territory', binding effects of a law stipulated by mainland China on acts in Hong Kong can be considered as extraterritorial.There are two meanings attached to extraterritoriality. The first is binding effects on persons, things and acts in the territory beyond the lawmaker's. The second is the likelihood of extraterritorial application of a law by a nation rather than the lawmaker, ie its extraterritorial enforcement.Extraterritoriality is often called extraterritorial jurisdiction in international law. Jurisdiction is a power owned by a nation to describe, adjudicate and enforce.Extraterritoriality of economic administrative law can be found in such special situations as followings: (1) the binding effect of a national law in South Pole, arctic pole, the high seas and outer space; (2) the binding effect of a treaty on the third country who is not a contracting party to the treaty; (3) extraterritorial effect based on special arrangements. For example, while a person who enjoys diplomatic privileges is immune from the jurisdiction of host country, he is under the jurisdiction of the nation which missions him. In this sense, the law of sending nation is extraterritorial. Under consular extraterritoriality which once existed in China and Turkey, the acts of foreigners were governed by their national law, thus their national law was extraterritorial.There exits a presumption against extraterritorial application in most countries that all laws are territorial except stipulated otherwise. There are several exceptions to this presumption, including clear intent exception, adverse effects exception and location of conduct exception. Exceptions can be established in such ways as express indication from lawmaker and through adjudicating processes.Widespread allegation of extraterritoriality of economic administrative law was made after World War II, because the conditions of expansion are met at that time. While economic integration provide a economic base of expansion of legal binding, universal concern about global pollution and decline of labor standard provide a moral base, overwhelming power of some nations provide a political base, lack of express limits on domestic jurisdiction and broad bases for jurisdiction provide a legal base.Extraterritoriality mainly concerns international law. Territorial principle and nationality principle are traditional bases for jurisdiction. Under nationality principle, a nation has a jurisdiction over the acts of its subjects. To some extent, nationality principle provides a base for extraterritoriality. For instance, U.S.A imposes taxation duty on the incomes from abroad of its citizens. The Locus Case of 1927 is about criminal penalty, but it is often quoted as a proof for extraterritoriality. In this case, two principles were established. One is that a nation has a jurisdiction over the act occurred in foreign country if it had effects in domestic territory. The other is that prohibition of the jurisdictional power of a nation can not be drawn from the fact that international law hasn't empowered this jurisdiction definitely.Territorial principle has been explained to include the objective territorial principle and the subjective territorial principle, and nationality principle has been explained to include positive personality, passive personality, and resident jurisdiction. This kind of expansive explanation contributes a lot to extraterritoriality.After World War II, a series of new bases, such as the effect doctrine, act attribution and implementation principles, are established to support extraterritoriality. If domestic subsidiary acts according to a foreign parent company, two companies can be seen as a single economic entity, the nation where the subsidiary situated has jurisdiction over the foreign parent company. Under implementation test doctrine, one of act chains occurred in domestic territory, domestic economic administrative law can apply extraterritorially.Some expansion of extraterritorial bases is controversial and causes conflicts. The controversial practices are product nationality, technology nationality and extraterritoriality based on controlling relations between a company and its foreign subsidiary.Universal jurisdiction originally means any nation has jurisdiction over international crime. But it is now used as a base for extraterritoriality of basic labor standard and financial regulating (anti-terrorism) act. Traditional protective jurisdiction is now used as a base for extraterritoriality of export regulation and the law of protection of domestic interests.Extraterritoriality bases vary in different realm of law. It depends on the effect doctrine, attribution act theory and implementation test doctrine in competitive law, on nationality principle and the effect doctrine in environmental protection law, on universal principle and nationality in labor standard requirement, on the effect doctrine in security law, on resident identity on taxation law, and on people, product and technology nationality and controlling relation in export regulation.Except for voluntary abidance, the realization of extraterritoriality depends on enforcement by domestic administrative agency and court of law. As far as natural person and legal person are concerned, the domestic authority can take the measure of frost and seizure of property, order to cease economic relation and refuse visa to enforce regulating law. As for foreign nation, domestic authority can withdraw trade favor treatment, prohibit import of goods and retaliate in trade relation.Different opinion exist as for if domestic economic administrative law can be enforced extraterritorially. Some writers think it could not, because of following reasons: penal regulations are territorial; enforcement of foreign law would hurt domestic trade interest and domestic people's interest; it is contrary to sovereignty and public policy; to review foreign law according public policy will irrigate foreign nation while refusing all foreign law risk less; foreign taxation laws are too complex to understand exactly and correctly and so on. Other writers are for extraterritorial enforcement by another country's authority thinking that nations should cooperate to stop violation of economic administrative law. They argue that it is immoral for a nation to benefit from the violating act of other nation's law. All nations can benefit from international cooperation. A lot of treaties and domestic laws provide for extraterritorial enforcement of domestic economic administrative law. Under the International Monetary Fund Agreement, exchange control regulation can be applied extraterritorially. Tax law can also be enforced extraterritorially according to the taxation treaties between U.S.A. and France, Canada etc. The Institute of International Law adopted Wiesbaden Resolution which proposed extraterritorial enforcement of domestic economic administrative law. Extraterritorial enforcement can be achieved directly and indirectly, that is by enforcement of foreign court judgments given according to foreign economic administrative law, or by applying foreign economic administrative law in adjudicating a case.Conflict arises while different economic administrative laws of different countries apply to one relation or event. Confrontations include issuing of conflicting orders, diplomatic protests, making of blocking laws, issuing injunction to forbid nationals to participate in foreign procedure and political and economic retaliation. Severity of conflict differs in different fields. Conflict of laws is a conflict of interests of different contries in nature.Excessive extraterritoriality is an abuse. It uses other country's resources without acquiring its consent, it is a political manipulation under seemingly just cover, and will lead to double standard or discriminate treatment. Some requirements are necessary to set to prevent the abuse. Requirements needed to be satistied before the exercice of extraterritoriality are not violating basic international principles, treaties duties and customary international laws.Extraterritoriality may produce negative effects, such as legal and commercial uncertainty, distortion of foreign trade and investment, unwarranted costs and frustration of enthusiasm of international investment, decline of employment rate and slowing down of economic growth. Unilateral measures that can be taken to encounter the negative effects are adoption of the principle of comity, the principle of reason, the act of state doctrine, the foreign country compulsion rule, an attempt to avoid conflict with the law of host country, effort to narrow the limiting effect of public policy. It is necessary to cooperate with other countries to solve the disputes over extraterritoriality, bilaterally and multilaterally. Model law made by international organization has played an important part in the harmonization of different laws.GATT doesn't contain articles articulate clearly about extraterritoriality, but it does have some requirements like indiscrimination and transparency that have some effects on extraterritoriality. Exception of products of prison labor in article 20 supports extraterritoriality of labor standard. The exception of measures for protection of life or health, the exception of necessity to secure compliance with law, or exception of protection of exhaustible natural resources, is often quoted as a base for extraterritoriality of environmental protection measures. Security exception in article 21 is used as a base for extraterritoriality of export control acts. GATT/WTO dispute settlement body has accepted and dealt with several cases concerning extraterritoriality. New round of trade negotiation enlists such topics as environment protection, labor standard and competition law. Its breaking through will surely help reduce the conflict over extraterritoriality.China has long been a victim country of excessive extraterritoriality. She is a target of international embargo. Its enterprise like BDA in Macao was sanctioned for a reason listed in Patriotic Act of U.S.A. She was also accused of violation of international labor standard and is susceptible to sanctions. China moderately stipulates its extraterritoriality in such laws as Natural Person Income Tax Law, the Enterprise Income Tax Law, the Anti-trust Law (draft). By Mar. 30, 2007, it has concluded agreement of avoiding double taxation with 82 nations and its Hong Kong and Macao special administrative region, which contributed a lot to the successful settlement of extraterritoriality conflict in tax laws. In addition, China and Kazakstan reached an agreement on the cooperation in the field of competitive law and anti-trust law in 1999. But it still doesn't have regulations about extraterritoriality in such field as security law, environment protection law. China does not have not a regulation or an article about its unilateral measures of avoiding conflict of extraterritoriality, nor does it about blocking law to counter the abuse of extraterritoriality of foreign country. There is lots of work left for China to do.