The presumption against extraterritoriality (“PAE”), like all canons of construction, is a shorthand rule of interpretation used by judges to determine how a statute should be applied. Under the PAE, where there exists ambiguity as to the geographical scope of a statute, the court is required to limit the statute’s application to acts which occur within the territorial limits of the United States. But the PAE, as originally construed in EEOC v. Arabian American Oil Co. (1991) (“Aramco”), and as elaborated upon in Morrison v. National Australia Bank Ltd. (2010) and, more recently, in Kiobel v. Royal Dutch Petroleum (2013), is of a relatively modern vintage for a judicial canon, as it did not exist in its current form until the second half of the 20th century. Prior to the 1950s, the PAE, as it is understood today, did not exist. The modern PAE is instead a conflation of two older canons of construction, and although both those canons are often described as ‘presumptions against extraterritoriality,’ neither canon functioned in the manner that the PAE does today.
These two prior canons, although related both to each other and the modern PAE, were used by the courts two answer two separate questions of statutory construction, and did not typically overlap in their application. The first of these canons, which for purposes of this post has been dubbed the presumption against absurdities (“PAA”), was a presumption that a statute does not provide for extraterritorial application when doing so or when such an interpretation would necessarily imply that the court possesses an unflattering opinion of Congress’ competence. The second canon, which will be referred to here as the presumption against universality (“PAU”), provided that when a statute uses words such as “any,” or “all,” or “every,” those words would not be presumed to have been intended literally when the statute’s context shows that Congress used those words with a more limited definition in mind.
The Presumption Against Absurdities
The PAA, as an offspring of the Charming Betsy Canon, was based in part on the assumed conformity between U.S. law and international law, and was used when a statute could be interpreted in a manner that would place it beyond Congress’ actual authority to enact, either under international law or domestic law. Under the PAA, courts presumed that Congress had a reasonable intent, rather than an unreasonable one, when enacting legislation — or, in other words, that courts should refrain from interpreting statutes in a manner which would make Congress look like a bunch of idiots. As it was well understood to 19th century jurists “that the legislation of every country is territorial [ and] that beyond its own territory, [a state's legislation] can only affect its own subjects or citizens,” Rose v. Himely (1808), statutes were not to be construed in a way that would extend their effect beyond this permissible realm. As such, courts applying the PAA would not interpret a statute to cover extraterritorial conduct when doing so would necessarily have unflattering implications about the perceived competence of the legislative branch.
The roots of the PAA can be seen in U.S. v. Palmer (1818), in which the Court considered a law proscribing certain acts committed by “any seaman.” The Court concluded that “it cannot be supposed, that the legislature intended to punish a seaman, on board a ship sailing under a foreign flag, under the jurisdiction of a foreign government[.]” The Court’s reasoning was that it “would be difficult to believe” that Congress could have actually intended something so foolish, and therefore an interpretation that makes Congress look less ignorant should be presumed. This was not a presumption against extraterritoriality, however, because the statute’s extraterritorial effect was not in question. The Court needed a way to interpret “any seamen” to apply to U.S. seamen that were outside of the U.S., and not to alien seamen that were outside of the U.S., and it did do by assuming that a literal interpretation of a statute cannot be correct when a less literal construction would not make Congress look like a bunch of rubes.
Following Palmer, the PAA would be invoked by the courts many times over the course of the 19th and 20th centuries, both to find that an extraterritorial effect was not warranted because it conflicted with international law, and also to find that extraterritorial effect was warranted where it would not conflict with international law. See The Apollon (1824) (“[D]oes it follow that the power to arrest her was meant to be given, after she had passed into the exclusive territory of a foreign nation? We think not. It would be monstrous to suppose that our revenue officers were authorized to enter into foreign ports and territories, for the purpose of seizing vessels which had offended against our laws. It cannot be presumed that Congress would voluntarily justify such a clear violation of the laws of nations. The arrest of the offending vessel must, therefore, be restrained to places where our jurisdiction is complete, to our own waters, or to the ocean, the common highway of all nations.”); Toland v. Sprague, 37 US 300 (1838) (“[I]t is easy to perceive why the restriction in regard to the process was confined to inhabitants of the United States. Plainly, because it would not have been necessary or proper to apply the restriction to those whom the legislature did not contemplate, as being within the reach of the process of the courts, either with or without restrictions.”); United States v. Coombs (1838) (“There is, then, no reason, founded in the language or policy of the clause, to insert a restriction and locality which have not been expressed by the legislature. On the contrary, upon general principles of interpretation, where the words are general, the Court are not at liberty to insert limitations not called for by the sense, or the objects, or the mischiefs of the enactment.”); Waring v. Clarke (1847) (“There is no escape from this result, unless it is to be implied that the amendments were proposed by persons careless or ignorant of the difference in the mode of trial of suits at common law and in admiralty”); Patterson v. Bark Eudora (1903) (holding that “[a]n act to amend the laws relating to American seamen” also applied to foreign seamen; as Congress in this instance legitimately had the power under international law to impose this statute, to read the statute so as to exclude them would be improper, and especially so where excluding foreign seamen would gravely undermine the congressional interests underlying the statute); American Banana v. United Fruit Co. (1909) (“In the case of the present statute the improbability of the United States attempting to make acts done in Panama or Costa Rica criminal is obvious[.]“); U.S. v. Freeman (1915) (“And yet all will concede that Congress did not intend to do anything so obviously futile as to denounce as criminal an act wholly done in a foreign country, such as is the delivery to the carrier where the shipment is from a foreign country into a State.”); Sandberg v. McDonald (1918) (“Congress certainly did not intend to punish criminally acts done within a foreign jurisdiction; a purpose so wholly futile is not to be attributed to Congress.”); United States v. Bowman (1922) (holding that an extraterritorial effect should be presumed where there was no conflict with external laws, and where the purpose of the law would plainly be served by applying extraterritorially: “It would hardly be reasonable to hold that if any one, certainly if a citizen of the United States, were to steal or embezzle such property which may properly and lawfully be in the custody of army or naval officers either in foreign countries, in foreign ports or on the high seas, it would not be in such places an offense which Congress intended to punish by this section.”); and Branch v. FTC (7th Cir. 1944) (holding that American Banana did not prevent extraterritorial application of the statute in question, because “[t]he exercise by the United States of its sovereign control over its commerce and the acts of its resident citizens therein is no invasion of the sovereignty of any other country or any attempt to act beyond the territorial jurisdiction of the United States.”).
Often, American Banana is wrongfully identified as the iconic modern case that established the presumption against extraterritoriality, based on its pronouncement that “[a]ll legislation is prima facie territorial.” This is a misreading of that case, however, as American Banana did not intend — or even contemplate — the PAE, as it was applied in Morrison or Kiobel. The statement from American Banana, in context, was as follows:
The foregoing considerations would lead in case of doubt to a construction of any statute as intended to be confined in its operation and effect to the territorial limits over which the lawmaker has general and legitimate power. “All legislation is prima facie territorial.” Ex parte Blain, In re Sawers, 12 Ch. Div. 522, 528; State v. Carter, 27 N.J. (3 Dutcher) 499; People v. Merrill, 2 Parker, Crim. Rep. 590, 596
Examining the Court’s citations clarify that American Banana was not a presumption against extraterritoriality, but a presumption against absurd applications of the law. The two American cases the Court cites to are both concerned with inter-state applications of domestic criminal law. See State v. Carter (holding that an indictment setting forth a felonious assault and battery in New York, in which the victim then came into New Jersey and died from the assault’s effects there, could not result in a criminal charge under New Jersey law); and People v. Merrill (1855) (“[t]he penal acts of one state can have no operation in another state.”).
And American Banana’s most famous statement, “[a]ll legislation is prima facie territorial,” was adopted from the British case of Ex parte Blain [1879]. The full quotation from that case was:
The governing principle is, that all legislation is prima facie territorial, that is to say, that the legislation of any country binds its own subjects and the subjects of other countries who, for the time, bring themselves within the allegiance of the legislating power.
By “territorial,” Ex parte Blain was not referring literally to a geographical limitation, but to the limitations on a nation’s sovereignty. This is nothing more than a restatement of U.S. case law on that same subject, as held by Rose v. Himely (1808):
It is conceded that the legislation of every country is territorial; that beyond its own territory, it can only affect its own subjects or citizens.
The PAA is based on this traditional understanding of the limitations on Congress’ prescriptive jurisdiction, which allows courts to assume that Congress had not contemplated exceeding these boundaries, even when a statute could be fairly read to extend beyond this permissible scope. The PAA, unlike the PAU, is therefore concerned with the actual limits of the U.S.’s sovereignty under international law, and as such, the PAA only arises when a proposed interpretation of a statute would in fact place the statute in conflict with either the laws of foreign states or the law of nations. The PAA does not apply to extraterritorial legislation which is not at risk of causing such conflicts.
The Presumption Against Universality
In contrast to the presumption against absurdities, the presumption against universality has little to no relation to international law, and it has no relation at all to the existence of any limitations on congressional power. Its primary use was as a judicial mechanism for repairing the imprecise edicts of a slightly sloppy legislative branch: in the language of Congress, “all things” does not mean “all things in the universe,” but rather “all things we meant to refer to in this law.” As such, under the PAU, when a statute uses a universal term, courts are not obligated to read into the statute a universal effect.
By applying the PAU, courts were thus able to free themselves from literal interpretations of vaguely worded statutes. When the legislature had included a universally inclusive term, but it seemed most probable that that no universal inclusion was intended, “all” and “every” were read instead as “all the subjects contemplated by this statute,” and “every act that is intended to be regulated by this section.” Unsurprisingly, then, the PAU often (but not exclusively) arose in cases concerning the proposed global application of a law, when all surrounding circumstances would suggest that only local regulation had been intended. See Cohens v. Virginia (1821) (“Congress must have considered itself as delegating to this corporate body powers for these objects, and for these objects solely. In delegating these powers, therefore, it seems reasonable to suppose that the mind of the legislature was directed to the City alone, to the action of the being they were creating within the City, and not to any extra-territorial operations. In describing the powers of such a being, no words of limitation need be used. They are limited by the subject.”); Brown v. Duchesne (1857) (“The general words used in the clause of the patent laws granting the exclusive right to the patentee to use the improvement, taken by themselves, and literally construed, without regard to the object in view, would seem to sanction the claim of the plaintiff. But this mode of expounding a statute has never been adopted by any enlightened tribunal — because it is evident that in many cases it would defeat the object which the Legislature intended to accomplish.”; “[T]hese acts of Congress do not, and were not intended to, operate beyond the limits of the United States; and as the patentee’s right of property and exclusive use is derived from them, they cannot extend beyond the limits to which the law itself is confined. And the use of it outside of the jurisdiction of the United States is not an infringement of his rights, and he has no claim to any compensation for the profit or advantage the party may derive from it.”); Ellis v. United States (1907) (“Without further elaboration of details we are of opinion that the persons employed by the two defendant companies were not laborers or mechanics and were not employed upon any of the public works of the United States within the meaning of the act. As in other cases where a broad distinction is admitted, it ultimately becomes necessary to draw a line, and the determination of the precise place of that line in nice cases always seems somewhat technical, but still the line must be drawn.”); N.Y. Cent. R.R. Co. v. Chisholm (1925) (“It is unnecessary for us to consider the power of Congress to impose civil liability upon citizens of the United States for torts committed within the territory of another nation. The present case presents nothing beyond a question of construction.”); Blackmer v. United States (1932) (“While the legislation of the Congress, unless the contrary intent appears, is construed to apply only within the territorial jurisdiction of the United States, the question of its application, so far as citizens of the United States in foreign countries are concerned, is one of construction, not of legislative power.”); Foley Bros. v. Filardo (1949) (“The question before us is not the power of Congress to extend the Eight Hour Law to work performed in foreign countries. Petitioners concede that such power exists. The question is rather whether Congress intended to make the law applicable to such work.”).
The modern restatement of the PAU was most plainly set forth in Foley Bros. v. Filardo. There, in interpreting the reach of a statute that used the phrased “every contract,” the Court held that “every” could be understood figuratively, rather than literally. In doing so, it applied “canon of construction” that permit the court to make inferences “whereby unexpressed congressional intent may be ascertained.” Foley Bros. v. Filardo (1949) (citing Blackmer v. United States (1932)). This allowed the Court to avoid reading the statute as it was actually written:
Nothing in the legislative history supports the conclusion of respondent and the court below that “every contract” must of necessity, by virtue of the broadness of the language, include contracts for work to be performed in foreign countries.
And, importantly, the Court’s holding in Foley Bros. regarding this ‘canon of construction’ was not based on prior caselaw which had excluded the extraterritorial reach of any statutes. Instead, the Court cited to U.S. v. Bowman (“The necessary locus, when not specially defined, depends upon the purpose of Congress”) and Blackmer v. U.S. (“By virtue of the obligations of citizenship, the United States retained its authority over him, and he was bound by its laws made applicable to him in a foreign country.”), and contrasted its holding in Foley Bros. with a prior cases in which, despite any explicit statement of extraterritoriality in the statutes in question, the Court had found the existence of an extraterritorial effect, where an extraterritorial effect appeared consistent with Congress’ purpose in enacting the statute. See Vermilya-Brown Co. v. Connell (1948) (“We think these facts indicate an intention on the part of Congress in its use of the word ‘possession’ to have the Act apply to employer-employee relationships on foreign territory under lease for bases. Such a construction seems to us to carry out the remedial enactment in accord with the purpose of Congress.”).
Unlike the PAA, the PAU is unconcerned with whether or not Congress had the authority under international law to enact the statute being considered. And, unlike the PAE, the PAU did not provide for a blanket preference that statutes are only to be applied territorially, nor did it provide that extraterritorial effects can only exist when Congress has won a complicated game of “Mother May I” in the drafting of its enactments. Instead, the canon’s purpose and effect was much more limited: when a statute contains words of a universal scope, the statute may, when appropriate, be interpreted to have a more limited scope than what is literally provided for.
The Invention of the Presumption Against Extraterritoriality
The modern PAE was officially recognized — if not invented — by the Court’s decision in Aramco. It was in Aramco that the new, more expansive canon of construction was announced, and given the name of the “presumption against extraterritoriality” by the Court. In doing so, the Court eliminated the implicit, but long-recognized, distinctions between the PAU and PAA. The new PAE included elements of both the PAU and the PAA, but was more extensive in its application, and more confused about the justification for its existence.
Although Aramco was not the very first case to wrongfully conflate the PAU and PAA (Benz v. Compania Naviera Hidalgo, S.A. (1957) had as well, in a more limited fashion), it was the first case to do so explicitly. The Court’s method of statutory construction, in interpreting Title VII of the Civil Rights Act, invoked PAA and the PAU simultaneously, while erroneously claiming that the two canons were one and the same:
It is a longstanding principle of American law “that legislation of Congress, unless a contrary intent appears, is meant to apply only within the territorial jurisdiction of the United States.” Foley Bros., 336 U. S., at 285. This “canon of construction … is a valid approach whereby unexpressed congressional intent may be ascertained.” Ibid. It serves to protect against unintended clashes between our laws and those of other nations which could result in international discord. See McCulloch v. Sociedad Nacional de Marineros de Honduras, 372 U. S. 10, 20-22 (1963).
Contrary to the Court’s blithe assertion in Aramco, however, the “canon of construction” referred to in Foley Bros. did not “serve[] to protect against unintended clashes between our laws and those of other nations,” as was stated in McCulloch. The decision in Foley Bros. had been based on the PAU, and, relying on the previous decision in Blackmer, held that its decision was “one of construction, not of legislative power.” In contrast, McCulloch was based on the PAA; there, the Court had based its decision directly on Charming Betsy, holding that it could “find no basis for a construction which would exert United States jurisdiction over and apply its laws” in circumstances contrary to the holdings of the State Department, Congress, and international law.
But the conflation of the two lines of statutory construction stuck, and, post-Aramco, the PAU and the PAA were treated as one and the same. And, although the PAU and PAA had both been canons of limited scope, applying only to statutes which raised the specific problems of statutory construction that the canons were concerned with, Aramco’s PAE applies to all statutes without exception. To compound matters, Aramco also kicked off the invention of the previously unknown ‘clear indication’ rule. As a result, the PAE, as it is understood today, is as often used as a means of judicial constraint against the legislative branch as it used as a means of ascertaining congressional intent.
-Susan
