USA Law and Practice Contributed by: Eric Bruce and Justin Simeone, Freshfields US LLP
US statutes are presumed not to have extraterritorial effect unless they include a “clear indication” to the contrary. Without a “clear indication”, courts examine the statute’s “focus” to determine whether or not an alleged violation is “domestic”. The law continues to change in this area; some courts have found that domestic conduct is necessary, but not sufficient, to apply US law to claims that mostly arise overseas. As an initial point, US law applies on US soil – so if individuals are visiting the US (for busi - ness or pleasure), they face increased US legal risk over any business they do while on their trip. Second, US law often applies to US citizens, permanent resi - dents (ie, “green card” holders), and entities organised under US law anywhere in the world. Non-US transac - tions could be exposed to US legal risk because some of the personnel are US nationals. FCPA – Generally The FCPA has relatively broad extraterritorial applica - tion. Criminal conduct outside the USA could result in FCPA liability under one of four theories: issuer liabil - ity, domestic concern liability, liability as an agent of an issuer or domestic concern, and, potentially, con - spiracy/accomplice liability. FCPA – Issuers If a legal entity is an issuer of registered US securities (regardless of where the entity is headquartered), the entity may be held liable for violations of the FCPA’s anti-bribery provisions committed anywhere in the world, provided that there is a connection to the USA (eg, an email that touches the USA). If an issuer is organised under US laws, the entity may be held liable for FCPA violations, irrespective of any other connec - tion to the US. Issuers are also subject to the FCPA’s accounting pro - visions everywhere in the world. FCPA – Domestic Concerns US domestic concerns (ie, US nationals and business - es incorporated under US law or headquartered in the USA, and their employees, agents, etc) are required to comply with the FCPA’s anti-bribery provisions, regardless of where their operations may be located.
Such entities may be held liable for violations of the FCPA outside the USA. FCPA – Agent Liability A person or legal entity acting as an agent of an issuer or domestic concern can face FCPA liability for engaging in conduct in furtherance of an improper payment, even when the issuer/domestic concern did not expressly direct or authorise the improper pay - ment. This type of liability may apply without regard to where the improper payments were made if the conduct involves a US person or there is a connection to the USA. FCPA – Conspiracy and Accomplice Liability If a non-US company acts in concert with another company or person, and jurisdiction can be estab - lished for that company or person (eg, because they are a domestic concern), it is possible that the non- US company could be held liable for either conspiring with or aiding and abetting the US person or legal entity that is directly subject to the FCPA, or wilfully causing the US person or legal entity to violate the FCPA. As with direct liability for issuers and domes - tic concerns, this type of liability may apply without regard to where any improper payments were made, as long as the co-conspirator is organised under the laws of the USA or any state in the USA, or there is a connection to the USA. The United States Court of Appeals for the Second Circuit, however, has ruled that a non-resident foreign national may not be charged with conspiracy to violate the FCPA or with aiding and abetting an FCPA viola - tion unless the foreign national acted as an agent of an “issuer” or a “domestic concern” or was physically present in the US. The Second Circuit is only one of 11 intermediate federal appellate courts, and the Fifth Circuit has declined to follow the same approach. Domestic Statutes As noted, US courts presume that most US criminal statutes do not apply extraterritorially. For example, courts have ruled that 18 USC, Sections 666, 1341, 1343, and 1346 do not apply extraterritorially. It is important to note, however, that even if specific statutes are not applied extraterritorially, non-US con -
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