Extraterritorial jurisdiction is the situation when a state extends its legal power beyond its territorial boundaries. Examples include where a state maintains jurisdiction over its citizens when they are overseas, and where certain criminal offences can be prosecuted in a state regardless of where they were committed (e.g. piracy and child sex offences). Extraterritorial jurisdiction and its application is one of the most hotly debated issues in the area of human rights generally, and within the area of business and human rights.
The UN Guiding Principles on Business and Human Rights (UNGPs) recognise the principle of extraterritorial jurisdiction. Specifically, Commentary to UNGP 2 states that:
“At present States are not generally required under international human rights law to regulate the extraterritorial activities of businesses domiciled in their territory and/or jurisdiction. Nor are they generally prohibited from doing so, provided there is a recognized jurisdictional basis. Within these parameters some human rights treaty bodies recommend that home States take steps to prevent abuse abroad by business enterprises within their jurisdiction.
There are strong policy reasons for home States to set out clearly the expectation that businesses respect human rights abroad, especially where the State itself is involved in or supports those businesses. The reasons include ensuring predictability for business enterprises by providing coherent and consistent messages, and preserving the State’s own reputation.
States have adopted a range of approaches in this regard. Some are domestic measures with extraterritorial implications. Examples include requirements on “parent” companies to report on the global operations of the entire enterprise; multilateral soft-law instruments such as the Guidelines for Multinational Enterprises of the Organisation for Economic Co-operation and Development; and performance standards required by institutions that support overseas investments. Other approaches amount to direct extraterritorial legislation and enforcement. This includes criminal regimes that allow for prosecutions based on the nationality of the perpetrator no matter where the offence occurs. Various factors may contribute to the perceived and actual reasonableness of States’ actions, for example whether they are grounded in multilateral agreement.”+ Read more
As such, the commentary to Guiding Principle 2 draws a distinction between two types of extraterritoriality:
- Domestic measures with extraterritorial implications: For example, requirements on ‘parent’ companies to report on operations globally (i.e. including on the activities of their subsidiaries), or the contractual applicability of standards of international finance institutions; and
- Direct extraterritorial legislation: For example, criminal laws that allow for prosecution based on the nationality of the perpetrator regardless of where the offence occurs.
Some commentators have criticised the position articulated in the UNGPs for insufficiently reflecting the duty of a “home” state to a transnational corporation (TNC) to protect against abuses occurring on the territory of a “host” state. The notion that states have extraterritorial human rights obligations is also one basis upon which calls are made for an international treaty on business and human rights to be developed.
A number of human rights treaty bodies have also recommended that home states take steps to prevent abuse abroad by business enterprises within their jurisdiction. For example, the Committee on Economic Social and Cultural Rights (CESCR) stated in General Comment No 24 on State Obligations under ICESCR in the Context of Business Activities that “States Parties are required to take the necessary steps to prevent human rights violations abroad by corporations domiciled in their territory and/or jurisdiction (whether they are incorporated under their laws, or have their statutory seat, central administration or principal place of business on the national territory), without infringing the sovereignty or diminishing the obligations of the host States under the Covenant”.
General Comment No 24 further states that “the extraterritorial obligation to protect requires States Parties to take steps to prevent and redress infringements of Covenant rights that occur outside their territories due to the activities of business entities over which they can exercise control, especially in cases where the remedies available to victims before the domestic courts of the State where the harm occurs are unavailable or ineffective”.
The Committee on the Elimination of Racial Discrimination has also urged states to take appropriate measures to prevent adverse impacts on the rights of indigenous peoples from corporations registered in their state. For example, it has recommended that Canada “take appropriate legislative measures to prevent transnational corporations registered in Canada from carrying out activities that negatively impact on the enjoyment of rights of indigenous peoples in territories outside Canada, and hold them accountable.”
To influence the behaviour of private actors abroad without the direct use of extraterritorial jurisdiction, States can make use of import or export controls or require “parent” companies to report or exercise due diligence on the global operations of the entire enterprise. For example, The UK Modern Slavery Act 2015 obligates all large businesses, globally, who operate in the UK market, to provide an annual, board-approved, publicly available statement that describes what they are doing to eliminate modern slavery in their operations and supply chains. States can make use of the multilateral soft-law instruments, such as the OECD Guidelines for Multinational Enterprises, and performance standards required by institutions that support overseas investments. They can also adopt direct extraterritorial legislation and enforcement, to prosecute perpetrators, irrespective of where the offence occurs.