Building Blocks: Australia's Response to Foreign Extraterritorial Legislation

[This paper discusses the nature of extraterritorial legislation and the use of `blocking' legislation to counter its effects, It examines the history of Australia's blocking legislation and the effects of foreign extraterritorial laws on Australia. It discusses strategies for responding to the use o f foreign extraterritorial legislation against Australian nationals and corporations and considers the usefulness of the current Australian blocking legislation. One aspect of globalisation is the interconnectedness of national economies. Extraterritorial legislation is being used to exploit this interdependence to promote foreign policy objectives. While Canada has recently amended its blocking legislation to respond to the new ways in which extraterritorial laws are being used, and the European Union has adopted a far-reaching blocking statute for the same reason, Australian blocking legislation has not been amended since its enactment in 1984. Given the increasing resort to extraterritorial legislation as a means of fostering foreign policy objectives and the inadequacies of the Australian blocking legislation, the authors argue that Australia needs to develop a coherent policy and legislative framework for responding to the effects of foreign extraterritorial legislation.] I INTRODUCTION Extraterritorial legislation is a controversial category of law. The exercise of jurisdiction by a state over activities occurring outside its borders is seen to impinge upon the sovereignty of the country in which the conduct took place, and/or of the country whose nationals are caught by foreign extraterritorial measures.(1) Extraterritorial laws cut across the international, domestic, public and private spheres of law and their effects are amplified by the increasing interdependence of national economies. The legitimacy of extraterritorial assertions of jurisdiction continues to be the subject of international litigation, scholarly debate and bureaucratic consideration. While courts, scholars and governments generally assume that there are limits to the enforcement of extraterritorial jurisdiction, there is little agreement as to what those limits are. Despite this debate, extraterritorial legislation has increasingly been used. This paper will examine the extraterritoriality issue from the perspective of its impact on Australia.(2) To date, no general study of the actual and potential liability of Australians under foreign extraterritorial legislation has been conducted. Australia's involvement in the Westinghouse antitrust litigation in the late 1970s and early 1980s sparked a major government inquiry into the extraterritorial application of United States laws,(3) and saw a cluster of Australian jurists examine the problem.(4) However, the implications of foreign extraterritorial laws for Australia have received little attention since that time.(5) This is despite new and highly contentious forms of extraterritorial legislation. One aspect of globalisation is the interconnectedness of national economies. Extraterritorial legislation is increasingly being used to exploit this interdependence to promote foreign policy objectives. In 1996 the US adopted two laws with extraterritorial application, both designed to further its foreign policy. The Cuban Liberty and Democratic Solidarity (Libertad) Act of 1996 (`Helms-Burton Act')(6) aims to isolate Cuba and to enforce the US economic embargo on that country. The Iran and Libya Sanctions Act of 1996 (`D'Amato Act')(7) seeks to enforce US sanctions against Iran and Libya by imposing penalties on persons who invest in the Iranian or Libyan oil or gas industries. The effects of these US extraterritorial trade controls represent a new source of difficulties and concern for Australia. For instance, there have been claims that Broken Hill Proprietary Company Ltd (`BHP') pulled out of negotiations concerning a lucrative pipeline project in Iran because of the D'Amato legislation. …

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