British Commonwealth lawyers, in general, and Australian lawyers, in particular, traditionally maintain a conservative view of the extraterritorial reach of commercial legislation. As a result of the Alcoa decision in 1945, if not earlier decisions, the United States courts have espoused fairly grand ideas on the stretch of their judicial writ. In fact, the "effects" doctrine was first proclaimed in 1909 by the United States Supreme Court in American Banana Co. v. United Fruit Co. In this case, the Court proclaimed that the United States has the power to punish "acts done outside [the] jurisdiction but intended to produce and producing detrimental effects within it."
Although the international community was cool to the Court's position, it did not react too violently in the 1950s and 1960s. The reach of United States commercial legislation at this time appeared bearable. This somewhat mild response to the expansive reach of United States laws may have been grounded in the standing of the United States as the giant of the international trading world. The United States quickly filled the trading vacuums left by World War II when the prewar cartel arrangements and, to some extent, prior colonial links had broken down. During this period, practically anyone who could produce and deliver scarce goods was welcome. The United States was one of the countries able to meet the demand. Its companies actively developed worldwide branches and subsidiaries. The United States remains an international trading giant but, as the United States itself is beginning to realize, other countries and trading blocks now have the ability to retaliate if they regard the reach of United States laws as an unwarranted extension of jurisdiction.
Extraterritorial Effects of United States Commercial and Antitrust Legislation: A View from "Down Under",
16 Vanderbilt Law Review
Available at: https://scholarship.law.vanderbilt.edu/vjtl/vol16/iss4/2