US Extraterritorial Jurisdiction (British Foreign & Commercial Policy)


Mark Simmonds (The Parliamentary Under-Secretary of State for Foreign and Commonwealth Affairs; Boston and Skegness, Conservative)
It is a pleasure to serve under your guidance this afternoon,

Mr Davies. I congratulate Mr Straw on securing this important debate and, as always, on the detailed, measured and articulate way in which he set out his case.

Before I get into the granularity of some of the issues that he raises, I want to set out Her Majesty’s Government’s wider approach to tackling extraterritoriality, because it is an important issue. The impacts of extraterritorial application of another country’s domestic laws on UK businesses can be significant and are not always easy to measure or to cost. British Governments of all colours—both the current Government and their predecessor—have maintained their opposition to overly broad assertions of extraterritorial civil jurisdiction, including when the right hon. Gentleman was Foreign Secretary.

It is not that the UK is averse to legislating to regulate extraterritorial activity; we have done so ourselves in certain cases that concerned the actions of British nationals abroad, the most obvious example of which is the Bribery Act 2010. However, the UK has always opposed the exertion of jurisdiction by a foreign country over British nationals or businesses that have little or no connection to that country. In such cases, we consider that the UK or the state on whose territory the activity occurred should rightfully exercise jurisdiction. As the right hon. Gentleman rightly said, that has principally been an issue with regard to the United States. He will be aware, I hope, that the United States Supreme Court is not immune to such arguments, and has stated that

“even where the claims touch and concern the territory of the United States, they must do so with sufficient force to displace the presumption against extraterritorial application.”

Successive British Governments have taken an interest in seeking to ensure that US courts do not try to exert jurisdiction over cases that have no substantial links to the United States. Indeed, we have submitted amicus briefs in a number of cases to the US Supreme Court under the so-called alien tort statute, and the right hon. Gentleman may well be aware of the most recent cases involving Rio Tinto and Shell.

It is important to reiterate the importance that the UK Government attach to sanctions. I know that there is cross-party support from Members, including the right hon. Gentleman, for those sanctions. They are an essential tool of foreign policy and provide a means of coercing changes in behaviour, constraining ability to continue to behave in a particular way and signalling collective opposition to the actions of certain states or individuals. It is still Her Majesty’s Government’s view that that is the case, as has been evidenced by the reaction to the events recently in Ukraine.

I turn to Iran, which was the main focus of the right hon. Gentleman’s remarks. The international community has applied significant pressure to the Iranian economy through sanctions, because of the international concerns surrounding Iran’s nuclear programme. International sanctions, particularly the stringent measures put in place in recent years by the US and the EU, have brought Iran back to the negotiating table. I believe that sanctions have, therefore, been proven to be a vital tool in our attempts to resolve the Iranian nuclear question through peaceful means. I will drill down into what that means with specific relation to Iran in a moment.

My hon. Friend Mr Wallace rightly raised the example of Cuba. In the case of Cuba, we and our EU partners have a

very different view from the US on how best to engage. The US continues to impose a trade embargo and apply sanctions, but we do not feel that the US approach regarding sanctions is right and we have raised our objections with them. Clearly, however, US policy towards Cuba is a matter for the US authorities and not for the UK Government. Whereas British businesses and banks can trade freely with Cuba, the US has a sanctions regime. Companies must be fully aware of how their business is being transacted. Banks often use the US clearing systems—this goes right to the heart of the point my hon. Friend made—in which case they are subject to US laws. That is not extraterritorial application of the US-Cuban sanctions regime. We have made it clear for some time to British businesses that operate in Cuba that that is a risk that they should look to mitigate.

On the points the right hon. Member for Blackburn made about the impact of sanctions, it is important that the House understand the distinction between what is and what is not extraterritorial in nature. US sanctions impact on all businesses that operate through the US. Companies, including UK companies, that conduct business with sanctioned regimes must therefore ensure that, if their business goes through the US or there is a US link within the transactions, they comply with US law. That applies to Iran, Cuba and other regimes against which the US applies sanctions but the EU does not—for example, Sudan.