Harry Cassin Publisher and Editor

Andy Spalding Senior Editor

Jessica Tillipman Senior Editor

Richard L. Cassin Editor at Large

Elizabeth K. Spahn Editor Emeritus 

Cody Worthington Contributing Editor

Julie DiMauro Contributing Editor

Thomas Fox Contributing Editor

Marc Alain Bohn Contributing Editor

Bill Waite Contributing Editor

Shruti J. Shah Contributing Editor

Russell A. Stamets Contributing Editor

Richard Bistrong Contributing Editor 

Eric Carlson Contributing Editor

Bill Steinman Contributing Editor

Aarti Maharaj Contributing Editor

FCPA Blog Daily News

« Open Season On The FCPA | Main | SFO Expands Innospec Prosecution »

Beyond Balance VI: The Jurisdictional Sword Just May Cut the Other Way

 In last week’s post in this series we explained that the core purpose of the FCPA is to encourage, or require, ethical international business. Indeed, we suggested that the criterion by which FCPA reform proposals should be measured is what we might call the ethical business criterion: if a proposed reform would increase the volume of ethical business in the world, it is good; if it would do the opposite, either by relaxing ethical standards or by deterring business, it is not.

But the contemporary debate is now controlled by a false dichotomy: one side calls for more enforcement while the other calls for less, and neither side engages with much nuance the question of what exactly we’re trying to accomplish. Nowhere is this false dichotomy more apparent than in our discussion about jurisdiction.

The FCPA establishes personal jurisdiction over a foreign company for bribery violations if the company committed an act “in furtherance of” the corrupt payment “while in the territory" of the United States. The DOJ has recently broadened its interpretation to include a “correspondent account theory,” whereby jurisdiction is established when illicit payments to foreign officials are transmitted via wire transfers that pass through U.S. financial institutions. The U.S. business community has by and large objected to this theory, seeing it as yet another example of overreaching enforcement based on dubious theories that likely would not withstand judicial scrutiny.

But maybe this approach to the jurisdictional problem is wrongheaded. Maybe the U.S. business community is viewing this issue through entirely the wrong lens. Might the jurisdictional sword actually cut the other way?

Wouldn’t a more expansive personal jurisdiction provision make the global business environment more competitive, rather than less? Wouldn’t it reduce the competitive disadvantage of which U.S. companies now complain? The FCPA would reach more business conduct, thus satisfying the anti-bribery advocates, but the impact would be felt only by foreign companies who are not already subject to FCPA jurisdiction. In short, might an expansive personal jurisdiction provision satisfy the ethical business criterion with flying colors, to the great satisfaction of both so-called “sides” of the reform debate?

Some will counter that the correspondent account theory is unsupported by the current statutory text. But this is a discussion about amending the statute; we’ve got an easy workaround.

My recommendation is this: the U.S. business community should change its tune on expanding personal jurisdiction. It should actively support such expansion; indeed, it should propose a specific amendment to the FCPA and put this proposal at the center of its reform agenda. In doing so, the reform proponents would dispel the criticism that they seek only to scale back anti-bribery laws. They would earn credibility among anti-bribery advocates, and could leverage that credibility to facilitate a more nuanced, and less polarizing, discussion of other reform proposals.

Imagine, then, a reform package that was both pro-business and pro-FCPA; one that sought not to scale back anti-bribery enforcement, but to make it more effective by making business both more competitive and more ethical. What else would that package include? Up next.


Andy Spalding teaches international business law at the Chicago-Kent College of Law; effective June 1, he’ll be an Assistant Professor at the University of Richmond School of Law. A former Fulbright Senior Research Scholar and lawyer at a major international firm, he has lectured and conducted research on anti-corruption law throughout the developing world. He can be contacted here.

We're grateful to Professor Spalding for allowing us to serialize 'Beyond Balance.'

Beyond Balance I can be viewed here, II here, III here, IV here, and Beyond Balance V here.

Reader Comments

There are no comments for this journal entry. To create a new comment, use the form below.

PostPost a New Comment

Enter your information below to add a new comment.

My response is on my own website »
Author Email (optional):
Author URL (optional):
All HTML will be escaped. Hyperlinks will be created for URLs automatically.