The concepts of sovereignty, jurisdiction and territoriality are closely linked. One of the key features of the (traditional) concept of sovereignty is that it entails the right of the State to prescribe the laws in force, and to enforce those laws, on its own territory. As Lord Macmillan famously expressed it in the UK House of Lords some 75 years ago, “It is an essential attribute of the sovereignty of this realm, as of all sovereign independent States, that it should possess jurisdiction over all persons and things within its territorial limits and in all causes civil and criminal arising within these limits.”
This positive concept of territoriality (power to make laws for one’s territory) has the logical negative corollary as expressed in the excerpt from the Lotus above, i.e., in principle and in the absence of a permissive rule to the contrary, a State ought not to exercise jurisdiction in another State’s territory. Exercise of extra-territorial jurisdiction has, therefore, typically been treated with suspicion under international law doctrine.
At the same time, however, States and regions have increasingly been faced with global problems which do not respect traditional State boundaries, and for which effective regulation may require (legal) solutions that transcend the State geographies we have become used to. Daniel Bethlehem has rather provocatively termed this the “end of geography”: denoting the array of trans-border, geography-defying challenges which will, he argues, force us to move beyond our traditional notions of Westphalian States and international law, and with them our traditional concepts of sovereignty, jurisdiction and territoriality. These challenges include the globalisation of the economic system, trade and financial flows; the globalisation of security risks; as well as global warming and other environmental problems of a global scale.
Viewed in this light, it is perhaps unsurprising that an increasing number of States and entities that might normally (claim to) respect international law are being criticised for alleged extraterritorial exercise of jurisdiction. Among them is the EU, although it is by no means the only culprit in this regard. This contribution considers the relevance of territoriality as a restricting factor on the legislative jurisdiction of EU Member States, and the EU itself, with particular regard to EU tax law. Section 2 considers jurisdictional bases and conceptions of territoriality in international law. Section 3 switches to an EU law perspective, considering the status of customary international law in EU law. Section 4 considers the CJEU’s approach to territoriality as a justification for Member State action. Section 5 considers the CJEU’s approach to territoriality as a limitation on EU action, focusing on three examples of alleged extraterritorial exercise of jurisdiction by the EU in the past – in the fields of competition law, environmental law, data protection law, and financial markets law – and considers the legal and political responses to such exercise. Section 6 considers the case of the proposed Financial Transaction Tax (FTT), and the objections linked to territoriality concerns. Section 7 concludes with a discussion.