A decade ago, during the Argentine bond saga, the U.S. Court of Appeals for the Second Circuit held that Argentina was prohibited from paying any of its creditors anywhere in the world, unless it first paid a handful of Wall Street hedge funds. The ruling forced Argentina into default and sparked condemnation from governments, activists, legal scholars, and even many financial commentators, with accusations ranging from those of bad law to judicially-backed financial imperialism. For many, U.S. courts so baldly telling another government what to do seemed to breach the normal rules of territorial sovereignty, according to which countries are supposed to refrain from interfering in one another’s internal affairs.
The case was both more and less significant than most critics realized. On the one hand, it is hardly unique: U.S. courts exercise authority beyond U.S. borders, including over foreign governments, all the time, especially in “commercial” cases. On the other hand, the transnational power of U.S. courts does call into question much received wisdom about the triumph of the nation-state in the 20th century—and it has not received nearly enough attention from critical political economy or legal studies scholars.
Of course, legal experts are well aware of the proliferation of cross-border jurisdictional claims since the mid-20th century. This is widely seen as a corollary of increasing economic globalization and legal modernization. The common story is that the supposedly traditional Westphalian system, in which jurisdiction, territory, and sovereignty were coterminous, has broken down in the face of cross-border supply chains, global financial markets, and the intangibility of cyberspace. Indeed, prolific scholarship provides empirical insights into the ways jurisdiction is increasingly based on factors other than national territory per se.
Yet, as I argue in my recent book, Judicial Territory: Law, Capital, and the Expansion of American Empire, these modern jurisdictional practices have not made territory irrelevant—instead, they have contributed to the remapping of both territory and sovereignty, as well as to the constitution of the global political economy. In this brief post, I hope to explain how one concept that I develop in the book – “judicial territory” – can help us better understand these transformations and assess recent claims about “de-globalization.”
Judicial Territory
During the post-WWII era, U.S. courts increasingly extended their authority over the economic decisions and property of foreign sovereign governments within and beyond U.S. borders. This extension was spurred first and foremost not by economic globalization in general, but by the desire to counter those interventionist economic practices of Communist and especially postcolonial states that were seen as threats to U.S. capital and “free” markets.
By restricting previously robust foreign sovereign immunity and act of state protections for foreign governments, U.S. courts and domestic law gradually replaced executive power and foreign policy instruments as the primary means for dealing with foreign governments engaged in less than fully liberal economic practices. For example, in 1926 the U.S. Supreme Court determined that foreign state-owned merchant ships were public vessels and thus immune from U.S. courts so long as they were engaged in the “maintenance and advancement of the economic welfare of a people.” Yet this decision was gradually undone by the development of a “commercial exception” to foreign sovereign immunity that was used to deny immunity to state-owned ships, railroads, airports, and other entities run by Communist and especially postcolonial governments after World War II. U.S. courts could not, of course, prohibit foreign governments from using such entities altogether. But by rolling back legal protections for foreign sovereigns not only within but also beyond U.S. borders, they ensured that those governments could not benefit from the prerogatives enjoyed by Western governments not long before.
Just as importantly, U.S. courts helped ensure that where such economic practices came into conflict with private U.S. capital, they would often be governed not by the laws of their own host states, but by domestic U.S. commercial law—in other words, by the most capital friendly laws in the world. In the process, U.S. common law became a thoroughly geopolitical if technocratic tool of U.S. empire in the post-war period. This enabled the U.S. to outwardly maintain its avowedly anti-colonial position, while perpetuating neocolonial economic inequalities between (mostly American) multinational companies and postcolonial states.
In analyzing this history, I develop the concept of “judicial territory” to refer to the entire space, within and beyond official U.S. borders, over which U.S. courts have come to regularly exercise authority. In contrast to most discussions of jurisdiction, the concept of territory, drawn from the tradition of critical human geography, refocuses attention on spatio-legal strategies. Territoriality—the struggle to establish boundaries around and control over space—is a simultaneously discursive and material practice that shapes who can and cannot move or act in which ways and under whose authority. While not all territory is state space and not all state spaces are territorial, territory remains central to state power. Yet it is not reducible to the neatly marked political spaces of our maps. It is, rather, a political technology that helps organize relationshipsamong states, people, land, and resources in space. In this sense, territory is often fuzzy and dynamic, as well as overlapping, porous, graduated, and non-contiguous.
Like all territorial processes, U.S. judicial territory has evolved through repeated struggle—in this case,over the boundaries of U.S. vis-à-vis foreign legal space. Relevant litigation often explicitly debates the proper boundaries of U.S. versus foreign territory, as, for example, when the “situs” of a debt was redefined from being with the debtor—as it had been in the context of Cuban nationalizations when U.S. investors owed money to expropriated Cuban businesses—to being with the creditor in the context of the developing country debt crises of the 1980s. In both cases, the determination meant that the debt could be defined as being “in” the United States and thus within the authority of U.S. courts.
Struggles over the definitions of “public” and “private,” which are central to foreign sovereign immunity and act of state cases, are also implicitly spatial—determining which modality of US state power (i.e. executive vs. judicial) will govern transnational relationships. As late as 1965, for instance, U.S. courts categorized sovereign debt as fundamentally public and thus as immune from U.S. judicial authority, though the U.S. executive had long been involved in pressuring foreign governments over sovereign debt disputes. In 1992, the U.S. Supreme Court changed this, recharacterizing sovereign debt issuance as a private, commercial act in order to allow private creditors to sue foreign sovereign debtors in U.S. courts.
Of course, the idea that states sometimes extend legal authority beyond their own borders is already partly captured by the well-known concept of “extraterritoriality.” Yet this term is most often reserved for exceptional situations. It is rarely used to refer to the mundane operations of transnational commercial law. The concept of extraterritoriality, furthermore, suggests a clear boundary between domestic and foreign that can then be transgressed—obscuring the many cases in which defining that boundary is precisely the question. More broadly, neither the scholarship on extraterritoriality nor on the broader proliferation of more mundane cross-border jurisdictional complexity sufficiently centers the way that transnational legal spaces are actively and strategically produced—by jurists, government officials, corporations, and other litigants and through judicial decisions, briefs, lobbying, contractual practices and more. In short, increasingly transnational jurisdictional practices do not merely reflect a globalized economy. Rather, these practices and the economies they enable have to be made and remade again and again.
De-globalization and “national” economic space?
The concept of judicial territory outlined above can help us understand the significant transnational power wielded by U.S. common law and courts. But the idea of territoriality can also be extended to a broader concept of “legal territory” that goes beyond common law to include the spaces produced through legislative and administrative law, as well as bilateral, multilateral, and international legal agreements. This approach is especially useful for thinking about ongoing transformations in geopolitical relations and a potential shift away from neoliberalism towards a more explicitly interventionist economic order.
Increasing protectionism, re-shoring, and industrial subsidies in both the Global North and the Global South have led to heated debates about whether we are moving into a period of re-nationalization and de-globalization—in contrast to the supposedly de-territorializing and open globalization of the past several decades. Yet, a focus on legal territoriality (re)centers the role of state power, strategy, and struggle in the repeated and often painstakingly detailed re-territorialization of economic space in both periods.
Contrary to common tropes about “national” states versus “global” markets, powerful states never ceased to operate beyond national borders even at the height of the period of neoliberal globalization. Rather, as the extension of U.S. judicial territory to rein in foreign nationalizations, state-owned enterprises, and sovereign debtors shows, the transnational deployment of nationally anchored legal power has been an important mechanism through which such states have helped produce the global economy.
At the same time, the idea that increasingly assertive states are now remaking economies at the “national” scale is a gross oversimplification. Even the much-discussed domestic content provisions for electric vehicle tax credits in the U.S. Inflation Reduction Act (IRA), for example, are far from straightforwardly “national.” To qualify for the credit, critical minerals in vehicle batteries, for instance, can either be produced “in the United States” or in a “country with which the United States has a free trade agreement,” or they may be “recycled in North America.” Other countries are now scrambling for critical minerals agreements with the United States in order to count as domestic for the purposes of this credit. The “Buy America” provisions referenced elsewhere in the IRA, moreover, show just how complicated it is to define what being produced “in the United States” even means in a world in which most end products contain components, subcomponents, and raw materials sourced from a variety of places. Even in the most influential new industrial policies, the legal construction of “national” economic space remains stubbornly complex, fuzzy, and transnational.
This is not to deny the important changes unfolding in the relationship between states, law, territory, and cross-border economic processes today. But rejecting binary distinctions between “national territory” and “globalized capital” in the past and the present, and emphasizing the active and strategic role of law in defining economic space at multiple scales instead, allows us to move on to the really important questions: what kinds of legal territories are being produced today, why, and for whom?
