The Extraterritorial Reach of the Commodity Exchange Act in the Wake of Morrison and Dodd-Frank

July 03, 2017

Michael L. Spafford and Daren F. Stanaway

“When a statute gives no clear indication of an extraterritorial application, it has none.” This seemingly simple, straightforward canon—a “longstanding principle of American law”—has challenged American courts for decades. Far from a clear-cut inquiry, it leaves courts to determine what qualifies as Congress’s “affirmative” and “clearly expressed” intent. In the recent past, when faced with “congressional silence,” numerous courts sought to “divin[e] what Congress would have wanted if it had thought of the situation before the court.” That approach proved “unpredictable and inconsistent,” however, and in Morrison v. National Australia Bank Ltd., a decision addressing the transnational reach of Section 10(b) of the Securities Exchange Act of 1934 (“Exchange Act”), the Supreme Court put an end to it, in favor of “preserving a stable background against which Congress can legislate with predictable effects.” The Morrison Court found that an “affirmative indication . . . that [a statute] applies extraterritorially” is required as “clear evidence of congressional intent” to overcome the presumption against extraterritoriality. Mere statutory “silence” on the issue is not enough.

This article was originally published in the Futures and Derivatives Law Report

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