Extraterritoriality in the Context of Nationalism and Legal Imperialism: Implications for Multinationals and Climate Policies

Lin Lerpold (Stockholm School of Economics)
Örjan Sjöberg (Stockholm School of Economics)
Erik Wikberg (Stockholm School of Economics)

Abstract: Multinationals are currently operating in an (re-)emerging context of legal imperialism linked to the use of extraterritorial regulation. As a geopolitical phenomenon, legal imperialism involves actions by nation-states extending and enforcing political policy beyond their boundaries by means of unilaterally imposed legislation, thereby potentially infringing on the sovereign status of other jurisdictions. We consider two recent types of new trade regulations with extraterritorial reach that have come into effect during 2018, the US sanctions on Iran and the EU trade deal sustainability clause and explore the implications of this form of extraterritoriality on multinationals’ strategies, the one clearly unilateral, the other at least nominally bilateral and subject to negotiations between parties. The growing impact of extraterritorial jurisdiction is a phenomenon that has received little scholarly attention in the international business literature, despite being relatively salient in international relations and legal studies. This lacuna is unfortunate since understanding extraterritorial jurisdiction holds implications for the theory of the firm and international business, also significant managerial implications for MNEs as well as nation-state policymakers. It may also put the discussion on the role and nature of globalisation in a slightly different light.

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