This article will discuss extraterritorial jurisdiction (ETJ) globally, especially the United States’ application of ETJ in the EU. First, this article will (i) define ETJ in the context of the US, then (ii) it will examine USETJ’s legality under international law, (iii) evaluate the difference between ETJ used in private, public, and contract law, (iv) examine an illustrative case, the one of Société Générale v. the U.S., and discuss how the EU has responded to USETJ.
A. Defining USETJ: ETJ is the application of a country’s domestic law to foreign countries. Under US law, any operator, domestically or abroad, can be investigated for its transactions in US dollars and charged if those transactions offend US law. This practice of USETJ has been coined ‘dollar jurisdiction.’ An example of the dollar jurisdiction would be if a non-US-sanctioned country processes a transaction with a US-sanctioned country in the American dollar. The US can then charge the non-sanctioned country for its domestically illegal usage of the dollar.
B. USETJ and International Law: Many scholars deem USETJ illegal under international law, largely due to the sovereignty principle, which determines that all countries should have the right to self-govern. USETJ applications, such as the dollar jurisdiction, break this sovereignty principle.
C. Private and Public International Law: Applications of ETJ in public and private international law differ significantly. ETJ tends to be applied more directly in the former, where a state will enact laws domestically and then allow its governing bodies to assert jurisdiction over foreign entities.
ETJ in private international law is more complex, and usually relates to legal disputes between two entities governed by two different states. In these cases, the court must decide which state’s laws should govern the legal dispute. This results in one entity being governed by a state that is not its own, thus enacting ETJ.
D. ETJ in Contract Law: When a contract is disputed between two entities governed by two separate bodies, as previously discussed, courts must decide which state should govern the dispute. The significant relationship test is used to decide this, which considers where the contract was negotiated and formed, the subject of the contract, etc. Alternative to the court deciding which state’s jurisdiction should be applied, although significantly uncommon, parties can agree on which state’s laws they want to be governed by, meaning one party willingly applies ETJ to themselves.
E. Société Générale: In 2017, after a US government investigation, French bank Société Générale was discovered to have processed transactions in the US dollar with several countries subject to US sanctions. The US announced its prosecution of Société Générale in January of 2017 in an American court, and in November of that same year, the bank settled for a total of 1.3 billion USD (1.1 billion EUR).
Société Générale had little choice but to comply with the US and settle, despite not being based in the US, for several key reasons. First and foremost, the US threatened Société Générale that if it did not comply, it would be banned from the US market (a notably profitable market) and would not be cleared to process transactions in the US dollar. Société Générale would also have faced a depleted reputation for its disrespect of the US government. Thus, the French bank decided it was most optimal to settle with the American government.
F. EU Response to USETJ: The EU has made it overwhelmingly clear that they are against USETJ. The European Commission directly states on their website that the “European Union does not recognise the extra-territorial application of laws adopted by third countries and considers such effects to be contrary to international law,” such as USETJ(1).
The EU also adopted the blocking statute, which protects EU operators who practice lawful international trade that contradicts ETJ, specifically targeting USETJ. More specifically, the statute directly gives foreign court rulings surrounding ETJ no value in the EU, and aids EU operators in recovering from the consequences faced in cases involving ETJ.
(1) European Commission. (n.d.). Extraterritoriality (Blocking statute). Finance. Retrieved June 27, 2025, from https://finance.ec.europa.eu/eu-and-world/open-strategic autonomy/extraterritoriality-blocking-statute_en
Katherine O’Connor
Grenoble, juillet 2025
LexInnov Avocat 