For the most part, the extraterritoriality system that prevailed in the nineteenth century, and was maintained, especially in China, down to World War II, is now a relic of the past. However, military status-of-forces agreements negotiated after World War II with Japan, Korea, Taiwan, and the Philippines, among others, embody in a new form extraterritorial jurisdiction affecting American military personnel abroad. However, the abandonment of regional or national extraterritoriality by the United States did not mean the abrogation of all extraterritorial claims. Beginning in 1945, U.S. courts commenced redefining the scope of their sovereign jurisdiction over the activities of American corporations doing business abroad.
In three significant cases the United States broadened the definition of sovereignty and proprietary economic hegemony. Authority for such claims was the Sherman Antitrust Act of 1890. However, in its first substantive ruling involving application of the Sherman Act to overseas commercial disputes, the Supreme Court issued a narrow opinion restricting extraterritorial rights. In American Banana Company v. United Fruit Company (13 U.S. 347), the Court asserted in essence that extraterritoriality was appropriate only on the high seas or in countries where unjust laws prevailed. Subsequently, it declined to assert the jurisdiction of U.S. courts in Costa Rica and stated that the Sherman Act did not apply outside of American sovereign (that is, territorial) jurisdiction. Indeed, in a similar case, Underhill v. Hernandez (168 U.S. 250), the Court ruled that "Every sovereign State is bound to respect the independence of every other sovereign State, and the courts of one country will not sit in judgment on the acts of the government of another done within its own country."
Since World War II, the Supreme Court has abandoned this narrow interpretation of sovereignty. In a series of rulings— United States v. Aluminum Company of America (148 U.S.2d 416), Timberlane Lumber Company v. Bank of America Nt&SA (549 F.2d 597), and Mannington Mills, Inc. v. Congoleum Corp. (595 F.2d 1287)—the Court has evolved complex tests for ascertaining what constitutes an "act of state," and has come to justify claims of extraterritorial jurisdiction to address the growing economic interdependence of the global economy. It would appear that the United States gradually has broadened the nineteenth-century definition of exclusive territorial sovereignty, now clearly transcended by twenty-first-century developments. It has been replaced by new legal conceptions of sovereignty and by the principles of universal rights that are imperative in international relations, especially in developing countries that once were colonies. There appears to be a growing legal sensitivity to the global impacts of activities by states beyond narrowly territorial considerations that will challenge them to creatively define what were once condoned as "extraterritorial rights."
Finally, it is appropriate to note the application of extraterritoriality in matters of ocean travel, airspace, and international terrorists. Whereas private vessels are subject to local laws, rights of extraterritoriality extend to state-owned vessels in foreign territorial waterways and ports, where they are customarily exempt from local jurisdiction. Likewise, the advent of national "territorial airspace" has given rise to extraterritorial claims, although such claims have found little consensus for an international regime beyond limited bilateral agreements.
In response to terrorist attacks on U.S. embassies and their personnel, in 1999, Congress passed, and President Bill Clinton signed into law, legislation making terrorism abroad a crime punishable as if the attack occurred in the United States (and thus was subject to U.S. laws). In accordance with normal diplomatic practice, the United States retains jurisdiction over its diplomatic officials abroad. It also claims jurisdiction over U.S. military personnel on American military bases abroad. The United States has also criminalized some activities engaged in by Americans abroad. For example, the Foreign Corrupt Practices Act prohibits American companies from paying bribes to foreign officials. However, this legislation is very different from the past practice of extraterritorial jurisdiction over Americans abroad, because it covers American companies. It is, in a sense, a hybrid of regional and global extraterritoriality.
Many states have enacted "blocking statutes" that prevent their citizens and companies from complying with American extraterritorial laws and court rulings. They include Australia, Canada, Denmark, Finland, France, Italy, Japan, Mexico, New Zealand, Norway, Sweden, Switzerland, and the United Kingdom. The European Union and the Organization of American States have also lodged formal protests against American extraterritorial claims.
Clearly, then, the concept of extraterritoriality historically has been an evolving expression of state sovereignty, which, one suspects, will continue to transform to meet the needs of an everchanging international system.