Regulating The Multinational Bank
In case 1, the bank operates in various jurisdictions and is subject to parallel, but not conflicting, regulatory regimes. There is no question but that, in international law, both jurisdictions have competence to prescribe and enforce their capital-adequacy rules. The bank must comply with both regulatory regimes. Where the branch in country Y is separately incorporated, it will generally have to meet the requirements of a fully independent bank there
Where it is not separately incorporated, regulation of its capital there will usually be tailored to take into account its capital base in country X. As we saw in 3, regulatory authorities will usually supervise the capital adequacy of a bank group on a consolidated, as well as an individual, basis. Across many jurisdictions the regulatory regimes are now very similar: there has been a remarkable degree of international harmonisation in banking regulation since the 1980s.
As a matter of international law, a country has clear competence to prescribe as regards resources and persons within its own territory (the territorial principle). Moreover, nationality provides a basis for a country to prescribe, although it may not enforce its law over nationals in another country's jurisdiction (the nationality principle). A problem with nationality as a basis of jurisdiction is identity: which are a country's nationals? In case 5, country Y claims that its nationals include any branches of its banks around the world. That might be acceptable to other countries in the case of branches and representative offices, but once there is a subsidiary or incorporated affiliate it becomes a different story.
The third possible basis of extraterritorial jurisdiction is the effects doctrine.
One interpretation is that this is not a claim to extraterritorial jurisdiction, but to territorial jurisdiction: if an offence committed outside a country is concluded or consummated there, the courts have jurisdiction. Another interpretation is that a country has the jurisdiction to prescribe rules of law governing conduct which has effects within its jurisdiction. The US view, set out for example in the third edition of the Restatement on Foreign Relations Laws, is that international law enables the exercise of jurisdiction over conduct having significant effects in a state. The European Court of Justice gives some support to the effects principle. Many consider the American to be too expansive a view and require a more direct connection between the effects and jurisdiction.
hese differing views of international law are reflected in the domestic laws of states.
Thus civil law countries may use a nationality principle and proceed against a national no matter where in the world an offence is committed. Some common law countries adopt what has been described as 'subjective territoriality' and assume jurisdiction if any ele ment of an offence is committed there. English law, however, has been
bedeviled by an analytical distinction between conduct offences and result offences. With a conduct offence, an English court will only assume jurisdiction if the last element comprising it is carried out in England. Jurisdiction over a result offence depends on whether the offence has an effect in England.
Take an example. English customers of an English bank, who obtain foreign currency at a German bank through use of a eurocheque or a payment card, when they know that their account is overdrawn and they have no overdraft arrangement, are guilty of obtaining money by decep tion from the German bank (to use the English terminology for such behaviour).
Because all elements of that offence are committed abroad, however, an English court does not regard itself as having jurisdiction. But because a customer in such circumstances can also be guilty of another offence, obtaining a pecuniary advantage by deception in the form of borrowing by way of overdraft, a prosecution can be brought in England where the overdraft arises. The policy behind the decision of the court which established the latter proposition is explicit in the judgment: 'If an English court had no jurisdiction when a person resident here with a bank account here uses his cheque card abroad dishonestly, a great deal of dishonesty may go unpunished'.
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