Extraterritorial jurisdiction

Extraterritorial jurisdiction (역외관할/域外管轄, 역외적용/域外適用) is the legal ability of a government to enforce laws beyond its normal boundaries.

Nowadays the issue of extraterritorial jurisdiction arises in the areas of anti-competition, securities fraud, tax evasion, data protection, and so forth. Its first and foremost critiria are: cf. Purposeful availment in terms of international jurisdiction
 * Effects of foreign offences to the territory
 * Residence for a certain period
 * Decision-making function or mere instrumentality (alter ego theory)
 * Permanent establishment in terms of double taxation

Key words
extraterritorial jurisdiction, legal authority, binding effect, competition law

International law
Extraterritorial jurisdiction can apply internationally. For example, the United States has Status of Forces Agreements with many nations which give the United States jurisdiction over members of its military. Many countries have implemented laws which allow their nationals to be prosecuted by their courts for crimes such as war crimes and genocide even when the crime is committed extraterritorially.

Competition law
Extraterritorial jurisdiction plays a significant role in regulation of cross-border anti-competitive practices.

In the United States, initially it was at issue in the Aluminum Company of America (Alcoa) case, where the effects doctrine was introduced. The effects doctrine allows for jurisdiction over the foreign offenders and foreign conduct, so long as the economic effects of the anticompetitive conduct are experienced on the domestic market. The effects doctrine has been gradually developed in the United States and then in various forms accepted in other jurisdictions.

In the European Union, it is known as the implementation test. Extraterritorial jurisdiction in the area of antitrust faces various limitations, such as problem of accessing foreign-based evidence or difficulties of challenged anticompetitive conduct with foreign state involvement.

Tax law
The Korean National Tax Service (NTS) is staging all-out war against illicit tax dodging activities. NTC is collecting tax evasion information overseas and has found some faults with several businessmen including legendary salaried man-turned billionnaire Cha Yong-keu, former CEO of Kazakhmys, state copper giant of Kazakhstan.

NTS's first target in 2011 was Cido Shipping Chairman Kwon Hyuk, who was reported in April to the Supreme Prosecutors’ Office on charges of evading taxes up to 900 billion won ($852 million). Kwon’s alleged illicit act of raising slush funds was detected by NTS investigaters in June 2010. After all, Kwon was allegedly charged with an additional unprecedented tax figure of 410.1 billion won, including general income and corporate taxes.

NTS said that Kwon disguised himself as a resident of a foreign country and his company as a foreign company despite running his business substantially in Korea and smuggling out money to foreign banks. But Chairman Kwon insisted he is a nonresident of Korea and not subject to Korean tax jurisdiction.

The biggest controversy of the Cido Shipping tax scandal is whether Kwon is a resident or a nonresident residing in Korea, or whether he is a nonresident residing overseas.

Data protection law
In principle, the Korean legislation does not have any provisions concerning extraterritorial application. However, the Korean investigators summoned Google headquarters personnel to Seoul.

In August 2010, police investigated Google Korea on suspicion of Google’s Street View cars collected and stored data on unspecified Internet users from Wi-Fi networks in South Korea. A few months later, the National Police Agency’s cybercrime unit was successful to verify that Google illegally collected private data after decoding passwords on the hard disks seized at the Seoul office of Google Korea. At that time, it was doubtful, the Korean court could judge the illegality of Google headquarters beyond the jurisdiction of the Korean law.

Avatar theory
In June 2011 at the Asia-Pacific Privacy Authority (APPA) Forum held in Jeju, Professor Whon-il Park suggested an “Avatar theory” that the unidentified controller should be responsible for any wrongful action of his/her avatar because the avatar and its distant controller act like “one united body” as shown by the blockbuster 3-D movie “Avatar”. Accordingly, even though the controller was not identified, its employer, Google itself, could be subject to a considerable amount of fine under the Korean law. So to speak, Google is subject to vicarious liability in accordance with the double punishment provision.

Prof. Park mentioned three conditions are required for such decision of guilty action:
 * First, any illegal act takes place in the territory as a result of wrongful initiation of the non-existing accused;
 * Second, such illegal act amounts to grave violation of privacy of Korean citizens and results in irreparable injury to the victims; and
 * Third, an avatar-like being in the territory ceases to perform wrongful action when its controller beyond the Korean jurisdiction stops the operation.

Then, is this Avatar theory still effective to the Google’s changed Terms of Service (ToS) at issue? As a matter of fact, so far, there is no reported violation of privacy of Korean citizens. On the contrary, some users are willing to give consent to and take advantage of such personalized services promised by Google.

Of course, there must be opponents to such personalized services. The data protection authorities are concerned about the “let me be alone” attitude of those Google users. They demand Google should be respectful of the anti-personalized service response.

At this juncture, Prof. Park proposed concerted efforts by each and all data protection authorities to protest Google’s stubborn conduct with respect to the new ToS. It was well illustrated in the movie "Avatar" when a few humanist avatar controllers stood against the well-armored human forces in cooperation with Na’vi to defend Pandora.

Possible enforcement actions
The collective dispute mediation before the Dispute Mediation Committee may be required in case data subject sufferings or violations of rights take place to a multitude of subjects or in a similar manner. (Artile 49 of the Personal Information Protection Act) The Presidential Decree stipulates the number of suffered data subject as more than 50 persons on the legally and factually common ground, excluding the data subjects who have agreed compensation with the violator, or are in the process of dispute mediation or other legal proceedings. (Article 52 of the Enforcement Decree)