Sufficiency Of Effects Doctrine Under The United States And American Law

CHAPTER 2: EFFECTS DOCTRINE UNDER EU, US AND INDIAN LAWS. Under the Effects Doctrine, a State may assume jurisdiction when an act is committed in another State, by citizens or companies of other states, has effects in the former. This was accepted by the Permanent Court of International Justice in the S.S.Lotus case. Back in 1909, in the case of American Banana Co. v. United Fruit Co., all the acts complained of were committed outside the territory of the United States, including the defendant’s alleged inducements of the Costa Rican government to monopolize the banana trade, the US Supreme Court, categorically denied jurisdiction over the issue on the basis of the traditional territorial principle. The US has long applied the effects doctrine
The sufficiency of effects doctrine is also contested. Under US legal system, the federal courts have jurisdiction over a defendant corporation if the corporation is incorporated or has its principal place of business in the state where the federal court sits. A court has general jurisdiction over a resident corporation if the corporation’s contacts with the forum state are “continuous and systematic”. In the case of United States v Nippon Paper , the Supreme Court repeated that jurisdiction can be exercised over ‘foreign conduct that was meant to produce and did in fact produce some substantial effect in the United States’. With regard to jurisdiction over foreign anti-trust defendants, the locus classicus in the US is Hartford Fire Insurance Co. case , wherein a number of states and a private plaintiff sued the defendant companies, alleging that the insurance companies had violated Section 1 of the Sherman Act by conspiring to restrict the terms of coverage of commercial general liability insurance available in the United States. The court also clarified that “international comity” is
Section 32 of the Competition Act of 2002 confers the powers over the Commission to inquire into the agreement referred in Section 3 that have been entered into outside India which have an appreciable adverse effect on the competition in the relevant market in India. This Section empowers the Commission to take jurisdiction over disputes taking place outside India if it produces an adverse effect within its territory. The mechanism for controlling anti-competitive acts carried on by persons having the location of their operations at some place in India and are, therefore, directly subject to the territorial jurisdiction of Indian courts and tribunals. Thus, it is an evident inference that where there is conduct within the country and such a conduct causes an appreciable adverse effect within the market of that country, then the Commission positively has jurisdiction to decide such cases. Also, Section 14 of the MRTP Act stated that “Where any practice substantially follows within monopolistic, restrictive, or unfair, trade practice relating to the production, storage, supply, distribution or control of goods of any description or the provision of any services and any party to such practice does not carry on business in India, an order may be made under this Act, with respect to that part of the practice which is carried on in