I. Introduction 

In the last fifty years, the United States has extended its legal power far beyond its borders. What began as the domestic principle of “minimum contact” became a global web of enforcement that affected companies, banks, and individuals worldwide. This global limitation on trade, often referred to as extraterritorial jurisdiction, is now one of the most contested issues in international law. 

The U.S. government defends its actions as promoting accountability and fair competition, while other countries perceive it differently: as a system that allows one nation to act as a global regulator. According to the United States Department of the Treasury, the total number of blocked persons till 2021 increased to nearly 9,400, a nine-fold increase since 2000.This is the beginning of the ever-increasing impact of U.S. law on the global business community. 

II. The Uneven Burden: How U.S. Enforcement Falls on Foreign Companies 

The United States upholds the Foreign Corrupt Practices Act (FCPA) and sanctions violations by the Office of Foreign Assets Control (OFAC) regulations and legislation. Even if, in theory, one were to assume that these regulations treat every individual or business the same, it is apparent that they have affect non-American companies the most. An examination of the FCPA enforcement patterns reveals that non-American companies have received the majority of the biggest fines in recent periods. Eight of the ten largest FCPA settlements have been with non-American companies such as Airbus, Ericsson, and Telia.

Siemens AG, a German multinational technology conglomerate, exemplifies this pattern: in 2008, it paid $800 million to the U.S. Department of Justice (DOJ) and the Securities and Exchange Commission (SEC) for violating bribery laws. Adding to the fine in Germany, it reached a total of $1.6 billion, which at that time was the largest settlement ever reached in a foreign bribery case. That case served as a warning to every multinational company that even limited contact with the United States can trigger U.S. jurisdiction and costly investigations. Beyond the fines themselves, compliance expenses are steep. Research by Hans Christensen at the University of Chicago found that after FCPA enforcement intensified in the mid-2000s, firms subject to U.S. jurisdiction reduced capital spending in high-risk countries by about 16 percent compared with other companies. They also lengthened due diligence processes by roughly one-third, increasing transaction costs and slowing investment. These results demonstrate how U.S. enforcement changes business behavior even when no wrongdoing occurs. By deterring investment in entire regions, it shifts the cost of compliance from wrongdoing firms to the global market itself, undermining the fairness of the system it claims to uphold. 

The economic consequences ripple across borders. Reduced investment in developing countries limits job creation and infrastructure projects. For those economies, compliance risk becomes another obstacle to economic growth. The legal goal of reducing corruption is noble, but when the burden of compliance falls unevenly, it also becomes a form of economic leverage. 

III. Eroding Sovereignty: When One Nation’s Law Becomes the World’s Law 

U.S. agencies often justify extraterritorial reach by citing global markets and security interests, yet this approach undermines other nations’ sovereignty. One mechanism is the compulsion of foreign data through the U.S. legal process. The DOJ and other agencies frequently require banks or technology firms with American branches to hand over information stored abroad. The U.S. Attorneys’ Manual §9-13.525 confirms that prosecutors may subpoena foreign data if the firm maintains a U.S. presence. This practice bypasses established procedures for international judicial assistance, such as the Mutual Legal Assistance Treaties, and violates domestic privacy laws. A more dramatic example occurred in Europe. In 2003, the CIA abducted a terrorism suspect in Italy’s Milan and handed him over to another nation. Italy’s courts then sentenced twenty-three CIA officials in absentia for disregard of Italian sovereignty. This case shows how legal authority, when exercised without consent or coordination, can become a form of economic coercion. 

The campaign against Swiss banking secrecy further demonstrates how U.S. enforcement influences another nation’s laws. In 2008, the U.S. threatened to indict UBS AG unless it disclosed client data related to American taxpayers. Facing potential collapse, the Swiss government issued an emergency decree authorizing the transfer of 4,400 accounts to U.S. authorities. A few years later, when Wegelin & Co., Switzerland’s oldest private bank, refused to comply, it was indicted, pleaded guilty, and closed within weeks. Once Switzerland conceded, other banking centers followed. European and Canadian legislators introduced blocking statutes to stop local firms from obeying foreign orders. Yet these efforts had little effect. The risk of losing access to U.S. markets outweighed domestic penalties. The result is a global patchwork of conflicting obligations that no court can reconcile. Such legal collisions show how unilateral enforcement replaces cooperation with compliance, forcing nations to adapt under pressure rather than through consent. 

VI. The Trust Deficit: How Unilateral Enforcement Damages Cooperation 

Extraterritorial enforcement has disrupted global confidence in three ways: it appears politically selective, deters investment, and undermines multilateral cooperation. Many observers view high-profile cases as driven by economic interest. In 2014, Alstom, a major French energy and transport firm, paid $772 million to settle bribery charges in Indonesia and other countries.  At the same time, General Electric, a leading American multinational specializing in power, aviation, and industrial technologies, was negotiating to buy Alstom’s energy business for €12 billion. The overlap led several French commentators and policy analysts to question whether 

the timing of U.S. enforcement had affected Alstom’s negotiating position. Even if unintentional, such coincidences damage confidence in the fairness of U.S. actions. When enforcement appears commercially motivated, it weakens the legitimacy of U.S. law itself, making allies less willing to cooperate on future investigations. 

Foreign companies rarely contest these cases in court. About 90 percent of corporate FCPA defendants settle through negotiated resolutions rather than trials. This rate suggests not only the strength of the government’s evidence but also the immense pressure to avoid exclusion from U.S. markets. 

The fear of unpredictable enforcement reduces investment. According to the UN Conference on Trade and Development (UNCTAD), there was a marked drop in direct investment going to high-risk countries, post-large-scale anti-corruption crackdowns, because companies have been wary even in perfectly legal transfers, aware of the potential legal jeopardy that can be created if it goes through a U.S. bank, or is sent through a U.S. server.

At last, unilateral enforcement damages multilateral regimes. In 1999, the World Trade Organization decided that trade actions under Section 301 of the U.S. Trade Act of 1974 did not meet international standards. Nonetheless, the United States continued to enforce them. For international criminal law, the United States is known to reject calls for assistance from the International Criminal Court (ICC), imposing sanctions on those who support the ICC’s mission. These measures send a clear message that those rules simply do not apply to the United States. 

V. From Limited Jurisdiction to Global Reach 

The notion that American law could regulate extranational behavior developed over time. The turning point came in 1945, when the Supreme Court ruled in International Shoe Co. v. Washington that a defendant with “minimum contacts” within a state could be subject to its jurisdiction. At that point, the concern remained internal to the United States. A short time later, new legislation codified the reach. The Trading with the Enemy Act of 1917 had given constitutional support to control foreign activities during wartime. Subsequently, the Sherman Antitrust Act could be applied to extranational behavior, causing significant effects within the USA. Eventually, in the 1970s, the FCPA criminalized bribery abroad by corporations with U.S. citizenship.

The global enforcement era began in the 2000s. Advances in tracking financial flows, communicative technology, and data analytics have made it possible to follow funds anywhere in the world. The Data Portal of the FCPA at Stanford Law School indicates more than 300 cases against companies since 2000, with combined fines above $10 billion. The sanctions list administered by the Treasury increased from less than 1,000 in 2000 to 9,400 in 2021. These figures together reflect just how America's legal standards have influenced the world. 

VI. Rebalancing Law and Sovereignty 

Nothing is wrong with the intention to control corruption or to uphold human rights. It is the unilateral element that is problematic. A law of universal applicability that is subject to one capital's control will not carry the same weight. This balance requires both national and multilateral coordination. The General Assembly of the United Nations adopted a resolution with consistent opposition to unilateral sanctions in 1991—one can build on that. These might require a substantial domestic nexus, proportional penalties, and prior consultation through recognized international bodies. Countries can also strengthen their domestic laws to respond more effectively to foreign demands by clarifying when cooperation is permissible, formalizing review processes for foreign subpoenas, and protecting sensitive data through privacy statutes. The European Union’s blocking statute and Canada’s Foreign Extraterritorial Measures Act are early models. While they cannot offset U.S. economic power, they articulate an important legal principle: sovereignty cannot depend solely on market access. 

Reducing dependence on U.S. systems is another practical step. The Eurozone is promoting the use of the euro in global trade. China’s Cross-Border Interbank Payment System (CIPS) offers an alternative to the Society for Worldwide Interbank Financial Telecommunication (SWIFT) for international settlements. Diversifying financial and data infrastructure does not mean rejecting cooperation. It means ensuring that no single country controls the channels of commerce. 

Multinational corporations also play a role. Strong compliance programs, transparent governance, and careful risk assessment can prevent violations and reduce vulnerability. Yet compliance should not become a substitute for fairness. Firms must be able to predict legal exposure without fearing that ordinary operations will become jurisdictional traps. 

VII. The Path Forward 

History shows that when legal power concentrates in one state, others lose trust. The economic cost is clear. Billions of dollars in fines and compliance costs could have been used to facilitate innovation and development. Secondly, the political toll includes the effect of every unilateral action to lower one's belief in the promise of equal justice. 

The principles that should form the bases of reform include sovereignty and equality, proportionality, due process, cooperation, and transparency. These principles are simple and important if public trust is to be regained. Technology increases the need for such reforms. This is because technology creates new instances of jurisdictional conflicts, particularly regarding online money transfers, AI, and cloud storage. At the same time, technology can improve accountability when used prudently. This is because blockchain technology can provide a transparent and tamper-proof record of the measures taken to enforce a contract or a settlement. 

VIII. Conclusion: Restoring Balance 

The reach of U.S. law across borders has become one of the defining features of the global legal order. It has produced greater transparency in some areas but has also deepened inequality. Foreign firms bear most of the cost, smaller nations lose policy space, and multilateral trust weakens. From International Shoe in 1945 to the present sanctions network, the path of U.S. law has moved steadily outward. What began as a doctrine of fairness within states has become a mechanism of global enforcement. That shift calls for reflection. 

A world built on cooperation, rather than coercion, requires restraint as well as ambition. The United States has the capacity to lead that change. For the United States, continuing to expand enforcement without coordination carries real costs: it invites retaliation, isolates American firms under foreign countermeasures, and erodes the credibility of the very legal standards the U.S. seeks to promote. A more balanced approach would protect long-term U.S. influence by restoring global confidence in its fairness.