Margaret Peters 0:00

So much for coming

today. We are very excited to have our pretty own Shaina Potts joining us here,

as you all know, or most of you know, Shana is a member of the geography department. She is an associate professor here. She came here from Berkeley, where she did her PhD, and today she's going to be talking about her book, Judicial Territory: Laws, Capital and the expansion of the American Empire. For those of us joining online, just reminder, put your questions in the Questions, and Alexandra and Molly will help me field your questions. For everybody in the room. Sheena will talk for a little bit, then I'll ask her some questions, and then we'll open it up to questions from the audience. So Shaina, great.

Shaina Potts 0:51

Thanks. Thanks so much, Maggie, and thank you for organizing this. And thank you all of you are here late in the day, late in the week, late in the quarter,

but I really appreciate being here, so I think I'm supposed to talk for about 20 minutes, so I'll just was going to try to do a pretty casual sort of overview of the book, rather than focusing in on any of those sort of particular details or episodes in the book. And thought instead, I would try to say a little bit about sort of the overall scope of the project to my overall approach and sort of the basic empirical argument, and then wrap up by talking about what seemed to me, I think, to be some of the broader conceptual conversations that I sort of see the book as contributing to. So

broadly speaking, the book traces the extension of US judicial authority beyond official US political borders since roughly World War Two, and looking at specifically at how judicial authority has increasingly been exercised over the economic activities of foreign sovereign governments, mostly post colonial states. So I use the concept of judicial territory, as the book is titled, in the book to refer to this space and define that essentially, very simply, as the entire space within and beyond official US borders over which US courts regularly exercise authority.

So I mean, as a caveat that most of the cases heard by US courts that involve cross border, these sort of transnational cross border economic relations are private cases that don't involve foreign governments. That's under the much larger volume of their private commercial cases over which US courts regularly exercise authority, and I do consider that also to be part of this sort of broader judicial territory. But the focus on the book is specifically on the relationship with cases involving foreign governments. So my own entry into the topic began with a pretty simple or naive question, I guess, which is simply, how is it that US courts have the authority, or came to have the authority to issue decision orders against not only, you know, not only over economic transnational economic relations with private companies, but even with situations in which foreign sovereign governments are involved. And I really stumbled onto this project in 2012 I guess when I was in graduate school, because I was paying attention to Argentina and so on. And there was a very dramatic case where an Argentine off duty naval frigate the Libertad, was held for two months or so in a port in the court of Tama in Ghana by order of a Ghanaian judge who had issued an injunction against the court on behalf of a bunch of US based hedge funds, who, it turned out, were suing Argentina in New York City. They had obtained a bunch of judgments against Argentina for defaulted sovereign bonds in New York and were able to take that judgment and ask the Ghanaian court, basically to say, to allow them to seize the ship as collateral for these defaulted bonds.

Eventually, both the United Nations and the Ghanaian Supreme Court overturned the lower Ghanaian courts decisions, although they did so, not because it wasn't sort of international case per se, but specifically because they said that even though this ship was off duty, it was still a naval ship, and therefore still counted as a public ship, so a public vessel, and therefore had support, had protections upon sovereign immunity, and couldn't be held in this way. So, so that was sort of the what spurred my interest. But then what I really started paying to was that court case back in New York City, and what was happening there, and this was sort of in the middle of that court case, and when I started really paying attention the New York courts, both the district court and the second district the Second Circuit Court

had made a few pretty major decisions, so they had ordered Argentina to pay these hedge funds, often referred to in the press as vulture funds, because these hedge funds were what are known as pulled out creditors. So they had purposely purchased aArgentine defaulted debt after Argentina's economic crisis in 2001 when they were able to get it for very, very cheap on secondary debt markets, with the intention of suing Argentina for full recovery, rather than participating in the sort of IMF like restructuring, some in a way that most creditors usually do.

So the courts, by the time I started paying attention, had already issued several judgments against Argentina telling Argentina to pay these vulture funds. And Argentina had refused to do so, which was actually very unusual in this sort of litigation, that most of the countries that are sued in this way do pay as soon as there's a court judgment against them. But because Argentina had not paid yet. The courts had also issued a new order in either 2011 or 2012 I can't remember off the top of my head, that forbade Argentina from paying any of its other creditors until it paid these vulture funds first. And also issued an injunction saying that any financier anywhere in the world outside of Argentina that helped Argentina make those payments, make payments to other creditors would be held in contempt of court in New York City. That court case ended up going on for another couple of years. The Supreme Court eventually allowed those judgments to stand. Argentina still refused to pay and was put into a sort of another technical default because it was no longer able to pay all the other sort of debt it had been making good on and then eventually, after a shift in administration in 2016 Argentina did pay off the vulture currency in full, to the tune of something like $10 billion at the time. So it was a very dramatic case. Most sovereign debt cases don't get that much press, and this one did, and was very unusual in that regard.

But my own initial question of watching all that again, as I said, was really a fairly naive one, of saying, well, that's to me, it seems so strange that a US Court had the authority to do all this, and why to issue not only a judgment against Argentina, but especially this injunction that claims at least, to forbid financers anywhere in the world from helping Argentina in this way. And how did it come to be that a court could do this, and that question really ended up leading me on a much longer research journey than I expected, and taking me to a much more temporally wide ranging so back, seeing you, back in time to the early 19th century, and especially to the early 20th century and on. And then also sort of became a more conceptually wide ranging project for me about law, geopolitics and territoriality and sovereignty and so on. So as I said, the basic argument in the book is that what I call judicial territory has been expanding since roughly World War Two, and in particular that it's expanded in relation to the economic activities of foreign sovereign governments, and that one primary function of this judicial expansion has been to discipline the sort of developmental or interventionist activities of post colonial states. So at first in the kind of 50s and 60s, in the moment of third worldism, and just more broadly, sort of alternative developmental, attempted an alternative developed, developmental paths, and then, in the case of the 1980 Zack crises, and on in other moments as well. So the book proceeds roughly chronologically, and I won't go into detail about the chapters, but it starts by trying to think comparatively about the role of law in shaping, sort of the entwined projects of

European and US, imperial expansion and capitalist expansion,

sort of in the 18th and 19th centuries, and in comparison to the post world war two period, and thinking about the sort of similarities and differences in the way law and US in particular particular has functioned in those two periods. And then the rest of the book focuses on case law, really, from the early 20th century through the present, but looking specifically at how from the 1940s on, these transnational economic activities that foreign governments were increasingly brought within US judicial reach. And I guess I'll just say here that there were sort of two main strategies for this and that for maybe we should back up for a moment when it's only private companies involved. The primary legal technology for doing this is quite simple. It's the use of governing law clauses is not the only but the primary mechanism. These are clauses that since the 1970s and 1980s have allowed major parties to major commercial contracts to decide for themselves which jurisdiction and which set of laws will govern their transaction, whether or not there's any particular spatial connection between the transaction in question and the court. So it's very normal, for example, for a French company signing an agreement to do something in Zimbabwe to choose New York governing law and New York courts, or potentially French law or English law, is the other sort of most important legal jurisdiction for this. But when it comes to foreign governments, the obstacles are a little bit higher because of the long standing doctrines of Foreign Sovereign immunity and also something called the active state doctrine, which I can get into. But for simplicity sake, I'll just talk about sovereign immunity, which have basically, basically said for a long time that it was not acceptable for US courts to hear suits or to issue judgments against foreign sovereigns or Foreign Sovereign officials, or to seize Foreign Sovereign property. At least insofar as it involved the public acts of those of those entities or the public property of those entities. And so what I document in the book is how, since the 1940s

investors mostly US, but also more transnational capitalists and US, courts and the executive branch, all in various ways, at different moments, worked to try to get around those restrictions and just increasingly restrict the doctrine of Foreign Sovereign immunity and make it easier for courts to extend their authority over these foreign government acts.

There were two sort of primary legal strategies for doing this. Then, if we were to sum it up, one was to create something called a commercial exception to Foreign Sovereign Immunity laws, which said that Foreign Sovereign Immunity rules would no longer apply to what were deemed to be the commercial act of sovereign governments, of foreign governments. The first step in doing this was to say, well, actually we're going to redefine for the first time, in relation to foreign governments, at least, all commercial activity as necessarily private, as sort of by definition, private rather than public activity. So say all commercial activity counts as private, and then over time, to gradually expand the category of commercial activity. So just change the goalpost between what counted as public and private and what counts private, or what counted as political versus economic activity. So for example, in the 1960s issuing sovereign debt was considered by the New York courts to be a definitively public act that was protected by Foreign Sovereign immunity. And then in the 1990s in the context of the sovereign debt crises, the third world sovereign debt crises, specifically, in a case involving Argentina, the Supreme Court redefined sovereign debt as a private apt and said issuing debt any corporation can issue debt. Issuing debt is our garden variety. It was a quote, a garden variety economic activity. Therefore, sovereignty does not apply to sovereign debt cases. And then the other primary legal strategy, technical strategy, for doing this, was a sort of more, maybe a more diffuse, set of changes that made the spatial rules for proclaiming US jurisdiction more flexible. So sort of the probably the most important change there was that in 1976

the US passed a statute, the Foreign Sovereign Immunities Act, which codified the commercial exception, but also established spatial criteria that said that US courts could extend their jurisdiction over foreign governments, not only when those acts or those officials came into the boundaries of the US, but if their acts had a direct effect on the United States. And then, as you might imagine, there was a lot of litigation over the ensuing decades about what counted as a direct effect. And the tendency has been to define what counts as a direct effect more and more flexibly, since to make it easier for US courts to sort of claim that indeed something has had a direct effect on the United States. Another interesting example has to do. I see both of these having to do is, in some sense, but more directly, with how courts define the location of intangible and often indeed transnational financial activities. So in relation to debt, again, courts, the US court, shifted their their definition for the situ, or the location of a debt, where, in the 1960s

and previously, in relation to Cuba's nationalization of US property, for example, they said that

the locus of a debt was with the debtor, which I won't go into the details. But in the context of the Cuban nationalization of US property that allowed us courts to claim jurisdiction over certain nationalized accounts that Cuba, that Cuba started, had claimed ownership of So, claiming so arguing that US debt was that that debt was situated with the debtor. Helped us courts extend their authority in that situation, and then again, in the context of the Third World debt crises of the 80s. The 1980s courts changed the definition for the cits of debt to say that, well, actually the Citrix of debt is always located with the creditor, which, in the case of

developing country debt, that generally means in New York or another major creditor country. And again, we're able to therefore claim jurisdiction for the US. So the book sort of traces these legal changes, these kind of technical legal changes in different moments, looking at some of the sort of developmental activities of post colonial states in the first couple of decades after World War Two.

So then I have a chapter on the aftermath of the Cuban Revolution and the cases running Cuban nationalizations, and then the 1980s Zack crises, and then this has continued and even into the 21st Century, and very dramatically in the case of Argentina, as I mentioned before,

I think maybe I'll skip to what seemed to me to be some of the sort of broader conceptual arguments, or some of the broader conceptual points I've tried to make in the book. And for me, it's sort of in the interplay of these technical legal changes and thinking more broadly about the geopolitical and sort of macroeconomic context for those changes, or motivations behind those changes that I've seen, what I hope will be some of those are bigger conceptual contributions of the book. So first I see, I sort of situate the book in relation to ongoing debates about territory and territoriality. And I make this specific argument in the book that it's useful to see this kind of transnational US judicial reach in terms, not only of jurisdiction, which is the way it's usually talked about by legal scholars, but of territory, more specifically,

I make that argument because the well, in part, because I think the concept of jurisdiction, and certainly most of the conversations about transnational jurisdiction, tend to see this as a very apolitical act, and also often talk about it in quite a spatial ways. So sort of talk about jurisdiction as becoming about space as becoming less and less important as jurisdiction has become more flexible. And to my mind, actually, space really remains central to all of these cases in the very prosaic sense, that when you start reading the cases, many of the arguments are really about the details of these spatial arrangements, and arguing back and forth between the parties about exactly where courts do or do not have authority when it comes to these cases involving foreign governments. In particular, those are often framed explicitly in relation to territorial sovereignty, and making arguments about that and the concept of territoriality, more broadly, I think, calls attention to the to the importance of spatial strategies and spatial contestation in all of these sort of legal processes. To me, this is also significant for thinking about what form of empire do we see the US as sort of engaging in in that post war period, and whether we talk about it as having a nearly informal Empire that's about sort of economic influence and political influence on other places, or whether, I think, in my view, this actually means that there remain very important elements of a juridical Empire extending beyond the boundary, the official boundaries of the United States, the

emphasis on territory, I think, also necessarily brings one to questions about sovereignty and thinking about how is sovereignty defined. And to me, one of the most striking things about this whole phenomenon is that it's precisely at the moment after World War Two, when the remaining colonial and European empires are disbanding, of widespread decolonization, when formal national sovereignty is recognized for so many new

new states, that you see this legal redefinition of what sovereignty means, and a really sort of literal change in the rules of sovereignty, of what constitutes sovereignty here, I

think it also contributes, more broadly to a lot of ongoing conversations and geography and other fields about thinking about more complicated, graduated forms of sort of overlapping sovereignty, and rather than thinking about sort of national sovereignty as something that's bounded by national borders.

I also talk a lot in the book about the role of this kind of you just US judicial territory, and especially of the rise of the commercial exception and the redefinition of the public private distinction in helping to constitute, not only to reflect, but also to help constitute, kind of neoliberal vision of the economy as a bounded and separate sphere, and to sort of institutionalize a certain understanding of the proper relationship between states on the one hand and markets on the other.

And finally, I try to think throughout the book a challenging topic about what is specific about a kind of legal modality of state power, the legal modality of state power in operation here. And I think at one point in the book, I tried to reflect on the ways in which I think it's useful to see this explicitly as a certain kind of Imperial modality of power, in the way that it's about expansion and extraction.

But that also that law brings with it a number of what we could call sort of hegemonizing functions. And that one of the reasons why this has been so useful to the United States is precisely because of the way the sort of deep politicizing character of recasting what used to be considered foreign policy issues as near sort of legal issues, and the way the discourse of the rule of law sort of obscures some of the underlying geopolitical tensions

that really drive, in my opinion, these kinds of double myths.

And then I had thought maybe about trying to say something about the current moment and Trump and so on, but I think maybe I'll hold off.

Margaret Peters 20:14

That sounds good. All right. So thank you so much for that overview music book. I first wanted to get your opinion of how much of this was driven by the judiciary, because we've also seen, over the same sort of time span, the judiciary wanting to get their hands on more and more as much as they claim they're just calling balls and strikes. I mean, really making policy at this point, versus an executive branch who, you know, didn't want to deal with this any longer. It's like, well, let's push it onto the courts to deal with.

Shaina Potts 20:49

Yeah, yeah. I think those are important. It's really important question. I think it shifted it over time.

I think in the early years, the Department of States, which had been the agency of the executive branch that sort of would handle, for example, conflicts over nationalized property or or debt renegotiations in the sort

of early, early 20th century and so on. The Department of State was quite

active in and explicit about encouraging the courts to take on more of this responsibility in the first couple of decades after in the sort of 1940s through the 1960s especially, and issued a few memoranda to the courts encouraging them to adopt the commercial exception to sovereign immunity, for example, and also weighing in even on a lot of these court cases,

you know so and The courts were sort of variously eager to do that, or sort of or a little bit less or or a little bit more worried about whether or not this would mean an improper, improper overstepping of the other authority and or sort of rearrangement of the separation of powers that they were uncomfortable with. So, so there were moments when the when it was really the Department of State and the courts were sort of hesitant, and then other moments where the courts were quite happy to say, look, the Department of State said it was okay. But through the 20th century, through the end of the 20th century, the courts remained quite deferential to the interests of the executive branch when it made its interest known explicitly in all of these cases. So even, even when they were basically claiming authority, if the executive branch made a particular statement about it, they would cite that statement to talk about why that usually, in most cases, gave them sort of more authority to do this and so on. Because, look, see, the Department of State even says that this is okay in this case and so on. And it's really in the 21st century that the courts say, Hey, you redefined these as as private commercial issues. This is none of your business. And even if the executive branch suddenly says, well, actually, we do have a concern. In this sovereign debt case, for example, the courts were willing to say, well, we just don't care. It's not It's not your business. This is the domain of the courts.

Margaret Peters 22:58

All right, I'm going to bring up a question from David Kim, which was very similar to one that I had,

which is

kind of why. So he phrased it as why is, what is the relationship between the rise of the US courts, claiming judicial territory around the globe, and the declining or advising role of the International Court of Justice in any international negotiation of sovereign debt, and my sort of similar question was, you know, why wasn't there a similar development, or to rely on the Court of Justice or another international body, the way there was, with, at least with trade disputes for a long time to rely on the WTO. So why do you think

US courts kind of took over instead of pushing this on that international level?

Shaina Potts 23:51

Yeah, that's a great question. I don't know enough about the ICJ role in negotiating debt

to answer that direct part of the question.

I mean to take the trade case, I guess, where you do see a shift, really, to international arbitration rather than to domestic judicial authority. I think that actually, interestingly, comes out of the nationalizations of the Third World, nationalizations of the 60s and 70s,

and in part, comes out of the fact that it actually was hard for us courts, and I'm not saying this is the only reason, but it was actually much harder for US courts to fully claim authority over nationalizations than it was for them to claim authority over sovereign debt, in large part because expropriations, national expropriations, are still considered to be a definitively public act

in sort of both US and international law. And so coming out of the nationalized the Cuban nationalizations in particular, in particular, but at a moment when those are widespread nationalizations around the sort of world, you see a sort of a number of different techniques, right? So the sort of expansion of judicial authority gets you part of the way and makes it harder for.

I mean for countries to operate with nationalized property very beyond their borders in various ways. But you also see the shift to sort of new bilateral investment treaties and to international arbitration, which are both very, very heavily influenced by us rules, US style, economic rules on expropriations and so on. And one thing the courts do in the context of nationalization that I think is relevant here is that they start claiming an international law violation actually as one of the major ways to claim authority. So you end up getting, I think, in both the nationalization case and the investment the trade dispute case,

this like sort of relay between US domestic law and international law, where the US courts say, Well, this is an international principle, therefore we can do this. And then the courts say, Hey, look at the international bodies sort of say, Look, you can see, increasingly, all countries, meaning mostly the US and England and a few other countries, are doing this. So, so we can consider this a sort of consensus in international law. I know that's only a partial answer, David, to your question, but which is a great question.

Margaret Peters 26:06

Hey, let me open up and see anybody in the room have a question.

Audience 26:12

Yeah, just wondering, looking towards the future, like, do you think US courts will continue to exercise more and more authority over, like, sovereign public activities. Or, do you think that's, I guess I'm thinking, in keeping with kind of the current administration's kind of scaling back of

foreign relations in China,

almost like isolationism, right? Like, will we generally stop exercising our authority as much?

Shaina Potts 26:41

Yeah, yeah. It's great question. I mean, the book, which I finished writing, really in like 2023 right? So it doesn't talk about this Trump administration, but the book does end with some very, very sketchy, brief comments on, you know, I guess I phrased it more as a question of, what will the relationship as US power declines going forward, what will that mean for the power of US judicial territory in the world, and when I still don't feel like I know fully the answer to this? I think that. But I think

the power of the authority of US courts to act in this way transnationally, is absolutely tied to the economic power of the United States and in these financial cases, the economic power of New York in general, I mean specifically the financial power of New York. So as US economic power declines, these would be other parts of the world that will absolutely mean eventually, at least a relative decline in the power of us judiciary to do this kind of stuff. So what we are already seeing is increasing competition for legal space, for transnational legal space between the United States, as I said, England, as though it has always been another major source of this sort of transnational legal power. But now increasingly, a number of Southeast Asian

financial jurisdictions, or key financial jurisdictions are claiming more of this type of legal authority. And China, from what I understand, although definitely not an expert, is also trying to make make itself a bigger player in sort of exercising this kind of transnational legal authority, at least gradually. I think there's a big question about how fast or gradual that will be, and whether it will be relative decline, and sort of you'll just see a sort of more multipolar, sort of geography of these transnational legal domains, which is what I would mostly expect we would see. Or whether it be a sort of more dramatic decline, I think that

sort of the biggest blow to us traditional authority would be if there really was a way to operate financially, to operate in global financial markets without touching New York at all. So to the extent that China, or China and Russia or whoever would could and wanted to actually establish a sort of separate financial architecture, then that would really diminish the what US courts could do. It might also change what US courts tried to do right in order, in order to make sure that they weren't issuing the types of judgments that people would really go out of their way to to avoid.

But I think the Trump situation is a little bit different, or add sort of different dimensions. I mean one, I think it will clearly accelerate the decline of US economic and political hegemony, and to that extent, likely to some extent, undermining the power of the US courts. However, I do think there's a quite a large degree of independence now between the judiciary, at least in relation to commercial questions, to what they consider to be commercial questions, and the executive branch. So So I don't think they'll just suddenly sort of roll over. And I'm also not sure the Trump administration would have any particular interest in trying to convince them to rein in that, that sort of, those types of economic decisions. The Trump, Trump administration's attacks on the judicial, on the judiciary, on the other hand, even though they're not focused on this kind of commercial as you think, may very well undermine some of the sort of trust of the business community in the.

Us in the in US legal institutions, so you could see a decline there as well.

Audience 30:07

Did you have a rise in Victorian and all around the globe, which they one of their procedures is to control the judiciary? Don't you feel that? Then it would just sort of be what we saw with Trump, with the whole Greenland thing. You know? Well, this is our national security so therefore. And do you think it's wise to think that just because, as we see things changing so quickly, that the Trump administration is not capable of just slipping on a dime, or, bro, no, I definitely, I mean, I definitely don't think they're not capable of it.

Shaina Potts 30:44

So it's a question of, shouldn't we see that as really undermining, potentially, the sort of the way that this judicial territory operates? Yeah, I do think Trump could. I think we haven't seen any sign yet that he's interested in these kinds of commercial cases. And I guess, I guess to me, one of the questions would be, but certainly I wouldn't put it past him, but I think one of the questions would be kind of, you know, to the extent that he's sort of shaped by competing economic

theories and interests and so on. I think he, himself and his businesses are still quite invested in this kind of architecture of transnational commercial law that, generally speaking, is very good for transnational business, right?

I think it's what, I think what would be interesting, for example, is whether other countries start suing or contesting in US courts, things like the Trump tariffs, or sure there were sort of seizures, like real, sort of seizures of land or territory or so on, and what that would look like in the courts? Yeah, I think you're right. There could be a more, more of a sort of head butting between the administration and and the judiciary, for sure,

Audience 31:45

and general authoritarian

Shaina Potts 31:48

. Yes, yes. Again, I think,

I guess, I guess I feel like I just, I'm not sure how it will go, but I guess one of the questions there is, to what extent are many of these authoritarian governments, but also governments, more broadly in the world right now who have been increasingly engaging in what we call, sort of the, you know, more more explicitly interventionist economic policies, industrial policies and so on, and tariffs and export, import quotas and things like that. To what extent are they interested in preserving versus sort of changing the type of international or transnational commercial rules that we've had, I guess to me, seems not totally clear cut to me, whether it be in their interests to try to undermine these types of rules. Or, you know, I think in the case of China, for example, which is a very different case, obviously politically, or maybe this is, maybe it's part of what we would see. I think China is increasingly taking on the mantle of saying, hey, we'll uphold these kind of standard neoliberal economic rules in many ways. And so obviously you could see a shift of business to China, I guess if more right wing authoritarian countries in the West started undermining that. But yeah, I mean, no, I think that's a good point.

Audience 33:03

Yeah, so focus more on the books, on the American but in your studies, if you find that maybe European Union,

or other countries like Great Britain, or any other Asian African countries also doing kind of same

electoral jubitext on the US companies, or maybe some other companies like, is it

after World War Two? Everything happening? Definitely. There are other powers wants to do the same.

Maybe you can set some light what you study

only America. American the court

system is really doing only is that the only country or other countries?

Shaina Potts 33:48

Yeah, no, it is definitely not only the US. And I'd say again that that the UK, and specifically the lots of England and Wales, is the other major transnational legal commercial space that widely extended in this way

the end. And it's not an accident, but Anglo American law generally is considered sort of is the sort of favored law for for capital in the post war period and the US, the US, and especially in New York law and English law are considered to be the sort of the two most pro business and pro predator jurisdictions in the world. And they're also the most the most transnational jurisdictions, and to the extent that they're both through the governing law clauses that allow private companies to choose the law and through the these kind of cases involving foreign governments. But other European countries definitely do this too. And partly, I think it's their their their

less extensive economic power, and that means that they do a little bit less of it. But certainly in relation to their own former colonies, there are a lot of really important cases that's not something that I'm expert on. But in relation to post.

Nationalizations. All of the former European powers are making similar decisions and trying to sort of use their courts to impede those types of expropriations in the sort of post war period. And then it's the US and the UK that tend to sort of drive, sort of make the first strides in a number of the sort of new shifts to Foreign Sovereign Immunity law. But then over the next few decades, those tend to get picked up by other states as well and are increasingly embraced by other states. My understanding is that there still remain

some differences in the US, that the US remains sort of the most territorially flexible in its definitions of what counts as a sort of effect on the US, for example, and it also has the most expansive definition of what counts as merely private or commercial law, which is or commercial activity, which is one of the reasons why an attempt to get a UN Convention on the Law of jurisdictional immunities hasn't gone forward is because they haven't been able to get consensus since the early 90s, I Think, is when they first started trying, and they haven't been able to get the United States to agree or consensus with other countries to create those international rules.

Audience 36:10

I have kind of a completely different kind of question. And then it has to do with disciplines. Right? As a geographer, how did you

equip yourself with all these skills could be analyzing the sort of more legal kind of materials.

Shaina Potts 36:26

Yeah, probably not in the recommended way,

which, unfortunately, I simple. I came into this project after I'd already finished my qualifying exams and everything, and I had not been attending to study law. I was interested in geopolitics and finance and economic geography and fun, but not law. And so I just really knew not very little about law. And so it definitely extended my graduate career, my graduate school career. But, yeah, I mean, it was a lot of sort of crash course

in reading a lot of legal scholarship, talking to some legal scholars at UC Berkeley, where I was, and elsewhere, reading lots and lots of the sort of legal news about these cases and so on and and then the doing very painstaking reading of hundreds and hundreds of legal documents from the Argentina case, and then sort of tracing those back to earlier cases and so on. So, yeah. So it was a bit of that, I would say, again, not necessarily the recommended approach, but I was going to help guide someone on how to set out in for in sort of combining Legal Studies and geography and so on.

But, yeah, that's sort of the way I went about it,

Audience 37:43

very impressive.

Margaret Peters 37:48

Don't you mention your book also that the system that was set up that you know, that gives preference to judicial authority the US, it was also used to prevent a lot of post colonial independent states from pursuing non

Audience 38:07

extreme capitalist systems. I mean, I think we have one of the most extreme forms of capitalism in the world. Maybe it's in Asia. It's over been overtaken, but, but can you talk a little bit about what happened there?

Shaina Potts 38:22

Yeah, so, so, why I say that this was targeting students explicitly? Yeah, so, so part of that was sort of why that ended up becoming my own. My argument that this was largely aimed at those sort of developmental economic practices is because when I went the way I went about this was sort of starting with Argentina case, but then, because the US common law system is based on case precedent, right, then I sort of reverse, sort of track that, what are the cases being cited in the Argentina case? And then going back further from there, what are the cases those were citing? What are the cases those were citing sort of back to the early 20th century and a few 19th century cases as well. And it turned out that while these rules do apply to all foreign sovereigns, that in the 40s through the 80s, at least, overwhelmingly, the cases in which sort of new extensions of US judicial authority were made,

overwhelmingly did involve post colonial states. Occasionally, there were others, like a case involving,

well, Franco Spain, for instance, or Greece, or some other countries, like there were others, but, but overwhelmingly, the cases that came up were post colonial states who were engaging in these types of practices. And you know, to be to be clear, bringing these transactions under US law doesn't like that. Running of state owned enterprises, for example, didn't mean that those countries could not run state owned enterprises, but it meant that to the extent that they did, and to the extent that those state owned enterprises operated transnationally, the US courts and sort of the US companies engaging with those state owned companies were able to bring us commercial.

Law, rather than the laws of those of those other countries to bear on the transaction. And that meant generally, the sort of more, you know, the more sort of, what we now call, the sort of more neoliberal or more but the more free, free market contract, fundamentalist approaches of US law to bear on, on those cases, on those types of situations. And it's always hard to measure exactly what the sort of deterrent, deterrent effect of this sort of transnational law is. But there's at least a widespread sense among legal scholars that you know that all major business contracts are established or sort of negotiated with the general sort of rules of the transnational legal order in mind, and that these kinds of cases will shape to cases will shape, sort of what types of decisions people make going forward. So, so yeah, it's a way of

clearing, sort of the sovereign immunity issues die. But also just meant that in comparison to some European countries that had been engaged in similar lawsuits with United States in the early 20th century, and who were not penalized because they were able to claim sovereign immunity, that that defense was no longer accessible to post colonial states who were doing very similar things sometimes in that in the post world war two period. Does that answer?

Audience 41:14

Oh, yeah, go ahead. Could you just give a few examples of those post colonial states that were mentioned in those cases? Like, were they just some examples? Were they specifically targeted? Because I'm thinking during that time period is obviously the Cold War era,

capitalism versus communism, or the courts trying to infer

western style, American style financial systems, financial report on to those most colonial developing states.

Shaina Potts 41:46

I mean, yes, broadly speaking, I think yes. I don't think the courts were like going out and seeking these particular cases. I think US based companies were heavily engaged in global economic activity. And when they, when they, you know, when they came into conflict with

often, sort of contract claims or something right, when they came into conflict with states, then they then they were able to use US courts. They were able to bring these cases in US courts right. And one of the reasons you would have more of these conflicts in relation to post colonial states at the time was because, in part, because the European companies or countries were less likely to be sort of operating these types of state owned enterprises or to engage in expropriations or things like that later on. So I don't think it was that the courts were sort of seeking this, and it certainly wasn't like they had this sort of grand strategy, you know, of using ports to do this. I don't think but,

but I think the

but, I think they did develop, over the course of the first few decades, in a sort of bumbling way, and then a bit more systematically, certain legal techniques that they tended to use over and over again to to deny sovereign immunity claims in these types of cases and to continually redefine more and more and more types of activity, for example, like the distribution of food aid, the sort of acceptance of distribution of food aid, or running state owned enterprises, or expropriating property, or imposing exchange controls in the context of a sovereign debt crisis, they were able to increasingly redefine those things as merely commercial rather than sovereign activities, and is therefore things that should be governed just by sort of standard commercial law, rather than in any sort of special way.

Margaret Peters 43:30

So one question I have for you in the book

is, if we go back in history, you know, empires have sort of always done this in different ways. They just used to take out gun votes to do it. And, you know, the British would say, Oh, you haven't paid the debt. Or even, you know, we think back. You know why we call them banana republics.

You know, the US did it. Other states have done it. Think about take over Hawaii, like, what? Why we own Hawaii

now and so, and I think, you know, the use of basically law fair is probably better than the gunboats, maybe, maybe not. But I was curious to get a sense from you of what would be the right what would be the right way to do this system. Would it be to go to a system whereby, you know, you invest overseas, or you buy sovereign debt and you don't get paid back, and that's on you, like, sorry, like you made you took the risk. No big deal. Well, we're not going to deal with that. But of course, you've seen then, you know, these sort of sovereign debt crises can then explode across multiple jurisdictions and take down other states

or other states economies. Or is this the system whereby we should move to, like, an international level? Like, how would you if you could, like, redefine or redesign a system? What, what would be like your your perfect system? Yeah.

Shaina Potts 45:00

Yeah, yeah. It might be trying to avoid trying to engage too much in that, but I'll try right now. You

thought about that as you were working out. I think it depends on the specific domain you're talking about. For one thing, sure. I mean, especially in the current moment, right? We're facing a moment where we may very well see a much more violent type of military imperial expansion, right? Yes, I definitely prefer this to that, but I in the context of sovereign debt in particular, I'd say that to my mind, the sort of legal approach, well, the US based approach to dealing with sovereign debt crises, and including its support for these kinds of hedge funds, this kind of hedge fund delegation, has exacerbated sovereign debt crises and made them much more likely to occur and spread than certain other ways of approaching them would be. So I mean, you know, in the case of sovereign debt in particular, and I think the most one of a couple of the most basic things would be outlawing hold out litigation, right, and make which actually used to be technically illegal, although it wasn't enforced all that much. But used to be technically legal to buy debt with the intention of suing, right? But the UK has actually passed some legislation in the 2010s that outlaws hold out litigation, I believe, only for certain like very low income, like a hip country, certain low, very low income states,

but you could outlaw this kind of litigation, right? You. But more broadly, I mean, as plenty of people like Joseph Stiglitz, maybe most famously, has argued, we should have an international bankruptcy mechanism for sovereign debt, for resolving sovereign debt crises. It shouldn't be handled by the courts, and it shouldn't be, certainly shouldn't be handled by one country, and one very powerful creditor country in particular. So so I think in the sovereign debt case, you know, there are actually many great proposals for for other ways to do this. Do I think any of them would just sort

Unknown Speaker 46:49

of fix the problem of sovereignty entirely? No, probably not that that's a much bigger issue about uneven development and so on, right on, which require a much bigger fix. But in the case, I guess more broadly, I mean, I think, I think one of the questions here, especially at a moment where especially at a moment where we're seeing sort

Shaina Potts 47:05

of also the incredible extension of executive power, right? I'm certainly not suggesting that we should, that the ideal is to restore some sort of total, absolute immunity for, for, for governments, right? But one of the big, big points I make in the book is that in practice, we've only really restricted government immunity for commercial activities and not for things like human rights violations, for environmental damage, for all sorts of other things where I would much rather see major restrictions on governmental

Margaret Peters 47:35

and you even see like the backing down of the human rights like we had a brief moment where you could use the Alien Tort statue, which is a way for people to basically sue, usually, US companies, typically, or governments even for their actions in US courts for, like, human rights violations. So there's cases where, like, you know, Exxon basically hired the Indonesian government to go kill a bunch of people, and, you know, their relatives then were able to sue here in US courts, or things like we see in other countries, like universal jurisdiction, right?

Shaina Potts 48:12

Yeah. So there's some limited cases of that, but by and large, that's been much less expensive,

Margaret Peters 48:17

at least, the the Supreme Court recently rolled that back, right?

Shaina Potts 48:20

Yeah, yeah. So, I mean, So personally, I would prefer to see a much greater restriction of sovereign immunity in relation to those types of things. But to my mind, I think this is such a part of a much bigger conversation about changed understanding of what constitutes proper state authority, proper state economic activity and sort of the ways in which we want states to be able to intervene, especially in moments of economic crisis. Right, to do things, even if they mean a breach of contract with a handful of major corporations who are going to lose some money, right? So, so, I guess, you know. And then, yes, the idea of having at least, at the very least, I'd say, sort of UN based international

rules for these things, rather than sort of rules that were created in the most powerful creditor countries in the world and then sort of exported outwards, but, but yeah. So,yeah.

Audience 49:15

So, I mean, when we're talking about institutions like the ICJ, the WTO, or just the UN in general. Do you think a stronger presence of such an institution would make these countries, I mean, not just the US, but like any Western European countries, kind of step their like, step back from their jurisdictions? Or do you think their economic power is the sole kind of prerequisite that they need to have this, this role.

Shaina Potts 49:41

Do you mean, like, could the WTO wanted to curb the power of the US court?

Margaret Peters 49:46

I'll just

sort of add to that. Like, if you look at the role of the international arbitration, even under UN agency, under these bilateral investment treaties, I mean.

It's very clear that it's very much based, as you mentioned, based off of US and British law. And, you know, countries have decided to pull out of the those arbitration agreements because they think they're pretty unfair to a lot of countries, right?

Shaina Potts 50:16

Yeah. I mean, I guess I'd say we have not yet been in a world where the WTO would have had any interest in curbing English or New York legal authority this way, and the two have really worked hand in hand, I think, rather than being opposed. I mean, so you would need an international order in which

especially sort of lower income countries had a much stronger, much more political power. I think, to get a situation where those decisions had any interest in curbing this sort of sort of power, and then you would think England and the US to agree to

sign on to those so it doesn't seem likely. Yeah. I mean, I think the question you raised earlier, Maggie about is a super interesting one about why some issues have remained largely in the domain of transnational domestic law, and some have moved more to arbitration. It's an interesting one that I have wondered about, but I don't really know a general answer, but I think in some ways, I think the apt, as you just said, the arbitration, when it is actually technically easier for countries to pull out of because it is an international agreement, whereas this is about 1000, 1000, 1000s of contracts that you know, and it would be quite difficult to sort of remove all of those from

from your legal authority in one fell swoop, at least.

Margaret Peters 51:30

All right, time for one last question

Audience 51:35

So an entity which is not a US entity, it's

called by the US entity

like that I'm suing, for example, the company in India

got sued by one of the H models over here

to that company, and then I think that company or the owner lost. So if that happens, what's like, the entity and the proprietor of entities are not in US, let's say, even if they lose,

the code gives the favor of the US entity, right? What next? Right? What power really can the

judicial system over here can really is the judicial system going to work with the other sovereign nation to punish on what exactly we have?

Shaina Potts 52:34

Yeah. So, so basically this is sort of, how does a US court enforce a judgment? Right? And were you saying against a foreign company or against a foreign government, either one foreign a foreign company or a foreign government?

Audience 52:47

Company.

Shaina Potts 52:48

A foreign company? Okay, yeah. I think it's a little bit different in the case of companies or governments. Yeah. So I would say the so it is actually the case that many courts will enforce the judgments of other courts. So it's not uncommon for, like, an Indian case to agree to enforce a judgment from a New York court. So potentially, the US company could sort of go to India and get a get an Indian court to do that against a company, right? But much more broadly, as I said before, but I don't think I fully explained the point.

So economists, or sorry, legal scholars often talk about this as the sort of the enforcement problem in international law or in transnational law, and the fact that there is obviously no police force that will be able to go out and sort of arrest the offending party, right? And so it's sometimes talked about by legal scholars as the puzzle of, sort of the enforcement puzzles, or why do foreign entities obey? And this has been talked a lot about, specifically in the sovereign debt case. And to me, it's not really that much of a puzzle. It's really basically that the in the case of the US and England in particular, their their economies are so powerful and their economic systems are so extensive that any company who decided to disobey, to not obey, an order like this, would be unable to operate in much of the world market, because any to the extent that they sort of touched on the US or English or economic space of they would be held in contempt of court or their if they had assets in either of those jurisdiction, those assets could be seized to sort of make good on the on the on the judgments and so on. So clearly that would not be the case if a Zimbabwean court ruled against an Indian company, right? That might be a very different situation in theory. And then in the case of governments, it's really the same thing, right? It's that governments who are involved in the international financial system and so on, will be essentially unable to operate in that in the financial system. So when Argentina did refuse to obey, even after the Supreme Court order, not only were they forced into a kind of technical default on their debts, because no financial institution would help them make the payments, because those financial institutions didn't want to be held in contempt of court in New York.

Um, but they also didn't really have any access to new financing on international markets during that period, right? So, so it's really a question of economic power shoring up the legal power, although I think also then it goes the other way around, that that legal power also shores up the economic power in turn, in certain ways.

So it's really a de facto enforcement power, all right.

Margaret Peters 55:23

Well, thank you so much for coming.

Shaina Potts 55:25

Thank you.

Margaret Peters 55:26

It's the last talk in the series for the year. Thank you so much for being on that one.

Shaina Potts 55:30

Thank you for having me.

Transcribed by https://otter.ai