With the US Treasury into the Chinese for $850 billion in debt alone—an amount about which the Chinese have expressed understandable concern—do we really want our Supreme Court sending a message of isolationism?
In Morrison v. National Australia Bank, decided in June, the Supreme Court ruled that owners of shares in a foreign bank cannot bring suit related to those shares in U.S. court. “Legislation of Congress… is meant to apply only within the territorial jurisdiction of the United States,” Justice Scalia reasoned on behalf of the Court.
Really? What stocks are we talking about? How ’bout household names like Toyota and BP? Yes BP. These multinationals have no borders. Why should they be insulated from exposure if they choose to trade on the Singapore Stock Exchange. To corporations, at least, the US Court system is a beacon of justice, governed by hundreds of years of precedent, fairness and the rule of law. It is time to become the Hague for an array of securities claims occurring across physical borders.
With the US Treasury into the Chinese for $850 billion in debt alone—an amount about which the Chinese have expressed understandable concern—do we really want our Supreme Court sending a message of isolationism? Why in an economy that grows more global every day should the law favor investment in securities only listed on homegrown exchanges? Shouldn’t our citizens have the advantage and choice of a wider array of investments? This “buy American” approach is shortsighted and hardly allows for liquidity to flow to the most desirable investments or for American investors to obtain the highest returns. At a minimum the Supreme Court should have found a middle ground—something that reflects today’s reality—and as with any jurisprudential shift: move slowly to reflect the changes in the marketplace.
Congress holds the ultimate power in this area, and they can expand the securities laws but the courts must be more enlightened. This is yet another example of the Supreme Court’s inability to come to terms with the practical imperatives of today’s world. I wrote previously about their refusal to consider alternatives to the hourly billing method of determining attorney fees; we can see here another example of the same antiquated thinking. When will members of the Court actually join the era in which we live?
Assisted by David Martin