For a U.S. court to have adjudicative jurisdiction in civil matters, it must have both subject-matter jurisdiction and personal jurisdiction. Subject-matter jurisdiction concerns a “court’s competence to adjudicate a particular category of cases.” For example, only a federal court can hear a case relating to federal legislation, such as the FCPA. Personal jurisdiction refers to the authority of a court to hear cases concerning a particular person.
Historically, U.S. courts were only able to hear civil matters concerning residents within their own forum. This is called general jurisdiction. The rise of inter-state commerce and travel created issues as courts would be limited in their ability to adjudicate situations that occurred in their territorial limits but involved a nonresident defendant who left the forum. To fix this gap, laws began to be passed that allowed a court to exercise personal jurisdiction over nonresident defendants when there was some connection to a court whose territory gave rise to the dispute. This became known as specific jurisdiction.
The first long-arm statute was introduced in Illinois in 1955. Since then, every US state and the federal government have introduced a long-arm statute or long-arm clause. The extent of this jurisdiction varies considerably. It can be very broad, such as the California Code of Civil Procedure and the Federal Rules of Civil Procedure, both of which allow for jurisdiction to the limit allowed by the constitution. Others, such as the New York Consolidated Laws, Civil Practice Law and Rules, are quite narrow and delineate specific situations where it would apply. Some federal statutes, including the Exchange Act, contain their own rules for establishing specific jurisdiction through the use of a long-arm clause.
When it comes to a federal court, the statutory basis for specific jurisdiction can either come from a federal or state long-arm statute or long-arm clause located in an individual statue. First, a federal court will look to the relevant federal statute that gives rise to the legal issue to determine whether it explicitly allows for specific jurisdiction. If the federal statue does not specifically provide for jurisdiction over nonresidents, the forum state’s personal jurisdiction rules will apply. As the Exchange Act contains a long-arm clause that specifically allows for “worldwide service of process and permits the exercise of personal jurisdiction to the limit of the Fifth Amendment,” civil litigation involving the FCPA is not governed by state long-arm statutes.