Country Risk Arising from the Home-Country Legal Environment

Does country risk arise only due to the host country’s legal environment? No, home-country legal systems also play a role. Extraterritoriality refers to the application of home-country laws to persons or conduct outside national borders. In most cases, such laws are intended to prosecute individuals or firms located abroad for some type of wrongdoing.

Examples of extraterritoriality in international business abound. A French court ordered Yahoo! to bar access to Nazi-related items on its website in France and to remove related messages and images from its sites accessible in the United States. In 2018, the European Union fined Qualcomm $1.2 billion for unfair and anti-competitive practices ...

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