Courts in the United States frequently preside over cross-border litigation involving foreign parties and activities that occurred, in large part, outside of the country. But in recent years, the U.S. Supreme Court has led the charge in pulling back on the reach of U.S. courts’ jurisdiction over foreign companies. As a result, cross-border disputes that played out in U.S. courts in the past have become more susceptible to jurisdictional challenges from foreign defendants hoping to avoid litigating in the United States.

Personal Jurisdiction Threshold

When faced with a lawsuit in the United States, the first issue a foreign company defendant (i.e., incorporated and/or based outside of the U.S.) should consider is whether the court has grounds for exercising personal jurisdiction over the defendant. A court may exercise personal jurisdiction over a foreign defendant only if federal due process and the forum state’s “long-arm” statute are satisfied. Long-arm statutes set out the circumstances under which a state’s courts may exercise personal jurisdiction over an out-of-state defendant. However, since long-arm statutes often reach as far as federal due process allows, personal jurisdiction typically focuses on the due process requirement of whether the defendant purposely established “minimum contacts” with the forum state.