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In this chapter, the concept of jurisdiction as exercised by states (or regional organizations such as the European Union) is analysed. Such jurisdiction is concerned with the reach of a state's law: what link, if any, is required for a state to apply its laws to situations and persons? Jurisdiction is an aspect of a state's sovereignty, as the right to prescribe and enforce laws is an essential component of statehood. In the classic Westphalian understanding, this right has been limited to a state's territory, a limitation that at the same time ensures that no state intervenes in another state's affairs (2.1). This idea is no longer strictly applied, if it ever was. Exceptions that allow for limited extra-territorial jurisdiction have been carved out, and, moreover, the territoriality principle has been construed rather liberally (2.2). To be true, some states employ a rather strict presumption that the legislature does not normally intend to apply its laws extra-territorially, but such a presumption does not limit the discretion of the legislature to do just that if it so desires (2.3). The overlapping assertions that result from multiple states' invocation of permissive principles of jurisdiction may almost unavoidably result in international friction. This friction may be mitigated by a 'rule of reason', which instructs courts and regulators to balance the interests and connections of the case with the different states involved (2.4).

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