## Facts

- Plaintiffs were traders who bought and sold Brent crude-linked futures and derivatives on ICE Futures Europe and NYMEX between 2002 and 2015.
- Defendants were entities involved in producing, trading, and marketing North Sea Brent crude and Brent-based derivatives.
- Physical Brent crude cargoes were traded in over-the-counter foreign markets; price-reporting agencies compiled transaction data to publish benchmark assessments, including a London-based assessment used in global pricing.
- Plaintiffs alleged defendants executed artificial trades in foreign physical Brent markets and reported those trades to the London price-reporting agency to distort the benchmark.
- Plaintiffs alleged the distorted benchmark influenced Brent futures and derivatives pricing abroad and, indirectly, NYMEX Brent-linked contracts in the United States, causing trading losses.
- Plaintiffs sued under multiple Commodity Exchange Act (CEA) provisions prohibiting manipulation and related misconduct.
- The district court dismissed, finding the claims impermissibly extraterritorial because the alleged scheme was predominantly foreign; plaintiffs appealed.

## Issues

1. Whether the CEA provisions invoked contain a clear indication of extraterritorial application.
2. What the “focus” of the relevant CEA anti-manipulation provisions is for purposes of the presumption against extraterritoriality.
3. Whether alleged foreign manipulation that allegedly affected U.S.-traded futures constitutes a permissible domestic application of the CEA.

## Decision

- The Second Circuit affirmed dismissal of the CEA claims.
- The court held the relevant CEA provisions do not apply extraterritorially absent clear congressional direction.
- Applying the statute domestically required domestic conduct tied to the provisions’ focus; downstream U.S. price effects and plaintiffs’ NYMEX trading were insufficient.
- Because the alleged manipulative trading and reporting underlying the scheme occurred abroad and the case was predominantly foreign, the claims sought an impermissible extraterritorial application of the CEA.

## Legal Principles

- Under the presumption against extraterritoriality, courts apply a two-step test: (1) whether Congress clearly authorized extraterritorial reach; if not, (2) whether the case involves a domestic application by examining the statute’s “focus” and where conduct relevant to that focus occurred.
- Domestic “effects” of foreign conduct do not, by themselves, make application of a statute domestic.
- For CEA anti-manipulation provisions at issue, the focus is the allegedly manipulative conduct in the relevant commodity and derivatives markets, not merely the location of a plaintiff’s transaction or downstream impact on U.S. prices.
- A plaintiff’s domestic trading on a U.S. exchange does not alone supply a domestic application where the alleged manipulation central to the claim occurred in foreign markets.

## Conclusion

The Second Circuit held that CEA anti-manipulation claims based on an alleged Brent benchmark manipulation scheme centered in foreign physical trading and foreign reporting were predominantly foreign and therefore barred as an impermissible extraterritorial application of the CEA, even though plaintiffs alleged losses from U.S.-traded NYMEX contracts.


Prime Int’l Trading, Ltd. v. BP P.L.C., 937 F.3d 94 (2d Cir. 2019)