Clarifying the Territorial Scope of “Conduct” under Section 137 of the Extradition Act 2003

Introduction

The Supreme Court’s decision in El-Khouri v Government of the United States of America ([2025] UKSC 3) addresses a complex, yet pivotal, question in extradition law: how the double criminality rule in section 137 of the Extradition Act 2003 applies when alleged criminal conduct takes place partly in the requesting state and partly elsewhere. In this case, the United States sought extradition of Mr. El-Khouri, a dual UK-Lebanese national, for insider dealing and related fraud charges concerning mergers and acquisitions with ties to US stock exchanges.

While the facts involved multinational elements—acts allegedly committed by conspirators in London, payments made in multiple European countries, and US-based securities—the core legal issue centered on whether the conduct at issue took place “in” or “outside” the United States for purposes of the Extradition Act. The Court’s decision illuminates the correct interpretation of sections 137(3) and 137(4), the relationship between these subsections, and the proper scope of the “conduct” test in a cross-border context.

This judgment also re-examines the earlier House of Lords decision in Cando Armas and sets the record straight regarding any misunderstanding about assigning extraterritorial significance to criminal conduct for double criminality purposes. Ultimately, the Supreme Court allowed the appeal and quashed the order for Mr. El-Khouri’s extradition.

Summary of the Judgment

The Court unanimously determined that the alleged conduct—primarily insider dealing transactions facilitated by brokers in the UK—did not occur “in” the United States within the meaning of section 137(3). Instead, the proper subsection to apply was section 137(4), which governs conduct that takes place outside the requesting state. Since it was necessary under section 137(4) that an equivalent (mirrored) set of facts would constitute an extraterritorial offence under UK law, and that requirement was not satisfied, the court found that the request did not meet the double criminality condition.

Consequently, the Supreme Court ordered the discharge of Mr. El-Khouri, overturning the lower courts’ findings that the conduct met the threshold for “an extradition offence” under section 137(3). The ruling confirms that purely territorial acts in the UK, plus minor incidental events abroad, cannot be treated as conduct “in” the requesting state, even if the alleged scheme targeted that state’s markets in some way.

Analysis

A. Precedents Cited

1. Cando Armas ([2005] UKHL 67):
In Cando Armas, the House of Lords examined section 65 of the Extradition Act 2003, which parallels sections 137(3) and (4). Lord Hope had suggested that acts done outside a requesting jurisdiction could be treated as if they occurred “in” that jurisdiction if they were intended to have effects there. While that proposition helped to dispose of the Cando Armas appeal on the narrower ground that some part of the conduct had genuinely occurred in the requesting state, the Supreme Court in this case declared those remarks unnecessary to the final result and corrected the interpretation for future guidance.

2. Norris v Government of the United States of America ([2008] AC 920):
The Supreme Court also referenced Norris for the principle that the Extradition Act 2003 adopts a “conduct-based” test for double criminality—looking primarily at the alleged behavior rather than the exact legal ingredients of the foreign offence. Nevertheless, the Court stressed that the question of where that conduct is deemed to have taken place remains a separate critical inquiry under sections 137(3) and 137(4).

3. Other Cases:
The Court reviewed the High Court decisions in Hosseini, Kodos, as well as references to R v Rogers ([2014] EWCA Crim 1680) in the discussion of purported extra-territorial scope under the Proceeds of Crime Act 2002. Ultimately, the Supreme Court found Rogers to be incorrectly decided and reaffirmed the presumption against extra-territorial application in the absence of explicit statutory rules.

B. Legal Reasoning

The Court’s key legal determination is that “conduct” for purposes of sections 137(3) and (4) of the Extradition Act 2003 speaks to the physical acts carried out by the alleged offender, not the intended or actual effects. Specifically:

• Mutual Exclusivity: Section 137(3) applies where the conduct takes place “in” the requesting state; section 137(4) covers conduct taking place “outside” that state. Both subsections cannot apply to the same conduct simultaneously.
• Physical Acts vs. Effects: The Court disapproved of using intended consequences in the requesting state (e.g., impacting its markets) to reclassify conduct that evidently happened in the UK as conduct in the foreign jurisdiction.
• Limitations on Territorial Scope: Where courts rely on section 137(4), the relevant inquiry is whether the United Kingdom would, under corresponding extraterritorial circumstances, criminalize the same conduct. Absent explicit statutory authorization for extraterritorial reach, no such jurisdiction exists.
• Outcome: Since essentially all of Mr. El-Khouri’s alleged insider trading activities (trading in CFDs, obtaining confidential information, and paying conspirators) took place in the United Kingdom, double criminality must be tested under section 137(4). The specific offences in question, such as insider dealing under the Criminal Justice Act 1993, do not afford extraterritorial application on these facts.

C. Impact

This Supreme Court ruling revises and clarifies the law by firmly holding that the location of the defendant’s alleged acts themselves—rather than their cross-border effects—governs whether section 137(3) or 137(4) of the Extradition Act 2003 applies. Several significant consequences emerge:

1. Extradition Requests: Law enforcement authorities must carefully consider where the core misconduct physically took place. A state cannot justify extradition merely by pointing to the effects of overseas conduct on its own homeland.
2. Overruling Obiter in Cando Armas: The Court effectively removes confusion caused by Lord Hope’s comments on intended effects. Courts and practitioners must now examine whether the defendant really was in the requesting territory at the time of committing the relevant actions.
3. Presumption Against Extra-territoriality: This case underscores the strong presumption that, unless expressly provided, domestic criminal statutes do not extend to acts committed outside the United Kingdom. This principle will shape how prosecuting authorities frame charges in multinational investigations.
4. Guidance on Double Criminality: Where subsection (4) applies, a thorough “mirror” analysis must be undertaken to ascertain whether the counterpart UK offence extends beyond British borders.

Complex Concepts Simplified

Double Criminality Rule: A core principle in extradition law, requiring that the alleged conduct be criminal both in the requesting state and in the state receiving the extradition request. In practical terms, the requested person’s behavior must violate the law of both countries.

Territorial vs. Extra-territorial Offences: Criminal laws typically apply to acts committed within a country’s physical borders. However, certain statutes explicitly or implicitly allow for prosecution of acts outside those borders (for example, terrorism or serious cross-border crimes), subject to legislative intention. If no such intention exists, the offence is purely “territorial.”

Conduct-based Test: Instead of matching up legal ingredients of the foreign offence with an identical or closely analogous UK offence, courts look to the factual allegations—what the defendant did. If those facts would amount to a criminal offence in the UK, the test is satisfied (assuming the correct subsection—(3) or (4)—is engaged).

Conclusion

In El-Khouri v Government of the United States of America, the Supreme Court has firmly reset the interpretation of section 137 of the Extradition Act 2003, clarifying that the location of the defendant’s physical acts—not the effects experienced in the requesting state—determines which double criminality test to apply. Sections 137(3) and 137(4) operate mutually exclusively, with subsection (3) focusing on acts occurring “in” the requesting state, and subsection (4) governing acts occurring “outside” it.

Because nearly all of Mr. El-Khouri’s relevant behavior took place in the United Kingdom, the Supreme Court concluded that subsection (4) applied—triggering a requirement that the conduct be prosecutable as an extra-territorial offence under UK law. As neither insider dealing (under the Criminal Justice Act 1993) nor any of the alternative offences submitted by the United States applies extra-territorially in these circumstances, the court held that the double criminality rule was not met. The judgment ultimately discharges Mr. El-Khouri and reasserts a principled framework for future extradition disputes involving transnational conduct.