Applications
The practice of individuals seeking asylum involves appealing to a jurisdiction with favorable individual rights for residency, where the individual's native jurisdiction is seen to offer insufficient protection. By way of example, women have fled West African nations which practice female genital mutilation or extremist Islam in favour of European and North American jurisdictions.
To avoid arbitrary restrictions on skilled immigration, high-tech companies may set up offices in countries neighboring those with the restrictive policies, preferably in locations close to the border, as was the case with Microsoft's plans to open a satellite office in Vancouver, Canada, situated only 140 miles (225 km) from its headquarters in Seattle, United States. In Silicon Valley, a project is underway to launch a ship 12 nautical miles from the shore, in international waters, with the goal of allowing entrepreneurs without US work visas to legally create and work for companies close to the area (see Blueseed).
On the other hand, jurisdictional arbitrage has also been utilized to hinder attempts at governmental prosecution, by transnational criminals such as terrorists, money launderers, and cyber-attackers.
Prior to recent international mobilization against the practice, there existed a long-standing tradition of ousted state leaders such as Erich Honecker, Idi Amin and Augusto Pinochet finding refuge and retirement abroad to avoid prosecution in their native jurisdiction. Pinochet, one-time military leader of Chile sought to evade retributive prosecution in his native jurisdiction by seeking refuge in United Kingdom. He was later prosecuted by a Spanish court according to the principle of universal jurisdiction.
To counter-act this phenomenon, most countries have signed bilateral extradition treaties with most other countries, and some governments adopted the principle of Universal jurisdiction, which has enabled individuals to be prosecuted for offences (particularly alleged human rights violations and war crimes) committed outside the jurisdiction of prosecution — the legal structure of nations such as Belgium and Spain allow for this, as does that of international tribunals operating under the aegis of the United Nations.
A similar attempt at governmental collusion to limit the use of jurisdictional arbitrage for tax avoidance is the policy of tax harmonization. The membership of European governments in the European Union resulted in a collection of nations with a limited set of common legal structures (Four Freedoms) which has resulted in tax competition by the otherwise less-developed nations (such as the Republic of Ireland in the early 1990s) whereby governments compete for foreign investment by lowering their tax rates significantly below those of their neighbours. This strategy has been adopted in the form of a flat tax by various Eastern European nations, which has resulted in calls for harmonization of tax rates by the traditionally more developed nations such as France, Britain and Germany.
Read more about this topic: Jurisdictional Arbitrage