A recent district court decision substantially limits the reach of the government’s enforcement arm under the Foreign Corrupt Practices Act.

The FCPA grants jurisdiction over three categories of companies or individuals: a U.S. issuer or “domestic concern” or any officer, director, employee, or agent thereof; a U.S. citizen acting in furtherance of a corrupt payment; and any person in U.S. territory acting in furtherance of a corrupt payment.

In a ruling last month in the case United States v. Lawrence Hoskins, U.S. District Judge Janet Arterton for the District of Connecticut ruled that the U.S. government cannot charge any individual or company who doesn’t fall into one of these three categories with aiding and abetting or conspiring to violate the FCPA.

The ruling is important because it directly contradicts the FCPA Resource Guide, which states that “[a] foreign company or individual may be held liable for aiding and abetting an FCPA violation or for conspiring to violate the FCPA, even if the foreign company or individual did not take any act in furtherance of the corrupt payment while in the territory of the United States.”

“Given the rarity of written judicial opinions interpreting the FCPA, this ruling is likely to have an outsized impact on future FCPA enforcement actions,” Andrew Hruska, a partner with  law firm King & Spalding, said in a client alert.

The decision resulted from charges the government brought against Lawrence Hoskins, a U.K. citizen and a former senior vice president of French power and transportation giant Alstom, for violations of the FCPA and conspiring to violate the FCPA.

As Compliance Week previously reported, the charges related to allegations that Alstom paid bribes to foreign government officials in Indonesia in order to secure a $118 million contract, known as the Tarahan project, to provide power-related services in the country. According to the Justice Department, Hoskins was responsible for authorizing payments to consultants retained for the purpose of paying bribes to Indonesian officials with influence to award the Tarahan Project contract.

Hoskins moved to dismiss the conspiracy count of the indictment. Arterton summarized the question before the court as this: “Whether a non-resident foreign national could be subject to criminal liability under the FCPA, even where he is not an agent of a domestic concern and does not commit acts while physically present in the territory of the United States, under a theory of conspiracy or aiding and abetting a violation of the FCPA by a person who is within the statute’s reach.”

The short answer, Arterton ruled, is “no.”

“Based on the text and structure of the FCPA and the legislative history accompanying its enactment and its amendment, the court concludes that Congress did not intend to impose accomplice liability on non-resident foreign nationals who were not subject to direct liability,” the opinion stated.

Arterton’s ruling is a win for companies and, thus, a blow to the Justice Department and Securities and Exchange Commission’s long-standing theory that non-resident foreign nationals are subject to the FCPA if they conspire with, or aid and abet, an individual or company otherwise subject to the FCPA.