The global reach of the internet sometimes creates practical difficulties for law enforcement and, for private litigants, in “getting a remedy”. In essence, one country’s laws do not have (without special arrangements) “extraterritorial” effect in another country. But that does not mean that just because something or someone is located overseas, a court in another country cannot claim jurisdiction.
This issue has arisen several times in defamation proceedings, where a person complains that they have been defamed in another country, even though they would not be able to sue for defamation in that second country. A few years back, an Australian court ruled that an article posted on the internet is considered published wherever it is downloaded. So an article written in the United States by a US citizen, and not actionable in the US, could be actionable in Australia if it is defamatory under Australian law.
Another example, this time involving criminal law, is currently underway with the Australian Human Rights Commission threatening to lay charges against the US-based operator of Encyclopedia Dramatica over an offensive entry on Aborigines.
Similarly, a UK court recently confirmed that English criminal law can apply to internet content accessible in the UK, regardless of where in the world it is hosted. Meanwhile, three US-based Google managers were convicted in absentia by an Italian court for “allowing” disturbing footage of an Italian boy being bullied to be posted online, and not removing it.
In other cases, specific legislation (e.g. section 7A of the Crimes Act) or public policy may compel or be used to justify a court exercising jurisdiction. For example, in New Zealand the Commerce Commission has successfully prosecuted overseas residents for breaches (in New Zealand) of the Fair Trading Act.
In summary, it does not typically matter that a server, or a person, is located outside of the jurisdiction. The fact that conduct occurs in a jurisdiction (e.g. material can be accessed in a jurisdiction in the same manner as if the server or material were located there; conduct by an overseas person is “aimed” at the local jurisdiction) is often sufficient.