The state which is being overflown has just as much entitlement to licence a pilot to fly in it's airspace.
That is an old sleeping dog which
AFAIK has never been clarified either way.
I think it is good enough to rely on from the POV of a
prosecution, because for obvious practical reasons (you have to do a little bit more than shoplifting to get extradited to the USA... well maybe not
) any prosecution is going to come from the airspace owner, and if you have a piece of paper from him which says something is legal, he hasn't got a hope of prosecuting you (even if the advice was completely wrong, so long as it appears to come from someone in a position of authority).
But
insurance works the other way. The insurer has a duty (to his shareholders) to avoid paying out unless legally obliged, and anyway it is a civil action which is going to cost megabucks to argue. So if there is any doubt, he can avoid paying out and just say "sue me if you don't like it" and leave you p1ssing in the wind.
Aviation insurers have a reputation for paying out even in the most ludicrous cases of pilot negligence, but they won't pay out if they think the flight was illegal before it got off the ground. I have this from the horse's mouth - an underwriter.
FWIW, the FAA Chief Counsel has ruled on the JAA license acceptability under FAR 61.3 and it is
not valid. I have the references
BUT the FAA don't recognise the "JAA" as one entity
The key word in 61.3 is
issued. JAA does not issue licenses; they only mutually validate them. This was also confirmed by the FAA lawyer presentation at Luton in April (I was there).
Edited for grammar.