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Public International Law and Multinational Companies: The quest for International Legal Personality

Public International Law and Multinational Companies: The quest for International Legal Personality

Introduction

Global Business has exploded with the integration of markets and socio political changes that opened up a post-Cold War world to a set of fresh opportunities that stretched across international plane. As such, multinational companies due to the open market success are able to generate a turnover that in many instances surpasses even that of states[1], amassing about a quarter of the total Global GDP.[2] With such potential at its grasp, it is therefore easily conceivable that Multinational Companies play an enormous role in the technological and economic development[3]. However, simultaneously, they can also be a source of misery, by either damaging the environment, or human rights or even at some instances commit crimes. As such therefore, it is crucial to investigate on the interplay between the effectiveness of domestic legislation to effectively regulate the activities of the Multinational Companies, and in the other hand, the discerning dynamics which has shifted the discussion about MNCs in the plain filed of international law.

The rise of the need for international regulation of MNCs comes first and foremost as a result of the often inability of national domestic legislations in creating stable regulatory frameworks upon which MNCs can operate safely, primarily due to their very nature. Since usually these type of companies are comprised of a decentralized structural organization, often exercising global activities, it becomes therefore difficult for national legislation to keep the operations of MNCs in check by mere domestic means[4].

However, the involvement of MNCs as subjects of international law has been widely discussed among scholars and has been object of considerable scrutiny, concentrated mainly on the issue of whether they are “capable of possessing international rights and duties and capacity to maintaining their rights by bringing international claims[5].” Historically speaking, international law was seen as the domain of the sovereigns and as such governing only transactions that involved states.[6] However as international human rights law and international organizations enter the sphere, the circle of subjects comprising international law gradually expanded. Here two major opinions emerged, in the one hand the positivists who saw international law as the domain of states, whereby the primary subjects of international law could be “upgraded” to include non-state actors, only if their subjectivity derived from states and it was depend upon states, their recognition[7]. Adhering to this principle, the vast majority of scholars are of the opinion that indeed MNCs do not possess international legal personality[8]. They hold the opinion that despite the fact that these companies benefit from a substantively large body of international law provisions, however, does not mean that they enjoy corresponding rights, similar to states[9].  

In the other hand some other notable scholars share another view. Higgins for example explains the “the alternative approach”, that of redefining what subjects and objects of international law mean. She argues that by alluding to this classification it traps the entirety of the concept into an “intellectual prison” with no “functional purpose”[10]. Another scholar Clapham focuses his main attention to the status and role non state actors play in the eyes of international law, mainly in their conjuring rights and obligations, reaching in his conclusion that they indeed do possess international limited personality[11]. Likewise similarly other scholars tend to focus more on the “substance” of the issue[12], being chiefly rights and responsibilities rather than “the label”[13] they have in eyes of international law.  One can see as a result that the discussion among legal scholars is extensive and by no means conclusive. Klabbers gives the best narrative to the problem by extrapolating, ‘personality is by no means a threshold which must be crossed before an entity can participate in international legal relations; instead, once an entity does participate, it may be usefully described as having a degree of international legal personality’.[14]

CONCLUSION

To conclude there are ongoing discussions as to the question of legality in the eyes of international law concerning Multinational Companies. Throughout this short essay I tried to summarize some of the main positions on the legal question and its rationale. Peter Malanczuk, Akenhurst, Hailbronner and a another vast majority of scholars are of the opinion that Multinational Companies do not enjoy legal personality rights in eyes of international law, at least not in the same conceptuology as that of a state participants in international law. In the other hand Clapham, Klabbers Higgins and other hold another more substantial opinion arguing that it should be the “substance” of the multinational companies’ activities that should play a major role in deciding the question of legal personality and not the “label” as Pentikainen puts it. In short considering the implications in the eyes of international law this issue could potentially bring, it becomes paramount that there is a need for a gradual cohesive effort towards a semi unilateral commonality on the centrality of the concept regarding legal personality in International law. As Jan Wouters best summarized it, “In light of the ever growing power of MNCs and considering ongoing reports about their involvement in human rights abuses and environmental harm, the calls for stronger obligations of MNCs under international law persist. Caution should be exercised, though, since a single-minded focus on MNCs risks distracting from the primary responsibility of states”[15] and as such, the question deserves a further more enqueirous scrutiny as any contribution on the field, would bring the discussion a step closer towards apheasal.


[1] John Mikler, Global Companies as Actors in Global Policy and Governance (Wiley-Blackwell 2013)

[2] UNCTAD, World Investment Report: Non-Equity Modes of International Production and Development (UNCTAD/WIR/2011)

[3] Jan Wouters, Philip De Man, Nicolas Hanchez and Oliver der Schutter, Foreign Direct Investment, Human Development and Human Rights: Framing the Issues (2009)

[4] Nicolas Zambrana Tevar, Shortcomings and Disadvantages of Existing Legal Mechanism to Hold Multinational Corporations Accountable for Human Rights Violations (2012)

[5] Reparations for Injuries Suffered in the Service of the United Nations (Advisory Opinion 1949) ICJ Rep 174, 179.

[6] Jeremy Bentham, An Introduction to the Principles of Morlas and Legislation (Burns&Hart 1970)

[7] Peter Malanczuk, “Akenhurst’s modern introduction to international law” (7th edn, Rutledge 1997)

[8] Kay Hailbronner „Der Staat und der Einzelne als Wölkrrechsubjekte“ (4 edn, De Gruyter 2007)

[9] Malanczuk (n24) 100: “The fact that individuals or companies are beneficiaries of many rules of international law does not measn that these rules create rights for the individual or companies, in much the same way as law prohibiting cruelty to animals do not create rights for animals”.

[10] Rosalyn Higgins, “Problems and Process: International Law and How We Use It” (Claredon Press 1994)

[11] Clapham (n 14) 77 f

[12] Jose E. Alvarez “Are Corporations ‘Subjects’ of International Law?” (2011) Santa Clara Journal of International Law

[13] Pentikainen (n 37) 153

[14] Jan Klabbers, “An Introduction to International Institutional Law” (2nd ed, CUP 2009) 52.

[15] Wouters, Jan & Chané, Anna-Luise. (2013). Multinational Corporations in International Law. SSRN Electronic Journal. 10.2139/ssrn.2371216.

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