The early attempts described in the previous section demonstrate that the topic of business actors as subjects of international law has never been black and white. Questions of status are, however, a late twentieth century development inextricably linked to globalisation and the rise of commercial power:
…the need to qualify the international legal position of transnational corporations is mainly a development of the period after 1945.122
Even within a Westphalian paradigm, it was inevitable that as the economic and political power of transnational business actors increased, their participation in international law would also increase. Post-1945, States have certainly been ever more willing to recognise corporations as participants, if not subjects outright, in international law that have rights, obligations and responsibilities, specifically on the basis of international covenants. Wolfgang Friedmann, writing in 1964, concluded unequivocally that ‘private corporations are participants in the evolution of modern international law’.123 This is especially true
121 L.Turner, ‘Multinational Companies and the Third World’ 30 The World Today No.9 394-402 (Sep.,1974)
at 394. See also P.Chapman, Bananas: How the United Fruit Company Shaped the World, (Canongate, 2004); S.May & G.Plaza, The United Fruit Company in Latin America, (Washington: National Planning
Association, 1958).
122 C.Walter, ‘Subjects of International Law,’ in R. Wolfrum, (ed.), The Max Planck Encyclopedia of Public International Law, (OUP: Oxford, 2008), online edition, www.mpepil.com [last accessed 2.9.11]para.19.
123 W.Friedmann, The Changing Structure of International Law (1964) at 230. See also M.Kamminga,
within the context of international investment. Steven Ratner talks of ‘host states and TNEs’ adjusting their ‘economic and legal relationship through economic development agreements’ which ‘clearly defined a set of rights and duties between the TNE and the host state.’124 An examination of decisions of the Permanent Court of International Justice
(PCIJ) and the International Court of Justice (ICJ) as well as international conventions reveals the truth of his assertion.
In terms of rights under international law, there are various examples. Thus, as highlighted earlier in this chapter,125 corporate actors are entitled to claim the nationality of the State in
which they are incorporated and consequently may claim the right of diplomatic
protection. This is founded upon the well established twin, substantive and procedural, principles of diplomatic protection of citizens abroad and State responsibility for injuries to aliens.126 Described by the Permanent Court of International Justice in the Mavrommatis
Palestine Concessions Case127 as an ‘elementary principle of international law’ it was also
firmly upheld in relation to corporations by the International Court of Justice in Barcelona Traction.128 As Richard Lillich comments:
Even as bitter a critic of diplomatic protection as Judge Padilla Nervo admitted in the Barcelona Traction Case that ‘[f]or the time being, the principle which recognizes the capacity of a State to intervene, by way of diplomatic protection of a company of its own nationality, has proved to be a fair and well-balanced safeguard or insurance, both for the investor and for the State, where foreign companies operate.129
As highlighted in Section 2.1.2.2., however, there is an asymmetry to this principle which leads to the conclusion that corporations receive all of the benefits of international law without the same emphasis on corresponding responsibilities. The world that Lillich
124 Ratner note 87 at 456. 125 Infra Section 2.2.2.2.
126 See: R.B.Lillich, International Law of Responsibility for Injuries to Aliens (University Press of Virginia:
Charlottesville, 1983); C.F.Amerasinghe, State Responsibility for Injuries to Aliens (Clarendon Press: Oxford, 1967); Sornarajah note 99 at 17.
127 PCIJ Ser.A No.2 (1924) at 12. 128 Barcelona Traction note 88 passim.
129 R.B.Lillich, ‘The Diplomatic Protection of Nationals Abroad: An Elementary Principle of International
Law Under Attack’ 69 AJIL 359-365 (1975) at 364 citing Barcelona Traction note 88 Judge Padillo Nervo’s Separate Opinion http://www.icj-cij.org/docket/files/50/5405.pdf [last accessed 5.9.11] at 245.
describes is one where the rights of business actors are safeguarded but the rights of human beings violated by those same business actors are not.130
Numerous corporate actors have sought the diplomatic protection of their State of
incorporation in a wide variety of circumstances.131 The position was recently reaffirmed
in the Case Concerning Ahmadou Sadio Diallo.132
Another category of right arises in relation to the taking of property. A company is permitted to bring a claim against a State which has expropriated its property unlawfully.133 In so doing, the international community is again recognising private
business actors as subjects or of international law because jurisdiction is dependent upon the consent of the parties to the dispute. Such claims may be made in a variety of fora. For example the Convention on the Settlement of Investment Disputes was established to deal specifically with disputes between States and the nationals of other Contracting States and is very widely ratified.134 Article 25 of the ICSID Convention135 outlines the extent of
the Centre’s jurisdiction: Article 25
(1) The jurisdiction of the Centre shall extend to any legal dispute arising directly out of an investment, between a Contracting State (or any constituent subdivision or agency of a Contracting State designated to the Centre by that State) and a national of another Contracting State, which the parties to the dispute consent in writing to submit to the Centre. When the parties have given their consent, no party may withdraw its consent unilaterally.
While Article 25(2)(b) extends the right to corporate actors: (2) ‘National of another Contracting State’ means:
130 See e.g. Dugard Report note 39 at para.14.
131 See e.g. Anglo Iranian Oil Co. Case (United Kingdom v. Iran) (Preliminary Objections) IC Rep. 93
[1952]; Interhandel Case (Switzerland v United States of America) (Interim Measures of Protection) ICJ Rep 105 [1957]; Elettronica Sicula S.p.A. (ELSI) (United States of America v. Italy) I.C.J. Rep. 15 (1989).
132 Republic of Guinea v. Democratic Republic of Congo (Preliminary Objections) ICJ (2007) at para.61
http://www.icj-cij.org/docket/files/103/13856.pdf [las accessed 5.9.11].
133 See e.g. Texaco Overseas Petroleum Co. v. Libyan Arab Republic 17 ILM 1 (1978); Government of Kuwait v. AMINOIL 66 ILR 519 (1982).
134 157 as of 5 May 2011 http://icsid.worldbank.org/ICSID/FrontServlet?
requestType=ICSIDDocRH&actionVal=ContractingStates&ReqFrom=Main [last accessed 4.9.11].
135 Convention on the Settlement of Investment Disputes between States and Nationals of Other States,
ICSID Convention, Regulations and Rules (International Centre for Settlement of Investment Disputes), ICSID/15 April 2006 http://icsid.worldbank.org/ICSID/ICSID/RulesMain.jsp [last accessed 4.9.11].
(b) any juridical person which had the nationality of a Contracting State other than the State party to the dispute on the date on which the parties consented to submit such dispute to conciliation or arbitration and any juridical person which had the nationality of the Contracting State party to the dispute on that date and which, because of foreign control, the parties have agreed should be treated as a national of another Contracting State for the purposes of this Convention.
Furthermore there is parity between State and corporate parties to the ICSID dispute settlement mechanism. For example, both parties must consent to the jurisdiction of ICSID,136 either party may request conciliation proceedings137 and costs are split between
the parties (unless the tribunal or the parties decide otherwise).138
As of January 2010, ICSID had concluded one hundred and eighty-one cases since its inception and is therefore an important example of State practice in relation to business actors. It demonstrates that corporations may be parties to international agreements and treated as the equals of States in many important aspects.
Another example of State practice are the rules of the Iran-US Claims Tribunal. Corporations which are nationals of either party to the constituent agreement may be a ‘claimant.’139 Furthermore, an examination of other treaties where obligations are imposed
upon corporations, offers additional support for the claim that private business enterprises are already regarded as subjects of international law. For example, under the UN
Convention on the Law of the Sea 1982 the restrictions relating to appropriation of the seabed apply to natural and juridical persons as well as states.140 Likewise the Convention
on Civil Liability for Oil Pollution Damage 1969 provides that the owner of a ship (natural
136 Art.25(1). 137 Art.28(1).
138 Administrative and Financial Regulations, Chapter III Financial Provisions Regulation 14 Direct Costs of
Individual Proceedings Reg.14(3)(d).
139 Articles II and VII of the Declaration of the Government of the Democratic and Popular Republic of
Algeria concerning the settlement of claims by the Government of the United States of America and the Government of the Islamic Republic of Iran (Claims Settlement Declaration), 19 January 1981 http:// www.iusct.org/claims-settlement.pdf [last accessed 5.9.11].
140 UN Convention on the Law of the Sea 1833 UNTS 3 Art.137(1) ‘nor shall any State or natural or juridical
or legal person) will be held liable for pollution caused by that ship.141 Article VI of the
Outer Space Treaty governs the activities of ‘non-governmental entities’ in relation to outer space, in particular, the moon and other celestial bodies.142 More recently, Article 10 of the
UN Convention Against Transnational Organized Crime makes reference to the liability of legal persons above and beyond the criminal liability of the natural persons involved.143
So it is clear that the international community recognises that private actors may incur international responsibility in some contexts but why not human rights responsibilities? Andrew Clapham, in the context of the International Criminal Court, has argued that:
As long as we admit that individuals have rights and duties under customary
international human rights law and international humanitarian law, we have to admit that legal persons also have the necessary international legal personality to enjoy some of these rights and conversely be prosecuted or held accountable for violations of their international duties.144
The only possible conclusion is that there is no desire on the part of the international community to do so.
There is, however, little or no agreement at international law as to whether human rights obligations ought to apply business enterprises at all, let alone the nature and degree of any applicable obligations. Chapter 3 considers each of these issues in turn. What is clear is that there is no reason to suggest that business actors cannot be subjects of international law. Whether that is a desirable goal is another matter, as Pellet notes, ‘the advent of multinational corporations becoming the major actors in international relations’ may be something that ‘we want to deplore or something we want to applaud.’145 There is no
doubt that they exercise great power and and are the recipients of many benefits under
141 Convention on Civil Liability for Oil Pollution Damage November 29, 1969 973 UNTS 3, as replaced by
the 1992 Protocol 27 November 1992 1956 UNTS 255, as amended in 2000.
142 Treaty on the principles governing the activities of States in the exploration and use of outer space,
including the moon and other celestial bodies, 27 January 1967, 610 UNTS 205.
143 UN Convention Against Transnational Organized Crime, 15 November 2000 UNTS
http://www.uncjin.org/Documents/Conventions/dcatoc/final_documents_2/convention_eng.pdf [last accessed 22.10.11]. See also A.Clapham, ‘On Complicity’ in M.Henzelin & R.Roth, (eds), Le droit penal à l’épreuve
de l’internationalisation, (Paris: LGDJ, Genève: Georg, Bruxelles: Brulant, 2000) 241-274 at 261.
144 A.Clapham, ‘The Question of Jurisdiction Under International Criminal Law Over Legal Persons: Lessons
from the Rome Conference on an International Criminal Court,’ in M.Kamminga & S. Zia-Zarifi, (eds),
Liability of Multinational Corporations under International Law, (Kluwer, 2000) 139-195 at 190. 145 Pellet note 8 at 55 para.36.
international law but there is a need to impose obligations on them, in particular human rights obligations. Of course, one way to avoid the subject-object debate altogether would be to consider the participation model as a more suitable option.
2.3 The Impact of the New Governance Paradigm on Business Actors as