Globalization can be referred to as an era of removal of political boundaries of nations from the globe in terms of doing business worldwide. “Globalization is the spread of products, technology, information, and jobs across national borders and cultures. In economic terms, it describes an interdependence of nations around the globe fostered through free trade.”[1]
The world has seen a drastic increase in the number of multi-national corporations in the past few decades and specially after the end of 20th century due to the introduction of internet and rapid communication facilities around the globe. Today, it doesn’t matter to which nation a corporation was established in, as it can have its reach to as many countries as it wants with due respect to the internal policies of that target nation. Any corporation, when crosses the borders of its parent nation and enters the boundaries of other nations as well in order to do business, becomes a multi-national corporation.
A big reason for the political interactions among various nations which lead to the establishment of concepts such as International Laws, is due to the benefits of being a part of such globalization process and to forget the national boundaries in terms of doing business. Such multi-national trade by such multi-national corporations contributes to a major portion of the consolidated global income that is generated today which could be more than the entire annual budgets of various states[2].
Multi-National Corporations are heavily dependent on the laws and policies of International scale for their smooth functioning as such laws and policies only regulate their operational strategies for trade and business. On one hand, where such Multi-National Corporations are contributing towards the development of the nations globally but can also be the reasons for harming the society either by violating human rights or causing depletion of environment or by some other ways such as to commit financial crimes, etc.[3] This also leads to a conflict of what law should be applicable on them, i.e., the laws of the nation in which those MNCs are formed and are based or the laws of the nations in which they are operating and committing such offences.
There are other non-state actors as well such as organizations working for human rights globally which plays a vital role in the framework of International laws, but this paper majorly focuses on the roles of Multi-National Corporations as a non-state actor in the framework of International laws in modern times of globalization.
Concept and Nature of International Law
International laws can be described as a set of rules which govern the conflicts between nations. Since all the nations are sovereign in themselves, International laws are the rules created and accepted by various states themselves in order to avoid any conflicts which may become the reason for disputes among them.
The term International law was introduced by Jeremy Bentham in the early 17th century whereby it was defined as a set of rules binding on the International actors, i.e., nations themselves.[4] Thereafter, International law progressed with the era of globalization when the world felt a need of a set of rules to regulate certain actions and relations between various nations in the globalizing world whereby the world was made to be a market with no boundaries in terms of doing business. Then International Law was introduced to the world officially in the form of a law after the end of the II world war and with the formation of the United Nations. Before that the world was aware of the essence of the International Law but there was no solid form of rules which were able to regulate the relations between the nations. United Nations was created with an aim to take all the nations together and to formulate certain rules to guide the relations among the nations so that the world would not have to face another world war.[5]
International Law in modern sense can be termed as a set of certain agreed principles by various states which are majorly governed by the International bodies such as United Nations, International Court of Justice which are not owned or controlled by any of the nation individually but collectively by all the member nations with a basic aim of reducing the chaos of diverse and separate laws of every nation individually.[6]
International Laws & MNCs
A major question that arises is weather International law can be binding upon such Multi-National Corporations in order to regulate their acts or to assign them with their rights and duties while operating in various nations or to provide them with certain rights and liabilities in order to create a uniform structure for governing the disputes involving such Multi-National Corporations.[7]
International Law was a concept which was traditionally introduced to regulate the relations among the nations by a set of agreed terms, treaties and covenants by which various nations bound themselves to follow them. But as the time passed by, the world moved to an era of globalization which required a certain set of rules which are acceptable globally in order to regulate the smooth functioning of such non-state actors which led to the development and introduction of a subset of rules for such non-state actors in the superset rules of International Laws. Therefore, the nations remained the primary subjects of the International Laws, but the non-state actors also got some space in the new developing picture of the International Laws in the form of certain rights and obligations.[8] However, certain scholars argue with a point of view that such non-state actors do not hold any place in the framework of International Laws.[9] Malanczuk in his book on International law states that “The fact that individuals or companies are the beneficiaries of many rules of international law does not mean that these rules create rights for the individual or companies, in much the same way as laws prohibiting cruelty to animals do not create rights for animals.”[10] Despite that, the role of non-state actors in the framework of International laws cannot be questioned as we will see hereinafter.
WTO & MNCs
World Trade Organization was formed in 1995 and is currently having 164 member nations which was created by a sole motive of regulating fair trade among the nations[11] and is thus unarguably an inevitable part of the framework of the International law at present.
Since the formation of WTO, as it succeeded the ‘General Agreement on Trade and Tariffs’, the main motive of WTO had been to promote free and fair trade among all its member nations which most often cannot be hindered by even the national policies of the member states. WTO had even undermined the national policies of its member states a few times in the past. Despite the strict national policies of trade, India was made to open up and liberalise the economy for Multi-National Corporations for promoting free trade globally.[12] Such regulating acts of WTO had directly provided various rights to the Multi-National Corporations worldwide to enter and expand their businesses in closed economies like India.
The WTO also introduced the world with the concepts such as most favoured nations and anti-dumping laws in order to regulate such free and fair-trade practices between the nations. However, even today, most nations prefer to enter into bilateral treaties for trade and investments in order to allow such free trade with chosen nations and some restrictions are imposed on the other nations, thereby formulating rules and procedures for such trade and dispute resolutions as well. Furthermore, the TRIPS agreement in regard to the Intellectual Property rights was a step taken by WTO which had favoured the optimal functioning of MNCs in all the member nations of the organisation.
Human Rights & MNCs
Human Rights are those set of rights which are globally accepted to be minimum which every human should get as a consequence of being a human. ‘Universal Declaration of Human Rights’ as well as several other covenants and treaties in International Law enlists various rights in the category of human rights such as freedom from discrimination[13], freedom from torture and degrading treatment[14], right to social security[15], right to desirable work and to join trade unions[16], right to education[17] as well as other rights as mentioned in Convention for the rights of Child, Convention on the rights of person with disability, etc.
Multi-National Corporations are profit oriented at their core and are known for taking advantage of the underdeveloped and third world countries in regard to factors such as getting cheap labour, raw materials, unregulated frameworks for doing business or not so stringent local laws for protection of human rights. The MNCs also engage in practices of discriminatory recruitment and in various instances, they had been found to be taking advantage of such factors which had even led to violation of such globally accepted human rights. Tafadzwa states that MNCs are often exploitative in nature and they do not hesitate from taking undue advantages out of the situations existing in the third world countries. They often destroy the small-scale businesses of local markets by using their advantage of economies of scale. All they aim is higher profits even if it includes ways of violating human rights such as involving themselves in acts of child labour in the third world countries for cheaper means of production.[18] Though International Human Rights laws does not impose any direct obligatory rules on such non-state actors but it can influence the states to make such provisions in their local laws in order to protect the basic human rights of everyone in the world and thus impacts the unethical functioning of MNCs indirectly.
At the same time, certain International level bodies like European Court of Human Rights considers equal human rights for a corporation as an individual by considering it under the category of non-governmental organisations in accordance with which various corporations have chosen in the past to exercise their rights such as their rights of expression.[19]
In Société Colas Est and Others v France[20], such provisions of human rights with respect to MNCs in International laws were argued upon when the French government raided the premises of an MNC without appropriate warrants. In another case of Autronic AG v Switzerland[21], the right of an MNC to advertise themselves in a foreign nation was held to be covered under their right of expression and was thus characterised under human rights.
Global Environment & MNCs
Environment is a leading concern in front of the world today as the globalisation and industrialisation in the modern times around the world have further led to environmental degradation of the planet along with the developmental aspects. A major characteristic of environment is that the environment pollution takes place without giving regard to any boundaries of nations and thus happens globally. There may be some more polluted or less polluted nations in the world but more or less, the environment of the globe is degraded wholly when the air, water or soil of the planet is polluted. Thus, it becomes a collective responsibility of all the nations to take steps for prevention of the environment and to lead towards the goals of sustainable development by collective efforts which make the global environment to be a crucial and very important subject of International law.
Multi-National Corporations function with the main goals of reducing the cost of their products which they offer to the world and thus they mostly ignore the carbon footprints that they bear on the planet while such operational functions are being conducted by them. Furthermore, acts of disposing their wastes from production including the nuclear wastes are often dumped in the middle of oceans as such procedures are relatively cheaper than their sustainable alternatives.
International Laws plays a vital role in controlling such polluting acts of the corporations as they push the states to make more stringent hard laws in order to protect the environment while also formulating worldwide accepted principles such as ‘polluter pay principle’. The International Convention on Civil Liability for Oil Pollution Damage[22] was a similar effort made at a global scale to deal with the problems of pollution of oceans due to oil spillage by the carriage ships of corporations which was earlier treated as a collateral damage of global trade. Another such example is Vienna Convention on Civil Liability for Nuclear Damage[23] which was entered into by various nations in order to deal with the alarming impacts of nuclear damage that is being done to the environment and to take measure as well as to create safety protocols for the same.
Conclusion
From the discussions made hereinabove, it can be concluded that International Laws are majorly influenced by the presence of Multi-National Corporations, i.e., non-state actors and not just the nations themselves. It is also very true the other way round that the functioning of Multi-National Corporations as well as their rights and liabilities are also impacted by the presence of International Laws of the world. The International laws are considered to be a soft form of law which influences the states to make more stringent hard forms of laws which can be implemented within their boundaries. Though the violation of such rules and procedures of International laws cannot be adjudicated by any other jurisdiction except for where such offences take place, but the domestic courts of the member nations can most likely be influenced by such international norms in the absence of internal laws and policies with regard to the same. Therefore, International laws cannot be studied in isolation without making any reference to the roles of non-state actors in their framework.
[1] Jason Fernando, ‘Globalization’ (2020), <https://www.investopedia.com/terms/g/globalization.asp> accessed on 08/12/2020.
[2] John Mikler, ‘Global Companies as Actors in Global Policy and Governance’, The Handbook of Global Companies (Wiley-Blackwell 2013) 1, 4 ff.
[3] Olivier De Schutter, Jan Wouters, Philip De Man, Nicolas Hachez and Mattias Sant’Ana, ‘Foreign Direct Investment, Human Development and Human Rights: Framing the Issues’ (2009) 3 Human Rights & International Legal Discourse, 137, 159.
[4] Malcom Shaw, ‘International Law’ https://www.britannica.com/topic/international-law accessed on 10/12/2020.
[5] ‘History of the UN’ (2015), https://www.un.org/un70/en/content/history/index.html accessed on 09/12/2020.
[6] Malcom Shaw, ‘International Law’ https://www.britannica.com/topic/international-law accessed on 10/12/2020.
[7] Reparation for Injuries Suffered in the Service of the United Nations (Advisory Opinion) [1949] ICJ Rep 179.
[8] Karsten Nowrot, ‘Reconceptualising International Legal Personality of Influential Non-State Actors: towards a Rebuttable Presumption of Normative Responsibilities’ in John Fleurs (ed), International Legal Personality (Ashgate 2010) 369, 372.
[9] Cassese (n 22) 103; Régis Bismuth, ‘Mapping a Responsibility of Corporations for Violations of International Humanitarian Law Sailing Between International and Domestic Legal Orders’ (2009/2010) 38 Denver Journal of International Law and Policy 204.
[10] Peter Malanczuk, Akehurst’s ‘Modern Introduction to International Law’ (7th edn, Routledge 1997).
[11] World Trade Organisation ‘What is WTO?’ https://www.wto.org/english/thewto_e/whatis_e/whatis_e.htm accessed on 08/12/2020.
[12] World Development Movement ‘WORLD: Multinationals and World Trade Organisation’ (1999), https://corpwatch.org/article/world-multinationals-and-world-trade-organisation accessed on 10/12/2020.
[13] See Article 2, UDHR, United Nations.
[14] See Article 5, UDHR, United Nations.
[15] See Article 22, UDHR, United Nations.
[16] See Article 23, UDHR, United Nations.
[17] See Article 26, UDHR, United Nations.
[18] Tafadzwa Chivanga, ‘What is the effect of human rights on corporate activity?’ (2015) Munich, GRIN Verlag, https://www.grin.com/document/355095 accessed on 10/12/2020.
[19] Winfried van den Muijsenbergh and Sam Rezai, ‘Corporations and the European Convention on Human Rights’ (2012) 25 Pacific McGeorge Global Business & Development Law Journal 48.
[20] Société Colas Est and Others v France ECHR 2002-III 105.
[21] Autronic AG v Switzerland (1990) Series A no 178.
[22] The International Convention on Civil Liability for Oil Pollution Damage (adopted 29 November 1969, entered into force 19 June 1975) 973 UNTS 3.
[23] Vienna Convention on Civil Liability for Nuclear Damage (adopted 21 May 1963, entered into force 12 November 1977) 1063 UNTS 265.