Transnational Corporations And International Organizations Outline

Transnational Corporations and International Organizations [Syllabus date: 1/24; Class date: 1/25]

1. Transnational Corporations in International Law

   1. Transnational corporation = private corporations that are incorporated in one state and carry out operations in many countries around the world.

   2. Not international legal persons in technical sense

   3. Not generally subject to obligations and generally don’t enjoy rights under I-law

   4. On surface treated like individual (but e.g. no imposition of criminal liability)

   5. In some cases they have entered into agreements with governments under which agreed that principles of public I-law will govern the transaction or investment.

   6. States can enter treaties which require each other to pass domestic laws to regulate corporations.

   7. Under EU private enterprises are accorded legal standing to participate in EU procedures.

   8. Corporations created through domestic law – essentially within State jurisdictions

   1. How do you regulate corporations if they aren’t formally part of I-law system?

Look for a general rule about corporate conduct (shared principles of various legal systems)

2. Try internationally to create obligations on States with respect to corporate conduct (e.g. create a treaty – operate through States who would use their municipal law to bind corporations)

2. Corporations need a genuine link to a state espousing their claim. This is either a place of incorporation (Barcelona) or a principal place of business.

3. UN Global Compact (soft law)

   1. Companies pledge to regulate themselves.

   2. Benefits: good PR, unenforceable soft law.

   3. Cons: Can be liable for shareholder derivative suit.

4. Barcelona Traction Light and Power Company Case (Belgium v. Spain) (pre-Lotus)

   1. Facts: Unlawful acts of Spanish authorities caused loss of all economic value of Barelona Traction (incorporated and registered in Canada) shares. Belgium interceded on behalf of Belgian shareholders.

   2. Held: Only the state where the company is incorporated can bring the claim. If Canada were legally unable bring the claim, Belgium could do so. The court’s ruling was implicitly overruled in the SS Lotus, which held that if there is no rule denying a state’s actions, a state can proceed with it.

   3. Reasoning:

Whenever a shareholder’s interests are harmed by an act done to the company, it is the company that must look to institute the appropriate action. So Belgium would have to be acting on behalf of the company, not the shareholders.

Considerations of equity might call for possibility of protection of shareholders in question by their own national State. But problematic:

1. Would be hard to make quantitative distinctions – 1% and 90% shareholder would get same benefit of diplomatic protection

2. Would create confusion and insecurity in economic relations

5. International Organizations

   1. International Organizations

Created and governed by international agreements – “intergovernmental”

Typically have

1. Plenary organ (where members are represented)

2. Executive committee or council

3. Secretariat (i.e. administrative staff) Ban Kai Moon

4. Commissions and agencies – subsidiary bodies in larger international organizations, under authority of principle organs but have lot of authority delegated to them

Most international organizations have...

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