The Long History of the Regulation of Private Business Corporations in International Law

The conclusion challenges the prevailing narrative on the 1990s as the watershed period during which a new sensibility emerged towards the responsibility of private business corporations as subjects of international legal responsibility. While the prevailing account focuses on the private business corporation as a subject of responsibility, it ignores alternative conceptual frameworks that were central to debates over business regulation in international law such as businesses as participants, monopolies, or multinational corporations (MNCs). Furthermore, this narrative is frequently informed by an implicit historical account on international law’s limited influence (or none at all) on the regulation of private business corporations until the 1990s. Conversely, the conclusion draws on the findings of this book to problematize this narrative of marginality and demonstrates how the supposed marginality of the business enterprise in international law, ingrained as it is in the commonly accepted narrative, is a conceptual bias that facilitated (rather than prevented) the emergence and reach of the private business corporation and legitimized the elements in the international legal order that enabled it to thrive.

The Nature of the Nazi State and the Responsibility of Corporate Officials at Nuremberg

Chapter 4 explores how various conceptions of the Nazi totalitarian state influenced the findings and prosecutions of the Industrialist Trials at Nuremberg conducted against key officials in the Flick, Krupp, and I.G. Farben companies. The chapter considers the influence of the Frankfurt School and Franz Neumann’s theory of the Nazi state as Behemoth on the prosecution’s innovative theory of the Nazi regime. The tribunals’ legal reasoning rejected Neumann’s theory of Behemoth and insisted instead on a link being established with state authority, influence, or control as a basis for the responsibility of corporate officials. The chapter analyses the shortcomings of the tribunals’ approach in meeting the normative challenge of the Industrialist Trials, namely to develop principles for establishing responsibilities among businesspersons operating as such. Furthermore, it reveals how the tribunals’ conceptions of the corporate veil of the state, the company, and the relation between them served as a shield against individual responsibility.

Introduction

Corporations have limited responsibilities in international law but enjoy far-reaching rights and privileges. International legal debates often conceive of this issue as a problem of business accountability for human rights violations. Conceptually, the issue of corporations in international law has focused on whether or not they are, or ought to be, recognized as ‘subjects’ of responsibility in international law and on the adequate conceptual analogy to the corporation. The introduction presents an alternative way of thinking about the role of international law and its relevance to the private business corporation. It traces the emergence of the contemporary legal architecture for corporations in international law and shows how modern international law constitutes a framework within which businesses and governments allocate resources and responsibilities—a framework that began to operate as early as the late-nineteenth century and continued throughout the twentieth century.

Liberia, Firestone, and the End of Slavery as a Political Cause

Chapter 3 chronicles the interwar case of the Firestone Company in Liberia against the backdrop of the League of Nations’ Slavery and Forced Labour Conventions of 1926 and 1934. While Liberia differs from later postcolonial states in its unique history and early independent status, the case of Firestone in Liberia is a precursor to future relations between foreign companies and postcolonial states. Given the power balance between the company and Liberia, the government was incapable of introducing limitations on the private enterprise’s labour policies. Liberia’s engagement with the Firestone Company thus provides an intriguing prelude to the incapacity of the emerging international legal order to abolish the enslavement of humans, and further demonstrates how this very limitation was able to facilitate the enslavement of political communities.

Back to Informal Empire?

Chapter 6 is devoted to the Abadan Crisis and the circumstances surrounding the decision of the International Court of Justice (ICJ) in the dispute between Britain and Iran over the ownership of oil in Iran, known as the Anglo-Iranian Oil Company case. The Iranians’ argument for their sovereign right to oil was based on the corporate veil of the state as a justification for the expropriation of the company’s assets and the corporate veil of the company to sustain the separation between ownership (the British Government) and control (the company’s management). The Iranian position used an old toolbox to promote a vision of a new postcolonial world order based on equality and distributive justice. The chapter juxtaposes the Iranian position with Philip Jessup’s theory of transnational law and the hermeneutics of legal realism in the British position and chronicles how the Iranian strategy and success in the ICJ eventually ushered the shift toward a new international investment law regime.

Without the Corporate Entity?

Chapter 5 analyses the possible influence of competing conceptions of the corporate structure of authority, its ethos, and popular perceptions as a possible explanation to the treatment of corporate officials in the industrialist trials. The chapter draws inspiration from Max Weber’s typology of legitimate authority and analyses how the bureaucratic features of the Farben enterprise, the association of the Krupp officials with the tradition of German militarism, and the persona of the charismatic Friedrich Flick all contributed to their ascriptions of legitimacy and scope of their recognized responsibility. Furthermore, it analyses how conceiving the structure of authority of the German companies primarily as monopolies or cartels served to delegitimize them and thus justify harsh legal measures against them. The chapter develops a critique on the decision not to engage with a rigorous analysis of corporate structures of authority in the Industrialist Trials as part of the legal reasoning required to establish the responsibility of corporate officials in international law.

Setting the Scene

During the latter part of the nineteenth century, international lawyers begin to conceive themselves as part of a modern discipline of law. This chapter returns to the debate over the legitimacy of the operation of chartered companies in Africa during this period. The dissolution of the charters towards the end of the century was reflected in the suspension of the debate over companies in international legal commentaries for almost a century. The silence following international lawyers’ active critique over the chartered companies could be conceived as a testament to the irrelevance of international legal ideas, institutions, and practices to the history of private business corporations in colonial and other global settings. This chapter argues against such an interpretation and unravels the relevance of international law to economic actors by analysing this episode from the vantage point of the Royal Niger Company operations in Africa. I argue that the dissolution of the charters did not represent a failure, as previously thought, but rather a multifaceted transformation through which the relationship between economic agents and governmental agents was renegotiated. Further, I assert that while material conditions are crucial to understanding the chronicle of the Charter’s dissolution, international law is pivotal to unraveling the contours of the alliance that replaced them.

From the NIEO to the International Investment Law Regime

Chapter 7 traces a ‘road not taken’ in the history of regulating global corporations in pursuit of economic democracy, the conditions that led to its failure, and the emergence of the contemporary regime that separates market and politics. The late 1960s saw a rare moment of unity in the struggle over the regulation of corporations among decolonized nations, which together formed the New International Economic Order and civil society of the Global North in a bid to defy unruly corporations. While North–South opposition to corporate power gained traction, the tensions between capital-exporting countries were augmented. These conditions opened a window of opportunity for a new international policy regime to regulate global corporations. But this window would not remain open for long. In the aftermath of the Barcelona Traction Case (1970), capital-exporting countries sought an alternative legal framework of a new regime of international investment law and redefined the normative content of corporate responsibility in human rights terms.