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Part I Contents, History, and Structure of International Economic Law, III The Actors of International Economic Law

From: Principles of International Economic Law (2nd Edition)

Matthias Herdegen

Content type:
Book content
Product:
Oxford Scholarly Authorities on International Law [OSAIL]
Published in print:
22 September 2016
ISBN:
9780198790563

From: Oxford Public International Law (http://opil.ouplaw.com). (c) Oxford University Press, 2023. All Rights Reserved. Subscriber: null; date: 08 June 2023

Subject(s):
Human rights remedies — NGOs (Non-Governmental Organizations) — International investment law — International monetary law

(p. 27) III  The Actors of International Economic Law

1.  Subjects of International Law and Actors in International Economic Relations

Traditional international law recognizes only a limited number of entities capable of possessing international rights or duties and of bringing international claims.1 The primary legal subjects in international law have always been States.2 Other traditional subjects of international law are insurgents recognized as belligerents and entities sui generis, for example the Holy See, the Sovereign Order of Malta, and the International Committee of the Red Cross.3 International (intergovernmental) organizations are also recognized as having international legal personality, the most prominent of them being the United Nations.4 Since the end of the Second World War, the number and importance of international organizations with an economic mission such as the IMF, the World Bank Group, and the WTO, has increased steadily.

The scope of actors in international economic relations reaches well beyond international legal subjects in the strict sense.5 International non-governmental organizations (NGOs), transnational corporations, non-formal governmental forums, and inter-agency cooperations shape today’s international economic scene and influence the formulation of rules and standards. In addition, the development of human rights standards and the possibility of investors to bring claims against a State before the International Centre for Settlement of Investment Disputes (ICSID) have strengthened the role and the legal standing of companies and individuals in international economic relations.

(p. 28) 2.  States

Despite the increasing variety of actors on the international plane, the world economic order is essentially still a system of coordination among States. States, in all their diversity, continue to be the most important subjects in international law and in international economic relations. States exercise regulatory power over economic activities in several ways. Within their own jurisdiction, they act through legislation and administrative supervision. On the international plane, they also influence international economic relations through the creation of new international rules and through their membership in international organizations and other forums of intergovernmental cooperation. Finally, States also participate directly in economic transactions, for example in trade in commodities or with regard to financial operations as central banks without legal personality of their own.

In principle, each State is free to choose its own economic system. The principle of non-intervention protects this freedom of States under customary international law.6 However, a broad range of international agreements restrict economic choices. By defining ‘strategic sectors’, States control industrial and other economic activities considered as particularly sensitive. Their sovereign rights include the power to administer natural resources such as commodities or genetic resources. States also control the supply of energy via transport infrastructures. Another unique feature concerning the economic activities of States resides in the fact that they are in many cases subject to different rules than their (private) competitors. For instance, international rules on State immunity prevent States and their subdivisions from being subjected to foreign jurisdiction in the case of acta iure imperii.7

3.  State Enterprises

States do not only participate in economic transactions directly but also through governmental agencies such as State enterprises. Such separate entities owe their creation mainly to reasons of specialization and efficiency.8 Many State enterprises exploit and market natural resources like oil and gas. In recent years, several sovereign wealth funds (SWF) are ranking among the most potent investors and allow their governments to implement an ‘ethical’ or otherwise selective investment policy. State enterprises are usually legally and organizationally independent of the (p. 29) State, thus having the capacity of having rights and obligations of all kinds in their own name.

Despite their legal autonomy, State enterprises acting as an extension of the State and exercising public power9 or possessing assets serving sovereign purposes (eg legally independent central banks) like the State itself enjoy immunity from legal proceedings. Separate treatment between State enterprises and States is also inappropriate if the corporate veil has been established for purposes of fraud and malfeasance.10 As a rule, actions of State enterprises and corporate obligations do not engage the responsibility of the State.11 Conversely, State enterprises may only be held liable for obligations of the State if a rigid divide between the two would lead to inequitable results.12

The Articles of the International Law Commission (ILC) on State Responsibility (2001) provide an exception from the general rule that actions of legally independent entities are not attributable to the State. Article 8 of the ILC Articles reads as follows:

Conduct directed or controlled by a State

The conduct of a person or group of persons shall be considered an act of a State under international law if the person or group of persons is in fact acting on the instructions of, or under the direction or control of that State in carrying out the conduct.

The term ‘person’ in Article 8 of the ILC Articles includes natural persons as well as legal entities like companies, which are controlled by the State.13 State responsibility may also be established when the State is ‘using its ownership interest in or control of a corporation specifically in order to achieve a particular result’.14 Occasionally, State enterprises seek release from their corporate liability arguing that the State defeated the fulfilment of their obligations by imposing legal or administrative restrictions (eg export bans). This is a valid reason as long as the enterprise, like a private entity, operates in full autonomy from the State. If, however, the State deliberately intervenes by releasing its own enterprise from its contractual obligations, the enterprise cannot rely on such collusive intervention.15

WTO law and regional trade agreements also deal with State-owned enterprises, (eg Article XVII GATT 1994 and Article 1503 NAFTA).

(p. 30) 4.  International Organizations

(a)  Role and history

Next to States, international (intergovernmental) organizations (IGOs) are the most relevant actors in today’s international law.16 Even though some of them have existed since the 19th century,17 the majority of international organizations have been established in the second half of the 20th century.18 After the end of the Second World War, the limited influence of the single State and the need for enhanced international cooperation as well as the complexity of economic relations and the activities of transnational corporations have fostered the creation of international economic organizations and other forms of intergovernmental cooperation. Quite a number of international organizations (eg the European Union) are members of other international organizations.

International organizations play a vital regulatory role both by creating legally binding rules for their Member States and by formulating non-binding standards and recommendations. They also provide forums for intergovernmental cooperation, consultation, and support. By now, direct involvement of international organizations in the market of commodities (eg by purchasing and selling commodities in order to stabilize prices) has given way to softer mechanisms of influencing trade.

(b)  International organizations as legal entities and the liability of members

The founding agreements usually provide for legal personality of international organizations both under international and municipal law. In principle, the status of international organizations as a legal entity separated from their Member States protects the Member State from liability for the organization’s obligations. There are, however, exceptional situations in which the ‘piercing of the corporate veil’ (p. 31) seems appropriate, thus extending obligations of the international organization to its members.

The collapse of the International Tin Council catalysed a controversy over members’ liability for the financial commitments of the organization.19 In this case, the managers of the Council’s buffer stock, over time, had engaged in highly speculative deals with tin, without the members of the International Tin Council or its representative organs interfering. After the organization went insolvent, private creditors sought relief with the members and brought actions against the Member States and the then European Community.

The extension of the liability of an international organization to its members, as a general principle of international law, can be based on common features of the company laws of most States.20 Members’ liability seems justified if

  • •  the founding Member States failed to provide the organization with enough capital resources;21

  • •  the organization’s activities evidently did not keep within its object and purpose as defined in the founding agreement; and

  • •  the members seeking cover behind the autonomy of the organization as a separate legal entity would amount to an abuse of law or bad faith.

However, it is important to draw a distinction between liability under international law and the liability towards private creditors. The criteria for a piercing of the corporate veil can only create liability of Member States with a view to their international obligations. As for the members’ liability for obligations under municipal law, for example out of sales or loan agreements, international law only sets the conditions for the possibility of a piercing of the corporate veil, that is the criteria for allowing a national court to pass over the legal personality of the organization. As a lesson drawn from the debacle involving the International Tin Council, a growing number of constituent agreements of international organizations exclude the liability of members for the obligations of the organization.22 Hence, the International Natural Rubber Agreement explicitly limited the liability of the Members of the International Natural Rubber Organization to their contributions under the Agreement.23

(p. 32) (c)  The United Nations and its ‘specialized agencies’

Some important forums of cooperation in international economic law have been established within the framework of the United Nations. In 1964, the UN General Assembly established the United Nations Conference on Trade and Development (UNCTAD)24 to promote the integration of poorer countries into the world economy with due regard for their development. The United Nations Commission on International Trade Law (UNCITRAL),25 set up in 1966, has the task of elaborating an improved legal framework for the facilitation of international trade and investment.26

The Economic and Social Council of the United Nations (ECOSOC) has entered into agreements with so-called ‘specialized agencies’, thus bringing them into relationship with the United Nations (Articles 57 and 63 UN Charter). Among the ‘specialized agencies’ (currently 15)27 rank a number of international organizations whose activities, directly or indirectly, relate to international economic relations:

  • •  International Labour Organization (ILO);

  • •  Food and Agriculture Organization (FAO)28 which fights hunger and fosters the agricultural development of developing countries and countries in transition;

  • •  United Nations Educational, Scientific and Cultural Organization (UNESCO);

  • •  World Health Organization (WHO);

  • •  World Bank Group

    • –  International Bank for Reconstruction and Development (IBRD)

    • –  International Development Association (IDA)

    • –  International Finance Corporation (IFC)

    • –  Multilateral Investment Guarantee Agency (MIGA)

    • –  International Centre for Settlement of Investment Disputes (ICSID);

  • •  International Monetary Fund (IMF);

  • •  International Civil Aviation Organization (ICAO);

  • •  International Maritime Organization (IMO);

  • •  International Telecommunication Union (ITU);

  • (p. 33) •  Universal Postal Union (UPU);

  • •  World Meteorological Organization (WMO);

  • •  World Intellectual Property Organization (WIPO);

  • •  International Fund for Agricultural Development (IFAD);

  • •  United Nations Industrial Development Organization (UNIDO);29 and

  • •  World Tourism Organization (UNWTO).

Moreover, several other organizations, on the basis of their cooperation with the UN, are classified as ‘related organizations’. These include:

  • •  the International Atomic Energy Agency (IAEA);

  • •  the Preparatory Commission for the Nuclear-Test-Ban Treaty Organization (CTBTO);

  • •  the Organisation for the Prohibition of Chemical Weapons (OPCW); and

  • •  the World Trade Organization (WTO).

(d)  International organizations as actors in international economic relations

In institutional terms, the international economic order rests on three pillars:

  • •  the International Monetary Fund (IMF);

  • •  the World Bank (International Bank for Reconstruction and Development— IBRD) with all its siblings; and

  • •  the World Trade Organization (WTO).

The IMF and the IBRD are fruits of the 1944 Bretton Woods Conference.30 The IMF plays a key role in international monetary relations. Today, the IMF’s main task is to monitor fluctuations in exchange rates and to provide assistance to Member States with serious financial problems (balance of payments deficit).

The main purpose of the IBRD is to assist in the reconstruction and economic development of its Member States. The IBRD’s mission was to finance specific development projects of developing States. However, in the last decades the Bank became engaged more and more in programme-based lending.31 Closely associated with the IBRD, the International Development Association (IDA), established in 1960, aims at reducing poverty by providing interest-free loans and grants. (p. 34) Another agency of the World Bank Group, the International Finance Corporation (IFC) assists private investment in borrower countries. The International Centre for Settlement of Investment Disputes (ICSID) and the Multilateral Investment Guarantee Agency (MIGA) also belong to the World Bank Group.

The Havana Charter for an International Trade Organization (1948) provided for the establishment of the International Trade Organization (ITO)32 as the third institutional pillar of the international economic order. However, because of strong US opposition to the comprehensive approach of the ITO only the General Agreement on Tariffs and Trade (GATT) entered into force in 1947. Though being a provisional arrangement in the first place, the GATT with its evolving organizational structure operated more and more as a de facto international organization. Finally, the establishment of the World Trade Organization (WTO), in 1994, vested the world trade order with a new and solid institutional basis.33 The International Labour Organization (ILO, created in 1919)34 sets international labour standards and supervises their implementation. The ILO, in particular, combats discrimination and contributes to improved labour conditions as well as to adequate social security for workers. At the same time, the ILO labour standards counteract ‘social dumping’ and other forms of ‘races to the bottom’.

A number of commodity organisations comprising producer as well as consumer countries like the International Natural Rubber Organization (INRO) or the International Tin Council were established with the objective to ensure stable price levels, for example through market operations or the regulation of production. As this model of directly influencing supply and prices fell short of expectations, most international commodity organizations have been reduced to forums for international communication and consultation. Only few organizations like the Organization of the Petroleum Exporting Countries (OPEC) coordinate the marketing of products or even operate as a cartel.

Apart from the universal international organizations, there is a variety of regional international economic organizations. The Organization for Economic Co-operation and Development (OECD) was established as a forum of cooperation for Western industrialized countries and now includes important emerging countries (such as Mexico, Chile, and Turkey).35 In light of the Ukrainian crisis the OECD postponed the process of Russia’s accession to the organization.36 By coordinating the economic and monetary policies of its members, the OECD (p. 35) has gained significant importance. Additionally, the OECD supports the economic development of developing countries through its Development Assistance Committee (DAC), which currently comprises 28 OECD Member States as well as the European Union.37 The World Bank, the IMF, and the United Nations Development Programme (UNDP) participate as observers.

Regional development banks make important contributions to the promotion of development as well as to the assistance in economic and political transformation processes. Nowadays, there are three major regional development banks: the Inter-American Development Bank, the Asian Development Bank, and the European Bank for Reconstruction and Development. Some South American countries established the Banco del Sur in 2007 as a counterweight to the Washington-based Inter-American Development Bank.

Within the European Union, the European Investment Bank38 assists development in the weaker economies of the Union. The European Investment Bank also provides assistance to projects in developing countries, for example in the African, Caribbean and Pacific (ACP) regions. The new Asian Infrastructure Investment Bank (AIIB) was launched by China as an interstate development bank.39

The BRIC States established a Development Bank and a Monetary Fund, parallel to the World Bank and the IMF. The creation of these new institutions means a significant power shift in monetary politics away from the dominating influence of North America and Western Europe.

Traditionally, regional cooperation is carried out within free trade areas and customs unions. Some but not all of these regional arrangements have taken the form of legally independent organizations as for example the European Free Trade Association (EFTA). A hitherto unparalleled level of economic and political integration has been achieved by the European Union, thanks to the high degree of industrialization and the far-reaching homogeneity concerning social, cultural, and economic values on the one hand, and the unprecedented disposition to transfer national sovereignty to supranational bodies on the other hand. The broad and still expanding competences of the European Union and its organs which directly affect the Member States and the ‘EU nationals’ individually accord the European Union a status in the international order which has no counterpart anywhere else in the world. There is no similar international organization with such a far-reaching influence on its Member States. Inspired by the European model of integration, Latin American countries have established some institutionally consolidated forms of economic cooperation as, for instance, the Andean Pact and the MERCOSUR. In the African region, the African Union, created in 2001, is inspired by the European model.40 For parts of the Asian region, the Association of Southeast Asian Nations (ASEAN) was initially established as a forum for economic cooperation. Particularly in the past decades, ASEAN has evolved rapidly, introducing an Asian Free Trade (p. 36) Area, creating an Asian Investment Area, and adopting the ASEAN Charter in 2007, which goes far beyond pure economic integration and introduces democracy, good governance, the rule of law, and human rights into ASEAN’s purposes and principles.41

A recent phenomenon with a massive impact on trade and development are ‘mega-regional’ agreements like the Comprehensive Economic and Trade Agreement (CETA) between Canada and the European Union, the Trans-Pacific Partnership Agreement (TPP) among twelve States of the Pacific Rim, and the currently negotiated Transatlantic Trade and Investment Partnership (TTIP) between the United States and the European Union.

5.  Non-institutionalized Forums of Cooperation in Economic Relations

Alongside international organizations, new forms of inter-State cooperation have emerged as a response to the ever-increasing economic globalization. These forums coordinate monetary and other economic policies, formulate standards (eg for the financial sector) or channel common interests without a firm institutional structure and without strictly binding mechanisms.

The most important of these non-formal platforms of cooperation is the Group of Twenty (G20).42 The G20 is the forum for global economic ‘governance’. The G20 emerged from the Group of Seven (G7) which unites the seven most important industrialized Western States: the United States, Canada, France, Germany, Italy, Japan, and the United Kingdom. In 1997, the G7 became the Group of Eight (G8) when Russia joined. Representatives of the European Union also take part in the meetings of the G7/G8. In response to Russia’s actions in the Crimean crisis, the G7 suspended the participation of Russia.43

The G20 was established in 1999 at the G7 Cologne Summit in order to enable a joint discussion of both industrialized and developing countries on key global economy issues, ensuring more representation in economic, demographic, and regional terms.44 The G20 integrates the 19 most important industrial countries and emerging economies plus the European Union, representing around 85 per (p. 37) cent of global gross domestic product, over 75 per cent of world trade (including EU intra-trade) as well as about two-thirds of the world’s population.45 It comprises Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, the United Kingdom, the United States, and the European Union. At the Pittsburgh Summit in 2009, the G20 was designated to be the leading forum for international economic cooperation.46 This change reflects the growing importance of emerging economies, especially the so-called ‘BRIC’-countries (Brazil, Russia, India, and China) which—together with the G7—represent the major political actors in shaping the framework for global economic relations. The aggregated voting power represented in the G20 dominates the International Monetary Fund. Thus, the G20 has turned into a kind of steering body for the world economy.47 At its regular meetings (World Economic Summits) the G20 discusses aspects of international economic and monetary policies.

Especially with regard to financial and monetary cooperation, the Group of 10 (G10), including the most important Western industrialized States, was established in 1962 in order to provide the IMF with special credits in case of cash-flow difficulties.

The G10 initially included Belgium, Canada, France, Germany, Italy, Japan, the Netherlands, Sweden, the United Kingdom, and the United States. Switzerland joined the G10 in 1984.

Within the United Nations Conference for Trade and Development (UNCTAD), a Group of originally 77 developing countries emerged in 1964 to combine their economic interests vis-à-vis the industrialized States. Today, the G77 has more than 130 members.48 The Cairns Group49 was established in 1986 as an interest group of agricultural countries. Within the WTO, the most influential interest group is the G21, a group of developing countries formed in 2003 under the leadership of Brazil, India, China, and South Africa, pursuing the agricultural interests of its members by calling for the opening of the markets for agricultural products, in particular through the elimination of import duties and subsidies, and for a reduction of internal subsidies distorting international competition.50 Comparable to (p. 38) the development of the G20, the creation of the G21 within the WTO marks a considerable shift of power towards the emerging economies.

6.  International Inter-Agency Cooperation

Inter-agency cooperation—understood as the cooperation between national authorities of participating States51—has an ever-increasing impact on domestic legislation and administrative practice.52 The process of mutual information and cooperation between national authorities contributes to a soft harmonization of administrative practices beyond legally binding standards. The concept of ‘global administrative law’53 essentially refers to such international cooperation between executive or administrative authorities. This form of international cooperation provides national authorities with a sort of institutional independence, thus ‘disaggregating’ the State in its monolithic appearance. The executive-sided cooperation of the State raises questions both of democratic legitimacy and political control.54

Under the roof of the Bank for International Settlements (BIS), the Basel Committee on Banking Supervision provides a forum for cooperation on banking supervisory matters.55 The members represented in the Committee comprise the G10 countries and Argentina, Australia, Brazil, China, the European Union, Hong Kong, India, Indonesia, Luxembourg, Mexico, Russia, Saudi Arabia, Singapore, South Africa, South Korea, Spain, and Turkey. The Committee is composed of the heads of the central banks and of the authorities for banking supervision of the participating States. By consensus, it establishes banking standards to be implemented by domestic legislation. The Basel standards serve as a model for the supervisory regime in a great number of States. They have an immense practical significance for the financial sector, even though they are not legally binding under international law.

(p. 39) The Financial Stability Board (FSB) operates as a forum for cooperation in the interest of global financial stability between the financial authorities of G20 Member States (in particular central banks, ministries of economics and finance, and financial supervision authorities) as well as institutions like the European Central Bank, the European Commission, the Bank for International Settlements, the International Monetary Fund, the OECD, the World Bank, and other standard setting bodies.56 The FSB formulates standards and recommendations for regulatory, supervisory, and other financial sector policies, addressing vulnerabilities which may affect the stability of the financial systems and fostering a level playing field through coherent legislative and administrative implementation.

The International Organization of Securities Commissions (IOSCO) is a private non-profit organization founded under the law of Quebec. It is composed of representatives of securities commissions of more than 100 countries.57 The Technical Committee of IOSCO develops standards for supervision. The International Association of Insurance Supervisors (IAIS) coordinates the formulation of standards by national insurance authorities. Various forms of inter-agency cooperation (on a regional and global level) exist in the field of postal services and telecommunication as well as in the sector of energy regulation.

The International Competition Network (ICN) provides a forum for more than 80 national competition authorities to exchange experiences and perspectives, thereby promoting convergence of administrative practices. Agreements between the European Union and the United States establish a framework for the cooperation of European and US competition authorities—the Department of Justice and the Federal Trade Commission.58

7.  Non-governmental Organizations

Non-governmental international organizations (NGOs) are established by private actors (a group of individuals or corporate entities) under national law to pursue a particular agenda.59 Early NGOs had the mission to promote and protect basic human rights or humanitarian standards in wartime.60 Today, NGOs operate in almost all fields of international law, including international economic law. NGOs (p. 40) are a significant feature of modern international life.61 Though NGOs (with the exception of the International Committee of the Red Cross) do not have international legal personality, a considerable number of them are highly visible and often influential actors on the international scene.62

NGOs working in the field of international economic law include established economic NGOs such as the International Chamber of Commerce (ICC), the International Air Transport Association (IATA), the International Federation of Consulting Engineers (FIDIC), and international trade unions and employers’ associations. Beyond these ‘genuine’ economic organizations, NGOs working in the context of environmental protection, human rights, and the fight against corruption (eg Greenpeace, Amnesty International, and Transparency International) address more and more economic issues.

NGOs also fulfil a most important function in fact-finding. Many cases of human rights violations or environmental damage were brought to light or made the focus of broad discussion by the intense investigations of NGOs. National and international courts or dispute settlement bodies, in varying degrees, give consideration to the opinion of NGOs, especially in human rights and environmental issues.63

Many NGOs have proven their ability to exert a considerable international pressure and to influence both State and non-State actors. This role often makes NGOs compete with State organs and parliamentary control, and raises issues of accountability and legitimacy.64

In the course of the energetic campaign of Greenpeace against the oil company Shell and its plan to dispose of the oil storage facility Brent Spar at the North Sea in 1995,65 many (including the German Government) responded to Greenpeace’s fierce criticism and its call to boycott Shell. In the end, Shell, giving in to Greenpeace’s pressure, disposed of the platform on shore. As was revealed afterwards, the form of the disposal finally chosen caused greater environmental damage than Shell’s initial plan. Greenpeace (to its own credit) confessed that its worldwide campaign rested on a deficient risk assessment. On repeated occasions, Greenpeace and other (p. 41) (European and African) NGOs have campaigned against US American food aid involving genetically modified products to famine-ridden African countries. Like their object, these actions have stirred great controversy.66 Another, more recent environmental activity of high visibility is the ‘Detox campaign’ launched by Greenpeace which calls for toxic-free fashion and clean water.

NGOs like Attac have joined the ranks of globalization critics. A number of these organizations are very actively engaged in the controversies surrounding the TTIP or the negotiation of the Trade in Services Agreement (TISA). Thanks to these activities, large sectors of European societies are far more sensitive to propagated risks for environmental and health standards resulting from trade liberalization or investment protection than to likely benefits for economic growth and employment.

NGOs also participate as observers in intergovernmental conferences as well as environmental proceedings and human rights litigation, often in context with economic activities.67 In particular with regard to environmental standards, NGOs have become internationally recognized actors. Thus, the Aarhus Convention on Access to Information in Environmental Matters68 was elaborated upon the instigation of NGOs. NGOs also cooperate with private enterprises, trade unions, and other institutions in the ‘Global Reporting Initiative’ which promotes voluntary reporting on the sustainability of business activities.69

8.  Private Enterprises and Standards for Transnational Corporations

(a)  The role of private enterprises in international economic law

The international exchange of goods, services, and payments mainly rests on transactions by private companies. They have the nationality of the State in which they are incorporated or in which they have their registered office (seat of management).70

(p. 42) US or British company laws follow the doctrine of incorporation.71 Other systems (like in Germany and Austria)72 principally refer to the seat of management. However, European Union law catalysed certain flexibility with respect to the seat of management. The right of establishment (Articles 49ff TFEU) allows companies lawfully established in one EU country to operate essentially or even entirely in other EU States without conforming to the rules of incorporation applying in the country of establishment (subject to possible exceptions, eg with respect to the protection of creditors).73 German company law has been modified so as to enable German companies to establish their effective administrative headquarters in a country other than their that of registered office.74 Germany now also recognizes the legal personality of a company incorporated under the law of another EU Member State.75

Private companies are subject to national jurisdiction, be it in their home State or in the host State in which they carry out their activities. The home State may grant diplomatic protection to its corporate nationals against their host State.76

Private ‘transnational corporations’ (TNCs)—or ‘multinational enterprises’ (MNEs)—participate in transboundary commercial activities.77 TNCs play a vital role in international trade and investment. They account for a large share of the most capital-rich business entities worldwide.

The revenues of a number of corporations surpass the GDP of many or even most States. According to the Forbes Global 2000 list in 2015, Wal-Mart’s revenues amounted to USD 485.7 billion, Sinopec reachedUSD 427.6 billion, Royal Dutch Shell USD 420.4 billion, and Exxon Mobil USD 376.2 billion.78 In comparison, South Africa achieved in 2015 a GDP of USD 317.379 billion, Peru USD 179.9 billion, and Romania USD 174.9 billion.80

(p. 43) Their network of operative bases in different countries and regions of the world provides TNCs—especially the very large ones—with the opportunity to take advantage of the regulatory, economic, and political differences between countries and regions on the one hand, and to respond flexibly to new challenges by shifting resources and operations within their operative system on the other hand.81 Their economic strength and international fields of operation make it easier for TNCs to escape the regulatory reach of national authorities. At the same time, these advantages often enable them to influence domestic politics more effectively than other private business entities with a more limited reach.

Some States, in particular developing countries, often take a critical view on TNCs activities on their territory. Among the concerns of host countries (especially those with weak authorities) are: true or apparent imbalances of power, undue political influence of TNCs in host countries, and insufficient regard of TNCs for environmental interests or labour and human rights standards. However, TNCs contribute significantly to the economic and technological development of host countries, providing employment and improving the balance of payments. The sometimes conflicting interests of developing and industrialised countries, especially with regard to foreign direct investment (FDI), were central aspects in the discussion on a ‘New International Economic Order’82 and remain a contentious issue.

(b)  Corporate social responsibility: codes of conduct and other international standards

i.  The concept of ‘corporate social responsibility’

As a response to widespread concerns about the role of TNCs, several codes of conduct or other soft law instruments have been established. These instruments are committed to internationally convergent standards of ‘corporate social responsibility’.83 This responsibility has several dimensions. It refers to the corporation’s employees, local communities affected by the corporation’s operations and broader public interests. Corporate social responsibility aims at respect for human rights, labour standards, and sustainable development as well as transparency and it bans undue political interference in the host State.

(p. 44) ii.  Instruments of the United Nations and its ‘specialized agencies’

Within the United Nations, there were several attempts to lay down standards of corporate social responsibility.84 The ‘Draft Code of Conduct on Transnational Corporations’85 was presented to the General Assembly in 1990, but was never fully adopted.86 The ‘Global Compact’87 is an initiative of former UN Secretary-General Kofi Annan and aims at voluntary compliance by TNCs. It rests on ten principles which refer to

  • •  human rights (businesses should support and respect the protection of internationally proclaimed human rights and ensure that they are not complicit in human rights abuses);

  • •  labour standards (businesses should uphold the freedom of association and the effective recognition of the right to collective bargaining; the elimination of all forms of forced and compulsory labour; the effective abolition of child labour; and the elimination of discrimination in respect of employment and occupation);

  • •  environmental protection (businesses should support a precautionary approach to environmental challenges; undertake initiatives to promote greater environmental responsibility; and encourage the development and diffusion of environmentally friendly technologies); and

  • •  fight against corruption (businesses should work against corruption in all its forms, including extortion and bribery).

After the project of the former UN Sub-Commission on the Promotion and Protection of Human Rights to establish a framework of ‘Norms on the Responsibility of Transnational Corporations and Other Business Enterprises with Regard to Human Rights’ had failed,88 the UN Secretary-General appointed John Ruggie as his Special Representative on Human Rights and Transnational Corporations and other Business Enterprises. In his final report, the Special Representative presented the ‘UN Guiding Principles on Business and Human Rights’ which were endorsed by the UN Human Rights Council.89 The ‘UN Guiding Principles on Business and Human Rights’ enhance the relevance of human rights standards for corporate social responsibility on a global level.

(p. 45) The International Labour Organization (ILO), a specialized agency of the United Nations, issued the ‘Tripartite Declaration of Principles on Multinational Enterprises and Social Policy’ for the first time in 1977.90 The declaration focuses on the protection of individual and collective interests of workers as enshrined in the conventions and recommendations of the ILO and offers guidelines for governments, employer organizations, and trade unions regarding these issues. The fourth edition of the Tripartite Declaration was published in 2006.91

Other instruments address specific issues of corporate social responsibility. The International Finance Corporation (IFC) laid down the ‘IFC Performance Standards on Environmental and Social Responsibility’ which govern private investment projects. The FAO ‘Voluntary Guidelines on the Responsible Governance of Tenure of Land, Fisheries and Forests in the Context of National Food Security’92 react to the large-scale sale of farmland to foreign investors (‘land grabbing’), sometimes coupled with the subsequent transformation of the land for biofuel or other non-food purposes“”, and to other threats to the supply of the local population with adequate and affordable food.93 The FAO Guidelines, though primarily addressing governments, also refer to the responsibility of non-State businesses.94

iii.  The OECD Guidelines for Multinational Enterprises

The OECD Guidelines for Multinational Enterprises, which were issued in the first version in 2000 and which have been updated in 2011,95 are designed as non-binding recommendations:

Guidelines are recommendations jointly addressed by governments to multinational enterprises. They provide principles and standards of good practice consistent with applicable laws and internationally recognised standards. Observance of the Guidelines by enterprises is voluntary and not legally enforceable. Nevertheless, some matters covered by the Guidelines may also be regulated by national law or international commitments.

The Guidelines list general policies and standards to be applied by multinational enterprises while operating in foreign States (Part I). The Guidelines were adopted by the governments of 45 States (the 35 OECD countries plus Argentina, Brazil, Colombia, Costa Rica, Egypt, Lithuania, Morocco, Peru, Romania, and Tunisia). (p. 46) On the OECD level, the Investment Committee is the forum for the interpretation, implementation, and monitoring of the OECD Guidelines.

Part I of the Guidelines lays down standards for good corporate practice in the areas of disclosure (ch III), human rights (ch IV), employment and industrial relations (ch V), environmental protection (ch VI), combating bribery, bribe solicitation, and extortion (ch VII), protection of consumer interests (ch VIII), science and technology (ch IX), competition (ch X), and taxation (ch XI). The Guidelines (Part I, ch II A) call for ‘due diligence’ not only within the enterprise, but also in its business relationships and accordingly require enterprises to

  1. 10.  [c]‌arry out risk-based due diligence, for example by incorporating it into their enterprise risk management systems, to identify, prevent and mitigate actual and potential adverse impacts as described in paragraphs 11 and 12, and account for how these impacts are addressed. The nature and extent of due diligence depend on the circumstances of a particular situation.

  2. 11.  [a]‌void causing or contributing to adverse impacts on matters covered by the Guidelines, through their own activities, and address such impacts when they occur.

  3. 12.  [s]‌eek to prevent or mitigate an adverse impact where they have not contributed to that impact, when the impact is nevertheless directly linked to their operations, products or services by a business relationship. This is not intended to shift responsibility from the entity causing an adverse impact to the enterprise with which it has a business relationship.

Additionally, the Guidelines (Part I ch II B) encourage enterprises to

  1. 1.  [s]‌upport, as appropriate to their circumstances, cooperative efforts in the appropriate fora to promote Internet Freedom through respect of freedom of expression, assembly and association online.

  2. 2.  [e]‌ngage in or support, where appropriate, private or multi-Stakeholder initiatives and social dialogue on responsible supply chain management while ensuring that these initiatives take due account of their social and economic effects on developing countries and of existing internationally recognized standards.

The OECD Guidelines provide for supervisory mechanisms in Part II based on a decision of the OECD Council (which is binding upon OECD members); other adhering countries have followed the implementation procedures on the grounds of a unilateral commitment. Under the Guidelines,96 National Contact Points (NCP) established by governments monitor compliance with the OECD Guidelines for Multinational Enterprises in ‘a manner that is impartial, predictable, equitable and compatible with the standards and principles of the Guidelines’.97 Some countries have opted for a mono- or inter-ministerial structure of their NCP, whilst other NCPs have a more open design with representatives of the government, trade unions, and enterprises. Any person or organization as well as governments of non-adhering countries and other NCPs may seize an NCP with issues of compliance (p. 47) with the guidelines and thus trigger the ‘specific instance procedure’.98 This procedure includes an initial assessment by the NCP and—if the issue merits further examination—a mediation process between the parties. Concluding the investigation, the NCP submits a ‘final statement’ on whether or not the multinational enterprise has complied with the Guidelines, if necessary, with recommendations for future conduct. NCPs also monitor subsequent compliance in a follow-up to the final statement. Just like the Guidelines themselves, the recommendations of the NCPs are not legally binding.99 Still, the statements of NCPs may have considerable impact by ‘naming and shaming’. As a rule, complaints (mostly presented by NGOs) will be brought before the NCP of the home State of an enterprise or the NCP of the State where a business or project is located.

Often, the good offices or mediation offered by NCPs facilitate agreements between notifiers and enterprises.100 Thus, in the Specific Instance notified by CEDHA, INCASUR Foundation, SOMO and Oxfam Novib concerning Nidera Holding BV, the Netherlands’ NCP mediated an agreement on the enterprises’ human rights policy, their procedure as to human rights due diligence and monitoring, their supply chain approach, and grievance mechanism.101 In other cases, the enterprises refused direct contact with complainants, but issued a voluntary commitment.102

If two or more NCPs are involved in a case which relates to several countries (as in the case of a company operated through a foreign subsidiary or of a bi-national joint venture), they shall enter consultations.

The POSCO case illustrates the potential of multilateral responsibility as well as the need for coherence and consistency when several NCPs assess the same facts. The POSCO case was concerned with the planned construction of an integrated steel plant and power plant in India by the South Korean company POSCO and an Indian subsidiary. The administrator of the funds of a large Dutch pension fund and the Norwegian Bank Investment Management held minority shares in POSCO. Indian, Norwegian, South Korean, and Dutch NGOs claimed that POSCO had (p. 48) violated the OECD standards with respect to human rights and environmental impacts. They furthermore complained that the investors had not taken appropriate steps to mitigate adverse human rights and environmental impacts in connection with their investment in POSCO. The NGOs submitted notifications to the NCPs of the Netherlands, Norway, and South Korea.103 Although the Netherlands’ NCP and its Norwegian counterpart agreed to cooperate throughout the specific instance and tried to coordinate their operations with the South Korean NCP, the tripartite consultation seems to have been far from perfect.104 The case documents the risk of inconsistent findings by one or more NCPs: Whilst the NCPs of the Netherlands and Norway found that the notifications raised serious issues of human rights and environmental due diligence, the South Korean NCP’s initial assessment concluded that the case did not merit further examination.105 This incoherence is all the more salient as the corporate social responsibility of minority investors is in a way ‘secondary’ in terms of being linked to the ‘primary responsibility’ of the enterprise in which they hold a relatively small capital share.

The OECD Guidelines have the merit of being to date the most comprehensive and most effective multilateral document dealing with corporate social responsibility of multinational enterprises. The inherent weakness of being a non-binding instrument is to some extent compensated by the supervisory function of NCPs which blurs the distinction between ‘soft’ standards and ‘hard’ obligations buttressed by palpable sanctions. By now, hundreds of specific instance procedures have turned supervision of compliance by NCPs into a quite effective instrument.

Particularly in context with supply chains, the requirement of ‘due diligence’ has become a most important standard of corporate social responsibility in connection with human rights violations by business partners.106 In the case (p. 49) DAS Air107 the British NCP found that an airfreight services company based in the United Kingdom had transported great quantities of cobalt stemming from a conflict zone in the Democratic Republic of the Congo. Although it was notorious that the conflict in the Democratic Republic of the Congo was essentially fuelled by trade in cobalt and other minerals, the company had not questioned the source of its freight, which was transported in violation of a UN Security Council resolution.108 The NCP found lack of due diligence in the supply chain with respect to the requirements to contribute to economic, social, and environmental progress, respect of human rights and encouragement of business partners to apply principles of corporate conduct compatible with the Guidelines.109

Prevailing interpretation tends to extend the UN Guiding Principles on Business and Human Rights as well as OECD Guidelines to the financial sector and, in this context, to minority shareholdings of institutional investors.110 Thus, in the Specific Instance notified by Lok Shakti Abhiyan, KTNC Watch, Fair Green and Global Alliance and Forum for Environment and Development concerning an alleged breach of the OECD Guidelines for Multinational Enterprises by the Dutch Pension Fund ABP and its Pension Administrator APG, the Netherlands’ NCP applied the OECD Guidelines to the largest Dutch fund ABP and the corporation APG which administers ABP’s pension capital with respect to the South Korean company POSCO, in which APG held a capital share of less than 0.1 per cent. According to the notifiers, the South Korean company and an Indian subsidiary which planned to construct an integrated steel plant and a captive power plant, had failed to carry out both a comprehensive human rights and environmental due diligence and a meaningful consultation with the neighbouring population threatened by displacement. The parties reached an agreement on monitoring the project by an independent review and assessment, and to work for a meaningful multi-stakeholder consultation.111 This case highlights the leverage of investors in context with corporate social responsibility.

(p. 50) Meanwhile, the OECD in conjunction with the countries of the International Conference on the Great Lakes Region, representatives of the industrial sector and of the civil society as well as the United Nations, has adopted the ‘OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas’ (2010).

iv.  Other international standards

With respect to the exploitation of natural resources, a network of companies, governments, and NGOs have launched the ‘Extractive Industries Transparency Initiative’ (EITI). The EITI has adopted principles and criteria which focus on enhanced participation, transparency, and accountability in the interest of sustainable development.112

Individual self-commitments of TNCs to respect human rights and environmental standards reflect an increased sensitivity of TNCs for their social responsibility. Examples for such a self-commitment are the ‘Joint Statement on the Baku-Tbilisi-Ceyhan Pipeline Project’ (BTC) of 16 March 2003 and the ‘BTC Human Rights Undertaking’ of 22 September 2003, in which the pipeline company renounces claims inconsistent with international human rights and environmental standards.113

The IFC ‘Performance Standards on Environmental and Social Responsibility’ have inspired private banks to adopt the ‘Equator Principles’ (2003) for the assessment and management of social and ecological risks to be considered in context with financing large private projects.114 The International Organization for Standardization (ISO) adopted ISO Standard 26000 on ‘Social Responsibility’ (2010).115

Guidelines for ethical investment strategies such as established by governments for Public Pension Funds or for Sovereign Wealth Funds116 are another mechanism to indirectly influence the behaviour of TNCs.

(p. 51) v.  The normative impact of international instruments on corporate social responsibility

The number and quality of the evolving soft law instruments aiming to control the impact of TNCs on human rights and the environment substantiate the influence of TNCs—that is ‘non-subjects’ of public international law—in today’s international economic law on the one hand as well as the growing importance of legally non-binding mechanisms for international economic relations on the other hand.

Unlike the 1997 OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions,117 the existing ‘codes of conduct’ and other instruments on the social and environmental responsibility of TNCs are not legally binding in international law. However, these ‘soft law’ standards may, in the long run, catalyse the formation of customary international law, which directly addresses corporations and gives rise to corporate responsibility.

With respect to the normative impact, there is certain inherent ambiguity in some ‘soft law’ standards. The OECD Guidelines for Multinational Enterprises do not pretend to be legally binding.118 However, the establishment of NCPs is mandatory for OECD Members (under the OECD Agreement) and other adhering States (via unilateral commitment). The findings of NCPs are the exercise of public authority and can have massive impact on an enterprise’s standing in the public eye. Likewise, the UN Principles on Business and Human Rights apparently do not purport to modify existing rules of international law;119 still they foster an international consensus on TNCs’ obligations under international law and a concurrent practice of home and host States.

(c)  Corporate Social Responsibility and Investment Protection

An emerging issue is the relationship between the standards of corporate social responsibility and investment protection. Especially human rights protection and sustainable development are areas with a potential of conflict with investors’ rights under international and domestic law. Agreements between TNCs and host States may freeze the domestic law applicable to foreign investors or limit their regulatory liability in so-called ‘stabilization clauses’.120 International treaties on investment protection limit the regulatory freedom of host States to require foreign investors to adopt stricter standards, for example with respect to human rights, labour standards, or environmental protection.

(p. 52) There is a tendency under the OECD Guidelines that investment protection shall not limit corporate social responsibility with respect to the effective protection of human rights obligations of host States under new domestic legislation, but may allow to freeze regulatory liability under existing domestic law.121 New human rights obligations of host States under international treaties are the benchmark for corporate social responsibility and require specific undertakings to trump accorded stabilization of an investor’s liability.122 The Agreement on the TPP emphasizes the corporate social responsibility of investors:

Article 9.16:  Corporate Social Responsibility

The Parties reaffirm the importance of each Party encouraging enterprises operating within its territory or subject to its jurisdiction to voluntarily incorporate into their internal policies those internationally recognised standards, guidelines and principles of corporate social responsibility that have been endorsed or are supported by that Party.

Though this provision defers to the discretion of the parties, it corroborates the tendency to vest the international standards on corporate social responsibility with legal effect.

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Footnotes:

1  See generally, C Walter, ‘Subjects of International Law’ in R Wolfrum (ed), The Max Planck Encyclopedia of Public International Law (OUP 2012) vol IX, 634.

2  A Cassese, International Law (2nd edn, OUP 2005) 71; R Jennings and A Watts (eds), Oppenheim’s International Law (OUP 1992) vol I, para 6; MN Shaw, International Law (7th edn, CUP 2014) 143.

3  See MN Shaw, International Law (7th edn, CUP 2014) 162ff, 178ff.

4  See Advisory Opinion of the ICJ on Reparation of Injuries Suffered in the Service of the United Nations (Advisory Opinion) [1949] ICJ Rep 174; J Crawford, Brownlie’s Principles of Public International Law (8th edn, OUP 2012) 166ff.

5  See generally on actors in international economic diplomacy, N Bayne and S Woolcock, ‘What is Economic Diplomacy?’ in N Bayne and S Woolcock (eds), The New Economic Diplomacy (3rd edn, Ashgate 2011) 3f; R Hofmann (ed), Non-State Actors as New Subjects of International Law—From the Traditional State Order Towards the Law of Global Community (Duncker & Humblot 2000).

6  See ICJ Military and Paramilitary Activities in and against Nicaragua (Nicaragua v United States)[1986] ICJ Rep 14 para 108.

7  J Kokott, ‘States, Sovereign Equality’ in R Wolfrum (ed), The Max Planck Encyclopedia of Public International Law (OUP 2012) vol IX, 571.

8  See generally on organisational structures, Organization of Economic Cooperation and Development (OECD), ‘Public Sector Modernisation: Changing Organisational Structures’ (2004) OECD Observer, Policy Brief.

9  R Dolzer and C Schreuer, Principles of International Investment Law (2nd edn, OUP 2012) 219f; Phillips Petroleum Co v Islamic Republic of Iran [1989] 21 Iran-USCTR 79.

10  See ICJ Barcelona Traction, Light and Power Company (Belgium v Spain) (Judgment) [1970] ICJ Rep 3, 39.

11  R Dolzer and C Schreuer, Principles of International Investment Law (2nd edn, OUP 2012) 219. In the case of the Chernobyl disaster, German courts have denied a direct liability of the Soviet Union for damages due to the legal independency of the operator of the nuclear power plant, see Amtsgericht Bonn (district court) NJW 1988, 1393; Landgericht Bonn (county court) NJW 1989, 1225.

12  First National Bank v Banco Para El Comercio Exterior de Cuba 462 US 611 (1983).

13  See J Crawford, The International Law Commission’s Articles on State Responsibility (CUP 2002) 110.

14  J Crawford, The International Law Commission’s Articles on State Responsibility (CUP 2002) 112.

15  See I Seidl-Hohenveldern, Corporations in and under International Law (CUP 1987) 55; see also House of Lords Czarnikow Ltd v Rolimpex 1979 AC 351.

16  See ICJ Reparation for Injuries Suffered in the Service of the United Nations (Advisory Opinion) [1949] ICJ Rep 174; ICJ Legality of the Threat or Use of Nuclear Weapons (Advisory Opinion) [1996] ICJ Rep 226; A Cassese, International Law (2nd edn, OUP 2005); see on the history of international organizations, CF Amerasinghe, Principles of the Institutional Law of International Organizations (2nd edn, CUP 2005) 1–6.

17  AA Stein, ‘Incentive Compatibility and Global Governance: Existential Multilateralism, a Weakly Confederal World, and Hegemony’ in AS Alexandroff (ed), Can the World Be Governed? (The Center for International Governance Innovation and Wilfrid Laurier University Press 2008) 17. The first international organizations were the international river commissions managing the rivers Rhine (1815), Elbe (1821), Douro (1835), Po (1849), and Danube (1856); K Schmalenbach, ‘International Organizations or Institutions, General Aspects’ in R Wolfrum (ed), The Max Planck Encyclopedia of Public International Law (OUP 2012) vol V, 1126 para 2.

18  According to the Union of International Associations, in 1909 the number of IGOs amounted to 37, while in 2012 this number had increased to 7,710. see <http://www.uia.org/sites/uia.org/files/misc_pdfs/stats/Historical_overview_of_number_of_international_organizations_by_type_1909–2013.pdf> (accessed 23 June 2016).

19  See M Herdegen, ‘The Insolvency of International Organizations and the Legal Position of Creditors: Some Observations in the Light of the International Tin Council Crisis’ (1988) 35 NILR 135; EJ McFadden, ‘The Collapse of Tin: Restructuring a Failed Commodity Agreement’ (1986) 80 AJIL 811.

20  See M Hartwig, Die Haftung der Mitgliedstaaten für internationale Organisationen (Responsibility of Member States for International Organizations) (Springer 1993).

21  See M Hartwig, Die Haftung der Mitgliedstaaten für internationale Organisationen (Responsibility of Member States for International Organizations) (Springer 1993).

22  See M Hartwig, Die Haftung der Mitgliedstaaten für internationale Organisationen (Responsibility of Member States for International Organizations) (Springer 1993) para 1589.

23  Article 48(4) of the International Natural Rubber Agreement (1995); see also Articles 7(2) and 23 of the International Cocoa Agreement (2010) and Article 22(2) of the International Coffee Agreement (2007).

24  See <http://www.unctad.org> (accessed 23 June 2016).

25  See <http://www.uncitral.org> (accessed 23 June 2016).

26  In the past decades, UNCITRAL has presented several model laws, eg the Model Law on International Commercial Arbitration (1985/2006), the Model Law on International Credit Transfer (1992), the Model Law on Cross Border Insolvencies (1997), the Model Law on Electronic Commerce (1996/98), the Model Law on Electronic Signatures (2001), and the Model Law on International Commercial Conciliation (2002).

28  See <http://www.fao.org> (accessed 23 June 2016).

29  See <http://www.unido.org> (accessed 23 June 2016).

30  Both organizations were founded in 1944 at the Bretton Woods Conference; see on the History of IMF and IBRD, ES Mason and RE Asher, The World Bank Since Bretton Woods (The Brookings Institution 1973); S Schlemmer-Schulte, ‘International Monetary Fund (IMF)’ in R Wolfrum (ed), The Max Planck Encyclopedia of Public International Law (OUP 2012) vol V, 1037; see generally on international financial institutions, M Ragazzi, ‘Financial Institutions, International’ in R Wolfrum (ed), The Max Planck Encyclopedia of Public International Law (OUP 2012) vol IV, 21.

31  See IF Shihata, The World Bank in a Changing World (Martinus Nijhoff Publishers 1991) vol I, 26.

32  See JH Jackson, The World Trading System (3rd edn, MIT Press 1999) 31.

33  See Ch XI.2.

34  See <http://www.ilo.org> (accessed 23 June 2016).

35  See <http://www.oecd.org> (accessed 23 June 2016); C Trüe, ‘Organization for Economic Cooperation and Development, Nuclear Energy Agency’ in R Wolfrum (ed), The Max Planck Encyclopedia of Public International Law (OUP 2012) vol VII, 1036; the OECD currently consists of 35 Member States: Australia, Austria, Belgium, Canada, Chile, the Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Israel, Italy, Japan, Korea, Latvia, Luxembourg, Mexico, the Netherlands, New Zealand, Norway, Poland, Portugal, Slovakia, Slovenia, Spain, Sweden, Switzerland, Turkey, the United Kingdom, and the United States.

37  See for all the 29 DAC members <http://www.oecd.org/dac/dacmembers.htm> (accessed 23 June 2016).

38  See Articles 308ff of the TFEU.

39  See Ch XL.2.

40  Constitutive Act of the African Union of 11 July 2000, OAU Doc CAB/LEG/23.15.

41  Articles 1(7) and 2(2) of the ASEAN Charter. Article 14 even provides for the establishment of an ASEAN human rights body.

42  See AS Alexandroff and J Kirton, ‘The “Great Recession” and the Emergence of the G-20 Leaders’ Summit’ in AS Alexandroff and AF Cooper (eds), Rising States, Rising Institutions: Challenges for Global Governance (Brookings Institution Press 2010); L Delabie, ‘Les modes de cooperation interétatique informels: G8 et G20’ (2009) 55 AFDI 629.

43  European Council, G7 The Hague declaration EUCO 73/14 (24 March 2014) para 6.

44  See on the background of the G20, AS Alexandroff and J Kirton, ‘The “Great Recession” and the Emergence of the G-20 Leaders’ Summit’ in AS Alexandroff and AF Cooper (eds), Rising States, Rising Institutions:Challenges for Global Governance (Brookings Institution Press 2010); JH Freis, ‘The G-20 Emphasis on Promoting Integrity in Financial Markets’ in M Giovanoli and D Devos (eds), International Monetary and Financial Law (OUP 2010); C Schmucker and K Gnath, ‘From the G8 to the G20: Reforming the Global Economic Governance System’ (2011) 2 EYIEL 389.

45  See <http://www.oecd.org/g20/g20-members.htm> (accessed 23 June 2016).

46  See Leader’s Statement: The Pittsburgh Summit (24–25 September 2009), available at <http://ec.europa.eu/commission_2010-2014/president/pdf/statement_20090826_en_2.pdf> (accessed 23 June 2016).

47  For a further analysis of the international legal status of the G8 and G20, see L Delabie, ‘Les modes de coopération interétatique informels: G8 et G20’ (2009) 55 AFDI 629, 651.

48  There are currently 134 Member States, see <http://www.g77.org/doc/members.html> (accessed 23 June 2016).

49  Members of the Cairns Group are, among others: Argentina, Australia, Brazil, Canada, Colombia, India, and New Zealand.

50  Additionally, a major group of developing countries led by India and China (G33) has joined together, not only claiming the opening of markets, but also aiming to protect their national agriculture. On the contrary, the G90, established by the majority of the poorest countries, rejects certain liberalization measures concerning trade in services or investments.

51  On cooperation between international organizations, see C Tietje, ‘Global Governance and Inter-Agency Co-operation in International Economic Law’ (2002) 36 JWT 501.

52  See generally, K Raustiala, ‘The Architecture of International Cooperation: Transgovernmental Networks and the Future of International Law’ (2002) 43 Va J Int’l L 1; A-M Slaughter, ‘Governing Through Government Networks’ in M Byers (ed), The Role of Law in International Politics (OUP 2000) 177.

53  N Krisch and B Kingsbury, ‘Introduction: Global Governance and Global Administrative Law in the International Legal Order’ (2006) 17 EJIL 1; S Cassese, ‘Administrative Law Without the State? The Challenge of Global Regulation’ (2005) 37 NYU J Int’l L & Pol 663; RB Stewart, ‘The Global Regulatory Challenge to U.S. Administrative Law ‘ (2005) 37 NYU J Int’l L & Pol 695.

54  See eg A-M Slaughter, ‘Governing Through Government Networks’ in M Byers (ed), The Role of Law in International Politics (OUP 2000) 177 (193ff); K Raustiala, ‘The Architecture of International Cooperation: Transgovernmental Networks and the Future of International Law‘ (2002) 43 Va J Int’l L 1 (70ff).

55  See <http://www.bis.org/bcbs> (accessed 23 June 2016); MS Barr and GP Miller, ‘Global Administrative Law: The View from Basel’ (2006) 17 EJIL 15; KP Follak, ‘The Basel Committee and EU Banking Regulation in the Aftermath of the Credit Crisis’ in M Giovanoli and D Devos (eds), International Monetary and Financial Law (OUP 2010) 177, 181.

56  See on the FSB, KP Follak, ‘The Basel Committee and EU Banking Regulation in the Aftermath of the Credit Crisis’ in M Giovanoli and D Devos (eds), International Monetary and Financial Law (OUP 2010) 177, 181.

57  See <http://www.iosco.org> (accessed 23 June 2016).

58  The framework is based primarily on the 1991 Competition Cooperation Agreement [1995] OJ L 95/47 and the 1998 Positive Comity Agreement [1998] OJ L 173/28

59  JL Dunoff, SR Ratner and D Wippman, International Law, Norms, Actors, Process (2nd edn, Aspen Publishers 2006) 192; on the different notions of NGOs see S Hobe, ‘Non-Governmental Organizations’ in R Wolfrum (ed), The Max Planck Encyclopedia of Public International Law (OUP 2012) vol VII, 716 paras 1ff.

60  Examples of such NGOs are the associations established in the 17th and 18th centuries to promote the abolitions of slave trade and slavery itself, and the Red Cross Movement in the 19th century.

61  D Thürer, ‘The Emergence of Non-Governmental Organizations and Transnational Enterprises in International Law and the Changing Role of the State’ in R Hofman and N Geissler (eds), Non-State Actors as New Subjects of International Law (Duncker & Humblot 2000) 37, 41.

62  MN Shaw, International Law (7th edn, CUP 2014) 190ff; JL Dunoff, SR Ratner and D Wippman, International Law, Norms, Actors, Process (2nd edn, Aspen Publishers 2006) 192. The importance of NGOs in today’s international community is reflected among others in the Committee on NGOs established within the Economic and Social Council (ECOSOC) of the United Nations.

63  See eg JP Trachtman and PM Moremen, ‘Costs and Benefits of Private Participation in WTO Dispute Settlement: Whose Right Is It Anyway?’ (2003) 44 Harv Int’l LJ 221. For NGOs as Amici Curiae see L van den Eynde, ‘An Empirical Look at the Amicus Curiae Practice of Human Rights NGOs Before the European Court of Human Rights’ (2013) 31 NQHR 271.

64  See M Herdegen, ‘Nichtregierungsorganisationen: rechtlicher Status, Einfluss und Legitimität’ in S Hieble, N Kassebohm, and H Lilie (eds), Festschrift für Volkmar Mehle (Nomos 2009) 261; A Reinisch, ‘Governance Through Accountability’ (2001) 44 GYIL 270; DC Thomas, ‘International NGOs, State Sovereignty and Democratic Values’ (2001) 2 Chi J Int’l L 389.

66  See P Driessen, Eco-Imperialism (Free Enterprise Press 2003) 19.

67  See U Beyerlin, ‘The Role of NGOs in Environmental Litigation’ (2001) 61 ZaöRV 357; SW Burgiel, ‘Non-state Actors and the Cartagena Protocol on Biosafety’ in MM Betsill and E Corell (eds), NGO Diplomacy: The Influence of Nongovernmental Organizations in International Environmental Negotiations (MIT Press 2008) 67; MT Kamminga, ‘The Evolving Status of NGOs under International Law: A Threat to the Inter-State System?’ in P Alston (ed), Non-State Actors and Human Rights (OUP 2005) 93.

68  UNECE Convention on Access to Information, Public Participation in Decision-making and Access to Justice in Environmental Matters of 25 June 1998.

69  HS Brown, M de Jong, and T Lessidrenska, ‘The Rise of the Global Reporting Initiative: a Case of Institutional Entrepreneurship’ (2009) 18 Environmental Politics 182; S Benn, D Dunphy, and A Griffiths, Organizational Change for Corporate Sustainability (3rd edn, Routledge 2014) 79; C Adams and V Narayanan, ‘The “Standardization” of Sustainability Reporting’ in J Unerman, J Bebbington, and B O’Dwyer (eds), Sustainability Accounting and Accountability (2nd edn, Routledge 2014) 72f.

70  MN Shaw, International Law (7th edn, CUP 2014) 588ff; R Dolzer and C Schreuer, Principles of International Investment Law (2nd edn, OUP 2012) 47ff; a differentiated approach is taken by the ILC Draft Articles on Diplomatic Protection (2006) in Art 9.

71  See §§ 14ff of the UK Companies Act (2006) which refers to incorporation or the registration of a company. The United States follow the incorporation doctrine since a Supreme Court ruling in 1868: Paul v Virginia [1868] 75 US 168.

72  See § 10 of the Austrian IPRG (International Private Law Act) of 1978.

73  O Mörsdorf, ‘The Legal Mobility of Companies within the European Union through Cross-border Conversion’ (2012) 49 CML Rev. 629.

74  See § 4a of the German Act on Companies with Limited Liability (GmbH-Gesetz); § 5 of the German Shares Act (Aktiengesetz).

75  BGHZ 178, 192. With regard to third countries, the German Federal Court of Justice continues to refer to the seat of management, BGHZ 153, 353.

76  See on diplomatic protection, ICJ Barcelona Traction, Light and Power Company (Belgium v Spain) [1970] ICJ Rep 3, 42. Under customary law, diplomatic protection based on the nationality of the shareholders of a company may only be exercised in exceptional cases. See on a treaty explicitly protecting nationals of one of the contracting States holding shares in companies of the other contracting States, ICJ Elettronica Sicula SpA (ELSI) (United States of America v Italy) [1989] ICJ Rep 15.

77  D Thürer, ‘The Emergence of Non-Governmental Organizations and Transnational Enterprises in International Law and the Changing Role of the State’ in R Hofmann and N Geissler (eds), Non- State Actors as New Subjects of International Law (Duncker & Humblot 2000) 37 (46).

78  <http://www.forbes.com/global2000/list/> (accessed 23 June 2016).

79  Gross domestic product (GDP) can be measured on the basis of purchasing power parity (PPP) (which reflects living conditions) or just of exchange rates (nominal). To ensure a greater comparability, reference is made to the nominal GDP.

80  For the World Economic Outlook of the International Monetary Fund launched in October 2015, see <https://www.imf.org/external/pubs/ft/weo/2015/02/weodata/index.aspx> (accessed 23 June 2016).

81  See D Thürer, ‘The Emergence of Non-Governmental Organizations and Transnational Enterprises in International Law and the Changing Role of the State’ in R Hofmann and N Geissler (eds), Non-State Actors as New Subjects of International Law (Duncker & Humblot 2000) 37 (47); CF Hillemanns, ‘UN Norms on the Responsibilities of Transnational Corporations and Other Business Enterprises with regard to Human Rights’ (2003) 4 German LJ 1065 (1067).

82  See Ch II.2.

83  See J Dillard, K Haynes, and A Murray (eds) Corporate Social Responsibility: A Research Handbook (Routledge 2012); A Crane, A McWilliams, D Matten, J Moon, and DS Siegel (eds) The Oxford Handbook of Corporate Social Responsibility (OUP 2009); TE Lambooy, Corporate Social Responsibility. Legal and Semi-legal Frameworks Supporting CSR (Kluwer 2010); P Muchlinski, ‘Corporations in International Law’ in R Wolfrum (ed), The Max Planck Encyclopedia of Public International Law (OUP 2012) vol II, 797 para 16.

84  See for a contemporary account, JH Knox, ‘The Human Rights Council Endorses “Guiding Principles” for Corporations’ (2011) 15 ASIL Insights No 21; J Rubin, ‘Transnational Corporations and International Codes of Conduct: A Study of the Relationship Between International Legal Cooperation and Economic Development’ (1995) 10 Am U J Int’l L & Pol’y 1275.

85  (1990) UN Doc E/1990/94.

86  See JL Dunoff, SR Ratner, and D Wippman, International Law, Norms, Actors, Process (2nd edn, Aspen Publishers 2006) 211.

87  For the Global Compact Initiative launched in July 2000 see <http://www.unglobalcompact.org> (accessed 23 June 2016); A Rasche and G Kell (eds), The United Nations Global Compact: Achievements, Trends and Challenges (CUP 2010).

88  See Ch.VII.3.

89  See Ch.VII.3(a).

90  (1978) 17 ILM 422.

91  (1978) 17 ILM 422; for the current fourth edition see <http://www.ilo.org/empent/Publications/WCMS_094386/lang--en/index.htm> (accessed 23 June 2016).

92  For the Food and Agriculture Organization of the United Nations, Voluntary Guidelines on the Responsible Governance of Tenure of Land, Fisheries and Forests in the Context of National Food Security (2012) see <http://www.fao.org/docrep/016/i2801e/i2801e.pdf> (accessed 23 June 2016).

93  BS Gentry, T Sikor, G Auld, AJ Bebbington, et al. ‘Changes in Land-Use Governance in an Urban Era’ in KC Seto and A Reenberg (eds), Rethinking Global Land Use in an Urban Era (MIT Press 2014) 261.

94  Para 3.2.

95  The 2000 edition of the Guidelines was published in (2000) 40 ILM 237. On 25 May 2011, the current version of the Guidelines was adopted; see OECD, OECD Guidelines for Multinational Enterprises (OECD Publishing 2011).

96  Part I of the Council Decision and Part I of the attached Procedural Guidance.

97  Part II Procedural Guidance. ch I C. For a detailed analysis, see J Motte-Baumvol, ‘Le règlement des différends à l’intention des entreprises multinationales – Quelques réflexions à partir des principes directeurs de l’OECD’ (2014) 118 RGDIP 303.

98  See <http://www.state.gov/e/eb/oecd/usncp/specificinstance/> (accessed 23 June 2016).

99  See Global Witness v Afrimex Ltd Final Statement by the UK National Contact Point for the OECD Guidelines for Multinational Enterprises (2008) <www.oecdwatch.org/cases/Case_114/561/at_download/file> (accessed 23 June 2016).

100  Final Statement by the UK National Contact Point for the OECD Guidelines for Multinational Enterprises Complaint from the International Union of Food, Agricultural, Hotel, Restaurant, Catering, Tobacco and Allied Workers’ Associations against Unilever plc (Doom Dooma factory – Assam – India) (2010), Annex; Final report of the Netherlands National Contact Point for the OECD Guidelines for Multinational Enterprises on the Specific Instance notified by Lok Shakti Abhiyan, KTNC Watch, Fair Green and Global Alliance and Forum for Environment and Development concerning an alleged breach of the OECD Guidelines for Multinational Enterprises by the Dutch Pension Fund ABP and its Pension Administrator APG, para. 4.2 (2013).

101  Final report of the National Contact Point for the OECD Guidelines in the Netherlands on the Specific Instance notified by CEDHA, INCASUR Foundation, SOMO and Oxfam Novib concerning Nidera Holding B.V. (2012); Agreement between Nidera Holdings B.V. and CEDHA, SOMO, Oxfam-Novib and INCASUR, 25 November 2011 <http://oecdwatch.org/cases/Case_220/1000/at_download/file> (accessed 23 June 2016).

102  Statement by the German National Contact Point for the ‘OECD Guidelines for Multinational Enterprises’ on the Complaint Filed against Bayer CropScience by German Watch, Global March, and Coordination gegen Bayer-Gefahren (2007).

103  Final report of the Netherlands National Contact Point for the OECD Guidelines for Multinational Enterprises on the Specific Instance notified by Lok Shakti Abhiyan, KTNC Watch, Fair Green and Global Alliance and Forum for Environment and Development concerning an alleged breach of the OECD Guidelines for Multinational Enterprises by the Dutch Pension Fund ABP and its Pension Administrator APG, section 2 with further references (2013); Final Statement of the Norwegian National Contact Point, Complaint from Lok Shakti Abhiyan, KTNC Watch, Fair Green and Global Alliance and Forum for Environment and Development vs. POSCO (South Korea), ABP/APG and NBIM (Norway) (2013).

104  Final report of the Netherlands National Contact Point for the OECD Guidelines for Multinational Enterprises on the Specific Instance notified by Lok Shakti Abhiyan, KTNC Watch, Fair Green and Global Alliance and Forum for Environment and Development concerning an alleged breach of the OECD Guidelines for Multinational Enterprises by the Dutch Pension Fund ABP and its Pension Administrator APG, para.2.3 (2013).

105  Final report of the Netherlands National Contact Point for the OECD Guidelines for Multinational Enterprises on the Specific Instance notified by Lok Shakti Abhiyan, KTNC Watch, Fair Green and Global Alliance and Forum for Environment and Development concerning an alleged breach of the OECD Guidelines for Multinational Enterprises by the Dutch Pension Fund ABP and its Pension Administrator APG, section 2 with further references (2013); Final Statement of the Norwegian National Contact Point, Complaint from Lok Shakti Abhiyan, KTNC Watch, Fair Green and Global Alliance and Forum for Environment and Development vs. POSCO (South Korea), ABP/APG and NBIM (Norway) (2013), with reference to the South Korean NCP’s initial assessment at section 5.

106  See Ch. VII.3.

107  Statement by the United Kingdom National Contact Point (NCP) for OECD Guidelines for Multinational Enterprises (NCP): DAS Air (2008) <http://www.oecd.org/investment/mne/44479531.pdf> (23 June 2016).

108  UN SC Res. 1592 (30 March 2005).

109  Statement by the United Kingdom National Contact Point (NCP) for OECD Guidelines for Multinational Enterprises (NCP): DAS Air (2008) <http://www.oecd.org/investment/mne/44479531.pdf> (accessed 21 January 2016), paras 49, 50.

110  Final report of the Netherlands National Contact Point for the OECD Guidelines for Multinational Enterprises on the Specific Instance notified by Lok Shakti Abhiyan, KTNC Watch, Fair Green and Global Alliance and Forum for Environment and Development concerning an alleged breach of the OECD Guidelines for Multinational Enterprises by the Dutch Pension Fund ABP and its Pension Administrator APG (2013), paras 3.3 and 3.4 with further references; Final Statement of the Norwegian National Contact Point, Complaint from Lok Shakti Abhiyan, KTNC Watch, Fair Green and Global Alliance and Forum for Environment and Development vs. POSCO (South Korea), ABP/APG and NBIM (Norway) (2013), para. 1.3.2.

111  Final report of the Netherlands National Contact Point for the OECD Guidelines for Multinational Enterprises on the Specific Instance notified by Lok Shakti Abhiyan, KTNC Watch, Fair Green and Global Alliance and Forum for Environment and Development concerning an alleged breach of the OECD Guidelines for Multinational Enterprises by the Dutch Pension Fund ABP and its Pension Administrator APG (2013), para. 4.2.

112  See EITI Principles and Criteria (2003) <http://eiti.org/eiti/principles> (accessed 23 June 2016).

113  On complaints about alleged non-compliance against the BTC pipeline company and its largest shareholder BP, UK National Contact Point, revised final statement in the specific instance BTC pipeline (2011).

114  See Equator Principles, ‘Leading Banks Announce Adoption of Equator Principles’ (Press Release 4 June 2003) <http://www.equator-principles.com/index.php/all-adoption/adoption-news-by-year/65-2003/167-leading-banks-announce-adoption-of-equator-principles> (accessed 23 June 2016).

115  See ISO Standard 26000 (2010) <http://www.iso.org/iso/home/standards/iso26000.htm> (accessed 23 June 2016).

116  The Norwegian Government has adopted such guidelines for its State pension funds, see Guidelines for observation and exclusion from the Government Pension Fund Global’s investment universe, available at <http://www.regjeringen.no/en/dep/fin/Selected-topics/the-government-pension-fund/responsible-investments/guidelines-for-observation-and-exclusion.html?id=594254> (accessed 23 June 2016); S Chestermann, ‘The Turn to Ethics: Disinvestment from Multinational Corporations for Human Rights Violations— The Case of Norway’s Sovereign Wealth Fund’ (2008) 23 Am U Int’l L Rev 577.

117  See S Hobe, ‘Non-Governmental Organizations’ in R Wolfrum (ed), The Max Planck Encyclopedia of Public International Law (OUP 2012) vol VII, 716 para 16.

118  OECD, OECD Guidelines for Multinational Enterprises (OECD Publishing 2011) 3, 37, 88.

119  A Flohr, Self-Regulation and Legalization: Making Global Rules for Banks and Corporations (2014 Palgrave Macmillan) 12.

120  See Ch XXXIII.1.

121  UK National Contact Point, revised final statement in the specific instance BTC pipeline, paras 26ff. (2011).

122  International Finance Corporation and J Ruggie, ‘Stabilization Clauses and Human Rights’ (2009), <http://www.ifc.org/wps/wcm/connect/9feb5b00488555eab8c4fa6a6515bb18/Stabilization%2BPaper.pdf?MOD=AJPERES> (accessed 23 June 2016).