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Rise of the Corporation and Corporate Social Responsibility: The Case for Corporate Customary International Law

  • KIRSTEN STEFANIK

Abstract

Corporations have taken on an expansive role in the global community with transnational operations, extensive resources, power and influence, and significant environmental and human rights impacts. While corporate social responsibility (CSR) has developed standards and practices aimed at addressing the social responsibility of corporations, its legal effect, if any, is unclear. In part, this can be linked to the lack of status and direct accountability for corporations in international law. This article seeks to carve out a space for corporations in which the realities of their power and impact can be acknowledged, addressed, and managed. It suggests that this can be accomplished through the recognition of corporate customary international law. This corporate customary international law would apply the well-developed law-creation processes of traditional state-based customary international law to businesses. Employing CSR as a practical example, the article suggests that not only is corporate customary international law a theoretical possibility, but its elements can already be seen in the development of CSR. Ultimately, this article aims to show how customary international law, which is an existing tool of international law formation, can be used to bridge the gap between the traditional and contemporary international systems and increase opportunities for businesses to fulfil ethical and legal obligations and to be held accountable for environmental and human rights harms.

Les entreprises ont assumé un rôle expansif dans la communauté mondiale de par leurs opérations transnationales, leurs ressources, pouvoir et influence étendues, et leurs impacts significatifs sur l’environnement et les droits de la personne. Bien que la notion de la responsabilité sociale des entreprises (RSE) ait élaboré des normes et des pratiques visant à identifier la responsabilité sociale des entreprises, son effet juridique, le cas échéant, n’est pas clair. En partie, cela peut être attribué à l’absence de personnalité juridique ou d’imputabilité directe des entreprises en droit international traditionnel. Cet article cherche à cerner un espace juridique dans lequel les réalités du pouvoir et de l’impact des entreprises pourraient être reconnues, abordées et gérées. L’auteure suggère que cela peut s’accomplir en reconnaissant un droit international coutumier d’entreprise. Ce droit international coutumier d’entreprise emprunterait les processus de création du droit déjà bien développés du droit international coutumier étatique traditionnel. En utilisant la RSE comme étude de cas, l’article suggère que non seulement le droit international coutumier d’entreprise est une possibilité théorique, mais ses éléments peuvent déjà être constatés dans le développement de la RSE. En fin de compte, cet article vise à montrer comment le droit international coutumier, un outil existant de formation du droit international, peut être utilisé pour combler l’écart entre les systèmes internationaux traditionnels et contemporains et accroître les opportunités pour les entreprises de s’acquitter de leurs obligations éthiques et juridiques et d’être tenues responsables en cas de manquement.

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1 Concurrent to the development of corporate social responsibility (CSR), the field of business and human rights (BHR) has evolved to place focus on the legal accountability of businesses, grounded in human rights and the UN Guiding Principles on Business and Human Rights, for harmful impacts of their operations on individuals and communities and remedies for such harms. See UN Human Rights Council, Report of the Special Representative of the Secretary-General on the Issues of Human Rights and Transnational Corporations and Other Business Enterprises: Guiding Principles on Business and Human Rights: Implementing the United Nations “Protect, Respect and Remedy” Framework, UNHRC, 17th Sess, UN Doc A/HRC/17/31 (2011) [Guiding Principles]. This article focuses primarily on CSR rather than BHR. For a more detailed discussion of the distinction between CSR and BHR, see Anita Ramasastry, “Corporate Social Responsibility versus Business and Human Rights: Bridging the Gap between Responsibility and Accountability” (2015) 14:2 J Intl HR 237.

2 Cassese, Antonio, International Law, 2nd ed (Oxford: Oxford University Press, 2005) at 2225.

3 Sir Jennings, Robert & Sir Watts, Arthur, eds, Oppenheim’s International Law, 9th ed, vol. 1 (Harlow, UK: Longman Group UK, 1992) at 16.

4 For a detailed discussion of this evolution of territoriality, see John Gerard Ruggie, “Territoriality and Beyond: Problematizing Modernity in International Relations” (1993) 47 Intl Org 139.

5 Reparation for Injuries Suffered in the Service of the United Nations, Advisory Opinion, [1949] ICJ Rep 174 at 178.

6 Ibid at 178.

7 See, eg, International Covenant on Civil and Political Rights, 16 December 1966, 999 UNTS 171; International Covenant on Economic, Social and Cultural Rights, 16 December 1966, 993 UNTS 3.

8 Muchlinski, Peter T, “‘Global Bukowina; Examined: Viewing the Multinational Enterprise as a Transnational Law-making Community” in Teubner, Gunther, ed, Global Law without a State (Aldershot, UK: Dartmouth Publishing Company, 1997) 79 at 89.

9 Ibid at 89.

10 Steinhardt, Ralph G, “Corporate Responsibility and the International Law of Human Rights: The New Lex Mercatoria in Alston, Philip, ed, Non-State Actors and Human Rights (Oxford: Oxford University Press, 2005) 177.

11 Muchlinski, Peter, “Corporate Social Responsibility and International Law: The Case of Human Rights and Multinational Enterprises” in et al, eds, The New Corporate Accountability: Corporate Social Responsibility and the Law (Cambridge: Cambridge University Press, 2007) 431 at 432–33 [Muchlinski, “Corporate Social Responsibility”].

12 Ibid at 433.

13 Zerk, Jennifer A, Multinationals and Corporate Social Responsibility: Limitations and Opportunities in International Law (Cambridge: Cambridge University Press, 2006) at 262.

14 For a concise summary of different theories, see International Law Association (ILA), Final Report of the Committee on Non-State Actors in International Law (2016) at 18–24.

15 Dashwood, Hevina, The Rise of Global Corporate Social Responsibility (Cambridge: Cambridge University Press, 2012) at 4.

16 Jean-Philippe Robé, “Multinational Enterprises: The Constitution of a Pluralistic Legal Order” in Teubner, supra note 8, 45 at 49.

17 Christiana Ochoa, “The Individual and Customary International Law Formation” (2007) 48 Va J Intl L 119 at 121 [Ochoa, “Individual and Customary International Law”].

18 Stephen Tully, “Introduction” in Stephen Tully, ed, International Corporate Legal Responsibility (Alphen aan den Rijn, NL: Kluwer Law International, 2012) 1 at 11 [Tully “Introduction”; Tully, International Corporate Legal Responsibility].

19 Ibid at 12.

20 Ibid at 13.

21 See, eg, Kerr, Michael, Janda, Richard & Pitts, Chip, Corporate Social Responsibility: A Legal Analysis (Markham, ON: LexisNexis Canada, 2009) at 18.

22 See Zerk, supra note 13 at 60; Stephen Tully, Corporations and International Lawmaking (Leiden: Martinus Nijhoff, 2007) at 111 [Tully, Corporations and International Lawmaking]; Adam McBeth & Justine Nolan, “The International Protection of Human Rights and Fundamental Freedoms” in Tully, International Corporate Legal Responsibility, supra note 18, 175 at 177.

23 Eg, Robé, supra note 16; Ochoa, “Individual and Customary International Law,” supra note 17; Dashwood, supra note 15; Muchlinski, “Corporate Social Responsibility,” supra note 11; Zerk, supra note 13.

24 Tully, Corporations and International Lawmaking, supra note 22 at 101.

25 International Law Association (ILA), Statement of Principles Applicable to the Formation of General Customary International Law, Report of the Committee on the Formation of Customary (General) International Law (2000) at 16 [ILA Report] [emphasis in original].

26 Maurice H Mendelson, “The Formation of Customary International Law” (1998) 272 Rec des Cours 155 at 203 [emphasis in original].

27 Tully, Corporations and International Lawmaking, supra note 22 at 95.

28 Louise Hertwig Hayes, “A Modern Lex Mercatoria: Political Rhetoric or Substantive Progress?” (1976–77) 3 Brook J Intl L 210 at 211–12.

29 Ibid at 212.

30 Steinhardt, supra note 10 at 179.

31 See Kerr, Janda & Pitts, supra note 21.

32 The four other principles are integrated, sustainable decision making, transparency, precautionary principle, and community investment.

33 Hayes, supra note 28 at 211–12.

34 Berthold Goldman, “The Applicable Law: General Principles of Law: The Lex Mercatoira” in JDM Lew, ed, Contemporary Problems in International Arbitration (Dordrecht: Martinus Nijhoff, 1987) 113 at 116 [emphasis in original].

35 Steinhardt, supra note 10 at 224.

36 Kerr, Janda & Pitts, supra note 21 at 547.

37 Isabelle R Gunning, “Modernizing Customary International Law: The Challenge of Human Rights” (1990–91) 31 Va J Intl L 211 at 216, 221. This idea has been further developed in the work of Christina Ochoa, “Relationship of Participatory Democracy,” infra note 40.

38 Gunning, supra note 37 at 225.

39 Ibid at 227.

40 Christiana Ochoa, “The Relationship of Participatory Democracy to Participatory Law Formation” (2008) 15 Ind J Global Legal Stud 5 at 6 [Ochoa, “Relationship of Participatory Democracy”].

41 Ibid at 12.

42 Ochoa, “Individual and Customary International Law,” supra note 17 at 175–76.

43 Julian Arato, “Corporations as Lawmakers” (2015) 56 Harvard Intl LJ 229.

44 Ibid at 231.

45 Dörr, Oliver & Schmalenbach, Kirsten, eds, Vienna Convention on the Law of Treaties A Commentary (Berlin: Springer, 2012) at 75–78.

46 See, eg, Coulombe, Louis-Philippe, “Duplicating the Umbrella Clause? Some Thoughts on Contractual Expectations and the Fair and Equitable Treatment Standard” in Laird, lan A et al, eds, Investment Treaty Arbitration and International Law, vol. 7 (New York: Juris Net, 2014) 101.

47 Ibid at 233.

48 Ibid.

49 Ibid (referencing Azurix Corp v Argentine Republic, ICSID Case no ARB/01/12, Award (14 July 2006) where a water works project raised sanitation risks).

50 Arato, supra note 43 at 233 (referencing Biwater Gauff (Tanzania) Ltd v United Republic of Tanzania, ICSID Case no ARB/05/ 22, Award (24 July 2008) where water works operations raised both sanitation risks and concerns over the human right to water).

51 Arato, supra note 43 at 234 (referencing Chevron Corporation and Texaco Petroleum Corporation v Republic of Ecuador, UNITRAL, PCA Case no 2009-23, First Partial Award on Track I (27 September 2013) where the tribunal concluded that the internalized contract precluded the state’s ability to claim damages against the corporation for environmental pollution resulting from oil spills and toxic water dumping by the corporation). This decision was affirmed in subsequent judgments though there was no further elaboration on this point.

52 Dashwood, supra note 15 at 9.

53 Kerr, Janda & Pitts, supra note 21 at 5 [emphasis in original].

54 Ibid at 5.

55 Kerr, Janda, and Pitts, supra note 21 at 51.

56 Zerk, supra note 13 at 32, 34.

57 Ibid at 35.

58 Dashwood, supra note 15 at 9.

59 See, eg, Dashwood, supra note 15 at 9; Zerk, supra note 13 at 8, 30–35; Kerr, Janda & Pitts, supra note 21 at 17.

60 Kerr, Janda & Pitts, supra note 21 at 17.

61 See, eg, Kerr, Janda & Pitts, supra note 21 at 17, 63; Dashwood, supra note 15 at 60–61; Lance Moir, “What Do We Mean by Corporate Social Responsibility?” (2001) 1 Corporate Governance 16 at 19; Michael Torrance, “Persuasive Authority beyond the State: A Theoretical Analysis of Transnational Corporate Social Responsibility Norms as Legal Reasons within Positive Legal Systems” (2011) 12 German LJ 1573 at 1583.

62 Kerr, Janda & Pitts, supra note 21 at 17.

63 Torrance, supra note 61 at 1575.

64 Ibid.

65 Cassese, supra note 2 at 153.

66 Ibid at 153; see also Thirlway, Hugh, “The Sources of International Law” in Evans, Malcolm D, ed, International Law, 2nd ed (Oxford: Oxford University Press, 2006) 115 at 122.

67 North Sea Continental Shelf (Federal Republic of Germany v Denmark; Federal Republic of Germany v Netherlands), [1969] ICJ Rep 3, para 74 [North Sea Continental Shelf cases].

68 Ibid, para 77.

69 ILA Report, supra note 25 at 8.

70 Ibid at 9.

71 Ibid at 10 [emphasis in original].

72 Ibid at 10.

73 See, eg, Byers, Michael, Custom, Power and the Power of Rules (Cambridge: Cambridge University Press, 1999) at 130; Jennings & Watts, supra note 3 at 37; Michael Akehurst, “Custom as a Source of International Law” (1974–75) Brit YB Intl L 1 at 33; Mendelson, supra note 26 at 246; ILA Report, supra note 25 at 10, 33.

74 Jennings & Watts, supra note 3 at 27.

75 Ibid.

76 See, eg, Tully, Corporations and International Lawmaking, supra note 22 at 92; Mendelson, supra note 26 at 184–86.

77 Mendelson, supra note 26 at 184.

78 Anthea Elizabeth Roberts, “Traditional and Modern Approaches to Customary International Law: A Reconciliation” (2001) 95 AJIL 757.

79 Ibid at 758.

80 Ibid.

81 Ibid.

82 Ibid [emphasis in original].

83 Military and Paramilitary Activities in and against Nicaragua (Nicaragua v United States of America), Merits, [1986] ICJ Rep 14 [Military and Paramilitary Activities].

84 Roberts, supra note 78 at 758.

85 Ibid at 758–59; Military and Paramilitary Activities, supra note 83, para 186.

86 See, eg, ILA Report, supra note 25 at 14–15.

87 Roberts, supra note 78 at 764 [emphasis in original].

88 Ibid at 764.

89 Ibid at 784.

90 See, eg, Zerk, supra note 13 at 67; Roberts, supra note 78 at 758; Mendelson, supra note 26 at 175.

91 See, eg, Mendelson, supra note 26 at 172; ILA Report, supra note 25 at 2.

92 Byers, supra note 73 at 155.

93 North Sea Continental Shelf cases, supra note 67, para 74; Mendelson, supra note 26 at 197.

94 Roberts, supra note 78 at 758; Mendelson, supra note 26 at 197.

95 Mendelson, supra note 26 at 197–203; ILA Report, supra note 25 at 16.

96 Akehurst, supra note 73 at 11; Jennings & Watts, supra note 3 at 31.

97 Akehurst, supra note 73 at 18; Mendelson, supra note 26 at 222; Continental Shelf (Libyan Arab Jamahiriya v Malta), Judgment, [1985] ICJ Rep 13 [Continental Shelf (Libya v Malta)]; Continental Shelf (Tunisia v Libyan Arab Jamahiriya), Judgment, [1982] ICJ Rep 18 [Continental Shelf (Tunisia v Libya)].

98 Akehurst, supra note 73 at 17; North Sea Continental Shelf cases, supra note 67 at 43.

99 ILA Report, supra note 25 at 14.

100 Ibid at 14–15.

101 Ibid at 14.

102 Ibid.

103 Nuclear Tests (Australia v France), [1974] ICJ Rep 253 at 267.

104 ILA Report, supra note 25 at 15.

105 See, eg, Cassese, supra note 2 at 153.

106 Akehurst, supra note 73 at 13.

107 North Sea Continental Shelf cases, supra note 67 at 43; Akehurst, supra note 73 at 17.

108 Mendelson, supra note 26 at 212.

109 Ibid at 213.

110 Ibid; Continental Shelf (Tunisia v Libya), supra note 97, para 100; Continental Shelf (Libya v Malta), supra note 97, para 34.

111 See, eg, Jennings & Watts, supra note 3 at 29.

112 Military and Paramilitary Activities, supra note 83 at 98.

113 North Sea Continental Shelf cases, supra note 67 at 43.

114 Ibid at 230 (Judge Lachs).

115 Zerk, supra note 13 at 7.

116 Kerr, Janda & Pitts, supra note 21 at 33 (referencing Global Corporate Responsibility Reporting Trends: Reporting in Context 2006 (2006) at 11, online: <http://www.upj.de/fileadmin/user_upload/MAIN-dateien/Infopool/Forschung/incontext_reporting_2006.pdf>).

117 Ibid at 33 (referencing the 2008 Stratos Report Canadian Corporate Sustainability Reporting: Best Practices).

118 Ibid at 279.

119 Ibid (referencing the history of the Global Reporting Initiative).

120 Tully “Introduction,” supra note 18 at 58; Zerk, supra note 13 at 42–43.

121 Zerk, supra note 13 at 42.

122 Ibid at 43.

123 Tully “Introduction,” supra note 18 at 58; Dashwood, supra note 15 at 41.

124 Mendelson, supra note 26 at 213; Continental Shelf (Tunisia v Libya), supra note 97, para 100; Continental Shelf (Libya v Malta), supra note 97, para 34.

125 Kerr, Janda & Pitts, supra note 21.

126 UN Global Compact, How to Participate, online: <http://www.unglobalcompact.org>.

127 UN Global Compact, Our Participants, online: <https://www.unglobalcompact.org/what-is-gc/participants>.

128 UN Global Compact, About Us, online: <http://www.unglobalcompact.org> [emphasis added].

129 Clapham, Andrew, Human Rights Obligations of Non-State Actors (Oxford: Oxford University Press, 2006) at 225; Deva, Surya, “Treating Human Rights Lightly: A Critique of the Consensus Rhetoric and the Language Employed by the Guiding Principles” in Deva, Surya & Bilchitz, David, eds, Human Rights Obligations of Businesses: Beyond the Corporate Responsibility to Respect? (Cambridge: Cambridge University Press, 2013) 78 at 92.

130 Military and Paramilitary Activities, supra note 83 at 98, para 186.

131 Ibid.

132 Guiding Principles, supra note 1.

133 Eg, Akehurst, supra note 73 at 31.

134 Mendelson, supra note 26 at 269.

135 North Sea Continental cases, supra note 67 at 44.

136 See, eg, Mendelson, supra note 26 at 260–66.

137 Ibid at 264–66.

138 Ibid at 260 [emphasis in original].

139 Thirlway, supra note 66 at 123; Mendelson, supra note 26 at 291.

140 Mendelson, supra note 26 at 269.

141 Tully, Corporations and International Lawmaking, supra note 22 at 92; Mendelson, supra note 26 at 185–88.

142 Jennings & Watts, supra note 3 at 27; ILA Report, supra note 25 at 33; Akehurst, supra note 73 at 33; Mendelson, supra note 26 at 246–47.

143 Akehurst, supra note 73 at 33. See also Mendelson, supra note 26 at 272.

144 Mendelson, supra note 26 at 272.

145 Rio Declaration on Environment and Development, 13 June 1992, 31 ILM 874 (1992); see also Zerk, supra note 13 at 71.

146 Cassese, supra note 2 at 491–92; Zerk, supra note 13 at 71.

147 Mendelson, supra note 26 at 292.

148 Ibid at 280.

149 Ibid.

150 Sir Michael Wood, First Report on Formation and Evidence of Customary International Law, International Law Commission (ILC), Sixty-fifth Session, Doc A/CN.4/663 (17 May 2013) at 12, para 28.

151 The ILA published a report on customary international law in 2000. ILA Report, supra note 25. The ILC has considered the topic many times: in 1948–50, 1971, and, most recently, in 2011–16.

152 Sir Michael Wood, Second Report on Formation and Evidence of Customary International Law, International Law Commission, Sixty-Sixth Session, Doc A/CN.4/672 (22 May 2014) at 53, para 66.

153 See, eg, Moir, supra note 61 at 17–20; Dashwood, supra note 15 at 60–61; Kerr, Janda & Pitts, supra note 21 at 63; Torrance, supra note 61 at 1580.

154 Dashwood, supra note 15 at 67.

155 Eg, Dashwood, supra note 15 at 9; Kerr, Janda & Pitts, supra note 21 at 609; Zerk, supra note 13.

156 Zerk, supra note 13 at 72.

157 Dashwood, supra note 15 at 66.

158 Kerr, Janda & Pitts, supra note 21 at 82.

159 Akehurst, supra note 73 at 23.

160 Byers, supra note 74 at 142.

161 Ibid at 143.

162 Ibid at 152; Akehurst, supra note 73 at 24.

163 Mendelson, supra note 26 at 227.

164 Akehurst, supra note 73 at 24.

165 Ibid at 24.

166 Thirlway, supra note 66 at 127.

167 See, eg, Zerk, supra note 13 at 67; Dashwood, supra note 15 at 220.

168 See Dashwood, supra note 15 at 249.

169 Jennings & Watts, supra note 3 at 30; Right of Passage over Indian Territory (Portugal v India), [1960] ICJ Rep 6 [Right of Passage]; Asylum Case (Colombia v Peru), [1950] ICJ Rep 266 at 369 [Asylum Case].

170 Jennings & Watts, supra note 3; Right of Passage, supra note 169; Asylum Case, supra note 169.

171 Statute of the International Court of Justice, 26 June 1945, 33 UNTS 993 at art 38(1)(b) [ICJ Statute].

172 Statute of the Special Court for Sierra Leone, 16 January 2002, 2178 UNTS 138 at 145, Appendix II, art 1(1) [SCSL Statute].

173 United Nations Convention on the Law of the Sea, 1833 UNTS 3, art 293(1) [UNCLOS].

174 ICJ Statute, supra note 171.

175 SCSL Statute, supra note 172.

176 UNCLOS, supra note 173, arts 286–96.

177 Cassese, supra note 2 at 224.

178 Ibid.

179 Eg, the United States, the United Kingdom, Canada, and France are among the states in which corporate entities can be held directly accountable under the law. In 2006, Fafo published a study comparing approaches to corporate accountability for human rights harms in sixteen countries. Anita Ramasastry & Robert C Thompson, Commerce, Crime and Conflict: Legal Remedies for Private Sector Liability for Grave Breaches of International Law (Norway: Fafo, 2006), online: <http://www.fafo.no/pub/rapp/536/536.pdf>.

180 See, eg, Sara L Seck, “Unilateral Home State Regulation: Imperialism or Tool for Subaltern Resistance?” (2008) 46 Osgoode Hall LJ 565.

181 Tully, “Introduction,” supra note 18 at 59; Kerr, Janda & Pitts, supra note 21 at 102.

182 McBeth & Nolan, supra note 22 at 188. McBeth and Nolan note the lack of sufficient enforcement mechanisms.

183 Henckaerts, Jean-Marie & Doswald-Beck, Louise, Customary Humanitarian Law, vol. 1: Rules (Cambridge: International Committee of the Red Cross and Cambridge University Press, 2009).

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Rise of the Corporation and Corporate Social Responsibility: The Case for Corporate Customary International Law

  • KIRSTEN STEFANIK

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