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4 - The liability of multinational corporations and home state measures

M. Sornarajah
Affiliation:
National University of Singapore
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Summary

Unlike under the old law, there is now an increasing expectation, particularly among developing countries and non-governmental organisations (NGOs), that home states of multinational corporations should exert control over the activities of their corporate nationals operating overseas. These measures include not only the measures taken to promote the flow of foreign investment into developing countries, but also measures that seek to ensure that multinational corporations do not act to the detriment of host developing states. This chapter concentrates on the latter type of measure. The rationale is that developed states owe a duty of control to the international community and do in fact have the means of legal control over the conduct abroad of their multinational corporations. In moral terms, the activities of multinational corporations eventually benefit the home state's economic prosperity. The argument is that it is therefore incumbent on the home state to ensure that these benefits are not secured through injury to other states or to the welfare of the international community as a whole. The early law concentrated only on the protection of foreign investment through the diplomatic intervention of the home state. However, there is now an evolution of the notion that the home state has duties as well as rights in matters relating to foreign investment which require the home state to intervene to ensure that its multinational corporations act in accordance with emerging standards that require their accountability.

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Publisher: Cambridge University Press
Print publication year: 2010

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