Multinational corporations often wield more power than many of the world's nations. Their immense wealth and political capital make them almost hegemonic entities. These domineering enterprises are often able to undertake profit-making endeavors, particularly involving the consumption or extraction of natural resources, in developing nations with little or no regulation, and often without meeting the social and environmental standards adhered to in the United States.
The emergence of multilateral free trade agreements, specifically within the developing world, has further enhanced the ability of multinational corporations to proliferate their business. Concomitant with the rise of free trade, political and legal barriers to multinational entry into the economy of developing nations are rapidly disappearing. In addition, many nations are unwilling and unable to protect their citizens from environmental abuses through domestic law. Therefore, finding a legal mechanism capable of checking the hegemonic power of multinational corporations is extremely important to the vitality of most developing nations.