Corporations as Regulatory Agents

The atrocities in Ukraine shed old-new light on the relationship between states and private corporations in international law. The predominant lens through which this relationship has been examined in recent decades, has been that of the public-private distinction and its adverse implications for international law’s (in)capacity to hold private corporations to account for violations of international law, particularly in the field of human rights. The growing attention in the early 2000s to transnational corporations’ involvement in human rights abuses in post-colonial settings has given rise to increasing demands for a ‘paradigm shift’ in international legal thinking, that would compensate for the regime’s ‘failure’ to include private corporate actors as subjects of direct legal responsibility.

While this approach rightly problematizes the consequences of corporate unaccountability in international law, it also perpetuates a myopic view of the complex role that corporations in fact assume in global governance. By centering on the need to endow corporations with international legal subjecthood, it overlooks their continuous engagement in the implementation, administration, and enforcement of human rights norms as exercises of what is, arguably, public regulatory power. From this perspective, transnational corporations function not only as violators of human rights norms who should be made legally accountable by and in international law, but they function also as regulatory agents who, like states, are jurisgenerative, and are routinely involved in international legal rule-making, institutionalization, and enforcement.

Corporations as Political Actors

This regulatory role of private commercial actors now comes to the fore with an interesting twist. In the context of corporate responses to Russia’s aggression, private corporations are now directly rebuking a state for its violations of international law. This is perhaps a subtle, but important point. To date, at least in the field of human rights, corporations have mostly exercised their regulatory functions ‘vertically’, vis-a-vis individuals whose rights they directly shape and affect. These vertical power-relations are mediated through various modalities of self-regulation, co-regulation, meta-regulation, or other hybrid, collaborative, and experimental regulatory structures. Through these, corporations establish and formalize for themselves (and perhaps for other business partners), a normative order that defines and limits the human rights conditions of communities of affected stakeholders, thereby supplanting or supplementing the role of states in whose territory or jurisdiction they operate. But corporate responses to Russia’s invasion of Ukraine also, and perhaps primarily, do something else: They flip (even if provisionally) the paradigmatic relationship between states and private corporate entities in international politics, so that the typical norm-enforcer becomes a norm-violator and vice versa. In this capacity, corporations operate as “keepers” of the international legal regime horizontally vis-à-vis states, and through the ‘private’ law and practices of corporate governance. I say ‘horizontally’ to emphasize the manner in which corporations position themselves on a par with states by engaging in the direct sanctioning of other states to address international legal misconduct.

This phenomenon is worth dwelling on for a moment. Indeed, nothing about this necessarily suggests a fundamental transformation in transnational corporations’ view of their own role in global affairs. In fact, it may well be the case that the driver for many of these corporate responses are self-interested commercial motivations foreseeing the reputational, and therefore, financial risks arising out of a failure to respond to Russia’s actions. But the extent to which these motivations or others really matter is questionable. Ultimately, the extant reality is that private corporate behavior mirrors in yet another way the international legal behavior of states, and, importantly, that the force of the international response to Russia’s aggression is not independent from the force of the financial pressure exerted on the Russian Federation by private corporations.

This particular power dynamic between states and private corporations on the world stage foregrounds not only the regulatory role of transnational corporations, but also, importantly, their political role. Corporations’ political role has been a dominant feature of transnational corporate activity for a great portion of their international legal history, taking on different guises during different time periods. Most notably, chartered companies across the sixteenth to nineteenth centuries organized trade, guided colonial expansion and settlement, and engaged in empire-building, as economic, but importantly as fundamentally political entities. And yet, this role has been conceptually ‘neglected’ with the turn to free incorporation and the ensuing understanding of corporations as private, commercial actors during the nineteenth century. Indeed, the symbiotic relationship that once existed between sovereigns and chartered companies no longer characterizes the interplay between states and modern transnational corporations. The latter’s political role, however, now comes back to focus in a contemporary guise and with novel sensibilities.

Parking for now normative questions that surround the political role of private corporations, taking it seriously requires that we continue to develop theories of international law and international human rights law that are more faithful to real-world dynamics. As scholars have long noted, and as historical accounts demonstrate, the public-private paradigm that dominates international legal thought is an analytical construct that does not reflect an organic state of affairs and yet continues to animate doctrinal structures, often counter- productively. Better theorizing is therefore needed as a basis for more generative legal construction and not merely for intellectual gymnastics. In the case of human rights for example, prevalent attempts to theorize the kinds of objects these rights are, the functions they serve, or the types of duties they impose, remain tethered to legal positivist assumptions that link to binary public-private distinctions. Such theories fail, therefore, to meaningfully envisage a different relationship between human rights norms and private actors that could inform legal frameworks capable of tracing and addressing other important relations of power and authority that considerably influence and shape human rights affordances. This is also true for international law more broadly. Theories that take seriously the regulatory and political functions of private corporations as agents of global governance (and by the same token take seriously the increasing marketization of political relationships), enable us to (re)imagine the ways in which international law could be made responsive to contemporary predicaments and perhaps rectify those of the past.