Posted by Anda Malescu International Business
Last Updated on December 15, 2022 by Anda Malescu
Are corporations subjects of international law? In this article we aim to answer the question of whether corporations are subjects of international law or not.
Historically, only states were subjects of international law, but the list of subjects now includes non-state actors, such as individuals, non-governmental organizations (NGOs), and multinational corporations (MNCs), according to some of the international law instruments. The International Court of Justice (ICJ) indicated back in 1949 that an entity of international law is something that can affect and be affected by international law and can enforce international law by bringing at least some international claims. In the same courts’ opinion, a corporation seems as much a subject of international law as an individual or an international organization. Moreover, a judicial decision taken under the Alien Tort Claims Act (ATCA) by the United States Court of Appeals for the Second Circuit suggested the same.
Customary international law is derived from the consistent practice of States accompanied by opinio juris (the conviction of states that the consistent practice is required by a legal obligation). However, in a 1970 case, the ICJ decided that only the state where a corporation is incorporated has standing to bring an action for damages for economic loss.
Today, sovereignty is the concept that established order in the system of international law among states. Sometimes, corporations seek to avoid international liability for their actions by claiming they are not subjects of international law, and that only states are. However, having in mind the modern concept of multinational corporation doing business in multiple states at the same time, the national boundaries are not that powerful. Aside from the above-mentioned ICJ opinion, the 1948 Genocide Convention diplomatic notes are ambivalent about including corporations in the term “person” as used in that treaty; consequently, a legal path is open for an international court to find them to be so.
A multinational corporation owns and controls other corporate entities in at least one country aside from the place of incorporation; therefore, a multinational corporation is established in more than one nation. The main difficulty that many authors have raised before, is the multinational corporations’ accountability and governance gap caused by the absence of corporate regulation in international law. Multinational corporations are subject to the domestic laws of the different countries in which they operate, and they must comply with the obligations issued by that state legislation.
Even though traditionally only states were subjects of international law, some authors affirm today that other organizations, such as corporations are considered international persons for limited and functional purposes because states can create private organizations such as corporations under domestic law. Recent interpretations of international human rights law, international humanitarian law, and international trade law such as the North American Free Trade Agreement (NAFTA) Chapter 11 actions and the new United States-Mexico-Canada Agreement have been inclusive of corporations as subjects of international law alongside certain individuals.
Debates concerning “Are corporations subject to international law?” will still continue to exist, as long as scholars and courts from all over the world adopt different positions towards this topic. Contact us or schedule a consultation with your international business attorney in Miami, Florida USA to assist you with your international law needs and the liability of your corporation on an international level.
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