Since the end of the Cold War, globalization has led to an unprecedented expansion of multinational companies. During the ten years that followed the fall of the USSR, these companies’ collective headcount surged from 24 to 54 million while their turnover doubled. Multinationals have become the biggest players in world trade (1). The international economy, with a political and diplomatic sphere, will be replaced by a multinational economy as these companies play an increasingly decisive role in globalization changes. Statistics show that the influence of multinationals is replacing that of States (over two thirds of the 100 largest economic entities are now companies and not States) (2). The international economy, with a political and diplomatic sphere, is being taken over by a multinational economy governed chiefly by financial concerns (the adjective global was first used in global finance). The dominance of the multinational and global economy continues to grow worldwide […].
These economic players have increasingly international responsibilities, drawing from national and international sources and involved in different fields (penal and civil). Their responsibilities cover two options.
The first option, through the spontaneous expansion of domestic law, is made possible by unilateral national initiatives. This is notably the case in the United States (3), where judges have the power to hand down punitive, criminal and civil penalties to multinational companies and their top executives for crimes committed overseas. This power is based on two laws, the Sarbanes Oxley Act and the Alien Tort Claims Act.
The Sarbanes Oxley Act (SOX), which was adopted in 2002 to restore investor confidence after the Enron scandal, has become a tool for internationalizing business law. This act applies extraterritorially to both all publicly-held companies in the United States and all companies subject to the Securities and Exchange Commission. The SOX Act modifies the obligations of auditors and the composition of boards of directors, and sets out two new crimes punishable by heavy fines or imprisonment up to 20 years. This is how oil company Royal Dutch Shell escaped penal sanctions but was forced to pay a $120 million dollar fine (4) while one of its affiliates (Royal Dutch Petroleum) was charged under the Alien Tort Claims Act (ATCA for human rights abuses during operations in Nigeria).
The ATCA dates back to 1789 and gives American federal courts jurisdiction in any violation of the “law of nations.” This provision allows foreigners to sue companies in the US for human rights abuses committed overseas. The ATCA can also be considered as a human rights tool as it constitutes a basis for lawsuits, particularly those against multinational companies.
This quasi-universal jurisdiction of American courts poses a number of legal and political problems – which explains US Supreme Court’s caution in its judgement on the Sosa v. Alvarez Machain case (5) (regarding an arrest in violation of the US-Mexico extradition treaty). The decision was largely interpreted as a soft warning against the spawning number of lawsuits being filed against multinationals under the ATCA (6).
Worried about the possible repercussions of an extensive jurisprudence and in particular for companies in danger of being sued, Australia, Great Britain, Switzerland and the European Commission filed amicus curiae briefs (7). The Supreme Court is set to incorporate the proposed criteria in its decision, such as the seriousness of the violation and the principle of subsidiary jurisdiction. Justice Breyer once again underlined the importance of international harmony as “a matter of increasing importance in an ever more interdependent world.” (8)
Such is the basis of a future, universal civil responsibility. This responsibility could be strengthened with a moral argument if a legal system were to incorporate the company responsibilities set out by the UN Subcommission of Human Rights in the future. While we wait for international soft law and domestic hard law to unite, this first possibility presented by the American courts remains a predominantly unilateral one.
Hence, the importance of the second option, which allows for expanding responsibilities within the framework of conventional and customary international law. This option could guarantee greater legitimacy because of international law’s basis on the multilateral adoption of shared norms, although its prerogative is restricted to areas like the fight against international corruption (9).
According to the preamble of the United Nations Convention against Corruption (2003), the convention’s objective is to protect national interests (state resources, political stability and sustainable development) and so-called universal values (democratic values and institutions, moral values and justice) from what have become global practices: “corruption is no longer a local matter but a transnational phenomenon that affects all societies and economies.” Likewise, the preamble of the OECD’s convention on “Combating Bribery of Foreign Public Officials in International Business Transactions” (1997) had already underscored that “corruption…undermines good governance of public affairs and economic development, while distorting international competitive conditions.”
In other words, if trade is be carried out freely and smoothly, competition must not be distorted, but requires a set of regulations to take the place of power struggles. We come back, then, to Durkheim and his analysis of contracts, which he says are “not sufficient by itself” since they are made possible by a regulation of contracts “of social origin.” (10) However, this regulation does not only refer to organic solidarity and restitutive sanctions, as Durkheim believed. Today, criminal law is at the forefront of global economics.
However, this expansion of criminal responsibility by conventional means results in the consolidation of private economic powers. We note again that one of liberalism’s strengths is directly related to its capacity to adapt and react quickly. This is how a private-public partnership in the very lucrative arms trade was envisaged (11). Faced with the threat of tightened ethics and greater responsibility, economic players do not contest the need for unified front against corruption. On the contrary, they present several arguments in favour of unified norms, i.e. that controls based on a principle of territoriality are becoming outdated in an era of globalization and electronic transactions, and that the various national practices and growing number of international legal proceedings make it impossible for companies operating on a global scale to take them into account. Yet, they consider it “wishful thinking” to believe that any control, however tight it might be, could be effective in the long-term if companies do not accept the principle and cooperate explicitly. This gives rise to the idea of associating economic players under one legislative, executive, and even judicial power.
In the absence of supra-state institutions representing the will of all on the global level, that idea is not absurd. However, such a sharing of powers (which would certainly entail some loss of sovereignty (12)) would manipulate responsibility and could promote the major players to a position of market dominance. From the predominance of economic players, we would drift towards the pre-eminence of the economic system, or even towards “economic totalitarianism.” Gérard Farjat has already pointed out this risk, citing the American Justice Posner who, a few years ago, advocated the notion of buying and selling babies on the free market to circumvent black market adoptions (13). From the black adoption market to the black torture market – a part of the fight against terrorism in this post 9/11 era (14) – we see the dangers of the sort of globalization that brings political and economics closer and close together.
In Conclusion, global powers, i.e. multinational corporations, must be made aware of their responsibility. In order to achieve this, an option that combines states’ guarantee of rights and flexible governance networks, must be found. In other words, it must be an option that, without separating powers divided among the network of institutional (state and international) entities and economic players, would improve the objectivity and predictability of legal norms as well as the independence and impartiality of the authorities who enforce them (judicial or jurisdictional guarantee). […]
(1) D. Carreau et P. Julliard, Droit international économique, Dalloz, 2e éd. 2005, n°14, p. 5.
(2) Ibidem, p. 26
(3) In France, the most innovative initiatives were launched by the Sherpa network, see W. Bourdon, « Entreprises multinationales et lois extraterritoriales et droit international », in « Les nouvelles figures…», RSC 2005, p. 747 sq.
(4) N. Norberg, « Entreprises multinationales et lois extraterritoriales », in « Les nouvelles figures… », RSC 2005, p. 739 sq.
(5) United States Supreme Court, June 29, 2004, 124 S. Ct. 2739; N. Norberg, “The US Supreme Court Affirms the Filartiga Paradigm”, JICJ 4 (2006) 387-400
(6) For universal civil responsibility, see JF Flauss, « Compétence civile universelle et droit international générale », in The fundamental rules of the International Legal Order, dir. Ch. Tomuschat et J.M. Thouvenin, Martinus Nijhoff, 2006, p. 385 sq.
(7) See the current cases cited by N. Norberg, above.
(8) See his opinion (also from 2004) on Hoffman La Roche v. Epagran concerning the vitamin cartel,
124 S. Ct/2359 L. Ed. 2d 226
(9) J. Tricot, « La corruption internationale » in Les figures … RSC 2005, p. 753 sq.
(10) E. Durkheim, La division du travail social, reed. PUF, p. 193.
(11 Le relatif et l’universel, above, p. 258 sq.
(12) Nadja Capus, « Le droit penal et la souveraineté partagée », RSC 2005. 251.
(13) G. Farjat, « L’éthique et le système économique, une analyse juridique », Mélanges Fouchard.
(14) E. Babissagana, L’interdit de la torture en procès ?, above.
Globalisation et sociétés transnationales
Mireille DELMAS-MARTY, professeur au Collège de France
© Sherpa ()