Print Archives

Print Archives

How Corporations Govern

Abstract:

It would seem to be a relatively uncontroversial claim among scholars, activists,and policymakers that corporations are significant contributors to the shape and content of national and transnational regulation and that their contributions have significant effects on social welfare. Yet, despite this general consensus, scholars have focused little attention on explicating the precise mechanisms through which corporations contribute to transnational regulation and governance or the extent to which the social welfare effects of regulation and policy may be attributable to corporate activity.

In this Article, I suggest the broad contours of a methodology for beginning to think about the question, “How do corporations govern in the transnational arena?” In so doing, I explore how scholarly attention to the role of corporations in transnational regulation and governance can contribute to the development of a richer understanding of the functioning and effects of the existing transnational governance regime. At the same time, through an analysis of some examples drawn from twelve years of practice as a transnational business lawyer, I suggest how an understanding of transnational governance, enriched through a focus on corporate activity and decisionmaking, can expose new sites for political contestation and new strategies for intervention by regulators, policymakers, and activists seeking to harness and shape corporate power for the public good.

Print Archives

Gambling with the Psyche

Abstract:

Legal action against those accused of committing brutal violations of human rights has flourished in the last decade. Saddam Hussein awaits trial in Iraq. Augusto Pinochet, Chile’s former military leader, has been pursued by European and Chilean prosecuting judges since Spain’s Balthasar Garzón sought his extradition for murder in October 1998. Meanwhile, at the International Criminal Tribunal for the former Yugoslavia (“ICTY”), Slobodan Milosevic is preparing his defense against charges of genocide and war crimes. Even U.S. Secretary of Defense Donald Rumsfeld, with other senior officials, has been accused in a privately filed criminal complaint in Germany of being responsible for the torture of prisoners held in Iraq. Such legal actions were almost unimaginable a decade ago.

These are only the most prominent cases. A dozen senior Baathist officials face prosecution by Iraq’s new government. In Argentina, a 2001 court ruling abrogated laws giving immunity to military officers who oversaw andparticipated in the kidnapping and secret execution (“disappearance”) of as many as 30,000 people between 1976 and 1983.  Two years later, Argentina’s parliament annulled the laws, mooting a pending appeal and reversing nearly two decades of hostility by the country’s elected leaders to criminal prosecution of perpetrators of atrocities during the dictatorship. In 2001, a Belgian jury sentenced four Rwandans to prison for participating in the 1994 genocide of Tutsis and moderate Hutus. Victims of Chadian dictator-turned expatriate Hissène Habré brought a criminal complaint against him in Senegal in January 1999, alleging torture, barbarous acts, and crimes against humanity. While the case was dismissed, it opened up new possibilities for calling Habré to legal account in Chad, as the Pinochet case had in Chile.

In addition to national courts, international criminal tribunals have recently become important forums for human rights cases. The prosecutor of the new International Criminal Court (“ICC”), veteran Argentine human rights lawyer Luis Moreno Ocampo, is investigating atrocities in Uganda, the Democratic Republic of Congo, and Sudan. The ICTY and the International Criminal Tribunal for Rwanda (“ICTR”) have imprisoned dozens of perpetrators of unspeakable horrors after trials and guilty pleas11 and have delivered groundbreaking judgments advancing international law. “Hybrid” courts with varying degrees of international involvement and independence from national court systems are prosecuting perpetrators of human rights violations in East Timor, Kosovo, and Sierra Leone.

Print Archives

Building an Investor-Friendly Shareholder Derivative Lawsuit System in China

Abstract:

Despite claims that China’s capital markets resemble a “casino,” China has in fact made extraordinary strides in its quest to develop stable and mature capital markets. Although the Shanghai and Shenzhen stock exchanges only opened in the early 1990s, by the end of 2004 they boasted a combined list of 1377 corporations with a total market capitalization of RMB 3.7055 trillion ($447.5 billion). Currently, China’s capital markets rank as the twelfth largest in the world.

What is most striking about Chinese capital markets is the dominance of individual investors. There are now more than seventy-two million securities trading accounts in China. At the close of 2003, of the accounts trading shares on the Shenzhen Stock Exchange, only 172,700 out of 33.21 million were held by institutional investors. Individual investors also generated more than 70% of the total trade turnover in 2003. Most of these individual investors are middle-aged individuals or senior citizens, with an average age of 43.01 years. The majority of them (86%) are low- or middle-income, and 55.63% have an annual income below RMB 20,000 ($2,418). In addition, many Chinese individual investors may lack basic financial or investment knowledge, as 43.81% of them have no higher education.

Faced with booming capital markets packed with unsophisticated individual investors, China’s securities regulators have faced tough questions about the adequacy of shareholder protections. The regulatory body adopted policies based on La Porta’s scholarship on the positive link between capital market development and public shareholder protection. As stated by Meilun Shi, former vice chairman of the China Securities Regulatory Commission (“CSRC”), “investors’ confidence and participation are critical to the healthy and stable development of China’s capital markets. They have a direct impact on the successful implementation of reform and the Open-Door Policy, as well as on social solidarity.” Since 2000, therefore, investor protection has consistently been “the top priority” of the CSRC. In January 2004, China’s State Council, in a policy declaration regarded as an important milestone in the history of China’s capital markets, reiterated that “protecting the legitimate interests of investors, particularly those interests of public investors” shall be one of the ongoing guiding principles in the reform and development of capital markets. Most recently, this principle was incorporated for the first time into the State Council’s Annual Government Work Report, which signifies the Chinese government’s determination to further protect investors.

Book Reviews, Print Archives

Book Review: The Dark Sides of Virtue: Reassessing International Humanitarianism

Review of The Dark Sides of Virtue: Reassessing International Humanitarianism. David Kennedy. Princeton University Press: Princeton, N.J., 2004. Pp. 400. $29.95 (cloth).

In The Dark Sides of Virtue: Reassessing International Humanitarianism, Professor David Kennedy asks how the many devoted, resourceful, and well-intentioned individuals who make up the international humanitarian community can so often fail in their most basic goals. According to Kennedy, humanitarianism has many unintended costs stemming from the failure of humanitarians to acknowledge their increasing influence on international policymaking. Government officials and political actors recognize that they ultimately bear responsibility for the consequences of their policies, and, therefore, they pragmatically consider the risks and potential costs of their actions as well as the benefits. Humanitarians have traditionally seen themselves as outsiders with respect to global “rulership” and thus do not feel the same accountability for their actions. In addition, humanitarians often mistakenly assume that because their actions are well-intentioned, they will have only benefits. Kennedy argues that if humanitarians identified with their power in global governance, they would engage in pragmatic cost-benefit analysis more often and avoid many of the dark sides of humanitarianism. Although Kennedy offers few concrete solutions, his broad exploration of the problem through his own experiences is thought provoking and compelling. Kennedy’s goal is to provoke the human rights community to engage in the type of self-critical, pragmatic thinking that might reduce, if not eliminate, the costs of humanitarian action. The result is a challenging, engaging, and complicated book that may well have the desired effect.

Book Reviews, Print Archives

Book Review: Defending Interests: Public-Private Partnerships in WTO Litigation

Abstract:

Review of Defending Interests: Public-Private Partnerships in WTO Litigation. Gregory Shaffer. Brookings Institution Press: Washington, D.C., 2003. Pp. 227. $46.95 (cloth).

Much has been written about the increasing legalization of international trade relations, especially the development of the World Trade Organization (“WTO”) Dispute Settlement Mechanism (“DSM”). Professor Gregory Shaffer is at the forefront of this emerging field with his book Defending Interests: Public-Private Partnerships in WTO Litigation, which analyzes the vital role that ad hoc public-private networks play in litigation before the WTO. Shaffer explains that, although only WTO Member States can bring litigation before the WTO, private actors such as corporations and activists play an important role in states’ decisions about which cases to bring. Private actors may also provide states with the information and expertise needed to navigate the dispute settlement proceedings. Shaffer draws on over 100 interviews with critical actors to evaluate the public-private networks and partnerships that drive states’ decisions, primarily examining the networks in the United States and the European Union. Shaffer’s focus is on the actors, but his analysis necessarily includes a brief review of the system itself.

The WTO is unique among international institutions for its legalized dispute settlement with two levels of legal panels and effective enforcement mechanism. Member States can file complaints against any other Member State for actions they believe violate a provision of a WTO agreement. The first step in the procedure is a period of mandatory consultation between the opposing parties. Many disputes are settled at this stage, before actual litigation, due to strategic legal decisions, expediency, or political considerations. If the complaint is not settled during the consultation period, it is referred to a panel of experts for adjudication. The panel’s decision can then be appealed to the Appellate Body, which reviews the case much as an appellate court in the United States would. A decision that survives appellate review is considered final and enforceable. While neither the WTO nor a member country can force a country to change its offending laws or practices, the WTO can authorize the winning country to withdraw trade concessions, effectively imposing sanctions on the loser. The imposition of these sanctions is optional, and, frequently, the states negotiate an alternative settlement instead. This seemingly toothless enforcement mechanism has been remarkably effective in bringing about compliance with WTO agreements.

Print Archives

Anxiety and the Sidekick State

Abstract:

In a quirk of parallel evolution, the annual United Kingdom Materials on International Law (“UKMIL”) is organized according to Marx’s methodology, “rising from the abstract to the concrete.” For twenty years, however, for all the reams of material the government put out, nothing of substance could be found to fill the first section, the broadest philosophical category on the “nature, basis, [and] purpose” of “international law in general.”  Then, in 2003, the UKMIL found its jurisprudential voice.

British Foreign Secretary Jack Straw waxed descriptive and transformative, in a burst of middlebrow messianism:

Events since September 11 . . . raise very large questions about the underlying assumptions of international relations . . . since the Peace of Westphalia . . . that the best guarantor of peace and security was to respect the territorial integrity of sovereign states . . . [W]e have to begin a discussion about how those principles are revisited in the modern environment because of threats posed other than by normally functioning sovereign states, posed by rogue states, posed by international terrorism, posed by others who are acting in an extremely oppressive way.

Almost simultaneously with Straw’s statement, sixteen scholars of international law signed a letter in The Guardian expressing grave reservations about the soon-to-be-launched Iraq War. This then led to the writing of “We Are Teachers of International Law,” an extraordinary piece of critical self-examination by four of the original scholars.

In its ten and a half pages, the authors ask sixty-five questions, none of which they answer; indeed, they conclude by asking whether the most important questions are those that should go unanswered. In its critical precision, and in its very angst, this article is perhaps the key document for the understanding of contemporary British thinking in international law, particularly when considered in conjunction with the government’s enthusiastic if lumpen analysis, as represented by Straw’s speech.

In the United Kingdom, public interest in international law has soared. Paradigmatic of this moment is the tension between the passionate evocation of a “new” international law by perpetrators of a war widely denounced as illegal and the deep anxieties about the law expressed by scholars of the field. In what follows, I attempt to map the recent moves of British international law, into a putatively new paradigm and back out again, and to the center of political debate. Illustrating how we got where we are might suggest which of the current approaches to the field are the most fruitful and, hopefully, where we might go next.

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