7 Case Studies of Business and Human Rights
8.1 Globalisation and Human Rights
Globalisation can often be an over-used and misinterpreted term.783 It can be thought to represent the economic trade liberalisation of the last decades and the diffusion of the open-market trade that followed. From a narrow view ‘globalization occurs when multinational enterprises engage in foreign direct investment to create foreign subsidiaries which add value across national borders’.784 From any point of view, globalisation entails a transnational quality of interaction between nations from across the world and makes them more interdependent on each other.785 Human rights are also a part of, but separate from globalisation,786 as the relation can be seen as mutually reinforcing or as threatening human rights.787 The entrance of multinational corporations has positively contributed to severe poverty considerably decreasing in recent decades. In addition, the protection of certain rights, such as physical integrity, has improved through the world.788 Of course globalisation has had its negative effect on human rights, as has been pointed out throughout this research, but there has also been positive changes. Rights such as freedom of speech, freedom of political participation and worker’s rights have had a beneficial effect compared to the protection of physical integrity.789
Globalisation has led some to believe that states are not a sufficient source in regulating multinational corporations.790 As Theo Van Boven remarks ‘one of the consequences of globalization of the world economy has been the weakening of the role of the state and, on the other side of the coin, an increase in the powers and
783 Reinisch (n 151) 76.
784 Alan M Rugman, ‘Multinational Enterprises and the End of Global Strategy’ in John H Dunning and Jean-Louis Mucchielli (eds), Multinational Firms - The Global-Local Dilemma (Routledge 2002) 3.
785 Mahmood Monshipouri, Claude Emerson Welch and Evan T Kennedy, ‘Multinational Corporations and the Ethics of Global Responsibility: Problems and Possibilities’ (2003) 25 Human Rights Quarterly 965, 968.
786 McCorquodale (n 88) 91.
787 Dinah Shelton, ‘Protecting Human Rights in a Globalized World’ (2002) 25 Boston College International &
Comparative Law Review 273, 454.
788 Axel Dreher, Martin Gassebner and Lars-HR Siemers, ‘Globalization, Economic Freedom, and Human Rights’
(2012) 56 Journal of Conflict Resolution 516, 538.
789 ibid 846.
790 Ratner (n 9) 461; Deva (n 87) 1; Deva (n 611) 42.
influence of non-state entities’.791 Scholars have tried to build ideas of new global governance, excluding the vital role of nations and focusing on international organs instead. Susan Strange, for example, has attempted to argue that, based on their political and economic power, multinational corporations could rival the power of nation states.792 In her argument, the authority and power of a state is diminishing as exclusive authority belonging to the state is now shared with other actors.793 States are not the only source of legislation as illustrated throughout Part II of this research. The current form of the so-called meta-regulation, which encompasses legal, non-legal and self-regulation, demonstrates that vertical and hierarchical state-enacted law is not the only source of important regulation.794 The ‘hollowing out of the state’ in this view is happening due to the growing number of governance networks consisting of states, business entities, NGOs and individuals.795 In this new form of governance, state action can have a greater or lesser role depending on the topic.796
The power has been subdivided, as Susan Strange expresses, firstly from weak states to powerful ones and secondly from states to the markets, whilst some power has altogether disappeared from state actors.797 The power states possess can be seen to illustrate the capability to regulate multinational corporations, which is often directly linked to their influence in the world economic order.798 This means that all states have lost levels of ingrained power to the globalised market economy and its actors, but specifically weak states are at a clear disadvantage in today’s world order. It is clear that through globalisation, international trade liberalisation and privatisation, certain amounts of power that sovereign states used to possess have been lost. This does not however mean that the power lost by states has directly flooded directly and solely to multinational corporations. The distribution of power has also made supranational, international and non-governmental organisations and also the individual more powerful and their role more substantial. For example, countries belonging to the EU have abjured levels of sovereignty and power to the EU, but it has not made them any less meaningful as states. Power distribution might adjust levels of power between actors, but not abolish the powers of the state.
791 Theo Van Boven, ‘A Universal Declaration of Human Responsibilites?’’ in Bahia van der Heijden, Barend;
Tahzib-Lie (ed), Reflections on the Universal Declaration of Human Rights, A Fiftieth Anniversary Anthology (Martinus Nijhoff 1998) 76.
792 Susan Strange, The Retreat of the State (Cambridge University Press 1996) 16–43.
793 ibid 82.
794 Christine Parker, ‘Meta-Regulation: Legal Accountability for Corporate Social Responsibility’ in Doreen McBarnet, Aurora Voiculescu and Tom Capbell (eds), The New Corporate Accountability: Corporate Social Responsibility and the Law (Cambridge University Press 2007) 210.
795 ibid 210–211.
796 ibid 211.
797 ibid 189.
798 Wells and Elias (n 91) 146.
This research has not demonstrated that multinational corporations would in any way be comparable to nation states in their role in the current global order.
The loss of power has not meant that the state is not still the most important actor in the international community. This can be based on four conclusions. Firstly, even with all their abilities, multinational corporations are non-state actors and even with any level of international legal personality they are unable to act in a role comparable to state entities. There is no need to re-establish the international order or the system of international law by establishing state and non-state actors as similar actors in the international arena. States have and should continue to have the primary responsibility in the protection and promotion of human rights.
Even with the political and economic power multinational corporations possess, they cannot and should not contend for the role of the state. This does not mean that they could not be viewed to have some level of international obligations, which will be discussed in Chapter 9. All such standards should however be kept clearly separate from states.
Secondly, a multinational corporation exists as a composite of legal companies due to domestic laws stating their requirements to be registered and considered a company. Each company acts in accordance with the laws of each jurisdiction.
The existence of a company is built from domicile corporate law and hence on the concept of domestic law. States also act as the jurisdictions in which non-state actors operate. States set the borders for their jurisdictions. The political and economic order of the world is built on the assumptions of domicile jurisdictions. The relation between a company and the domestic laws of the jurisdiction it operates in are therefore indispensable.
Thirdly, national states control transnational regulation and thus their governments are the primary actors in global economic governance.799 International law as a horizontally aligned law system is made by states for states, and it is state actors that define its requirements and more importantly its actual effects. States are currently the bearer of human rights duties directly and the human rights regime is dependent on the willingness and capability of states to enforce those duties.
Ian Brownlie noted that states would continue to be the primary actor until and only ‘if national entities, as political and legal systems, were absorbed in a world state’800. To diminish the role of the state in human rights would diminish the entire international law system and thus human rights law in the process. This does not however mean that the international order could not simultaneously incorporate other actors, but this must occur without limiting the role of the state.
799 Daniel W Drezner, ‘Globalization, Harmonization and Competition: The Different Pathways to Policy Convergence’ (2005) 12 Journal of European Public Policy 841, 843.
800 Brownlie (n 53) 58.
Globalisation has led to the weakening of the powers of states in some aspects, but this has not been the case in relation to business and human rights. Trade liberalisation and the global economic order have not made the state less important, but highlighted its role as the primary bearer of the international order and the obligations granted by it. When issues such as climate change or the global refugee movement arise, the role of the state has actually only increased. In the field of globalisation and environmental law, evidence points to the fact that the role of nation states has not decreased either.801 Actually globalisation has maybe even enforced the role of states as certain states share common goals and values. Even though some have expected international organisations to carry these tasks, it is still in the hands of intergovernmental cooperation between nations and their governments. Similarly, even though various actors act in the sphere of human rights, the role of the state has not deteriorated.