International Law: Multinational companies may lack personality under general international law; how
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International Law: Multinational companies may lack personality under general international law; how Multinational companies maybe described as 'enterprises which own or control production or service facilities outside the country in which they are based14.' Such companies are usually privately owned, and have developed to possess a substantial degree of international economic and political power, through its vast resources, which are above that of many states. Despite such power and global activities, which include entering into agreements such as concessions, with states, traditionally, such companies are not persons under general international law, where are only states are regarded as subjects15. Historically the socialist and developing states have been seen to oppose any recognition of multinationals. The socialist states were seen to oppose such entities on political and ideological grounds, whilst the developing states were weary of the power of multinationals, fearing exploitation. However, with the fall of communism in USSR and eastern Europe, and communist states such as China entering into agreements with multinationals16, opposition on ideological grounds has somewhat diminished. Whilst the need for foreign investment has led to developing states entering into agreements with multinationals, regardless of their fears. This indicates a de facto recognition of the rights of multinationals in the international legal system, in its ability to enter into agreements with states. ...read more.
In Texaco Overseas Petroleum Co. v Libyan Arab Republic20 , where Libya 'nationalised' all foreign property including that of the plaintiff, the court resolved that agreements could give companies enforceable rights under international law. The granting of these rights though is dependent on the state. The rights of multinationals was further undermined in the Charter of Economic Rights and Duties of States21 . Under which, states are given the right of expropriation of natural resources, where compensation is given. This implies that the rights of the state are primary to that of the multinationals, who are not subjects under general international law. Many international conventions though, which act as a source of international law, have recognised the rights of multinationals in the international legal system, through establishing tribunals for international commercial arbitration. Most notably, the World Bank through the Convention on Settlement of Investment Disputes Between States and Nationals of Other States in 1966 has created the International Centre for Settlement of Investment Disputes (ICSID)22. Article 25 of the Convention declares that the jurisdiction of the ICSID extends to any legal dispute between a contracting state and a national of a contracting state, where both parties consent to the arbitration. ...read more.
At present, the multinationals maybe said to only possess a measure of personality under international law. For the rights and responsibilities afforded are through the will of states in form of agreements. However, in contrast to individuals though, the granting of rights is not seen as a gratuitous gesture by states with mutual benefits more apparent. Under general international law though, despite the acceptance of tribunals and therefore the general rights of multinationals, there is no personality acquired. For the rights enforceable are not general but that granted through agreement. Thus it is seen that the rights acquired on the international plane are through the consent of states in forms of entering into agreements with multinationals, accepting the jurisdiction of international commercial tribunals and the willingness to take up claims of the multinationals in international courts. The power and influence of the multinationals will inevitably increase in the future as new markets are created in eastern Europe and south-east Asia. it is likely that the resources and activities of the multinationals will grow to an extent that they are only outnumbered by a handful of states. Hence, with such power and influence on the international plane there is a need for some form of recognition and therefore regulation of their international relations within the international legal system. ...read more.
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