International Law: Multinational companies may lack personality under general international law; how

If international law is stipulated in the agreement then the multinationals manifestly possesses rights under the international legal system. The issue of general principles of law though, raises differences in opinion between jurists. One point of view is that general principles of law form a separate legal system17. This being contrary to the view that general principles of law is equivalent to general international law, therefore any rights issued under the agreement according to general principles of law are also rights in international law. The lack of unanimity over this issue though indicates that in this respect multinationals are not generally recognised to have rights under general international law18.

Multinationals, like individuals, are accorded with nationality, thus their home state may take up any claims on their behalf on the international plane. This was seen in the Barcelona Traction Case19, where it was held that states had the capacity to act on the behalf of companies. However, it is at the state's discretion whether or not to take up the claim of the company. Such dependency on the home state implies that multinationals have no personality under general international law.

Although multinationals have no personality under general international law, it is generally recognised through state practice, and now custom, that multinationals can acquire personality in various forms where states consent.

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.

There are many international tribunals and ad-hoc tribunals which employed to settle international commercial disputes, the majority of which involve agreements between states and multinationals. Through contracting to systems establishing such tribunals, states are seen to recognise the rights and responsibilities of multinationals on the international plane.

The willingness to become party to such systems by states pertains both political and economic reasons. Politically, a refusal to accept the jurisdiction of any tribunal may result in a deterioration in relations with the home state of the multinational involved. Whilst economically, a failure to contract to any conventions may deter multinationals from providing much needed foreign investment in that state. For multinationals will feel that their investment is more secure where there is protection from an international tribunal, no longer merely relying on the principle of pacta sunt servanda.

As with individuals, the European Community has accorded multinationals, based within the Member States, international personality within the Community. Thus there is a right to enforce interests before the European Court of Justice23. Such recognition though is not afforded on a global scale though.

Recently, multinationals have developed to such an extent that the UN has recognised their role on the international plane, drafting a code of conduct to regulate the global activities of the multinationals, also establishing a Commission to examine the multinationals24. Although the code has yet to be adopted, such interest implies recognition by the states through an international organisation of the growing international personality of multinationals.

It maybe argued that the code is the first step in the recognition of multinationals under general international law. Despite acknowledgement by states of the need for international regulation there is fear that recognition will extend the already considerable powers of the multinationals. With a few states remaining ideologically opposed to multinationals, whilst developing states already are weary of the power welded by the multinationals without any further extension. Furthermore, the western states are also opposed to an extension of power, wishing to retain a degree of control over multinationals.

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.