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.

Such rights under international law though, are seen as limited to those conferred from the agreement. The agreement may not actually even involve international law, coming under the jurisdiction of municipal law. For it is common for agreements to include a 'choice of law' clause allowing the parties to stipulate the 'rules of law' that any dispute arising from the agreement will be settled under. Thus the national law of the host state may be chosen, multinationals though are usually reluctant to do this, in case of changes in the law which prove adverse to their interests. Hence international law or general principles of law is commonly employed for arbitration.
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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 ...

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