Doreen Lustig, an associate professor of law at Tel Aviv University, frames her book Veiled Power: International Law and the Private Corporation 1886–1981 as an effort to get beyond the “failure narrative” that focuses on how corporations escape responsibility for actions that if undertaken by a state would be a violation of international law. She sees law schools’ curricula as perpetuating the failure narrative and reinforcing the idea that: “Sovereignty is a concept of political or public law and property belongs to civil or private law” (p. 2). Lustig wants to bring in a historical understanding that demonstrates the longstanding interaction between corporations and international law, where “international legal doctrines, practices and institutions that were central to international law-making constitute a facilitative legal order that was pivotal to the operation and flourishing of private business corporations” (p. 3). She accomplishes this goal, and thus it is somewhat unfair of this review to wish that she had reached higher. Lustig's strategy of four chapter-long unconnected case studies buries the lede. Each chapter contains truly fascinating histories and claims, yet they leave the reader searching to understand why the stories unfolded as they did. This Review stresses the value added that lies within the case studies, and the important questions that remain.

The prelude to Lustig's central argument—what she calls “setting the scene”—is the end of the chartered company. For hundreds of years, imperial states extended their territorial powers by granting corporations extensive sovereign powers, to the point that chartered corporations functioned as states in the territories they operated, setting and enforcing the rules that they, local workers and inhabitants, and other trading companies were obliged and compelled to follow. At a certain point, imperial powers decided to reclaim the power of chartered companies, which was easier said than done. Lustig tells the story of the Royal Niger Company from 1886–1900, which was reorganized as the National African Company (NAC). The company sought to challenge French and British claims through arrangements with local leaders. NAC actions defied the British government's desire to end the company's monopolistic practices. The limited ability of the British government to actually stop the company from making whatever arrangements it wanted in Africa led to a negotiation wherein the charter was revoked, yet the company was granted extensive exclusive rights in return. Lustig notes that the NAC profited handsomely from the arrangement. “By contrast, the revocation had a detrimental effect on the coastal African brokers” (p. 24). The prelude informs us about the reasons and challenges imperial Britain will face in promoting free trade. We also learn that the post-corporate charter world saw the use of concessionary agreements as a way to assert imperial prerogatives and maintain the metropole's formal legal control over the national commercial actors operating abroad. What is buried within is the idea that the international law corporate veil comes from the sovereign's desire to reclaim charter-company power.

Piecing together points Lustig develops in the case studies, I see Lustig's central argument as being that the idea of corporate responsibility under international law was not invented in the 1990s. Rather, in the nineteenth century, international law created the category of private international law as distinct from public international law, conferring extremely limited responsibility on private corporations so that the state could more completely assert its own sovereign authority. She shows that at numerous points in the twentieth century, international legal arbiters considered whether corporate responsibility should be enlarged to address the reality that corporations were complicit violators and underminers of international law, and many states were not, in fact, powerful enough to compel corporate respect for international law. Yet time and again, legal arbiters chose to maintain the corporate fiction of a veil that separates corporate owners from corporate directors, and the corporation itself from individual decisionmakers, so that the corporation and its owners are never held responsible for violating international law.Footnote ¹ Decisionmakers also repeatedly chose to confer extensive international legal rights on corporations, while generating few, if any, corresponding duties under international law.

The argument is advanced through deeply researched historical case studies that mostly describe what legal decisionmakers argued and did. This technique reflects that Lustig embraces the lawyer's claim that each case must be considered on its own, because the factual situation of each case ineluctably drives legal decision making. This strategy has strengths and weaknesses. The reader learns a great deal about the historical context of each case. Lustig is also able to tell a compelling story without suggesting that what happened in Africa was in any way similar to what occurred in Asia. Yet use of this methodology can cause one to lose sight of the larger forces at play. It is as if each case is about a unique set of facts and legal choices, and as if legal arguments explain the choices of lawyers and judges. To be sure, Lustig acknowledges that lawyers were operating in a context of political constraints. Yet there must be a reason why, despite compelling opportunities, legal decisionmakers repeatedly chose to maintain corporate veils.

International law was present in the prelude's discussion in the form of agreements between companies and local leaders, and imperial-era concessionary agreements. But Lustig's main story begins in the era of the League of Nations, when decisionmakers decided that only territorial states would be responsible for ending slavery. Chapter 3's discussion of “Liberia, Firestone and the End of Slavery as a Political Cause” is a must-read for anyone interested in how international law enabled the perpetuation of slavery. Lustig skillfully untangles the Gordian knot that allowed Liberia formally to ban slavery, Liberian government officials and local tribal leaders to directly profit from slavery's continuation, and Firestone to pretend that it was paying employees rather than participating in a system of slavery. The problem League officials faced is that Liberian officials were complicit, and the contractual agreement under which Firestone built the rubber industry could not be fulfilled without compelled labor.Footnote ² Lustig identifies different solutions that were discussed, which included a shared responsibility of local and consular officials to ensure that anti-slavery laws are respected by foreign corporations. These discussions were about what to include in reports and efforts to end forced labor. They were not themselves international legal determinations. But Lustig connects the Firestone-Liberia situation to the conversations occurring in Geneva among League and International Labor Organization (ILO) officials about how to end forced labor. These conversations included the question of whether “a company practising forced labour [could] be held directly accountable under international law” (p. 41).

As decision making proceeded across discussions to end slavery, efforts to halt forced labor, and League investigations into Firestone's practices in Liberia, participants repeatedly decided not to make international legal demands of the corporation. Lustig thus presents events of the 1920s as teeing up a series of choices where a broad range of officials repeatedly diminished corporate responsibility for practices that were clearly prohibited under international law. Her account of international law's complicity in enslavement is incomplete insofar as she sidesteps the conversations about forced labor in the League Mandates,Footnote ³ but she compellingly shows how participants actively chose to let Firestone maintain the fiction that by paying nominal fees to tribal leaders and government officials, the company was not directly compelling labor. Firestone's actions were ostensibly legal, yet only because ILO rules vested responsibility in states and Liberian officials acted as enslavement intermediaries. Lustig sees this outcome as part of “a broader post-colonial pattern in which the interstate order rendered the economic exercise of coercion invisible in legal terms” (p. 67).

The next two chapters consider corporate responsibility in Nazi atrocities. My sense is that the project itself began in these cases, since Lustig's discussion goes quite far afield into competing ideas of the behemoth versus the leviathan versus the dual state. Were this reader equally fascinated by the Nazi era, I can well imagine that Lustig's discussion of the larger ideas of the state would be very revealing of how lawyers and judges dealt with Nazi crimes. On the one hand, the discussions clearly foreground how ideas about the state and the corporation led legal practitioners to choose absolute corporate impunity. Yet once again we see the limits of Lustig's penchant for treating each legal conundrum as a unique factual situation, and each company's corporate structure as important for assigning responsibility. Who is making a choice, and for what reasons, are not easy to follow. Given that the idea of an international-law corporate veil preceded and continued after the Nazi era trials, it is not fully persuasive to argue that large theoretical claims about the nature of the state are driving prosecutorial or judicial choices to see firms as followers that, because of their follower-status, cannot be accountable.

I found the excursions into competing theories of the state came at a cost. The many ways in which corporations participated in war crimes, and thus the different types of corporate responsibility that could have been developed because of the uniqueness of Nazi-era corporate complicity, get diluted by being spread across what are at times highly abstract discussions. Meanwhile corporate criminality for Nazi atrocities and corporate responsibility for life and property losses of Nazi victims may be distinguishable. It might make sense to treat individual corporate leaders, rather than corporations themselves, as criminals, and this was the strategy prosecutors pursued. This would mean that the result of a corporate impunity for Nazi-era crimes may come from the prosecutorial decision to use a criminal—as opposed a liability—model of dealing with Nazi-era corporate behavior. This would make the Nazi cases special, rather than an integral part of how corporate responsibility for and under international law evolved.

We learn from these discussions that the Nazi corporate complicity “problem” got defined as one of corporate monopoly rather than the idea that corporations are responsible for what is done in their name (pp. 115–18). We see that Nuremburg lawyers tried a number of strategies that failed to convince the judges, with the result being that corporations were granted the prerogative power to ignore the question of whether an action is or is not lawful according to international law. These choices were sustained by decisions of Nuremburg prosecutors and judges, but the reasonings behind these decisions are obscured by Lustig's fascination with the larger ideas about state authority, and the implication that where the state is responsible the firm is not responsible.

Another cost of the book's emphasis on theories of the state is that the pathbreaking and only somewhat successful nature of prosecutor's legal efforts are undersold. Alongside modest success, the magnitude of the missed opportunity is also not fully revealed. Nonetheless, Lustig offers nuggets of insight throughout. For example, we learn that soldiers were not permitted to successfully assert a “following orders” defense, but corporations were (p. 131), and that individuals may be held accountable for destruction and theft, but corporations are not accountable for their part in mass spoliation (pp. 99–102). We learn that some lawyers called out the fantasy that there was an “abyss” between the concentration camp that killed and housed slave labor, and the factory next door that used the slave labor while maintaining that it offered “bold hope” and “concern for the individual man” (p. 132). We learn that some judges named the “vacuum of legal irresponsibility—in which crime on such a broad scale can be actively participated in by a corporation exercising the power and influence of Farben without those who are responsible for participating in the policies being liable therefore” (p. 133). These are mind-boggling nuggets. If Lustig had expanded the lens to the contemporary and subsequent historical debate about corporate crimes and irresponsibility in the Nazi era, the list of choices and paths not taken would likely be larger and clearer. One wonders how the idea of corporate responsibility might have evolved had corporations and their boards of directors been held to account for their role in the crime of the century?

The last two case studies are about foreign investor rights, in which Lustig advances the interesting claim that international courts have granted states permanent sovereignty over their natural resources. Lustig returns to the League era, where Britain was trying to stop Iran from asserting a sovereign right to divest British companies of their oil concessions. This struggle involved decisions of the Permanent Court of International Justice (PCIJ), and a central feature of these last two chapters is that League and United Nations’ courts refused to let themselves be venues where states champion corporate rights. Instead, the path toward adjudicating something related to investor rights will be via questions about whether governments breached specific articles within interstate treaties. Lustig may be right in arguing that the PCIJ and its successor, the International Court of Justice, de facto endorsed the notion that states have permanent sovereignty over their natural resources. This is an interesting claim because of the conventional political wisdom that the New International Economic Order (NIEO) aspiration of permanent sovereignty over natural resources failed. What Lustig is suggesting is that even if the political objective of a positive legal statement in favor of permanent sovereignty failed, as a legal matter of customary international law, states do have permanent sovereignty.

The nature of the investor-rights chapters is different from what came before in that there is no central corporate bad actor in these stories. The sweeping and very general nature of the discussions make it hard to follow who is determining that corporations gain extensive rights and few responsibilities in international law. Presumably the answer lies in the negotiation and arbitration of bilateral investment treaties. Here a case study that revealed the imbalance between foreign investor rights and responsibilities, and between investor rights at the time of the Calvo doctrine compared to their rights in an age of bilateral investor treaties, would have helped.

One of the greatest strengths of Lustig's book is that she repeatedly reveals the paths that were not, but could have been, taken. There were many opportunities for a range of actors to insist that corporations themselves be held accountable for egregious international-law-violating actions. The implication is that international law did not inherit or acquiesce to European or American ideas or customary law practices that mandate the corporate veil shield corporations from liability for actions abroad. Instead, international legal actors repeatedly, in large and small ways, and deliberately chose to sustain the international law corporate veil.

There is no smoking gun evidence that explains why this choice was sustained. The implicit answer is that states preferred to maintain the international law corporate veil. Sometimes Lustig suggests that denying corporate responsibility was a way for states to claim all sovereign prerogatives for themselves or to avoid having also to condemn colonial metropoles for undertaking the same egregious practices as corporations. Sometimes developing country leaders were complicit supporters of a system that included personally enriching side-payments, and at other times developing countries lacked the power to persuade or compel powerful countries and corporations. Yet these accounts do not fully explain the legal decisionmaker's complicity in maintaining the corporate veil. ILO rules on forced labor are directed at states, and the drafters chose to not extend responsibility to private actors. But for other case studies discussed in the book, there does not seem to be a hard law that precludes corporate responsibility, especially if the alternative is corporate impunity. This means that the reality that states have some reasons to prefer the corporate veil does not explain why legal decisionmakers sustain the corporate veil. Perhaps the answer lies in the presumption that except for where specified by international law, state sovereignty rules. If states have not defined an international corporate responsibility, maybe legal decisionmakers feel unable to find corporations liable under international law. This legalistic type of argument is not something that critical scholars or political scientists will find sufficient, especially because many of the actors in her story are political rather than purely legal actors.

The larger objective of Veiled Power is to expand our historical knowledge of how international law conferred international legal rights while actively excluding that transnational corporations assume corresponding international legal duties. I have full faith in the historical treatments, where the accounts are replete with citations to an impressive range of scholarship. While historians were surely aware of international law's problematic engagement with slavery, connecting moments where corporations were granted a pass is very useful for a book on international law and the private corporation. Lustig does discuss the contemporary period where the rhetoric of human rights discourse has become the vocabulary through which corporate responsibility is considered, yet the book does not include a case study or chapter that analyzes this development. This is a reasonable decision, yet a discussion along these lines would better connect the book to contemporary conversations.

I am sympathetic that this book builds on a JSD dissertation at New York University. As a first book, built on a law dissertation, Veiled Power is truly an impressive piece of scholarship. Lustig is a deft writer and storyteller. Her integration of specific stories into a larger histories and ideational conversations are compelling. Given the sophistication of discussions about charters, slavery and the Nazi era, we can hope that Lustig will continue to research and write on these topics so as to provide the larger historiography of choices and paths not taken. Indeed throughout the book Lustig offers poignant observations such as:

It is thus with great admiration for this first scholarly enterprise that I identify a few discussions that would have made this book even stronger. For example, the reader is never told why the author picked these particular case studies, nor does the reader understand how these case studies fit into a larger sweep of international law and corporate impunity. The distillation of Veiled Power's argument offered in this review is clearer than that found in the book itself, and much of this review extrapolates by noting that the analysis “implies,” since Lustig too often stays at the level of description and her own interests. Indeed the book's introduction and conclusion are missed opportunities to situate this study into the larger conversation, and to draw out more fully the author's firm belief that the choices of legal decisionmakers, more than hard law itself, sustain the corporate veil.

One can tell that this book does not fully encapsulate the author's thoughts on the topic. What is most missing, and perhaps something for a sequel, is the why of the choices Lustig so carefully describes. By itself, studying what legal decisionmakers did and did not do will never reveal why certain choices prevailed. We could have a greater sense of what decisionmakers worried about when they chose the specific path. We could have a greater sense of the lawmaker's decision to not articulate corporate responsibilities. We could have a greater sense of how the background of judges and lawyers perhaps creates interpretive predilections. Yet the overwhelming contribution of this book is to make it very clear that there were choices and moments when a braver approach to corporate responsibility was possible but eschewed.