Doreen Lustig offers an original, engaging, and historically grounded insight into the development of international law's approach to private corporations. Lustig locates her account between the colonial times of the 1880s, when modern international law was forming and the private law corporation was being globally established, and the beginnings of international investment law at the end of the 1980s. On the way, we visit the rise and fall of the chartered Royal Niger Company seeking to exploit the riches of what is now Nigeria; Firestone's involvement with forced labor on the rubber plantations of pre-war Liberia; the missed opportunity to develop corporate responsibility for international crimes in the post-war Nuremberg Industrialist Trials; the Anglo-Iranian oil struggle in the early 1950s and its legal fallout in the International Court of Justice (ICJ); the failed alternative vision of corporate responsibility under the New International Economic Order (NIEO); and the eventual ascendancy of today's international investment law regime.
Through these examples, based on the impressive use of extensive archival research, Lustig convincingly illustrates why international law apparently ignores corporations while also promoting their interests. Lustig challenges the traditional view that corporate actors are irrelevant in international law and seeks to convince us that “international law has shaped the regulation of the business corporation” (8). This is achieved by “juxtaposing the conceptual approaches prevailing in international law throughout that period (such as the public/private distinction) and the practices of business corporations” exposing, “the central role that international regulation actually played in their history” (3).
Lustig demonstrates how state sovereignty and the private realm of corporations have come together to create the “sovereign veil” of the state and the “corporate veil” of the company. Through the former, the state enjoys non-interference in its internal legal and political affairs, while, through the latter, the company is insulated from international legal responsibility. As a result, traditional international legal thought and practice cannot grasp the realities of economic power and, in the process, also sustains hierarchical economic and political relations (4). International law, far from ignoring the corporation, offers, “the transnational regulatory space in which private business corporations were able to operate (and continue to do so)” (6). In other words, the apparent lack of corporate recognition, or regulation, in international law helps the corporation to flourish internationally.
Chapter 2 focuses on the use, by the Royal Niger Company, of a corporate charter as a vehicle for African colonization. The eventual revocation of its charter removed its public administrative functions, paving the way for the commercial success of the now-private Niger Company which, over time, evolved into today's Unilever. As a private company, its actions no longer fell within the province of international law. Chapter 3 highlights the relative power imbalance between the independent, but impoverished, state of Liberia and the economically strong Firestone Company. Firestone was able to obtain access to forced labor provided by the state through intermediaries, against the backdrop of the newly concluded League of Nations Convention Against Slavery and the International Labour Organisation (ILO) Convention Against Forced Labour. These international instruments were unable to regulate the private use of forced labor due to their emphasis on states as the principal holders of international treaty obligations. Accordingly, Firestone remained legally unaccountable.
Chapters 4 and 5 concentrate on the reasons why corporate accountability was avoided in the Nuremberg Industrialists Trials. According to Lustig, the tribunal wrongly gave primacy to political institutions over industrial institutions in the Nazi state, resulting in the avoidance of direct responsibility of corporate actors, or their senior executives, for war crimes which, the tribunal felt, could only be committed by political bodies and their leaders. Lustig sees this as a lost opportunity to tackle the corporate capacity to engage in “the private exercise of violence” (143), setting back the legal protection of human dignity in the “private sphere” by limiting it only to the “public sphere.”
Chapter 6 covers the nationalization by Iran of the assets of the Anglo-Iranian Oil Company (AIOC). Here Lustig argues that the public/private divide was used by Iran to avoid legal liability before the ICJ. Iran characterized the concession between itself and the AIOC as a private contract and not an international agreement, despite the fact that the AIOC was controlled by the British state. The ICJ accepted this analysis and ruled that it had no jurisdiction over the British claims arising out of the alleged breach of the concession, thereby giving legal force to Iran's actions. This ruling represented a legal threat to the commercial interests of multinational corporations (MNCs). It was reinforced when the ICJ ruled in the Barcelona Traction case that international law could not allow the national state of the shareholders to bring a claim for diplomatic protection upon the nationalization of the company in which they held their shares.
In Chapter 7 the author details how international law responded to this threat and moved towards today's investment law regime. Much of the chapter is based on secondary sources and covers well-known issues including: the rise and fall of the NIEO, what MNCs are, how the concern over MNC abuses of power arose, and how the United Nations tried and failed to adopt a code of conduct for MNCs. It completes the story by showing how corporations acquired investor protection rights under international investment agreements, and how voluntary “soft law” instruments arose in the OECD and ILO in the 1970s to deal with corporate responsibilities, which are only given one paragraph (see 213). As a result, too little attention is paid to these influential instruments, although the role of “soft law” in furthering corporate accountability in international law is touched upon in the concluding Chapter 8, as is corporate involvement in multi-stakeholder initiatives such as the 2011 United Nations Guiding Principles on Business and Human Rights.
This book is in many ways a “page turner,” which is rare for an international law book. It is also a work that departs from the usual historical accounts of international economic law, which focus largely on doctrinal questions analyzed in detachment from political and social contexts or archival research. Lustig offers a more refined contextual, indeed “micro-historical,” perspective which focuses on the detailed analysis of specific historical cases. The general conclusions of the book hang or fall on the choice and importance attached to each case study. One can ask why these cases and not others? But that is beside the point. The case studies presented offer reasonable evidence for the thesis that Lustig proposes. It is up to others to show if she is right or wrong, with further historical studies. Lustig offers an example of a valuable form of historical research that is not without precedent. Her approach recalls the so-called “new wave” approach to international corporate governance history. This seeks to depart from the first wave, which suffered from excessive attention to formal legal and economic analysis, by giving more extensive attention to archival detail thereby allowing a departure from often ideologically based assumptions about different national systems of corporate governance. Lustig's work has clear parallels with this line of related research and shows how we should approach a much-needed turn in international economic legal history. As a result, Lustig's work is a “must read” for anyone interested in this history and in the history of international law more generally.
