Multinational Corporations and Other Non-State Actors

Multinational Corporations and other Non-State Actors have become increasingly important in the contemporary international legal system. Traditional Public International Law was primarily concerned with relations between sovereign States. However, globalisation, international trade, technology, finance, human rights and transnational activities have expanded the influence of entities that are not States.

These actors may influence international law, participate in international processes, possess certain international rights and obligations, and in some situations be subject to international legal standards. However, they generally do not possess the same general international legal personality as States.

Meaning of Non-State Actors

Non-State Actors are entities that participate in international affairs but are not sovereign States.

The category may include:

• multinational corporations;
• international non-governmental organisations;
• individuals;
• armed groups;
• international civil society organisations;
• transnational advocacy networks;
• certain indigenous peoples’ organisations;
• financial and economic institutions;
• other entities exercising significant transnational influence.

The extent of their rights and obligations varies considerably.

Multinational Corporations

A Multinational Corporation (MNC) is a business enterprise that operates across the territory of more than one State.

An MNC may have:

• a parent company in one State;
• subsidiaries or branches in other States;
• international supply chains;
• employees across different jurisdictions;
• investments in multiple countries;
• substantial economic influence.

Examples include large corporations operating internationally in sectors such as:

• technology;
• energy;
• pharmaceuticals;
• finance;
• manufacturing;
• telecommunications;
• mining.

Multinational Corporations and International Law

Traditionally, corporations were primarily governed through domestic law.

An MNC was generally treated as a legal person under the domestic law of the State in which it was incorporated or operated.

However, the international activities of MNCs have created legal questions concerning:

• foreign investment;
• human rights;
• environmental protection;
• taxation;
• labour standards;
• international trade;
• corporate responsibility;
• corruption;
• corporate accountability.

This has increased the interaction between MNCs and international law.

Legal Personality of Multinational Corporations

MNCs generally do not possess the same general international legal personality as States.

Their legal status depends upon the particular international rules applicable to them.

They may possess certain rights or responsibilities through:

• investment treaties;
• international commercial agreements;
• domestic legislation implementing international standards;
• international arbitration mechanisms;
• corporate responsibility frameworks.

Therefore:

MNCs are important participants in international affairs, but they are not equivalent to sovereign States as subjects of international law.

MNCs and International Investment Law

International investment law is one of the most important areas connecting corporations with international law.

Investment treaties may provide protections to foreign investors concerning:

• expropriation;
• fair and equitable treatment;
• discrimination;
• protection and security;
• free transfer of funds;
• certain forms of arbitrary State conduct.

Where an applicable treaty permits it, a foreign investor may bring a claim directly against a host State through international arbitration.

This is a significant development because traditionally only States could bring international claims.

Investor-State Dispute Settlement

Investor-State Dispute Settlement (ISDS) allows qualifying foreign investors to bring claims against States under applicable investment treaties or investment agreements.

The investor may be able to initiate international arbitration without requiring its home State to exercise diplomatic protection.

This gives certain corporations and investors a form of direct international procedural capacity.

However, ISDS does not mean that corporations possess the same international legal personality as States.

Multinational Corporations and Human Rights

MNCs may have significant effects on human rights through their activities.

Potential issues include:

• labour rights;
• discrimination;
• workplace safety;
• privacy;
• land rights;
• indigenous peoples’ rights;
• access to essential resources;
• supply-chain abuses.

International law has increasingly focused on corporate responsibility for respecting human rights.

UN Guiding Principles on Business and Human Rights

The UN Guiding Principles on Business and Human Rights provide an important framework for understanding corporate responsibility.

They are based upon three broad pillars:

Protect

States have a duty to protect individuals against human rights abuses by third parties, including business enterprises.

Respect

Business enterprises have a responsibility to respect human rights.

Remedy

Victims should have access to appropriate remedies where human rights abuses occur.

The framework is commonly referred to as the “Protect, Respect and Remedy” framework.

Corporate Responsibility vs State Responsibility

The responsibility of an MNC must be distinguished from the international responsibility of a State.

State Responsibility

A State may incur international responsibility for conduct attributable to it that breaches an international obligation.

Corporate Responsibility

A corporation may face legal consequences under:

• domestic law;
• contractual obligations;
• investment law;
• applicable international standards;
• other relevant legal frameworks.

The existence of corporate responsibility does not automatically mean that every corporation is a subject of international law in the same manner as a State.

MNCs and Environmental Protection

MNCs can have substantial environmental impacts, particularly in industries such as:

• mining;
• energy;
• manufacturing;
• chemicals;
• infrastructure.

International environmental law increasingly addresses corporate activities through:

• environmental treaties;
• international standards;
• corporate responsibility frameworks;
• investment agreements;
• domestic implementation of international commitments.

Issues may include:

• pollution;
• climate change;
• biodiversity;
• natural resources;
• environmental damage;
• sustainable development.

MNCs and Labour Standards

International labour standards influence the activities of multinational corporations.

Important areas include:

• freedom of association;
• collective bargaining;
• prohibition of forced labour;
• elimination of child labour;
• non-discrimination;
• occupational safety.

The International Labour Organization has played an important role in establishing international labour standards relevant to business activities.

OECD Guidelines for Multinational Enterprises

The OECD Guidelines for Multinational Enterprises on Responsible Business Conduct provide standards concerning responsible corporate behaviour.

They address areas including:

• human rights;
• labour;
• environment;
• disclosure;
• bribery;
• consumer interests;
• science and technology;
• competition;
• taxation.

The Guidelines are an important example of international efforts to promote responsible conduct by multinational enterprises.

MNCs and International Criminal Law

The position of corporations under international criminal law is different from that of individuals.

International criminal law has traditionally focused on individual criminal responsibility.

Therefore, an individual corporate officer may incur international criminal responsibility where the applicable legal requirements are satisfied.

Corporate criminal responsibility at the international level remains more limited and depends upon the relevant legal framework.

Multinational Corporations and Taxation

MNCs operate across multiple tax jurisdictions.

Their activities raise international issues concerning:

• transfer pricing;
• profit shifting;
• double taxation;
• tax avoidance;
• allocation of taxing rights;
• cross-border financial structures.

International cooperation has increasingly developed to address these problems.

Non-Governmental Organisations

Non-Governmental Organisations (NGOs) are another important category of Non-State Actors.

NGOs are generally independent organisations that operate outside direct governmental control.

They may work in areas such as:

• human rights;
• humanitarian assistance;
• environment;
• development;
• public health;
• refugee protection;
• international peace.

Examples include organisations such as Amnesty International, Médecins Sans Frontières and the International Committee of the Red Cross, although their legal statuses and functions differ.

NGOs and International Law

NGOs generally do not possess the same legal personality as States.

Nevertheless, they can play important roles in international law by:

• participating in international conferences;
• submitting information to international institutions;
• assisting treaty negotiations;
• monitoring State compliance;
• documenting human rights violations;
• providing humanitarian assistance;
• influencing international legal development.

Their influence may therefore be substantial even where their formal legal personality is limited.

International Committee of the Red Cross

The International Committee of the Red Cross (ICRC) occupies a distinctive position.

It plays a major role in the development and implementation of international humanitarian law.

Its functions include:

• protecting victims of armed conflict;
• visiting detainees;
• facilitating humanitarian assistance;
• promoting compliance with international humanitarian law;
• contributing to the development of humanitarian norms.

Its legal status is distinct from that of an ordinary NGO.

Armed Groups

Non-State armed groups may also be relevant to international law, particularly during armed conflicts.

Depending upon the circumstances, international humanitarian law may impose obligations upon organised armed groups.

They may be required to comply with rules concerning:

• treatment of civilians;
• treatment of detainees;
• methods of warfare;
• protection of humanitarian personnel;
• prohibited attacks.

The fact that an armed group is not a State does not necessarily place its conduct outside international legal regulation.

Individuals as Non-State Actors

Individuals are also Non-State Actors.

Modern international law recognises individuals as:

• holders of human rights;
• participants in certain international proceedings;
• subjects of international criminal responsibility.

Their position demonstrates the broader movement away from an exclusively State-centred international legal system.

Indigenous Peoples

Indigenous peoples occupy a distinctive position in contemporary international law.

International law increasingly recognises rights relating to:

• self-determination;
• cultural identity;
• traditional lands;
• natural resources;
• participation;
• consultation.

The UN Declaration on the Rights of Indigenous Peoples is an important instrument in this area.

Transnational Civil Society

Civil society organisations and transnational networks can influence the development of international law by:

• campaigning for treaty adoption;
• monitoring compliance;
• generating public pressure;
• providing expertise;
• participating in international negotiations.

Their influence is particularly visible in fields such as:

• human rights;
• environmental protection;
• humanitarian law;
• international criminal justice.

Non-State Actors and International Law-Making

Non-State Actors increasingly participate indirectly in international law-making.

They may:

• provide technical expertise;
• submit proposals;
• participate in consultations;
• influence treaty negotiations;
• contribute to drafting processes;
• monitor implementation.

However, the formal authority to create binding international law generally remains concentrated in States and international organisations with the relevant legal authority.

Non-State Actors and International Organisations

Non-State Actors frequently interact with international organisations.

For example, NGOs may:

• receive consultative status;
• participate in conferences;
• submit reports;
• cooperate with UN agencies;
• assist humanitarian programmes.

International organisations may therefore provide institutional channels through which Non-State Actors influence international affairs.

Non-State Actors and Soft Law

Non-State Actors frequently contribute to the development of soft law.

Soft law may include:

• guidelines;
• declarations;
• principles;
• voluntary standards;
• codes of conduct.

Although such instruments may not be legally binding in the traditional sense, they can influence:

• State behaviour;
• corporate conduct;
• judicial interpretation;
• treaty development;
• international policy.

Corporate Codes of Conduct

MNCs may adopt voluntary codes concerning:

• human rights;
• labour standards;
• environmental protection;
• anti-corruption;
• supply chains.

Such codes can supplement formal legal regulation, although their legal enforceability varies.

Multinational Corporations and State Sovereignty

MNCs can have substantial economic power.

Their activities may affect:

• national economies;
• employment;
• natural resources;
• public policy;
• taxation;
• environmental regulation.

This creates a continuing tension between:

State sovereignty

and

transnational corporate economic power.

International law increasingly attempts to balance investment protection with the regulatory interests of States.

Corporate Accountability

A major contemporary issue is how to ensure accountability when corporate activities cause harm across multiple jurisdictions.

Challenges include:

• identifying the responsible corporate entity;
• determining the applicable law;
• jurisdictional difficulties;
• complex corporate structures;
• cross-border evidence;
• enforcement of judgments;
• parent company and subsidiary relationships.

These issues have encouraged the development of stronger international and domestic corporate accountability mechanisms.

Binding and Non-Binding Standards

Corporate obligations may arise through different mechanisms.

Binding Rules

These may include:

• domestic legislation;
• treaty obligations applicable to States and implemented domestically;
• investment agreements;
• contractual obligations.

Non-Binding Standards

These may include:

• UN Guiding Principles;
• OECD Guidelines;
• voluntary corporate codes;
• industry standards.

The distinction between binding and non-binding standards is important when determining legal consequences.

MNCs and International Arbitration

International arbitration has provided corporations and investors with mechanisms to resolve certain international disputes.

Investment arbitration may involve:

Foreign investor

vs.

Host State

The legal basis may be:

• bilateral investment treaty;
• multilateral investment treaty;
• investment contract;
• domestic legislation containing arbitration provisions.

Important Cases

Barcelona Traction, Light and Power Company, Limited (1970)

The ICJ considered the legal relationship between a corporation and the States connected with it.

The case is important for understanding:

• corporate nationality;
• diplomatic protection;
• the distinction between corporate rights and shareholder rights.

The Court emphasised the separate legal identity of the corporation.

Ahmadou Sadio Diallo, 2010

The ICJ considered the protection of an individual’s rights and the relationship between diplomatic protection and internationally protected rights.

The case demonstrates the continuing interaction between individuals, corporations and State responsibility.

Texaco Overseas Petroleum Company v Libya

The arbitration concerning the nationalisation of oil interests in Libya is important in the development of international investment law and the relationship between foreign investors and host States.

Urbaser v Argentina

The case is significant for discussions concerning whether an investor may itself have obligations relating to human rights under international investment law.

It illustrates the evolving debate concerning responsibilities of non-State actors in international law.

MNCs as Subjects of International Law

The legal position of MNCs can be summarised as follows:

They are not generally subjects of international law in the same comprehensive sense as States.

However, they may possess:

• specific international rights;
• procedural rights;
• treaty-based protections;
• investment rights;
• responsibilities under particular international frameworks.

Their status is therefore limited and issue-specific.

Other Non-State Actors

Non-State Actor	International Role
Multinational corporations	Investment, trade, economic activity and corporate responsibility
NGOs	Human rights, humanitarian work, advocacy and monitoring
Individuals	Human rights and international criminal responsibility
Armed groups	Subject to certain international humanitarian obligations
Indigenous peoples	Self-determination, cultural and land-related rights
Transnational networks	Advocacy, expertise and international policy influence
ICRC	Humanitarian protection and development of humanitarian law

States vs Non-State Actors

Point	States	Non-State Actors
Sovereignty	Possess sovereignty	Do not generally possess sovereignty
Legal personality	General	Limited or functional
Treaty-making	General capacity	Depends upon legal authority
International responsibility	Broad	Depends upon applicable rules
International claims	Broad capacity	Available only under specific mechanisms
International law-making	Primary role	Mainly indirect or participatory
Jurisdiction	Broad	Usually limited

Common Confusions

Are multinational corporations subjects of international law?

Not in the same general sense as States.

They may possess specific international rights and responsibilities under particular legal regimes.

Can an MNC sue a State internationally?

In certain circumstances, yes.

Investment treaties and agreements may provide investors with access to international arbitration.

Can an MNC be held responsible for human rights abuses?

Potentially, yes, but the precise legal basis and forum depend upon the applicable domestic and international rules.

Are NGOs subjects of international law?

Some may possess limited legal personality or special international status, but they do not generally possess the same legal personality as States.

Can armed groups be bound by international law?

Yes.

International humanitarian law may impose obligations directly upon organised armed groups participating in armed conflicts.

Do Non-State Actors make international law?

They can influence its development, but the formal creation of binding international law generally depends upon recognised international law-making processes.

Is every international standard legally binding?

No.

Many standards applicable to corporations and other Non-State Actors are soft-law instruments.

Topic at a Glance

Point	Position
Subject	MNCs and Other Non-State Actors
Traditional position	International law primarily State-centred
Modern position	Increasing recognition of Non-State Actors
MNC legal status	Limited and issue-specific
Major area	International investment law
Corporate rights	Treaty and investment protections
Corporate responsibilities	Human rights, labour, environmental and other standards
NGOs	Advocacy, monitoring and humanitarian functions
Armed groups	Subject to applicable humanitarian obligations
Individuals	Human rights and international criminal responsibility
Key case	Barcelona Traction
Key framework	UN Guiding Principles on Business and Human Rights
Core distinction	Influence and specific legal personality ≠ State sovereignty

Quick Revision

• Traditional Public International Law was primarily State-centred.
• Modern international law increasingly recognises the role of Non-State Actors.
• MNCs operate across multiple States and can exercise significant economic influence.
• MNCs generally do not possess the same general international legal personality as States.
• Certain investment treaties provide investors with direct procedural rights against States.
• Investor-State Dispute Settlement (ISDS) is an important mechanism in international investment law.
• Corporate activities may raise issues concerning human rights, labour, environment, taxation and corruption.
• The UN Guiding Principles on Business and Human Rights use the Protect, Respect and Remedy framework.
• The OECD Guidelines for Multinational Enterprises promote responsible business conduct.
• NGOs influence international law through advocacy, monitoring, expertise and participation.
• The ICRC has a distinctive role in international humanitarian law.
• Armed groups may be directly bound by applicable rules of international humanitarian law.
• Individuals possess international rights and may incur international criminal responsibility.
• Indigenous peoples possess recognised rights relating to self-determination and cultural identity.
• Non-State Actors can influence international law-making but generally do not possess the same formal law-making authority as States.
• Barcelona Traction is important for corporate nationality and diplomatic protection.
• The legal personality of MNCs is generally limited, functional and issue-specific.
• The essential distinction is:

Non-State Actors can possess international rights, obligations and influence without possessing the general sovereignty and legal personality of States.

Conclusion

The growing importance of Multinational Corporations and other Non-State Actors reflects the transformation of Public International Law from a predominantly State-centred system into a more complex international legal order. MNCs can possess specific international rights, particularly under investment law, and their activities increasingly attract international standards concerning human rights, labour, environment and responsible business conduct. NGOs, armed groups, individuals, indigenous peoples and transnational civil society organisations likewise play significant roles in international affairs. Nevertheless, their legal personality varies considerably and generally remains limited or functional. States continue to possess the broadest international legal personality and remain the principal creators of binding international law. The modern position is therefore best understood as one in which Non-State Actors are important participants in, and in certain contexts subjects of, international law, without being equivalent to sovereign States.