Sovereignty-Plus in the Era of Interdependence: Towards an International Convention on Combating Human Rights Violations by Transnational Corporations

CRIDHO WP n°2010/5

25 Pages Posted: 22 Aug 2014  

Olivier De Schutter

University of Louvain (Belgium)

Date Written: June 10, 2010

Abstract

This paper argues that the classical rules that restrain the exercise by States of their extraterritorial jurisdiction may have to be reinterpreted in the light of the growing interdependency between States, which results from increased trade and investment flows. The traditional understanding is that, when a State adopts regulations that seek to influence situations located outside its national territory, it competes with the sovereignty of the territorially competent State, and that such regulations therefore should only be allowed in the most exceptional circumstances, since they may run counter to the principle of sovereign equality of States. However, if the adoption by the State of origin of the investor of extra-territorial regulations in fact facilitates the role of the host State in regulating that investor, thus ensuring that the investment will contribute to human development and will benefit local communities, this enhances, rather than restricts, the exercise by the host State of its sovereignty. To the extent that it serves universal values, unilateral action may thus contribute to the achievement of the goals set by the international community: the regulation of transnational corporations becomes a global public good, to which each State should contribute in accordance with its ability.

Against this background, this paper examines the question of the jurisdiction of States over the activities of transnational corporations. It argues that the duty of the host State to regulate corporations operating on its territory could be more easily discharged if home States of transnational corporations made a more principled use of extraterritorial regulation. These two sovereignties are not as much competing with each other than they are mutually supportive: the adoption of a new international instrument allocating responsibilities to control transnational corporations could codify in treaty form what is already, arguably, emerging customary international law. The paper also argues that, until a consensus emerges about the desirable division of tasks between the host State and the home State in controlling investors, the adoption by the home State of extraterritorial legislation addressed directly to the parent company, but imposing on that company to exercise control on its subsidiaries, may be the best route forward.

Keywords: Extraterritorial jurisdiction, Transnational corporations, Global public goods

Suggested Citation

De Schutter, Olivier, Sovereignty-Plus in the Era of Interdependence: Towards an International Convention on Combating Human Rights Violations by Transnational Corporations (June 10, 2010). CRIDHO WP n°2010/5. Available at SSRN: https://ssrn.com/abstract=2448107 or http://dx.doi.org/10.2139/ssrn.2448107

Olivier De Schutter (Contact Author)

University of Louvain (Belgium) ( email )

Place Montesquieu, 3
B-1348 Louvain-la-Neuve, 1348
Belgium

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