The Bounds of (Il)Legality: Rethinking the Regulation of Transnational Corporate Wrongs

Abstract

The chapter critically interrogates the remedial limits of international law as regards the regulation of extraterritorial business by their home-states, by exploring the conceptual foundations of this area of law and their effects on state practice. The UN Guiding Principles on Business and Human Rights offer limited guidance to home-states on their obligations to regulate their corporate nationals’ extraterritorial activities. At the same time, traditional approaches to the domestic implementation of international human rights law have failed to account for the interplay and interrelation between international law and domestic law. As a result, the limits of the remedial nature of human rights law as regards the regulation of extraterritorial corporate activity have effectively shielded businesses and their home-states from consequences under both international and domestic law. Home-states’ obligations to ensure the non-recognition as lawful of internationally unlawful acts by its domestic legal order open the possibility of regulating such wrongs as either illegally-constituted gains or unlawfully obtained factors of production under domestic laws – and not only as violations of human rights law. The chapter offers such a re-examination and invites a rethinking of the regulation of extraterritorial business as a transnational legal process.

Keywords: business and human rights, extraterritoriality, home-state regulation, non-recognition, illicit financial flows, transnational legal process