Systemic Constraints and the Human Rights Obligations of States and State Owned Enterprises

Abstract

The state occupies a curious place in the contemporary global order constructed through markets and multilateral frameworks of regulatory governance. The state retains its core function as an apex form of regulation within its territories (even as the forms that this regulation takes shifts from statutes, to administrative rules, to data driven accountability based governance). At the same time, the state has become an important participant within the markets it itself regulates. Through its state owned enterprises (SOEs) and other instruments, the state engages in economic activities within its territories as regulator and producer; outside its territories those instruments of state economic power operate within complex and evolving law, norms and rules functioning like other commercial ventures in global markets. SOEs also share the state's dual character—as market participant and as the projection of state power in markets. This dual character poses challenges and opportunities for the development of a rules based approach to the responsibilities of SOEs to respect, and the duty of their state owners to protect, human rights. Section 2 considers fundamental issues of the nature of state obligations and the definition of SOEs. Section 3 then examines the central question of this essay—given the structures and trends in the development of frameworks for business and human rights, where and how do SOEs fit into these structures? The section first examines the way that emerging international soft law regulatory structures envision the role of SOEs within these human rights based regulatory standards. It then considers future challenges. The section ends with a set of brief recommendations.

Keywords: state owned enterprises (SOE), sovereign immunity, multinational enterprises, China, OECD, human rights, Guiding Principles for Business and Human Rights, supply chains

JEL Classification: F23, F52, F54, H54, K22, K23, K33, L32, L53, M14, M16