Tuesday, June 30, 2009

Yelling Loudly and Carrying a Small Stick: The Nation State and the Enforcement of Global Human Rights

Nation states continue to jealously guard their authority to discipline the juridical persons subject to their control. Many of them also encourage the incorporation of human rights, environmental and other social concerns in the operation of multinational corporations. On that basis, some states have resisted the move to impose something other than voluntary frameworks of corporate obligations for activities that touch on international human rights standards. Other states resist the incorporation of international law directly within their territory, without at least some mediation by the democratically elected representatives of the people of the state. And many states are wary of the direct imposition of international standards, hard or soft, on corporations or other entities over which they seek to assert national law. But as Anna Triponel reminds us, the result is not necessarily a vigorous development of either national law that elaborates human rights standards applicable to corporate entities, or the inclination to enforcement international standards in their courts against corporations, especially with respect to activities occurring outside the territory of the nation states or involving actions of subsidiaries or other entities with which the defendant corporation might have had a relationship. Anna Triponel, "Business and Human Rights Law: Diverging Trends in the United States and France", 23 American University International Law Review 855 (2008).
The application of human rights standards to the activities of transnational corporations has become an increasingly prominent debate in the international law and business arenas. As the international community moves forward in elaborating a framework for accountability for corporate acts, it will be crucial that this framework reflect the existing differences between legal systems in applying human rights law to corporations' operations. This article sets out the differences between the United States and France as two examples of fundamentally different approaches in addressing corporate compliance of human rights. Ultimately, these two different state approaches towards the role of business, government interventionism, stockholders and shareholders, and international law, should be taken into account in tailoring a true international consensus on corporate responsibility, accepted by both sides of the Atlantic. Triponel, supra, abstract.
Triponel suggests the substantial distinctions between France and the United States--both in the conceptualization of corporate social responsibility and its its implementation in the courts and through law. Both start from similar jurisprudential positions. The United States and France are parties to the host of international treaties setting minimum human rights standards, plus a host of declarations and other soft law. It is bound to incorporate those that bind and to be mindful of those that don't. But in both cases that might be harder done than said. "Both France and the United States benefit from clear guidance by the international community of which human rights are to be specifically targeted when regulating corporate activity. In practice, however, it can be difficult for the state to assert the contents of certain rights and therefore protect them." Triponel, supra at 874.

Yet while both states have not been aggressive in implementing international obligations within their national legal orders, they have been much more aggressive in asserting their rights over their own entities wherever they might operate.
In the United States, the nationality principle, which applies to juridical as well as natural persons, enables it to regulate corporations’ activities abroad. The U.S. Congress has used this principle to enact laws regulating the overseas conduct of U.S. corporations, such as to prohibit these companies from complying with the Arab boycott of Israel and engaging in corrupt practices. As for France, international mandatory rules called “Lois de police” enable the application of French law to corporate activities abroad. Indeed, these laws are considered so important for the country that their extraterritorial application is necessary. Triponel, supra, at 857.
The territorial principal, even in its extraterritorial application, is tethered more to domestic than international legal frameworks. "It is primarily through domestic law suits that individuals will seek to hold TNCs accountable for abusive practices. The ways in which American and French TNCs can be held accountable for their human rights violations overseas varies widely." Id., at 904. But Triponel reminds us that while the approach to the extraterritorial application of domestic law is different in France and the United States, the effect is substantially the same. In both states, the use of domestic legal regimes to reach human rights abuses is quite limited. Id., at 904-912.
A vivid example is the difference in treatment afforded to Burmese plaintiffs complaining against the American company Unocal and those complaining against the French company Total. Total was one of the partners of the joint venture between Unocal and the Burmese government. Total was initially one of the defendants in the American lawsuit launched in California, but an amicus curiae brief from France convinced the judge of its inaptitude to involve Total in the litigation, namely due to the principle of sovereignty. As France does not have the equivalent of the American ATCA, the plaintiffs used French criminal law to bring a suit against Total in France. The difficulty is that the criminal code prohibits only certain crimes committed abroad and additionally requires that the perpetrator be French. Therefore, in contrast to the Unocal plaintiffs, who managed to create an incentive for the company to settle, plaintiffs in French courts have no similar remedy under the same set of facts. Id., at 909.
At the same time, both states set high bars to reaching corporate groups for the liabilities incurred by a juridically autonomous corporate person. Id., at 909-910. "Furthermore, in the United States, the doctrine of forum non conveniens allows judges to refuse a case when it deems itself not a suitable forum. Forum non conveniens is said to “shield multinationals from liability for injuries abroad.” Id., at 910 (quoting in part JAMIE CASSELS, THE UNCERTAIN PROMISE OF LAW: LESSONS FROM BHOPAL 144 (1993)).

Both states also approach the issue implementing corporate social responsibility in distinct ways. "CSR in France aims at “integrat[ing] social and environmental concerns” into business operations.110 However, in the United States, CSR has a larger scope and is aimed at enhancing “business decision-making linked to ethical values . . . and respect for people, communities and the environment” around the world." Id., at 877 (citing in part, Yale Global Online, http://yaleglobal.yale.edu/display.article?id=1339 (last visited May 15, 2008) (quoting Business for Social Responsibility’s definition)).
In the United States, this movement has resulted in an explosion since the late 1990s of voluntary corporate initiatives undertaken by companies themselves. The fact that there has been increased government regulation of corporate disclosure in the United States is not, however, a direct result of this second CSR movement, but instead has stemmed from the need to protect American investors in the wake of financial scandals. In France, this CSR movement has, on the contrary, resulted directly in increased regulation of French companies without an increase in voluntary corporate initiatives. . . . France passed a law which mandated the disclosure of social, environmental, and profit performance. This law applies to all French companies listed on the French Stock Exchange and therefore to TNCs as well. French companies now have the obligation to describe to all stakeholders the social and environmental consequences of their activities in their annual reports. However, the companies have no further obligation to act upon these consequences. Id., at 878.
But these changes have collided with the fundamental structure of national law, and the limits of the territorial principle applied to global enterprises. All of these are well known and well articulated, in accordance with their respective national legal cultures, by the French and the Americans. But despite cultural differences in the form of law, the principles applied, and the effects, are the same.

Triponel reminds us that though international actors have been attempting to change global legal culture to embrace the notion of state liability for complicity in the human rights violations of private actors, "it is improbable that France or the United States would be held liable under this standard." Id., at 879. On the other hand, French courts will enforce supra national law directly in French courts to a much greater extent than American courts. But those direct obligations generally extend to the specific obligations of France under the European Convention on Human Rights, and the legal framework of the European Union. For Americans, the pickings are slim. For example, Triponel points to "a NAFTA side agreement [which] allows individuals and NGOs to submit complaints to a national administrative office in each country when one of the countries fails to enforce its labor laws." Id., at 885. Beyond that there are voluntary codes., but enforcement is private and subject to substantial criticism among civil society actors eager to impose more direct obligations on corporate entities. Id., at 885-891.

More interesting is the emergence of a framework for liability stemming form corporate complicity in human rights abuse. ID., at 898-904. The National Contacts Point in the UK has taken this up recently under the OECD Guidelines for Multinationals. See Larry Catá Backer, Rights and Accountability in Development (‘Raid’) V Das Air and Global Witness V Afrimex: Small Steps Toward an Autonomous Transnational Legal System for the Regulation of Multinational Corporations, Melbourne Journal of International Law Vol 10 (forthcoming 2009).
Triponel notes that "plaintiffs increasingly use the theory of corporate complicity in domestic law suits against corporations. As such, defining the parameters of corporate complicity is especially important." Triponel, supra, at 904 ("The International Commission for Jurists, for example, was created in 2006 to 'develop the legal and public policy meaning of corporate complicity in the worst violations of international human rights and humanitarian law that amount to international crimes.'” Id (quoting in part Business & Human Rights Resource Centre, International Commission of Jurists - Expert Legal Panel on Corporate Complicity in International Crimes)).

Triponel nicely highlights both the movement toward an acceptance of corporate social responsibility by developed states. Though its meaning is different in the United States and France, the notion is taking root that corporations have to adhere to substantive behavior norms. But beyond that, translating these aspirations into either a national or international system of rules in the traditional manner--through positive law enforced by national courts--continues to founder on the territorial principle. In this context, it makes sense for people seeking such a framework to turn from a singular reliance of conventional positive law and state (or international) systems and focus on the construction of governance outside the state. Triponel reminds us that the construction of national legal approaches to the regulation of transnational human rights within national legal orders is a difficult task. Moreover, it is a task that is in some respect inconsistent with the fundamental principle on which national legal orders are founded. Much of the gyrations Triponel relates reflects efforts to work around these conceptual restraints without undoing the state. None of these are likely to succeed. Either states will lose control of multinational corporations, or national legal orders will have to become more receptive to harmonized or global systems for their regulation. In the absence of these changes, the current system, which has worked well enough for dominant economic public and private powers, may continue to provide the basis for legal recourse for some time.

Disciplining Harmonization: Pablo Lerner on Common Principles of Comparative Law and the New Ius Commune

Pablo Lerner, of the Center of Law and Business (Ramat Gan, Israel), has recently published an article whose arguments are worth considering. Pablo Lerner, "The Relationship Between 'Common Principles', Comparative Law and the 'New Ius Commune', " (2008) 16 European Review of Private Law 6. The abstract suggests the thesis:
Harmonization blends the laws of various countries, enabling better trade and commercial practices; it occurs in a number of manners: through supranational agencies, conventions and treaties, soft law, and researchers. Comparative law is crucial to harmonization; it is not only a theoretical academic field, but rather a basis for creating world-wide legal solutions emphasizing collaboration and cooperation between the different legal systems. This article will focus on the process of ‘academic harmonization’, which has materialized via the enactment of common principles. The idea behind common principles is that harmonization can be achieved through formulating rules aimed as “common law” on an international or regional level. The fact that these common principles can be understood as comparative works should be examined. This article discusses the points of contact between the drafting of common principles and comparative law (i.e., language or methodological questions). While there is a different approach between comparative law and harmonization vis-à-vis common principles, there is a strong relationship between the two, and it is this relationship that allows the development of ‘the new ius commune’.
Lerner, supra, at 949. Lerner, of course, is not the first to suggest the protean nature of comparative law--as both substance and methodology. But Lerner adds an interesting twist, suggesting a methodological-substantive objective as both mediator between systems (the active agent of structural coupling, and as the source of values that shape the content of the communication. "While there is a different approach between comparative law and harmonization, there is a strong relationship between the two and it is this relationship that allows the development of ‘the new ius commune’." (Id. , 950). Lerner suggests, in a sense that the power of comparative law's methodological function as "translator" and "communicator" among systems also includes within it the power to shape the content of that communication--from communication. It suggests an active role in which communication produces a common language.

Lerner starts with a review of harmonization as a concept. It describes both an even and a political-jurisprudential-policy-power agenda. In the European Union, this sort of harmonization reflects both the diffusion of power within state and supra national public systems and the rise of non state repositories of governance power, all of which communicate with each other and interact within shifting hierarchies and limited power frameworks.
In Europe, harmonization is generally achieved through EU legislation, the European Court of Justice (ECJ) (through adjudication of relevant European issues), and as a by-product of the activities of the European Court of Human Rights (ECHR) (harmonization top-down). Additionally, think tanks and researchers in the field create harmonization projects in an attempt to influence legal dialogue, to create a unified legal culture, and to influence legislators and courts (harmonization top-down). (Lerner, id., 951).
This reflects a global phenomenum. See Larry Catá Backer, Of Somali Pirates, Global Corporations and the State: Governance Without Government, Government without a State and Military Power Law at the End of the Day, June 28, 2009.

Lerner considers the effects of top down versus bottom up harmonization. (Lerner, supra, at 952-957). He finds judicial harmonization useful but inadequate standing alone. "Thus harmonization achieved via transnational courts is at best fragmentary harmonization. The lack of success of the courts in harmonizing the law and the appeal of achieving a unified law has encouraged academics to adopt an active role in harmonization." (Id., at 954). Leave, it then, to the academics, to fill in the gaps--communicators among legal systems and, in synthesizing a common language, the progenitors of substantive change. And there is irony--Lerner suggests that a consequence of a leeriness among civil law academics of common law methodology is the production of a common law in civil law systems grounded in principle rather than in decision, and sourced form the academy rather than from the courts. "Academic harmonization has materialized via the enactment of common principles. The idea behind these principles is that this can be achieved through formulating the rules to be used as a ‘common law’ in a harmonized world or in a harmonized region." (Id., at 954). For this he points to the efforts of, for example, the Lando Comisison--the Commission on european contract law (chaired by prof. Ole LANDO) is the author of the Restatement called PRINCIPLES OF EUROPEAN CONTRACT LAW in the framework of the Resolutions of the European Parliament on the codification of private law. He notes the academic agitation for unification through codification. Lerner, supra, at 955. But he suggests that these efforts at unification or codification in the traditional state manner have not overtaken or replaced the use of a principles method for harmonization. The latter is more in accord with the softer touch of the European Union. It permits the indulgence of the appearance of difference (difference in form) while providing a similarity of result that evidences no difference in fact.

But the relationship between common principles, harmonization and comparative law (as a conventionally understood field) is not necessarily self evident. It is to the underlying substantive character of the ostensibly methodological praxis of comparative law that Lerner then turns. Lerner, supra, at 957-967. The focus, though, is clear: "The goal of the common principles is to achieve harmonization via comparison. In order to understand this idea, it is necessary to understand cardinal issues of comparative law: the use of one language as a basis for comparison, methodology, group work and individual endeavours, and the relationship between text and context." Id., at 957.

Lerner starts with a common language. Principles can be useful only if they can be communicated efficiently. Language is crucial. "The point is that, unlike comparative law, harmonization requires a lingua franca – or some linguas francas." (Id., at 958). Yet the essence of comparative law serves that purpose by providing translators who serve in lieu of a common language.
Translation woes and problems are a consequence of different concepts in language, not the inability to match a word from one language with a specific match from another. On the contrary, we should accept that translation, in itself, cannot solve the difficulty of understanding legal systems without knowing the theoretical background.48 Comparative research is necessary in order to truly understand other legal systems, enabling the closure of a gap that is not merely linguistic, but also conceptual. Understanding the role of language requires the prior comprehension that harmonization is not about enacting rules, but about developing a common legal culture. (Id., at 959).
Indeed, there is irony here. Implicit in the notion is Nietzsche's idea of the relationship of the priest to God and the community. See, Larry Catá Backer, Retaining Judicial Authority: A Preliminary Inquiry on the Dominion of Judges, 11 William & Mary Bill of Rights Journal 117(2003). This is certainly about power, and the assertion of power within the comparative law field, but is this really more about the disciplining of comparative law than about comparative law as a discipline?

The cultural barriers of language and the mediating role of comparison serves harmonization's quest for a common language in principle. But that common language first requires a common culture, that is a means of overcoming the conceptual differences inherent in language.
The role of similarities and differences in the harmonization process can be understood in the following manner: a) differences between legal systems should not be viewed as stumbling blocks on the road to harmonization, but rather points of contact; b) restatements of systems are based on similarities and constitute a foundation for a new comparison; and c) harmonization in a dynamic manner refers to legal systems that have the same rules although not exactly the same law. Lerner, supra, at 959.
For this purpose, comparative law can be harnessed, not as a neutral but as a positive actor in the construction of frameworks within which comparativists--now acolytes of harmonization through communication--may operate. "However, through the influence of harmonization, the trend in comparative law is also to focus on similarities among systems. This trend is also the result of the functional approach, which aims to reach a conceptual abstraction, while relegating differences among systems to legislative technicalities or to a matter of wording." Id. Privileging a certain framework within which comparison is directed tends to reinforce a project of harmonization that avoids the brutishness of unification and enhances the status of those in the business of comparison (now translation-transliteration). "Within the framework of harmonization, efficient solutions can be reached by eliminating gaps between systems and creating shared frameworks, thus saving time and litigation in cases that involve different countries. Just as one could argue for the necessity of competition, one could argue that simplifying and decreasing regulation." (Lerner, supra, at 960). As a consequence, differences between legal systems ought to be understood as points of contact, those points of contact produce a push to systematization of similarities and its differences form national law (from which these amalgamations are drawn), and the resulting production of harmonization does not impose homogeneity, "harmonization in a dynamic manner refers to legal systems that have the same rules, although not exactly the same law." (Id., at 961).

And thus Lerner takes comparative law and harmonization from principle to context--and that context suggests the harmonization on the model of European Union directives.
Having a single, unified text is not tantamount to having a unified interpretation in each country. The interaction between common principles and diversity jurisprudence should not be understood as being at odds with the question of harmonization, but rather, as the consequence of a legal system composed of different formats. This dichotomy, between the law and its interpretation, does not make unification obsolete. On the contrary, it forecasts that even in the ‘harmonized legal world’ there is a need for a comparative work of analysis." (Id., at 964).
But Lerner interrogates not merely the context of comparison and the nature of common principles as a roadmap to harmonization, he also suggests the relevance of the specific methodology of comparative law--a field for loners--and harmonization--a more collective effort. (Id., at 964-967). The latter "type of work aims to achieve the best solution, but no less importantly, it aims to achieve consensus, because only via consensus will their work receive a certain kind of legitimacy." (Id.).

With these overlaps developed, Lerner draws us to its relevance for the construction of a new ius commune. On the one hand, the new ius commune recalls the pre Westphalian system in which different states operated under a common legal framework, with territorial variation. On the other, the source of this common framework is now a product of the comparativist search for harmonizing principles--of similarities among disparate systems that are necessary for communication between systems in a world in which individuals arrange their affairs across borders--the production of harmonized principles of law. As Lerner explains:
In my view, from a comparative standpoint, common principles generate a new manner of legal transplants. Traditionally, the transplant idea was created following the export of legal systems by one country and the import of those ideas by another country. Today, various traditions come together in harmonization projects that create frameworks, solutions, or approaches that inspire their importation and adoption by other countries. We face the reception of comparative law imperio rationis. (Id., at 969-970).
Thus harmonization changes the principles through which individual legal systems are expressed. The appearance of difference is maintained as the underlying thrust of regulation is merged. And so, "these principles are not important as precursors of imposed law, but as a language of communication among scholars from different countries. This type of reception certainly adds a new dimension to comparative law, a dimension that did not exist in the past." (Id., at 971). And thus from out of translation, a single new language--the ius commune, whose priests are those comparativists who serve as translators and guardians of the common language (and its substantive grounding).

But there is something here that is greater than the utility of comparative law for the project of harmonization. Likewise the issue of the protean nature of comparative law as a large vessel (perhaps more the cloaca maxima of law beyond the state than a sangreal of post Westphalian legal focus) within or through which the law of states bump up against each other, misses the potency of comparative law within the complex transformations inherent in globalization. Instead, Lerner is onto something more interesting--a more subtle understanding of comparative law in globalization, not merely as a methodology or anchored to national laws in situ, but now dedicated to the construction of supra national legal frameworks, which its acolytes would dominate. Harmonization represents the constitution of legal systems beyond any of those which are its object. Harmonization through principles does more than synthesize. It does nore than provide a language for communication bectween systems. But in Lerner's conceptualization, it reconstitutes national law into supra national legal frameworks. These frameworks, derived from a synthesis of national law then serve as a basis for framing the laws of its sources, now tethered to a framework that seeks unification in results but preserves difference in form. The harmonization project, like those undertaken in the European Union through its directives, produce something more than communication. It suggests a step in the constitutionalization of syntghesis inot a n autonomous framework fo law which, when institutionalized can serve as the nbasis of governance without government serving a government without a state. Larry Catá Backer, Governance Without Government OR Government without a State?: Gunther Teubner on Complications of Umooring Corporate Governance From Corporate Law, Law at the End of the Day, June 25, 2009.

Sunday, June 28, 2009

Of Somali Pirates, Global Corporations and the State: Governance Without Government, Government without a State and Military Power

Recently I have been considering the issue of the construction of governance orders in the 21st century. I have suggested that political power is no longer necessarily the highest form of effective power, that states have become more limited as projections of power outside the territorial borders of these political units become easier, and I have suggested that both the division between public and private power and the hierarchical arrangement of power pursuant to that division have also softened. Larry Catá Backer, Governance Without Government OR Government without a State?: Gunther Teubner on Complications of Umooring Corporate Governance From Corporate Law, Law at the End of the Day, June 25, 2009; Larry Catá Backer, Governance Without Government: A Preliminary Overview Law at the End of the Day,June 16, 2009.

It is possible now to conceive of corporations that can regulate themselves--by arranging the operations to be subject to state regulatory regimes of their choice. The resulting basket of regulation reflects more the preferences of large enterprises with respect to the aggregate regulations to which it wishes to be subject, than the imposition of popular will through the law of any single nation state. See Larry Catá Backer, The Autonomous Global Enterprise: On the Role of Organizational Law Beyond Asset Partitioning and Legal Personality,Tulsa Law Journal, Vol 41, 2006. It is also possible for these entities to intermesh, producing industry wide regulation. More interestingly, it is also possible for private entities to develop autonomous governance systems beyond the nation state in which corporations, investors, consumers, non governmental organizations and the media substitute for the state and its organs. See Larry Catá Backer, Economic Globalization and the Rise of Efficient Systems of Global Private Lawmaking: Wal-Mart as Global Legislator, University of Connecticut Law Review, Vol. 39, No. 4, 2007. These autonomous systems are both institutionalized and regulatory, but exist only within specifically defined frameworks. More ominously, political and economic actors, without a state have increasingly institutionalized and bureaucratized their organization, creating governments operated under a constitution and subject to a juridified code of conduct overseen by an administrative structure. See, e.g., Backgrounder: al-Qaeda (a.k.a. al-Qaida, al-Qa'ida), Council on Foreign Relations, April 18, 2008.

But it is also possible to conceive of states as market participants on a global scale. This participation include projections into the economies of other states through the activities (operational and investment) of state owned enterprises. See Larry Catá Backer, State Owned Enterprises and Sovereign Investment in Foreign Economic Entities, Law at the End of the Day, Jan. 28, 2009. More importantly, perhaps, they also involve increasingly significant projections into global investment markets, for example through sovereign wealth funds. See Larry Catá Backer, Sovereign Wealth Funds as Regulatory Chameleons: The Norwegian Sovereign Wealth Funds and Public Global Governance Through Private Global Investment, Georgetown Journal of International Law, Vol. 40, No. 4, 2009. And states have sought to project their regulatory authority against enterprises operating within their territories, or with effects within their territories, for example in the United States under the Alien Tort Claims Act. Increasingly, states and private actors have sought to mediate their relationships through the construction of international soft law overseen by national actors with the consent of private enterprises. These regimes, from the Global Compact to the Organization for Economic Cooperation and Development Guidelines for Multinational Corporations represent strategic alliances between public and private domestic and international organizations for the regulation and stabilization of specifically defined sectors of activity. See Larry Catá Backer, The OECD Guidelines for Multinational Corporations: Using Soft Law to Operationalize a Transnational System of Corporate Governance, Law at the End of the Day, March 5, 2009. Moreover, the move toward a conflation of private and public space and the global spillover of national conduct has opened the door to assertions of broad national power to project their judiciaries abroad. See Larry Catá Backer, Universal Jurisdiction, Universal Law, Prosecutorial Discretion, Law at the End of the Day, April 13, 2009. It has also created opportunities for vertically integrated public private regulatory frameworks. See Larry Catá Backer, From Moral Obligation to International Law: Disclosure Systems, Markets and the Regulation of Multinational Corporations, Georgetown Journal of International Law, Vol. 39, 2008.

Within these networks of governance and systems, it is possible to see the outlines of governance and government in the coming decades. These include a proliferation of government beyond the state, and governance without government (at least as government is traditionally understood as necessarily legitimate only if viewed to a territory which it controls). Non state actors are constructing governments without states. These constructions range from groups seeking political power to those operating in economic sectors. States are becoming more involved in projections of public power through private markets in which they compete with private actors in functionally differentiated sectors of activity that no single state controls. At the same time, governance is becoming possible without government. States have developed a taste for privatizing governmental functions. See Larry Catá Backer, Surveillance and Control: Privatizing and Nationalizing Corporate Monitoring after Sarbanes-Oxley, Law Review of Michigan State University, 2004. Networks of actors have begun governing using an panoptic model of transparency, disclosure and efforts to control the machinery for the production and elaboration of values. See Larry Catá Backer, Global Panopticism: States, Corporations and the Governance Effects of Monitoring Regimes, Indiana Journal of Global Legal Studies, Vol. 15, 2007.

Still, this is a messy business. States are still strong, and some retain the disposition to be aggressive to the extent of their ability to control. Other have effectively ceased to exist. Still others exist as equals or inferiors in power to non state economic and political actors. Moreover, not all states are facing changes in the nature of their power and the exercise of their sovereignty vis a vis other states and non state actors in the same way. Neither the development of governance without government nor of government without a state is happening in single minded linear fashion. Many non state actors retain their position as juridical entities subordinate to the state that effectively control them; but an increasing number do not. The ease of movements of capital and the integrity and uniformity of global standards for governance, coupled with growing expectations of behavior among states makes existence beyond the power of a state increasingly feasible. And feasibility nurtured into fact produces a necessary turn to governance. And the relationships among these actors changes in context and over time. But what makes for the greatest part of the mess is that all of these actors are acting simultaneously against each other, over and over again in contexts that change over place and time.

A recent example of the overlap of private an public regimes, non-state governments, traditional states, and non state entities as regulators, and the consequences of their collisions drives home these points. I speak here of the recent successful ransoming of the cruise ship Le Ponant from the Somali pirates that had held her and her passengers and crew hostage in 2008. The story is , for our purposes, well related in William Langewiesche, "The Pirate Latitudes," Vanity Fair No. 584:148-153, 181-187, April 2009.

For most, the story is one of the perils of piracy and the fortitude of the French in resolving this particular ransoming to the satisfaction of the global media. "Within hours in Paris the top French military commanders held a triumphant press conference during which they announced the liberation of the hostages, and the arrest of six Somalis (half the pirate force, they said), at the end of a successful military operation that had been carried out with the permission of Somali authorities, whatever that may mean, and had involved no payments of state funds." Id., at 187. But for others modern piracy suggests the multi level and heterogeneous nature of international public-private relations in the 21st century.
If anyone had saved lives it was the pirates themselves, along with Marchesseau, and the shipowners in Marseille, Rodolphe and Jacques Saadé. By satellite phone they had succeeded with negotiations in an evolving global dimension that lies beyond the reach of government and its conventions. For all its firepower and training, the French Navy was neutralized by the fact that Ahmed never threatened to start executing the hostages, and that for whatever reason he actually cared about their welfare. As a result, the best the French Navy could do was stand by, eat well, and serve as bagmen for the money. It was successful at this—maybe more so than other navies would have been—but the claims that were subsequently made of a French national victory were exceedingly thin.

But neither of these stories is particularly interesting except for its revelations of the modern nature of power and governance relationships. What emerges is an apt descriptor of many of the criss crossing sectors of modern global governance. First consider the ship itself, the Ponant.
The company that owns the Ponant is a Marseille-based shipping conglomerate called CMA CGM, which is held by a Franco-Syrian-Lebanese family named Saadé, and does business through 650 agencies and offices worldwide, serving 403 ports in 150 countries, and operating more than 400 container ships, many of them under flags of convenience—cherry-picking the official home ports in a mockery of national chauvinisms. If there were a God looking down from above, he would have to approve, if only on the basis that all are equal in his sight. Id., at 150.
Citizens of three nations, united as a family unit, operate a ship from headquarters in France. But the ship itself, though operated form France, is governed by the laws of the Wallis and Futuna Territory. "The Futuna island group was discovered by the Dutch in 1616 and Wallis by the British in 1767, but it was the French who declared a protectorate over the islands in 1842. In 1959, the inhabitants of the islands voted to become a French overseas territory." Wallis and Futuna Territory, CIA Factbook. The reasons are simple--convenience and profit maximization. It appears that while it is advantageous for the company to operate as a French concern as far as its customers are concerned, it is also useful to apply the regulatory framework of the Wallis and Futuna Territory with respect to the business of the enterprise--that is the tourist ship Ponant. Wallis and Futuna has the distinction of serving as
a tax haven that does not impose French labor laws on shipowners but allows the French flag to be flown. The tax haven is Mata-Utu, the home port painted on the Ponants stern, . . . where the Ponant has never been. Today the territory is ruled by a French envoy, a fractious assembly, and three local kings. CMA CGM maintains a mailbox and an e-mail address there, in Mata-Utu, through which employment inquiries can be routed.
William Langewiesche, "The Pirate Latitudes," supra at 150. And evasion of French labor laws was apparently necessary to effect the image of the ship as a French fantasy adventure venue. This required hiring a French crew, for the most part.
Most were not sailors but hotel staff. Six were Filipinos, and formed a group apart. In the kitchen, the chef was an African from Cameroon, but because he had learned to cook in Lyon from Paul Bocuse, a famous father of nouvelle cuisine, he was considered to be as French as the French themselves. Of the rest of the crew all except one Ukrainian were as French as the French, but by birth. Id.
Thus a French company run by a transnational family based in France, Syria and Lebanon could proudly maintain its adherence to all universal human rights norms--including non discrimination under hard and soft international law and French law. "Appropriately, the CMA CGM personnel department promotes the United Nations’ Universal Declaration of Human Rights, and vigorously denounces “any kind of discrimination, based on national, social or ethnic origin, race, sex, age, religion, political or other opinions.” This means, of course, that the company denounces discrimination in favor of the French." Id. AT the same time it could also continue to run its Wallis and Futuna operation in compliance with the laws of that place applicable to the ship--effectively replacing one set of regulations for another more amendable to the needs of the enterprise. "They stemmed from the culture of a global shipping industry which over the past 60 years has pursued profit and efficiency in part by ridding itself of labor unions, and more fundamentally by freeing itself from the constraints of the nation-state and its laws." Id. The company was French by convenience, and when inconvenient, its operations could be something quite distinct. And its owners could be whatever they wanted. The object, of course, was to maximize the value of the operations--and a French sailing holiday required a mooring in France. But it did not require identity with or conformity to French law to the extent they detracted from the business.

The pirates themselves represent another sovereign non governmental actor. Well trained, well organized, and autonomous from any political control within the territory in which they operate, the Somalis present a political unit with a state owned enterprise--piracy. That is, they acquired control of other people's possessions and released them for money. The pirates were essentially the operations arm of the community of Somalis that lived along the coast and made their living off of piracy.
They called themselves the Coast Guard, and apparently did have origins as vigilante fishermen who in the early 1990s sailed out to regulate and rob foreign boats that were smuggling all manner of contraband to and from Somalia and overfishing the coastal waters. Loosely speaking, they were the same group who later, in September 2008, hijacked the Ukrainian ship Faina, loaded with weapons for southern Sudan, and who ignored the presence of American warships for more than four months, and then walked away with $3.2 million, to the embarrassment of officials worldwide. The Coast Guard is said to have 400 members—whatever membership means, and however a count could be taken. Four or five such pirate groups are believed to operate in Puntland. They are large, fluid, clan-based alliances whose contours are inherently difficult to discern, and who derive their resilience in part from the very looseness of their structures. They are genuine organizations nonetheless. Id., at 186.
Thus, the community was organically constituted, and self referencing entity with its own mission, organization structure and regulatory authority. And they were functionally differentiated to provide economic benefits for their people through the operation of an extortion business, the business of piracy, with supply lines, and a business organization in which different jobs were tasked to people in accordance with their abilities. Together they could deliver their product successfully and produce money for the community.

And, indeed, in this part of the world, piracy has been naturalized within the conventional practices of business. "In Mombasa, Kenya, I recently spoke to a seafarer named Andrew Mwangura, who has become the go-to man in many piracy cases, and who described elaborate payment schemes involving investors, money-launderers, and specialized middlemen in London, Dubai, and Nairobi." Id., at 184. For all that, these actors tend to be underestimated because of the colonial, race, ethnic and class blinders of those who are their targets. "A band of barefoot natives, Fuzzy Wuzzies in rags, hip-firing their Kalashnikovs with poor aim, and worshipping some filthy G.P.S. as if it had fallen from the sky. They should have surrendered days before, even to the Canadians. But they hadn’t, and that was the problem. They were not particularly bellicose or arrogant, but they refused to be impressed when they should have been." Id., at 184.
With nothing but a group of French nationals as a shield, they were enjoying meals, going back and forth between ship and shore, and negotiating directly with the Saadés in Marseille, as if the French Navy did not even exist. The pattern was unusually frustrating to French authorities, as more recent piracy cases have been to American, Russian, and Chinese authorities. It raised disturbing questions about the relevance of governments and the exercise of power. More specifically, a suspicion crept in that these pirates knew exactly what they were doing, and that they understood the forces at play with more sophistication than had been assumed.
Id., at 184.

The navies of France and Canada were soon on the scene. But they could do little. Bound by their own codes of behavior, and fearing to lose the hostages to the pirates, all they could do was watch. Though that could be done drantically and plans could be put in place for rescue.
The French government arrived, at first with another warship, a smallish, 260-foot corvette named the Commandant Bouan, which overtook the Canadians and assumed a position about three miles in trail of the Ponant. Unbeknownst to the Ponant’s crew, a large operation had been launched by officials in Paris under the direct supervision of the French president, Nicolas Sarkozy. Over the next several days the operation would grow to include a half dozen French Navy ships, two Bréguet maritime patrol planes, several Falcon executive jets, at least one government Airbus, many helicopters, at least 50 commandos from the navy and the gendarmerie, a squad of frogmen, several landing craft, hundreds of amphibious assault troops, multiple urgent motorcades through Paris (with motorcycle escorts), and a string of command-and-control centers, starting with a 24-hour crisis-management bureau that was established in the presidential palace. The commandos were particularly dashing, the way they flew from Djibouti and parachuted into the sea to get aboard the warships.
Id. at 183.

Ultimately, it was the company, and not the state, whose participation helped solve matters.
The pirates briefly left him unguarded on the bridge, and hurried the engineers down into the engine room to see what was wrong. When Marchesseau was alone, the satellite phone rang. It was a manager from the company, calling from Marseille. Marchesseau did not let him speak. In French he said, “We have about 10 pirates aboard. They want to take us to Somalia. We’ve stopped the motor. I can’t talk any longer. It’s dangerous, and I’m hanging up.” His heart pounded. He had taken a chance, but the contact with the company turned out to be the one that counted. Id., at 183.
The company also set up its own crisis center ("CMA CGM had set up a 24-hour crisis office, under the direction of the owner’s 38-year-old son and heir apparent, Rodolphe Saadé." Id., at 184). It conducted negotiations for the payment of the ransom. Id. These were undertaken under the nose of and without the intervention, of the French government. Business to business exchanges among a global operator and a local pirate, both of whom seemed to know what they were doing. And indeed, CMA CGM has already internalized the risk of piracy. It was likely that the ransom paid would be compensated through the company's insurer--just as it might in the case of fire or business interruption. Thus, "the money was not going to be paid directly by CMA CGM, but by its insurance company—which, according to the Paris-based Intelligence Online, was the now-notorious American company A.I.G. " Id., at 185. After negotiation, the original $3 million demand was reduced to "2.15 million

The navies of the various governments, meanwhile appeared to have been playing to the global media. And rightly so--for the press and the people of those states are the primary constituencies of those governments and the principle consumers of its product--in this case "action" to "defend" the "hostages" from criminal elements in a lawless part of the world. But the context in which the state operated, so different from that in which the pirates and the company operated, also made governmental action less effective. "Fuzzy Wuzzies they were, but until Paris decided it could accept casualties among the Ponant’s crew, they had stymied the French national will. " Id., at 184.

But it was more than that. The company, CMA CGM, does not operate in a vacuum. And its relations are not just institutional. Structural coupling, communication and integraiton across systems was as important here as other factors. But what made this particularly interesting was that the structural coupling, the communication and coordination occurred between state and non state actors and related to the actions of a quasi public non state actor operating within the territory of a state that had ceased to exist.
Furthermore, the ship’s owner, CMA CGM chairman Jacques Saadé, was making it clear through back channels that he intended to pay some sort of ransom. Sarkozy and Saadé were acquaintances and political allies, if not close friends. It is said that Sarkozy invoked principle to persuade Saadé not to pay, but to no avail. Saadé understood the reasoning, but in practice he had to place the safety of his crew and ship first—a decision compounded by the certainty that casualties would impose costs higher than the paltry $3 million demanded.
Id., at 185. "If anyone had saved lives it was the pirates themselves, along with Marchesseau, and the shipowners in Marseille, Rodolphe and Jacques Saadé. By satellite phone they had succeeded with negotiations in an evolving global dimension that lies beyond the reach of government and its conventions." Id, at 187.

And the national law of the players apparently could not reach the payment in any case. "This was private money, floating free of national constraints, and it could be spent quite legally on ransom. To be clear about the rules that apply: extortion is illegal everywhere, except when it is construed as taxation; the payment of extortion, however, is legal, unless it is construed as bribery." Id. But it should be remembered that extortion was not illegal within the territory of the place controlled by the Somali pirates. Indeed, there it might even be understood as positive obligation of local Somali law as experienced on the ground. On the other hand, there was nothing that would prevent the French from acting after the fact. "Reluctantly [Sarkozy] agreed to give Saadé several days to work out a deal before he would damn the consequences and send the French Navy into action. He summoned the families of the crew to a confidential meeting in the presidential palace, where he is reported to have said, “We’re dealing with crooks. They want money. We’re going to give it to them. But afterward it’s my affair.”" Id., at 185. And, indeed, it is nlot clear how effective the negotiations between the company and the pirates might have been without the presence of the state and its navy.

And so the transactions were effected. The company paid the ransom; the pirates released their hostages; and the French government swooped in and got their lawless bandits (about six of the pirates and several hundred thousand dollars were recovered). Id., at 186. However, the "main culprits and 90 percent of the ransom money remained in Garacad, a town clearly in view from the frigate yet completely out of reach." Id., at 187. Still, everyone could claim victory. The state satisfied its electorate and the expectations of the media. The company salvaged its business with little fussy and at small cost. The Somalis made money on the extortion transaction. The Somali national government continues to be a fantasy useful in uinternational circles.

Langeweische suggests "One of the ironies at play is that the maritime industry being victimized is itself a standard-bearer for the advantages that exist in a world beyond law and regulation." William Langewiesche, "The Pirate Latitudes," supra at 181. Yet it might be more correct to suggest that in a world beyond conmventional governance, the dynamics of governance and interactions among actors is at once reverting to a pattern existing between the rise of power monopolizing states, yet at the same time evidencing new patterns of control by potent non-sovereigns within the ambit of their control. This is both a more complex world and one that is harder to control by any singularity. The state is all powerful, and yet it is impotent in the face of modern forms of action by non state actors and unconventional activities--like piracy. Piracy is both internationally reviled and yet widely practiced within certain states, or communities of people exercising the powers of states within small territories. These actors are both public and private entities, though unconventionally organized in either aspect. Companies, themselves, are globally diffused. They appear to be both an aggregation of intentionally embraced regulatory schemes segmented to attain advantage. But they are also capable of acting in the place of states. And they have more successfully than conventional states, been able to adjust to the realities of activities, like piracy. Traditional state law and military power seems to play an overwhelming and yet not necessarily efficient force in transnational activities. Moreover, the stakeholders of each of the major actors--the company, the state, and the pirates--creates incentives to act that were both distinct and not consistent. Yet they each ultimately complemented the other.

Thus, what at first appears to be a story about pirates and lawlessness on the high seas reveals more about the fractious nature of power and its diffusion in a post modern global setting. Those who wish to regulate in this environment will have to acknowledge that governance will be a complicated affair. There are now more participants than states. Each of the actors serve both public and private purposes. Law is neither the beginning nor the end of the most effective form of governance. And international organizations provide little effective service. In particular, it will be important to understand both the limits of state power, and the trajectories of corporate citizenship within this emerging framework of power. But it will also be necessary to remember that while the nature of state power is changing, it has not disappeared.

Thursday, June 25, 2009

Governance Without Government OR Government without a State?: Gunther Teubner on Complications of Umooring Corporate Governance From Corporate Law

In a simpler time, about a generation ago, the fictional divisions into which social, cultural and legal life were segmented, were both simple and powerful methods for organizing communal life. It was especially straightforward with respect to the construction and control of fictional persons, and especially fictional actors organized for the purpose of conducting economic activity.

Like Athena born fully formed from out of the head of Zeus, these juridical persons were said to be given form by the state under whose rules these entities were "organized". While some might argue that these corporate or entity charters gave these fictive entities life, it might be more useful to think of state charters as granting economic entities certain rights and obligations in the public sphere. These entities exist in the form of their internal organization and connections among pits principle stakeholders, but can claim the public rights of natural persons only to the extent that the public authorities permit it. In the absence of those permissions, these entities exist only as private arrangements (through contract) rather than as public juridical persons (through law).

As the state served as the source of the public character of the entity, only that law could be said to impose general obligations on the stakeholders intimately connected with the governance of the organization. Specific obligations, of course, remained a vital part of private law (through contract). But these specific obligations gave no rights as against the entity to others. Nor was the corporation obligated to comply with behavior norms with respect to its conduct or governance beyond those mandated by the state through law. All of this was in accord with the core notions of rechtsstaat notions and substantive constitutional law principles that flared out like a sort of legal supernova for a brief burst at the conclusion of the last World War in 1945. Moral obligations were consigned to marketing departments. Just as states had no obligation and little incentive to comply with hortatory international declarations, corporations and other juridical persons had little incentive to comply with norms that were not imposed by law, nor to acknowledge the power of purported stakeholders with no legal connection to the entity. Governance, in effect, was firmly grounded in government.

But this simple notion of state, law and juridical persons, of governance and government, has been undergoing substantial changes over the last quarter century. See Larry Catá, Backer, Multinational Corporations, Transnational Law: The United Nation's Norms on the Responsibilities of Transnational Corporations as Harbinger of Corporate Responsibility in International Law, Columbia Human Rights Law Review, Vol. 37, 2005. Governance is no longer purely the province of government, though it hasn't abandoned the state entirely. Contract, moral obligations, communal consensus expressed in otherwise non-binding instruments have begun to assert a regulatory power far in excess of the extent of their formal effect in law within a system in which only legitimately enacted state measures are vested with a power to demand conformity and which may be enforced through the instrumentalities of the state. But this is a complicated process, messy and not clearly headed toward "success" in the conventional sense.

Gunther Teubner recently reminded us of the complexity and tentativenes of the process. Gunther Teubner, "The Corporate Codes of Multinationals: Company Constitutions Beyond Corporate Governance and Co-Determination," in Conflict of laws and Laws of Conflict in Europe and Beyond: Patterns of Supranational and Transnational Juridification (Rainer Nickel, ed., Oxford: Hart, 2009). Professor Teubner starts with a contradiction: the defeat of labor in its bid for formal and significant status as a corporate governance stakeholder through the German co-determination law by notions of corporate governance has not directed power back to shareholders or directors, but rather, in the form of corporate codes might have pushed power elsewhere "with a potential that is hard to gauge." (Id., at 1). Teubner lays the blame for this contradiction on the dynamics of globalization. "A strategy in which the pressure amassed by worldwide social conflicts, protest movements, domestic courts, non-governmental and international organisations, coerces multinationals into adopting codes of conduct in which they assume an obligation to uphold social standards, is more likely to succeed." (Id.).

But this is an odd state--for these codes have no legal effect--except perhaps as contract (and in many places and under most circumstances even the contract model is a stretch).
Legal aspects of the codes of conduct appear only at the periphery; that is to say, these codes occupy a juridical “no-man’s land”. As soft law, they are not enforceable; instead, they morally oblige companies. Everything depends on political relationships, namely, the pressure exerted by the leading actors and the mobilisation of the public. (Id., at 2).
But the contradictions of "soft" law that exhibits critical characteristics of "hard" law require examination. And thus, Teubner proposes a thesis: "that corporate codes are emergent legal phenomena in the constitutionalisation of private governance regimes. Unlike when they were first spawned, they are no longer mere public relations strategies; instead, they have matured into genuine civil constitutions – in the fashion of constitutional pluralism." (Id.). Teubner advances five factors contributing to the evolution of soft law regimes, of governance without government. These include what he calls, "(I) Juridification; (II) Constitutionalisation; (III) Judicialisation; (IV) Hybridisation; and (V) Intermeshing." (Id.). What is not clear is whether these factors have produced governance without government, that is the rise of fictive governance that supports fictive entities beyond the control of the state (itself a fiction but one with quite a sting), or whether it has produced a method fore the rise of intergovernmental governance, that is of public governance through private actors.

Juridification suggests, for Teubner, the quite correct insight that the notion of soft law is itself no longer useful as either descriptor or concept. The notion essentially "beg the same question as lex mercatoria, internet law and other global regimes in which private actors make rules, the binding nature of which is not guaranteed by state power, yet which display a high normative efficacy." (Id., at 3). And here one comes to the great conundrum of transitions in law and the assumptions of legal regimes: In global political systems which worked so hard, and through two centuries from the time of the French Revolution to the destruction of the Nazi Regime in Germany to cement the notion (in both higher law and statute) the the rule of law, grounded in legitimate state power, law assumes a central place as a legitimate expression of popular will, and popular will is the critical foundation for legitimate action. But at the moment of its global triumph these system of law appears upended by the semblance of law without the foundations in legitimacy. In short form--the usual question of academics and politicians confronted with the realities of governance through instruments like corporate codes, 'is this law?', is thus a shorthand for, is this a legitimate expression of governance or merely a private arrangement of no interest as law.

Teubner thus looks for other bases of legitimation, one "which self-perpetuates by recycling symbolic global (not national) validity. The first criterion, binary code, distinguishes global law from economic and other social processes. The second criterion, global validity, differentiates between national and international legal phenomena." Id., at 3). Still, Teubner concedes, not every code, or every expression of aspiration, is worthy of the moniker--law. He draws on Martin Herberg's formalist construction (if it mimics law it may be law) approach. (Id., at 3-4, citing Martin Herberg, "Private Authority, Global Governance and the Law: The Case of Environmental Self-Regulation," in Multilevel Governance of Global Environmental Change: Perspectives From Science, Sociology and the Law (Cambridge: Cambridge University Press, 2006). Formalism, it seems, leads to functional effect, or at least to comfort. But not enough without a certain level of institutionalization. Law must not merely be complete, it must exist within a differentiated sphere in which its own autonomy is grounded ion its own will. In other words--the juridical personality must assume the autonomy of that ultimate autonomous personality, the state, if it is to make law beyond that state. "A “global law without a state” should not yet be assumed upon the basis that non-state institutions judge behaviour pursuant to the normative code, but, rather, that it may be acknowledged only when processes which observe these judicial functions under the binary legal code have been institutionalised. Only then do corporate codes satisfy the structural pre-requisites of a transnational law outside of state law." Teubner, "The Corporate Codes of Multinationals, supra, at 4.

This requires juridification--a self reflexive mechanism for enforcement and elaboration.
This reflexive process requires certain institutional precautions, in particular, the development of actors or instances, who or which are responsible for the establishment, modification, interpretation and implementation of the primary norm formation. Fundamental to this is the growth of the central level of internal control and implementation organs, which mediates between the two other normative levels, thusly grounding the legal character of the corporate code. Id. at 5.
Thus the form of law may be contract--the essence of soft law in the 21st century (see Larry Catá Backer, Multinational Corporations as Objects and Sources of Transnational Regulation. ILSA Journal of International & Comparative Law, Vol. 14, No. 2, 2008), but the function is regulatory within a contractually elaborated governance system. (See Larry Catá Backer, Economic Globalization and the Rise of Efficient Systems of Global Private Lawmaking: Wal-Mart as Global Legislator, University of Connecticut Law Review, Vol. 39, No. 4, 2007.

But juridification requires a higher law that can serve as framework both for regulation and as the process basis for a legitimate application of process rule of law. In other words, as Teubner elaborates, juridification requires constitutionalization. However, for Teubner, this "occurs only when the reflexive processes in the organisations are appended to reflexive legal processes - in other words, when inter-systemic linking institutions tie together secondary rule-making in the law with fundamental, rational principles of the organisation." (Teubner, "The Corporate Codes of Multinationals, supra, at 5-6). This idea of auto-constitutionalization suggests that the "will to organization" of states, memorialized in constitutions, can migrate, and legitimately so, to non-state entities.
This is based upon a constitutional concept which is not limited to nation states constitutions, but which, instead requires that, under particular historical conditions, even non-state civic orders give birth to autonomous constitutionalisation. The positivisation of constitutional norms moves from the global political level to various social sectors, which, in parallel to political constitutions, produce their own constitutions of civil society. (Id., at 6).
The idea, one increasingly accepted among international actors, is that the constitution of states is not something to unique to states. Instead, any juridical person might also acquire a certain legitimacy as a regulatory entity by mimicking states. "We can observe the typical components of a constitution: regulations about the establishment and functioning of decision-making processes (organisational and procedural rules), and the codification of the boundaries of the organisation in relation to individual freedoms and civil liberties (basic rights)." (Id., at 7).

But neither juridification and constitutionalization are enough for more than "independent law formation." (Id.). If this was all there was to the corporate codes of multinational entities, then the academic debate would center on whether these entities constitute new forms of states. That is an anachronistic position--suggesting a return to the age of the Hudson's Bay Company and antique mercantilism, rather than to grasp the subtleties of the current movement. Teubner, though, suggests the necessity of structural coupling with national systems. Multinational codes may be autonomous, but they exist in a networked community of law and power. States still control territory, and multinational corporations manifest their activity within territories. "For the implementation success of codes of conduct, their judicialisation in the national legal order will be one of the most important pre-requisites. At the same time, it should be clear that their reception in national law is not a condition of the legal character or binding effect of the codes." (Id., at 8).

Still, the key here, for Teubner, lies in globalization, that is in international judicialization.
The corporate codes are neither prescribed by national legislation, nor adopted, nor integrated. More pertinent is the notion of conflict of laws: the autonomous legal orders of the multinationals collide with national and international laws. In this collision between autonomous legal orders, both undergo a deep process of change. (Id., at 8).
Structural coupling is not merely communicative, or interactive, it is also dynamic., "there is a reciprocal reconstruction of the state law in the corporate code and vice versa." (Id.). When it rebounds it changes all meta-system participants. But, of course, there is more to this. Teubner suggests within this notion a further layering of judicialization. This time, not in the service of the construction of an autonomous system, but instead as a meta-nexus point where structural coupling, systemic interactions, may be bureaucratized within a legitimacy-producing institution.
Here, we are concerned with regime-transcending legal conflicts, with effects in both legal orders. The only escape route in such a case of inter-regime conflict would be for the tribunal concerned to develop its own substantive norms. Mindful of the “domestic” and the “foreign” legal order, and with one eye on the third order, trans-institutional substantive norms, following the fashion of an asymmetrical law-mélange, could be formed. (Id., at 8).
This is certainly the framework that has emerged as the form of bureaucratization, par excellence, for legitimacy producing communication among systems above the state. In the West, the judge has again assumed the role as both Hebrew prophet and Greek oracle. See, Larry Catá Backer, Retaining Judicial Authority: A Preliminary Inquiry on the Dominion of Judges, 11 William & Mary Bill of Rights Journal 117 (2003). "Thus, the most pressing task might be the organisation of mutual awareness and reciprocal acknowledgment between decentralised tribunals." (Id., at 9).

Teubner has now moved us from the creation of a law-state conventionally understood as derived from the state as the supreme legal person to the possibility of the creation of governance-communities that are not states but acquire a legitimate form through constitutionalist organization and which exist autonomous of the state. But can the corporation, in the context of its great codification projects, pull away from the orbit of the state and its traditional law to become its own autonomous governance unit? There is always a danger, Teubner relates, that such codes will become little more than the privatised expression of public law. (Teubner, "The Corporate Codes of Multinationals, supra, at 9). Already there is a great tendency among Western states to do just that. The boundaries of the public and private sphere are sometimes blurred not at the instance of power seeking private juridical persons, but at the insistence of states that seek to privatize their governmental responsibilities. These present a more discrete method of governance. (See Larry Catá Backer, Surveillance and Control: Privatizing and Nationalizing Corporate Monitoring after Sarbanes-Oxley, Law Review of Michigan State University, 2004). "Instead, the hybridisation of the corporate codes is a developmental trend, in which the autonomy of the codes is preserved, but in which state agencies and international organisations are involved to the extent that they contribute to the delineation of the borders of the private code and to its implementation and regulation." (Teubner, "The Corporate Codes of Multinationals, supra, at 9). Ironically, the success of this strategy might well serve as a barometer of state power vis a vis their corporate regulatory competitors.

Teubner, however,
is not altogether optimistic about the ability of corporate code projects to reach escape velocity and detach from the orbital control of the states in which they operate. Or, more precisely to reach that escape velocity in a way capable of being seen as legitimate by competing governance organs. To work around this tension, Teubner suggests an approach, grounded in what he calls "intermeshing." (Id., at 9-10). Intermeshing involves the Europeanization of multinational regulatory enterprises. Just as the Member States of the European Union together might create broader and more powerfully effective cross state norms, so too might multinaitonal "states" do the same within cooperative regulatory communities. Thus he notes "the emergence of inter-company networks as an extension of the corporate code onto an entire production network. Global commodity chains have developed, which constitute neither market relationships nor integrated multinationals." (Id., at 9). These are "networks of independent companies, which have generated their own governance structures." (Id). Here is the model of the European Union in a privatized variant form!

But Teubner ultimately remains tied to the state and its forms. And he avoids the more interesting question of the possibility of communities of corporations (and other non-state actors), like the community of states, coming together for the elaboration of governance frameworks that can exist autonomously. Yet Teubner's argument can also be read to suggest something novel grounded in his concept of intermeshing: the intermeshing of networks of multinationals creating an autonomous framework which then with autonomous networks of states.

The model of the state and the multinational as a the basic and default binary foundation of analysis may no longer be as relevant as it once might have been. Just as Multinationals have congregated within networks, so too have states. It is those functionally differentiated networks of states--either formally or informally constituted--that might best serve the interests of helping corporate codes reach escape velocity. That result is not a product of altruism. But instead it might flow naturally from the value to groups of states of a consolidated and autonomous community with which it might negotiate for more efficient global relationships. Here, globalization is a crucial factor. The consequence suggests the construction of polycentric governance frameworks in which the corporation might owe duties to states in which they operate (and within the political system of which they assume a subordinate role), and also simultaneously assume obligations under social norm systems generated by and generally applicable to the global community of corporations. We move then from Teubner's state privileging universe--a universe in which the habits and forms of law-state systems are replicated--to a governance universe in which actors may acquire obligations and privileges sourced grounded in the social-norm frameworks of non.state regulatory communities, legitimated on their own terms. These are taking a variety of forms, from internally self constituted multinational enterprise governance systems, See Larry Catá Backer, The Autonomous Global Enterprise: On the Role of Organizational Law Beyond Asset Partitioning and Legal Personality, 41 Tulsa Law Journal (2006) and Larry Catá Backer, Economic Globalization and the Rise of Efficient Systems of Global Private Law Making: Wal-Mart as Global Legislator, 39(4) UNIVERSITY OF CONNECTICUT LAW REVIEW 1739 (2007); to social norm systems grounded in the public obligations of private actors in international scial norm systems. See, e.g., John Ruggie, Towards Operationalizing the Protect, Respect and Remedy Framework: A Progress Report, A/HRC/11/13, 22 April 2009. Li-Wen Lin has recently argued that these private transnational law systems might well leak into the law of host and home states as well, and as such, ought to be an object of comparative law study. See Li-Wen Lin, Legal Transplants through Private Contracting: Codes of Vendor Conduct in Global Supply Chains as an Example, 57(3) AMERICAN JOURNAL OF COMPARATIVE LAW 711 (2009).

An excellent example of this, perhaps, is the work of the Business Leaders Initiative on Human Rights. "Initially, BLIHR developed a “tool box” consisting of several guides for businesses on human rights. In addition, BLIHR promoted the human rights global governance of businesses by submitting reports to the UN Special Representative on business and human rights and by organizing international events, including the December 2008 International Seminar on Business and Human Rights held in Paris, France. Mary Robinson, former United Nations High Commissioner for Human Rights, chaired BLIHR." Roadmap Announced for Human Rights Global Governance of Transnational Businesses, Economics & Development, Human Rights, Wednesday, June 24, 2009. In this complex intermeshing, one can discern the development of consolidated norms within networked aggregations of privately constituted autonomous groups, negotiating for a harmonized set of regulatory standards at a supra national level. At this level, the public law-private law distinction falls away as well. "This human rights impact assessment tool is to be used by companies to ensure that current and future business practices meet human rights standards recommended in the framework established by the UN Special Representative on business and human rights. " Id.

Still, Teubner has suggested the skeleton of the constitution of governance without government, and their elaboration int he form of corporate codes. But that skeleton suggests more the methodology of the constitution of non-state states than it suggests the growing irrelevance of the soft law-hard law distinction. In effect, the "harder" the regulatory institutionalization the "harder" the governance produced, whatever its form. It is the constitution of government without a state, rather than the deepening of governance without government, that is the real object of these constructions. The implications of this are as readily apparent in the work of the U as their deficiencies are evident in the construciton of an autonomous single corporation.