Saturday, May 12, 2018

ASIL International Legal Theory Interest Group Symposium: "When Corporate and International Law Meet: Corporate Agency in a Global Context"

(Pix © Larry Catá Backer 2018)

It was my great delight to attend a recently concluded ASIL International Legal Theory Interest Group (ILTIG) Symposium,  When Corporate and International Law Meet: Corporate Agency in a Global Context. It was co-organized by Durham University's Institute of Commercial and Corporate Law (ICCL) and by the Jilin University School of Law.

Conference participants considered aspects of the following problem:  "Among the most significant challenges for governments and international organisations is to develop institutions for economic globalisation to promote economic growth but which also comply with moral demands that we can reasonably agree apply to these institutions. This symposium brings together legal scholars, social scientists, and philosophers to address these challenges."

The Symposium statement and a partially annotated Symposium Program follow below. 

Among the most significant challenges for governments and international organisations is to develop institutions for economic globalisation to promote economic growth but which also comply with moral demands that we can reasonably agree apply to these institutions. This symposium brings together legal scholars, social scientists, and philosophers to address these challenges.

The relationship between the international law on economic globalisation and the regulation of the corporation is underexplored. Corporate law scholars do not talk to international law scholars and vice versa, even though corporations are among the most powerful global economic actors, often more powerful than states, and whose actions often have global systemic significance affecting the rights and welfare of many. Still missing is a decent conception of corporate personhood upon which to rest a clear legal conception of responsibility on the corporation. Corporate legal scholars have developed a considerable body of work on the tensions between shareholder primacy and corporate social responsibility but this research avoids basic problems of human motivation and incentives, the collective action failures that tend to result without clear government mandates, and the effects on capital markets of pricing corporate social responsibility norms into share valuations. A pressing need exists to understand the relationship of China’s model of state-led development and enterprise governance on corporate social responsibility, particularly with the rise of China’s One-Belt One-Road initiative, the largest international investment initiative ever undertaken in the history of the world. The Beijing Consensus now holds the potential to overtake the Washington Consensus and change the nature of corporate governance and the role of the state in the regulation of firms. The business and human rights agenda has produced advances but they are limited by the reach and scope of international human rights law. International human rights law has not had the transformative effects that many hoped it would have. While discussions were ongoing about how to make corporations more socially responsible, the architecture for a global economy of liberalised trade, investment, and finance came into existence, an architecture supporting a liberal market order based on supply chains, outsourcing, offshoring, and the free trans-border flow of direct investment and financial capital. Add to this mix that cosmopolitan theories of global justice prevalent in normative political theory have made no contact with actual policy making or treaty developments. If justice is a consideration at all in law or public policy, governments seem to follow clear Rawlsian-type distinctions about the site of justice as the state. These strands are evidence of fragmentation in the legal order relevant to regulating multinational enterprises. It is a form of vertical fragmentation to be added to the horizontal fragmentation found in international law itself. This symposium explores these and other issues.

Keynote Lecture: James V Feinerman, Associate Dean for Transnational Programs, Co-Director, Georgetown Law Asia, and James M. Morita Professor of Asian Legal Studies, Georgetown University Law Center

Speakers include:
Daniel Attenborough, Associate Professor of Law, Durham University
Larry Catá Backer, W. Richard and Mary Eshelman Faculty Scholar & Professor of Law and International Affairs, Pennsylvania State University
Xi Chao, Professor and Vice Chancellor's Outstanding Fellow, Chinese University of Hong Kong
Zhipeng He, Professor of Law, Vice Dean for Education, Jilin University
Charles T Kotuby Jr, Partner, Jones Day
John Linarelli, Professor of Commercial Law, Durham University
Ming Qi, Professor of Law, Jilin University
Kish Parella, Associate Professor of Law, Washington & Lee University
Nicolas Perrone, Assistant Professor of Law, Durham University
Xirong Ren, Professor and Vice Dean for Academics, Jilin University
Ruth Sample, Associate Professor of Philosophy. University of New Hampshire
Beth Stephens, Distinguished Professor of Law, Rutgers University
Hongyun Tian, Professor of Law, Jillin University
William R Thomas, Climenko Fellow, Harvard University
Shuangge Wen, Professor of Law, Jilin University
When Corporate and International Law Meet: Corporate Agency in a Global Context

11 May 2018
Venue: American Society of International Law, Tillar House
ASIL International Legal Theory Interest Group (ILTIG) Symposium

Daniel Attenborough, Associate Professor of Corporate Law, Durham University
John Linarelli, Professor of Commercial Law, Durham University
Shuangge Wen, Professor of Law, Jilin University School of Law

Continental Breakfast 8.15-8.50am

Opening Remarks 8.50-9.00am
John Linarelli
Professor of Commercial Law, Durham University

Provided a warm welcome. Introduced the format of the Symposium with thanks to ASIL.

Keynote Lecture

James Feinerman 9.00-9.30am
Associate Dean for Transnational Programs; Co-Director,
Georgetown Law Asia, James M. Morita Professor of Asian Legal Studies
Spoke to two areas: corporate law and international/comparative law, and the overarching theme of CSR that cuts across both. CSR knows no borders. Core principles: (1) human rights; (2) labour rights, (3) environmental rights (sustainable development). Enforcement is a challenges in national and international law: at the margins are voluntary social reporting (challenge of green and blue washing; voluntary compliance to avoid legal regulation); lawsuits as a powerful disciplining force (even if unsuccessful) but issues of jurisdiction and limits of domestic substantive remedial rights. For all the challenges, the fact that these have become important issues peaks to the evolution of thinking about CSR as a legal subject in corporate and international law. Businesses can no longer treat issues of CSR as externalities nor can they avoid disclosure and perhaps consequences for actions,.

Panel I From Moral Agency to Legal Rules 9.30-10.40am

Evan J, Criddle
Cabell Research Professor of Law, William & Mary College

John Linarelli
Professor of Commercial Law, Durham University
“Tribes, Corporations and International Law,” from the book, The Misery of International Law. Why is corporate law situated in the domestic level but almost absent at the international level? Law reflects moral views of governed communities—representative agency embedded in morals and thus through morals in law of communities’ self-reflection and intermeshing with others. Cognitive approach to morality with sensitivity to cognitive bias of individuals and perhaps of institutions?

Ruth Sample
Associate Professor of Philosophy, University of New Hampshire
“Harm, Moral Injury, and Exploitation.” Grounded in failures of respect for others, and thus morally wrongful. That is, exploitation is better understood (and perhaps regulated) from a foundation in human dignity principles than from mere utilitarian principles. Worth exploring the way this approach changes approaches to regulation off markets and markets pricing, supply, etc. Considered this in the context of sweatshops, for example. Distinctions between moral injuries and physical harm in tort (the “lack of respect for the individual” issue). What can constitute moral injury is explored.

William R. Thomas
Climenko Fellow, Harvard University
“Corporate Personhood and Conceptual Confusion.” Starting point three conventional corporate law theories of personhood; (1) aggregate theory (corporations as a way of describing networks of contributions), (2) real entity theory (free standing collective entity), (3) artificial entity theory (creature of law and thus a manifestation of and dependent on a domestic legal order and the power of the creating state). These raise flags. Nos 1 and 3 are compatible with each other but Nos 1 and 2 are adverse. But each may be speaking to distinct levels of abstractions and to different ends. Yet these ae important to answer 2 questions: (1) what can corporations do and (2) to what extent can the state control them. Raise concerns around the propriety of methods for vesting personhood, based on premises that support each of the theories. So can the debate be reduced to one about methodology? From metaphysics to epistemology.

Coffee/Tea 10.40-11.00am

Panel II Social Considerations and MNEs 11.00am-12.10pm

John Linarelli
Professor of Commercial Law, Durham University

Larry Catá Backer
W. Richard and Mary Eshelman Faculty Scholar & Professor of Law and International Affairs, Pennsylvania State University 
"Where Neither Corporate Nor International Law Converge: The Multinational Enterprise and Societal Frameworks." Much of what is going on in the regulation of CSR and its related aspects (duties, responsibilities and rights) is not happening within the conventional structures of the corporation (enterprise) or law. The regulatory focus instead is on two constructs, neither of which is recognized fully in law: (1) Multinational corporations (MNCs); and (2) Societal rule making. But the regulation of both of these constructs is made more difficult by the conventional centrality of the corporation and of state based law (domestic and international) with all of its baggage. That presents a regulatory conundrum explored in the presentation. With a focus on the MNC as an object of legal/societal regulation, and on the legalization of societal space, and the emerging governance characteristics of accountability and assessment as the form of regulation, the presentation considered two questions. (1) has the legalization of societal space come to its end in the face of data driven governance?; (2) If not the MNC, are regulatory efforts targeting the right object?

Beth Stephens
Distinguished Professor of Law, Rutgers University
“Corporate Accountability.” Discussion of the rise and fall of the ATS regimes in U.S. courts. Discussion of some of the key factors in the development of the ATS jurisprudence in the courts. The central focus was corporate responsibility, and amenability to suit, under ATS. The presentation then considers the opinions in Jesner (with a look back to Citizens United). The juxtaposition  produced a deep analysis that suggested disjunctions in the character of U.S. Supreme Court conceptual approaches to corporate rights and responsibilities. The two cases suggest the contingency of notions of corporate personality under its Constitutional law. Noted the rise of a jurisprudence in the United States characterized by Strong support of corporate autonomy in the protection of its rights; more phlegmatic notions of corporate autonomy in the context of responsibility.

Xirong Ren
Vice Dean for Academics and Professor of Law, Jilin University

Lunch 12.10-1.20pm

Panel III Shareholders Versus the World 1.20-2.30-pm

Xirong Ren
Professor and Vice Dean for Academics, Jilin University

Daniel Attenborough
Associate Professor of Corporate Law, Durham University

“UK Corporate Law Ecology: No Place for International Law?” Starts with corporate law and agency theory as foundation for core corporate principles, and evolution as separation of ownership from control realities morph conceptions. Agency rules to mediate use of intra-shareholder power and protect shareholder power vis a vis governance apparatus (board and officers). The presentation then mapped shareholder empowerment in terms of primacy, sovereignty and wealth maximization (neither UK nor US accepts primacy; the UK accepts shareholder sovereignty (US board sovereignty); and both embrace shareholder wealth maximization). It then considered the origins of UK Shareholder sovereignty through the enactment of key statutory rights to shareholders that cannot be waived. From that it looked to globalization and corporate externalities. The later disempowers shareholders form opting out of shareholder empowering rules, the former looking to societal regulation through disclosure and transparency regimes.

Xi Chao
Professor and Vice Chancellor's Outstanding Fellow, Chinese University of Hong Kong
“Do Shareholders Care About CSR? Empirical Evidence from China.” Looking at empirical questions that underlie the themes of the Symposium. Chinese CSR since 2005 focusing on employee rights and environmental responsibility. Focused as well on stock exchanges and enlightened shareholder value. And thus the empirical question: do minority shareholders take CSR seriously? DO they vote strategically on CSR related proposals? Do firm attributes weigh on shareholder voting preferences on respect to CSR related disclosures? Drew on shareholder voting data for 2016 consisting of 14 CSR board proposals from 14 firms representing 4% of the 253 firms adopting CSR reports. Shareholders tend to favour CSR proposals in SOEs but not to the same extent for some private enterprises. The implications were then considered.

Ming Qi
Professor of Law, Jilin University

Coffee/Tea 2.30-2.45pm

Panel IV Regulatory Arbitrage, Fragmentation, and the Architecture of Globalisation 2.45-4.10pm

Harlan Cohen
Gabriel M. Wilner/UGA Foundation Professor in International Law, University of Georgia

Zhipeng He
Professor of Law, Vice Dean for Education, Jilin University
“State, Market, and the Evolution of International Law.” Starts with a review from Grotius to Cobden in the UK, to White in the U.S. (with a nod to the Miseries of International Law). Charts evolution from regional division of seas, to a markets based open approach to the contemporary stage of international law mare liberum policy. To this is tied Cobdon’s notion of world peace through free trade grounded in bilateral treaties among trading states (looking toward OBOR in the “New Era”). This second wave was marked by states represented by enterprises for whose advantage states sought the development and implementation of international law in the 19th century and produced both free trade and unequal treaties. In the 3rd stage, White argued for the Bretton Woods system. It is marked by the divisions of the Cold War, and a move to open internal markets to investment penetration and augured in the age of institution building for trade and investment at the international level. The presentation closed with insights about the relationships among states and enterprises, on the role of states to control the conduct of their companies, and the utility of international law to aid states in those efforts through advancing policies of coherence and mutually beneficial cooperation.

Kish Parella
Associate Professor of Law, Washington & Lee University
“How One Get MNCs to Abide by Nonbinding Norms.” Focus on soft law and its enforcement. Some successes, which are the focus of the discussion, as against less successful examples. Look at reputational mechanisms in IFIs. And business and human rights IFIs fit within webs of endogenous (intra-agency reputation) and exogenous (other organizations rewarding compliance conduct) reputational mechanisms. Different actors involved that reward or punish actors for abiding. In BHR context, there are fewer endogenous reputational mechanisms. Generally, the language and governance of BHR is in terms of responsibilities but not rights. Thus, these frameworks are characterized by more carrots and fewer sticks. It then draws lesions: First is institutional design—need to build into organization strong endogenous mechanisms. Second, where a governance institution lacks endogenous mechanisms, it can be created form the outside. These may be sourced in the reputational effects of legal systems (e.g., information effects of hard law process that translate into reputational effects (for example ongoing litigation even when enterprise succeeds). The presentation then gave the example of FIFA.

Charles T. Kotuby Jr.
Partner, Jones Day, Washington DC
“Are there a set of norms that States have to follow in their engagement with enterprises and individuals.” Litigation against foreign sovereigns. Much of the litigation are brought by middle level corporations against expropriation of their assets. What do these companies do when they face the realities of effective expropriation? For many of them little reliance on rule of law and strong governance. Only a few enclaves and thus there is a pressure toward alternative remedial mechanisms. ICSID offers that alternative. The presentation noted the absence of positive law in the international sector. Only reliance on general principles of international law (out of art 33). There are a few, one must abide by one’s contracts, estoppel, etc. Unanimity is not required (the way that accepted by civilized states as morphed in meaning). These are principles and not rules, they point to a constraining and interpretive function. These are not equitable principles—derived from how states behave toward private parties. Yet these principles are rarely enforced. Needs an international forum to bring claims against states, for which investor state arbitration mechanisms appears to be the only option to date. And it is through these for a that perhaps general principles of law can be applied and developed. Investment treaties, then, may not promote more investment, but it does provide better quality investment—long term sustainable investment.

Nicolas Perrone
Assistant Professor of International Law, Durham University
Corporate law and states are close but that is not the way these are conventionally understood. Sought to figure out means of bringing them closer together. International law tends to be state centred and regulatory. Corporate law tends to be mainly domestic and private, rights holders other than the state and states only with respect to their commercial (not regulatory) operations. Connection between the two are the set of rights necessary for the construction and operation of value chains across borders. The tension between the two comes from regulatory takings understood broadly in both domestic and cross border operations. Property and contract law tends to define the operating system of global economic activity, which moves farther afield from traditional Global Administrative Law and its framing. Yet property and contract rights are also regulatory in character with normative and distributive consequences, and in this way contain constraints on state action. And the interpretation of those entitlements within administrative systems tends to affect perceptions of legitimacy (e.g., where decisions are viewed as investor privileging).

Coffee/Tea 4.10-4.25pm

Panel V One-Belt One-Road and Corporate Social Responsibility in a Chinese Context 4.25-5.35pm

Zhipeng He
Professor of Law, Vice Dean for Education, Jilin University

Hongyun Tian
Professor of Law, Jilin University
Toward Legalization: One Possible Way to Ensure Chinese CSR.” It considered the development of CSR legislation theory and practice; presentations and reasons for the lack of Chinese CSR legislation; and approaches to realizing legislation. With respect to the first, the paper noted the transformations of domestic legal orders in the shadow of the movement of international law, noting the movement from the 1992 Rio Declaration to the 2011 UNGPs, and the private efforts of the ISO system. With respect to the second, five deficiencies were noted: (1) lack of a system for legislation of CSR, (2) lack of the constraining force of CSR, l(3) ack of operability, (4) lack of normalization, and (5) the lack of a useful guide. As a result, CSR development lags behind economic development. With respect to the second, the presentation noted the factors affecting the development of Chinese CSR, including China’s increasing involvement in internal organizations with CSR missions. And thus reasons for the slow pace of CSR implementation: the lack of an institutional basis, governmental guidance, the early stages of development of CSR requiring technical capacity, and the development of a CSR theory with Chinese characteristics. The presentation ended with a discussion of approaches to legalization going forward. These are based on the need to strengthen local capacity and local study of CSR, to strengthen the study of CSR and to see government drive CSR.

Xiaohong Zhou
Associate Professor of Law, Jilin University 

Shuangge Wen
Assistant Dean for Internationalisation and Professor of Law, Jilin University
“Business Disclosure Under the UK Modern Slavery Act.” Looking at social reporting regulation and its utility for Chinese efforts. Start with history of enactment of transparency acts form the 2010 California Transparency in Supply Chains Act to current times. Then turned to the UK Modern Slavery Act. The aims of the research is to contribute to a broader appraisal of regulatory methods and to evaluate its pragmatic effects. The presentation started with the definitional issues of modern (rather than traditional) notions of slavery—from ownership to compelled service; that is from a property regime to a labour regime. That definition broadens the challenges in global production chains grounded in highly dispersed operations in many states. It then considered the inadequacies of conventional command and control laws (governance gaps; the challenges of extraterritoriality; and inadequately developed international law frameworks). The result is a move form government to governance. And thus, to an analysis of the Modern Slavery Act itself. It is reflexive in nature encouraging self-corrective measures triggered by transparency. The paper then considered the extent of the innovations of the MSA and its value and its defects. Defects include asymmetries in interpretations favouring the large players and the lack of measures for assessment reducing the value of accountability. Also discussed were connections to policy derogations and limited scope of disclosure (a relatively few enterprises are required to comply). The presentation ended with a suggestions for future research: effects on global supply chains and the value of the mechanics of disclosure for eliminating the practices of modern slavery.

Dinner/ Reception 7.00pm


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