The forward looking
Hague Institute for the Internationalisation of Law (HiiL) "is an international research institute, located in The Hague, the Netherlands, which initiates, facilitates and funds top-level research in the field of the internationalisation of law. It explores how national legal orders function in a world where national borders are becoming less important and where the interconnectedness of societies – and thus their laws – is a fact of life." (
HiiL). Over the course of the last three years HiiL has organised a series of conferences on a specific domain of the relationship between law and globalisation. They included:
For 2011, the Fourth
HiiL Law of the Future Conference will focus on the Law of the Future in general: how will law and the legal sector develop in the 21st century? The specifics can be accessed
HERE.
Set out below is a short essay that serves as the basis for my contribution to that effort:
Inter-Systemic Harmonization and Its Challenges for the Law-State
Larry Catá Backer
We have been asked to consider, in summary essay form, three fundamental questions affecting the law-state in this century:
“What do you see as the most significant challenges for the development of the law? What developments
are we likely to see in the coming two to three decades? What do those developments mean for national
legal systems in the international legal order as a whole?”
The questions put at issue, in a precise way, the fundamental understanding of the basic building blocks of 20th century socio-economic political culture—and particularly the character of law, the state and non-state actors. But the questions also raise issues that are dynamic and that implicate fundamental questions of institutional form, function and legitimacy. Those issues revolve around communication, autonomy and interdependence in the governance activities of state and non-state actors, and the forms in which communication is undertaken, autonomy revealed and interdependence manifested. There is thus a dynamic element at the core of the questions that requires elaboration and that serves as the urtext for governance actors for this century. The thesis of this essay is this: Whatever the outcome in the decades to come, states and their domestic legal orders will not be able to maintain their isolation from the emerging non-national governance frameworks and retain a substantial relevance; to avoid irrelevance, states and their law systems must recognize governance polycentricity and more effectively communicate with the emerging extra-legal governance frameworks of public and private governance systems and by public and private actors. It is that dynamic element of inter-systemic harmonization and its challenges for that law-state that this essay considers, weaving this theme within the three questions initially posed.
What developments
are we likely to see in the coming two to three decades?
At the start of the 21st century, governance harmonization has become a more complicated, more desired, and yet elusive enterprise. Even as the enterprise of harmonization has grown, states have begun to more aggressively resist harmonization as its ability to serve as a framework for the transfer of governance power from states to new centers has been more widely felt. But that element of resistance has been complicated by the entry of new actors within governance circles. Harmonization is currently proceeding simultaneously along a number of different lines—horizontal, vertical and inter-systemic—that reflect these ambiguous and multi-vector interactions and that also suggest the context in which the future of legal systems, however understood, will be determined.
Horizontal harmonization occurs between entities (traditionally state entities) roughly similarly situated within hierarchies of authorities—for example between the states of the United States, between the Member States of the European Union, or between two less formally connected states, for example between India and Chile or between other states in the global community. It can be as simple a project as finding a common language for communication and as complicated a project as integrating legal systems. This push toward horizontal harmonization of laws among sovereigns describes the great project of comparative law with its origins in European 19th century notions of the state. Much that passes for lawmaking remains at this level of 19th century conceptions, even as the foundations for those conceptions—the superiority of the state, and of the positive law produced by a sovereign demos—has been severely challenged. The challenges are both horizontal and vertical. Harmonization among states unequal in power or development is sometimes understood either as a form of colonialism (a political undertaking through law) or more insidiously, as a means of insinuating the ideologies and political choices of powerful states on less developed ones under the guise of simplicity, communication and the other virtues of legal harmonization. Even something as basic as the linguistics of law language, when transposed, can have ideological effects, especially when words migrate from the legal cultures of developed states into those of developing states. For example, the migration of developed state notions of property imported into Brazil or Panama to protect the rights of squatters on public lands has been used as a vehicle for developers to deprive these dwellers of their property through sale or mortgage foreclosures.
However, vertical harmonization continues to be grounded at its core in the state. Ironically, the great project of vertical harmonization—economic globalization—has also served to illuminate the limitations of a state centered approach to law and harmonization. The 21st Century has now witnessed the emergence of governance polycentricity, of the potential broadening of the mechanics of law beyond the memorialization of the commands of territorially bounded states, of the rise of private law with public functions and of public entities as private actors. This has substantially changed the landscape of law. These changes have given rise to the most controversial form of harmonization, at once the most interesting and potentially far reaching variant—inter-systemic harmonization, or harmonization of public and private governance systems and by public and private actors. States operating as private enterprises in economic markets, economic entities serving as substitutes for the state in weak governance zones suggest the context in which public and private governance systems remain autonomous but communicate and converge. The movement from customary and positive law to contract and the governance mechanisms of surveillance expand and change the nature and character of governing.
These changes both augment the power of states (with respect to the expansion of the palette of legitimate governance tools) and shrink the scope of its control (as other governance communities emerge with authority over actors operating within the territory of states). The management of that convergence, communication and interaction has been the great challenge for current efforts at harmonization of polycentric public-private systems existing within states and outside of the domestic legal order of any state. Projects like that of John Ruggie’s business and human rights governance framework—the Three Pillar Protect-Respect-Remedy Framework—provide a contemporary application of these issues and serve as a harbinger of things to come. Indeed, within the cluster of governance issues understood as business and human rights, for example, the intersection among domestic and international public legal orders, private governance orders, the public role of private entities and the private role of public entities become acute.
Consequently, in place of the traditional focus on the law-state and its obsession with the division between public and private, another is emerging, one in which the comparative law project will need to bridge gaps between public law based state systems and private social norm based systems. Just as lawmaking might have become unmoored from the state, the state has itself become unmoored. And so the issue of corporate citizenship serves as a proxy for the equally important converse issues—that of the private rights of states as participants in global markets. At the international level, states and other collectives might well have to meet more as equals, even as they interact within vertical hierarchies in particular contexts. But even those localized hierarchies are now unstable. Corporations negotiate “agreements” with small states; nations negotiate treaties. Large corporations can coerce small states in ways that mimic the ways in which larger states can do the same to smaller and more vulnerable ones. States and corporations are now capable of deploying forces in the field—sometimes states hire corporations that serve as mercenary armies for hire. The clear lines of public and private authority, and even the once clear lines of its Marxist Leninist opposite, have become blurred.
What do you see as the most significant challenges for the development of the law?
The construction and management of inter-relations between public and private governance communities and the move from law to extra-legal systems of behavior control will serve as the great project of the 21st century. As a consequence, the greatest challenge for law in the 21st century is to avoid becoming irrelevant in an emerging global governance order in which corporations use contracts to regulate their supply chains, states reconstitute themselves as private market actors, and private enterprises assert regulatory control of markets through authoritative systems of assessment and rating.
Consider, for example, the conventionally understood relationship between public and private law. Private law has traditionally been understood to derive its power and legitimacy from the state. It is attached to the state. The attachment of private law to the state provides a strong ideological basis for the management of private relationships by the state apparatus and the political community it represents. That attachment also suggested a place outside of which law did not reach—but which was not considered legitimate or legal, whatever its binding effect. And that was the end of it—as far as the jurisdictional boundaries and legitimacy-dignity of law was understood to extend. Thus, for example, with respect to limits on the use of real property, the focus is on the individual common law states, whose rights and obligations are mediated by the state through an application of the law of nuisance. In China, the same limits start from the obligations of individuals to the community, memorialized in the great principles of Harmonious Society mediated through the state apparatus under the leadership of the Communist Party. In theocratic systems, the focus is on the community of the faithful whose collective obligations are mediated by a priestly institution through religious law.
Beyond the law of any of these variants lies a universe of morals, psychology, markets and religion to which law was opaque (though was not above deploying discretely from time to time through the device of “policy” focus, for example), and which existed subject to the preemptive power of law. The ideology of law produced an incentive towards autarchy totalitarianism in which the highest authority is characterized as political and vested in territorially bounded states whose legitimating organs (today democracy, yesterday anything from the Kaiser to the priest) were solely vested with authority to bind all juridically recognized persons within the state. The ideology of law permitted a certain variation—sustaining the political framework of the United States, the Soviet Union, Imperial Japan, and Nationalist Socialist Germany simultaneously.
But the 21st century has witnessed the rise of a new institutional phenomenon—the functional detachment of private law from the state. This suggests a fundamental reorientation of governance, a movement away from the law-state binary to one grounded in the law-norm binary (within which the state is not necessarily present). That reorientation, in turn, suggests polycentricity, breaking the monopoly of power exercised by the state producing positive law through democratically elected institutions and reviving the autonomous force of custom. Yet this is custom of a non-traditional sort; custom is now understood as producing rules that are given force through the state apparatus (the traditional understanding of customary domestic law) but it is also now understood as producing rules that memorialize the customs of other governance communities, from multi-national corporations, to supra-national actors. Law systems, in all their traditional variation, now co-exist with the regulatory contract systems of multi-national corporations, with the governance norms of transnational law-religion systems and with supra-national organizations that produce and seek to enforce their own sets of governance norms among their consenting members.
But detachment also produces different forms of governance. Law tends to assume a simple and single dimension form—a command to be obeyed, usually in the form of an injunction to act or avoid acting in particular ways. But the forms of governance have expanded well beyond this simple and ancient technique. The movement away from law to governance techniques has also made it easier for non-state communities to develop an institutional framework and mechanics of effective governance. Monitoring, surveillance, disclosure, standard setting, binding principles, and objective evaluation techniques are among the methods of governance that have acquired an increasing regulatory aspect. One can govern as effectively by fine-tuning the classes of information required of an individual and providing consequences for the results of the evaluation thereof, as by the command of a statute.
This challenge to law suggests another—an institutional convergence in governance capacity. Developed states and the largest multinational corporations are closer in form and operation than either is to less developed states and smaller corporations. Larger corporations and developed states are then more likely to look to each other for governance harmonization than either would look to developing states or smaller corporations. That, in turn, suggests a fundamental reorientation of governance chains grounded in a functional abandonment of the public-private distinction. The resulting polycentricity becomes a powerful governance force as the historical movement toward the assertion of near monopoly power by states within their territories is reversed under the operative framework of economic globalization.
Opening borders to commerce and investment has a strong collateral effect on extent of the empire of law as the operate instrument of the law-state. Open borders permit a disaggregation of citizenship from residence, especially among investors and their investments. It also produces a power in individuals to consent to membership in communities with its own rules and institutional structures, whose objectives and functions straddle multiple territorial borders. Law now finds itself in a competitive environment of a force unseen since the Enlightenment in Europe. On the one hand, the character of law within states in changing. On the other, new techniques of law making and porous borders have increased the sources of governance. Law, like the state, has not so much been reduced in scope and power, as it has now come to share governance space with a host of different institutions producing distinct forms of command that may have some of the effect of traditional law but are not law (classically understood as a legitimate command sourced in the apparatus of a political state). .
What do those developments mean for national
legal systems in the international legal order as a whole?
States need not embrace the passive virtues of the philosophy of quietism. Indeed, it is essential for each state to not merely rethink the basis of its legitimacy, form and function within its territory, but also to stake out a space for its positive contribution within emerging jurisdictional challenges posed by new governance frameworks and especially with respect to its areas of control. The great challenge for states is to find the way in which they might more actively engage in the processes of inter-systemic and vertical harmonization without losing their fundamental character and democratic connection with their citizens.
That task requires a number of actions. First, states must not pout; states that embrace insularity in the face of the emerging global polycentric governance orders, states that raise walls of domestic legal systems about the borders of their national territories (with the occasional extraterritorial foray) will, quite perversely, increase the ability and ease with which other regulatory actors might penetrate those barriers. The penetration would take advantage of the blindness of law-states to governance frameworks beyond the state, that is, they would take advantage of the limits inherent in the territorial borders that once served more positively as the means for asserting a monopoly of state power within them. Foreign multinational corporation regulation of host state suppliers through contract provisions with little connection to the domestic legal order of the host state, or the fidelity of host state actors to the requirements of foreign supra-national evaluation and standard setting bodies are examples of penetration that states would find difficult to prevent without foregoing those connections that are almost invariably essential to the well being of its people.
Second, states and their domestic legal orders will have to engage polycentricity within their territories. That might require some flexibility in communicating with autonomous systems and a willingness to harmonize their domestic legal order with those of important parallel systems. This future is likely represented by the governance communication and harmonization challenges faced recently by a multinational corporation in the mining business, which found itself in violation of the requirements of an autonomous international system of norms, for the conduct of its subsidiary, operating a mine through a subsidiary jointly owned by it and a provincial government in the place where the mine was located, despite the fact that the highest national court had determined that the conduct at issue met all of the legal requirements imposed by the state in which that mine was located. States without sufficient points of contact with non-state governance systems will find themselves isolated and less in control of activities that occur within their national territory.
Third, the complexities of governance, and the dispersion of governance authority pose institutional problems for states. One of the greatest is what John Ruggie has called problems of incoherence. At the state level, incoherence denotes the failure of communication and coordination of policy and law making among the various ministries and regulatory agencies of a state apparatus. The classic example is that of the South African Republic, whose negotiation of bi-lateral investment treaty provisions by one ministry did not take into account the requisites of human rights based policy being implemented by another ministry. The resulting conflicting obligations produced litigation to the detriment of state policy. At the international level, incoherence is more common and illustrated by the disjunction between the rules applicable within a state through domestic law and the international obligations of the state without direct domestic effect.
Fourth, states must avoid legal segmentation. In the context of 19th century global horizontal harmonization legal segmentation produces a harmonized law for elites driven by the state and a local traditionalist law/custom for everyone else. In places like Japan before 1945 this produced a tendency toward multiple domestic legal orders within a single territory. The same effects are sometimes exhibited in developing states subject to significant harmonization pressure through their entanglements with the global financial community regulators—the International Monetary Fund and the World Bank. In the context of inter-systemic harmonization, similar patterns produce a challenge of multiple domestic legal orders that harmonize rules applicable, at least functionally, to distinct segments of the national population. Already this is in evidence—China exhibits a tendency toward bifurcated labor markets depending on whether labor is hired for production within foreign dominated supply chains or domestic ones. Bi-lateral investment treaties create pockets of private law and rule making with respect to which the domestic legal order may not play a decisive role.
Taken together, these strategies suggest in briefest form, the contours of the challenges posed by inter-systemic harmonization, and the dangers of resisting harmonization among these governance frameworks of “unequal” and distinctive governance organs—states, intergovernmental organizations, transnational private actors and multinational corporations and religions, to name only a few. States seek to remain effective and powerful autonomous actors. The expression of state power through law must remain vital. Yet these two objectives have become complicated in a world in which states—and law—no longer occupy the governance stage without competitors. States that can accommodate the new realities of power diffusion and governance variety—of corporations that regulate, of states that seek to project their power through traditionally private juridical persons (corporations and sovereign investment funds), of functional law effectuated through survey, surveillance, disclosure, standards, conditional income support programs, supply chain relations, religious command and the like—are likely to be more effective actors within and without their territories than those who hide from these changes or resist them.
But of course the effects of these transformations are also largely dependent on state power. The least developed and least powerful (politically, culturally or economically) states are likely to face these challenges in more direct and consequential form than the largest or most powerful states. China and the United States can resist emerging trends longer, and reach accommodations with the products of such trends, in ways impossible for the least developed African states. A most interesting set of challenges face states that are already deeply enmeshed in supra-national governance organizations. The Member States of the European Union have greater experience in the dynamics of cooperation within loosely binding normative structures. They also have experience in governance within diffuse governance frameworks in which power is shared among a number of stakeholders. Yet all of this diffusion remains confined to the state and its supra-national creatures. Much can be learned from the experience of Europe, though European states will have much to learn, as well, from the experiences of developing states that confront the power of transnational non-state governance. Inter-systemic harmonization suggests the possibility that law might preserve its relevance and autonomy. But it can achieve this objective only by conceding its monopoly on governance.
