Castan Centre for Human Rights Law

"Human Rights, Social Responsibility
and the Regulation of International Business: The Development of
International Standards by Intergovernmental Organisations"

Peter Muchlinski

Professor of Law and International Business
Kent Law School, University of Kent at Canterbury,
Canterbury Kent, CT2 7NS, United Kingdom.

Conference draft only. Please do not cite or reproduce.
Comments are very welcome to P.T.Muchlinski@ukc.ac.uk

The rapid growth of international economic integration through the trading and investment activities of multinational enterprises (MNEs) is often described as leading to "economic globalisation"1 This, in turn has raised questions concerning the social effects of such a process. In particular, there exists a common perception that certain activities of MNEs can give rise to unacceptable damage and loss to the communities in which they operate, as a result of practices that may be regarded as morally and ethically questionable. Such practices have been highlighted in recent years by non-governmental organisations (NGOs) active in the human rights, development and environmental fields.2 Equally, it is increasingly believed that intergovernmental organisations in the economic field, epitomised by the World Trade Organisation (WTO) and the World Bank, are doing little to regulate such practices while, at the same time, creating a deregulated global space in which MNEs will be increasingly free to act as they will, and in which there is little by way of democratic accountability for the actions of these powerful private actors.

Against this background of popular perceptions,3 a discourse on ethics and international business is developing. This may be justified philosophically by appeals to a "social contract" and to the need of all actors, including non-state actors, to observe the preservation of human dignity through adherence to fundamental human rights.4 On the other hand, the precise content of this discourse remains open to ideological contest. There are at least three main contemporary positions that can be discerned from the literature. The first, a "hard libertarian" position, adheres strictly to a Lockean version of the social contract and limits the ethical agenda to the protection of private property and basic market freedoms. It seeks no wider social duties to be observed by corporations and, indeed, sees such wide duties as being illegitimate. The second position, that of the "neo-liberals", emphasises the benefits of an "economic constitution" based on international free trade, but, unlike the libertarian position, it is not opposed to the protection of fundamental rights or the environment.5 The precise role to be played by such standards is not fully explained, although there is a clear rejection of the "right to development". The third position, that of the "regulatory functionalists", which includes both pro-market and (so-called) anti-capitalist positions,6 sees serious problems in the unrestrained operation of MNEs in an increasingly de-regulated (or under-regulated) global economy and seeks, in response, to develop a global code of corporate social responsibility. Notable in its absence form (at least the more publicised aspects of) the current debate is a visible Marxist position on ethical business practices. Perhaps this can be explained by the recent failure of the state socialist alternative to capitalism in the former Soviet bloc, and by the fact that the main policy prescription of the Marxist agenda would be the replacement of the market itself by the state as the embodiment of the mass of the people. The current debate does not go so far. It is, in essence, a reformist debate rooted in an acceptance of some form of global market economy, not its rejection. Only time will tell whether the debate can remain so bounded. Much depends on the left's ability to redefine itself in the light of the failure of state socialism and the rise of the integrated global economy7

The three main positions noted above are contesting the agendas of intergovernmental organisations (IGOs). Here it is important to note that different IGOs have different cultures that respond more or less sympathetically to each of the above positions. For example, it is hard to envisage UNCTAD ever denying the existence of a right to development as such, though it would be open to debate on what that right means in practice.8 On the other hand the WTO is often, perhaps not entirely accurately, seen as a purveyor of "hard libertarianism". It is, in fact, closer in detail to the "neo-liberal" position, and in practice it is willing at least to hear out alternative social positions, as witnessed by the informal access now given to NGOs to WTO dispute settlement panels.9 The World Bank, too, is engaged in dialogues with governments, development institutions, the business world and NGOs as to the meaning, content and operationalisation of corporate social responsibility, which have, so far, gone furthest in relation to the environmental monitoring of project proposals. 10

In the light of the above, the present paper attempts, first, to cast some light on what IGOs have, to date, achieved in the field of standard setting under the general rubric of "corporate social responsibility", concentrating, in particular, on the issue of human rights and corporations. Secondly, it examines what this development means for the evolving role of IGOs as regulators of social issues in the international economy. This analysis concentrates especially on their constitutional role as "quasi-legislators" and what this implies for the role of the nation-state, which has, hitherto, been seen as the prime forum for the resolution of social issues in the regulation of business, whether national or international. It will also address the question of whether an increased role for IGOs as standard setting organisations will offer an effective means of ensuring that corporate behaviour conforms with essential ethical values, by way of response to the scepticism expressed by proponents of a liberal world trading order over whether such regulation is desirable or useful.

(1) Increased Concern over the Social Dimension of International Business Regulation

The considerable growth in concern over the social dimension of international business activity has led, in turn, to significant developments in the contents of international instruments dealing with trade and investment by MNEs. There are at least three principal sets of issues that need to be considered in this connection: the sources of substantive standards; how the "social dimension" and "social responsibility" should be defined for the purposes of developing new international standards and what kinds of "social" provisions have been used, to date, in international standard setting instruments

The Sources of Substantive Provisions

At the outset, it must be stressed that, traditionally, international agreements regulating international business have not covered social issues, or at least not directly or expressly. Rather, such agreements have tended to concentrate on the main issues that contribute to the proper functioning of international business. Thus, for example, the thrust of the GATT/WTO regime has been the progressive liberalisation of international trade in goods and, after the adoption of the Uruguay Round Agreements, services, coupled with increased protection for trade related intellectual property rights.11 In the area of foreign direct investment (FDI) the main category of treaty, the bilateral investment agreement (BIT) usually covers: non-discrimination, based on most-favoured-nation and national treatment standards; investment guarantees against expropriation or civil unrest and in support of free transfer of funds and dispute settlement.12 Indeed, even the failed Multilateral Agreement on Investment (MAI), as originally conceived, contained no references to labour or environmental standards, only provisions, echoing BITs, for the promotion and protection of investors and their investments coupled with new standards guaranteeing entry and establishment of investors and their investments, based on US and Canadian BIT practice, and on NAFTA.13 On the other hand, as will be shown below, even such types of agreements may contain provisions that have an important effect on the fair conduct of business across borders, a matter that can be properly included in any definition of corporate social responsibility.

Notwithstanding such possibilities, it is fair to say that the vast bulk of social responsibility standards for the conduct of international business can be found in instruments outside the field of international business regulation, even, indeed, outside the sphere of work covered by IGOs. The sources vary from voluntary codes of conduct developed by individual companies or industry sectors,14 NGO codes,15 codes drawn up by governments16 or IGOs and binding conventions on specific issues, of which the 1997 OECD Convention on Combating Bribery of Foreign Officials in International Business Transactions is the most prominent example,17 as are the conventions and codes of conduct developed by the International Labour Organisation (ILO).18

Apart from international standard setting conventions, which acquire the force of binding international treaties among the membership of the sponsoring IGO, or among the signatory states, if membership of the convention is permitted to any country including non-members of the sponsoring IGO, the majority of the above-mentioned sources are legally non-binding. They are "soft law" instruments. They offer little more than moral force, in that the major method of enforcement is through the shame of non-adherence. However, that is not to say that such codes are doomed to complete legal ineffectiveness. At the international level "soft law" can "harden" into positive law, where it is seen as evidence of emergent new standards of customary international law. For these purposes the origin of the legal principle in a "soft law" instrument, such as a voluntary code of conduct or a non-binding resolution of an international organisation, is of little consequence if a consensus develops that the principle in question should be viewed as an obligatory standard by reason of subsequent practice.19 Given that many of the most important international expressions of welfare values tend to be in such form20 the "hardening process" may be of especial importance here. Indeed, as the debate over the content of the MAI shows, the demand for "hard law" in this field might be difficult to resist. On the other hand, it should not be forgotten that even in "hard law" agreements, provisions concerning controversial social issues have been put into very general, and probably meaningless, hortatory language, simply to show that something has been done, but where there is little intention to see these provisions having any real legal effect.21

Equally, at the level of national law, a non-binding code of conduct can acquire legal force in private law. Private law suits can be brought against the firm or organisation adopting a voluntary code by other firms or organisations, consumers or other members of the community. Such claims may allege that a failure to comply with the code is evidence that the sponsoring firm or organisation is not meeting industry standards of conduct and is, therefore, not exercising reasonable care or due diligence. Furthermore, failure to follow the terms of a voluntary code could be evidence of a breach of contract, where such adherence is an express or implied term of the agreement, or of an actionable misrepresentation, as where a firm alleges that its adherence to a code of conduct entitles it to be regarded as qualifying for a governmental standard setting marque of approval, but where in fact it fails to meet such standards. In such cases, consumers can bring an action if they claim to have been attracted to purchasing the firms products or services in the light of such assertions of good conduct. Also the relevant government agency might bring an action for abuse of its certification scheme.22

Therefore, to dismiss voluntary sources of international or national corporate social responsibility standards as irrelevant seems to fail to appreciate how formal rules and principles of law emerge. The very fact that an increasing number of non-binding codes is being drafted and adopted in this area, suggests a growing interest among important groups and organisations - corporations, industry associations, NGOs, governments and IGOs - and is leading to the establishment of a rich set of sources from which new binding standards can emerge. No doubt this process can, and is being, criticised as one in which corporate interests are trying to capture the agenda through code making. However everyone seems to be at it! The real issue is when and how will all this "codification" turn into detailed legal standards which can act as fully binding benchmarks for the control of unacceptable lapses in corporate conduct at the international level. That is an issue of ideological contest, but one which seems to be veering slowly towards an acceptance of some kind of articulated set of minimum international standards for corporate social responsibility, as a trade-off for greater corporate freedom in the market.23

Defining the "Social Dimension" and "Social Responsibility"24

Despite calls for more, there is, as noted above, already a surprising amount of documentation, both legally binding and non-binding, that can offer an insight into the content of global social responsibility standards in business. However, despite such developments, it is still difficult to ascertain precisely what principles bind all of these disparate developments together, since the phrase "corporate social responsibility" can mean many different things.

As pointed out in a recent UNCTAD study on Social Responsibility, the obligations of firms in this matter can be drawn rather widely. That was the case, for example, in the Draft UN Code of Conduct for Transnational Corporations. The Draft Code contains obligations ranging from respect for the sovereignty and political system of the host state, respect for human rights, abstention from corrupt practices, full disclosure or observance of tax and competition laws, to obligations on TNCs not to abuse their economic power in a manner damaging to the economic well-being of the countries in which they operate.25 Equally, the recently revised OECD Guidelines for Multinational Enterprises contain an extensive range of social obligations for MNEs including, inter alia, a duty to contribute to the sustainable development of the countries in which they operate, to respect human rights, to encourage local capacity building, or to refrain from seeking or accepting exemptions to local regulatory frameworks in the areas of environment, health and safety, labour, taxation, financial incentives or other issues.26 By contrast, the UN Global Compact focuses on just three issue areas upon which world business should act by upholding the major international instruments in each field: respect for human rights as defined in the Universal Declaration of Human Rights; the International Labour Organisation's (ILO) Declaration on Fundamental Principles and Rights at Work, which requires respect for freedom of association, recognition of collective bargaining, elimination of all forms of forced and compulsory labour, the effective abolition of child labour and elimination of discrimination in respect of employment and occupation; and the Rio Declaration of the UN Conference on Environment and Development, which requires support for a precautionary approach to environmental challenges, the undertaking of initiatives to promote greater environmental responsibility and the encouragement of the development and diffusion of environmentally friendly technologies.27

The question of what the list of social responsibility standards should contain is, of course, a question of choice bound by ideological considerations.28 However, it is clear that it can cover potentially all aspects of corporate conduct, and that the matter may assume economic, social, political and ethical dimensions in that, "TNCs are expected to conduct their economic affairs in good faith and in accordance with proper standards of economic activity, while also observing fundamental principles of good socio-political and ethical conduct."29 What this means may be better explained by considering which social and economic interests have generated internationally sanctioned protective standards. Thus, a brief stocktaking, based on earlier research undertaken by the author, will be undertaken, followed by a closer examination of the development of human rights standards in relation to corporations with the aim of offering a closer issue-based example of standard setting developments in this very wide field.

Social Responsibility Standards: A Stocktaking:

This matter has been more fully discussed by the author elsewhere.30 For now it is enough to note that at least the following interests might be adversely affected by MNE operations, and that these have already elicited the development of, or calls for, new international standards.

First, in line with the "hard libertarian" approach outlined above, there may be other economic parties in the global market that might be adversely affected by MNE behaviour which upsets the fair and competitive operation of the market. In such cases, there is a need to promote market fairness. This will involve, in particular, controls over restrictive business practices, fraud and tax abuses. These matters are dealt with to a greater or lesser extent by international rules.31 It is also at the heart of anti-corruption developments which have, as noted above, already produced an major international convention.

However, this issue is not restricted to a "hard libertarian" agenda. The question of market fairness also involves the need to respect the interests of those unable to compete equally in the global economy, as advocated by the more socially oriented approaches discussed above. Thus, there may be weaker parties that encounter MNEs in their every day lives and who require protection through protective rules. In this regard, the protection of the rights of employees has figured highly in the social responsibility agenda, given the weaker position of employees in relation to their employers. Not only has this led to codes of conduct drawn up by the ILO,32 but also to the inclusion of "no lowering of standards" clauses in international economic agreements, which ensure that host countries do not lower labour, or other regulatory standards, such as health and safety, as an incentive to attract investment from MNEs.33 Similarly, the rise of international consumer protection standards can be attributed to the need to ensure adequate minimum protection for consumers dealing with products and services produced by MNEs, and to ensure the proper and ethical conduct of electronic consumer transactions, an area in which there has been considerable international concern in recent years.34

Secondly, another significant question of equality in the global economy concerns the special position of developing countries.35 Such countries may have particular problems that international social responsibility codes must recognise. Of these, perhaps the most important is the need to ensure developing country access to adequate information and resources while dealing with MNEs, so that agreements can be entered into with such firms that are truly beneficial to development. This entails the inclusion, in international regimes governing the conditions of investment into developing countries, provisions that ensure adequacy of information and resources for developing countries. This can be done by way of duties imposed on firms and their home governments to co-operate in the evolution of development policies on the part of developing countries through, for example, duties to transfer technology useful to the developing country's science and technology policy or through co-operation in the control of abusive business or taxation practices, such as transfer pricing.36

In addition, the special situation of developing countries raises the question of whether preferential treatment can be justified by reference to the "right to development". Such a right was first recognised in the African Charter of Human and Peoples Rights and was adopted by the UN General Assembly in its Declaration on the Right to Development.37 This right, which is not legally binding,38 asserts that there can be no trade-off between human rights and development - it trumps such hard pragmatism. Equally it is simultaneously an individual and a collective right and it encompasses civil and political and economic, social and cultural rights. It is a so-called third generation "solidarity right". Whether this right is a useful building block for justifying social responsibility on the part of states and corporations has been questioned from all sides. Thus, neo-liberals doubt whether civil and political and economic, social and cultural rights can be so conflated, while critics from the left have expressed concern over the state centred nature of the right in that developing states can invoke it as much as communities or individuals.39 However, while the value of the "right to development" to the elaboration of ethical international business standards is undoubtedly problematic, the ideal expressed by this right - the ideal of equal development and equitable redistribution - can be used to inform details of specific principles.

Thirdly, there will be interests requiring that MNEs operate in a manner that furthers more general, socially desirable goals. The need to act in a manner that is consistent with the protection of the environment and sustainable development may be seen in this light, as there is a general public interest in ensuring a healthy and safe environment. Hence the emphasis in the UN Global Compact on the principles contained in the Rio Declaration that are of direct application to the activities of MNEs.40 Similarly, the duty to observe fundamental human rights may be seen as an expression of the need for MNEs to act in a manner that protects wider social goals, in this case the furtherance and protection of human dignity. However, as will be discussed in the next sub-section, this area is still very much in the realm of evolution, though there exists an increasing number of non-binding declarations and codes outlining MNE responsibilities in this area.41

Finally, there is an interest in ensuring proper accountability on the part of MNEs through disclosure rules, and through emergent international standards of good corporate governance. At present both serve to protect mainly shareholder interests, and, in the case of disclosure, governmental interests in obtaining adequate information about the international operations of MNEs for regulatory purposes. Both areas could easily evolve into wider regimes catering for other stakeholder groups.42

Social Responsibility Standards: The Case of Human Rights and MNEs

Following from the brief general stocktaking in the last sub-section, the present sub-section will consider how far IGOs have contributed to the evolution of standards seeking the application of human rights principles to corporations. Here the focus has tended to be towards MNEs given the transnational character of their operations. However, the underlying issues of principle would apply mutatis mutandis to national firms as the applicability of human rights standards to private corporate actors does not depend on the mere fact that their business operations cross borders. Such a geographically based justification for applying human rights standards to one class of corporations, rather than another, seems both unprincipled and unjustifiable. The focus on MNEs can perhaps be explained as a pragmatic choice, evolving out of their visibility in certain widely publicised cases of mass violations of human rights and from the perception that MNEs, unlike purely national firms, can take advantage of more lax legal regimes in foreign host countries, which pay scant regard to social welfare concerns, allowing unscrupulous firms to turn this to their commercial advantage.43 On the other hand, it should be noted that MNEs are more likely than local firms, in countries where social welfare issues are either un- or de-regulated, to observe good practices in this arena. Thus, the real problem may be a lack of proper regulation in the host country of local businesses and institutions for which MNEs may not be responsible. Therefore, any programme of responsibility must take into account the relationship between local and transnational practices and the influence of MNEs theron, the possibility that MNEs will be standard setters, rather than standard lowerers, and the rarity of direct and premeditated transgressions of fundamental human rights standards by MNEs.

Against this background, the most significant IGO based developments are taking place in the UN Sub-Commission on the Promotion and Protection of Human Rights. In August 1998 the Sub-Commission decided to establish a Working Group on the Working Methods and Activities of Transnational Corporations.44 In August 1999, that Working Group, in turn, decided to consider developing a code of conduct for companies based on human rights standards. A draft code was compiled by Professor David Weissbrodt, with a first comprehensive draft being made available for comment in the Spring of 2000.45 A revised draft has now been produced, reflecting inter alia comments received during a seminar on the draft code in Geneva in March 2001, entitled "Draft Universal Human Rights Guidelines for Companies".46

The first thing to note is the change of title from "Code of Conduct" to "Guidelines". This is explained by the fact that members of the Working Group and other observers became concerned, during their review of the first draft, that the title "code of conduct" had been used too much by companies for voluntary codes and might be misleading. The current working title was suggested at the Geneva Seminar, though the final title has yet to be determined.47 Much will turn on the eventual legal status of the Guidelines, a matter discussed further below. Secondly, the Draft Guidelines make clear that the term "companies" includes, "any business enterprise, regardless of the international or domestic nature of its activities; the corporate, partnership, or other legal form used to establish the business entity; and the nature of the ownership of the entity, including any privately-owned or government-owned entity".48 This reflects a desire to see the application of human rights obligations to all business entities and not merely to MNEs (Transnational Corporations or TNCs in United Nations parlance). This is so not only to avoid the unjustifiable distinction between TNCs and national firms, outlined above, as regards responsibilities to observe fundamental human rights standards, but also to avoid the risk that an inadequate definition could allow companies to use financial and other structures to conceal their transnational nature and to appear as a domestic company thereby avoiding responsibility under the Guidelines.49 On the other hand, the discussion of the Draft Guidelines, at the 53rd Session of the Sub-Commission, stressed that TNCs needed to continue to be a special focus of the Working Group as they had a size and power that could enable them to do things smaller companies could not do such as evade national responsibilities.50

Thirdly, the Draft Guidelines make clear that governments retain the primary responsibility to uphold human rights standards, and that nothing contained within them shall diminish those obligations.51 This is a welcome approach, as it prevents the substitution of corporate responsibility for what are, in many, if not most, cases, failures of local government policy to uphold human rights either through passive inactivity or, in more extreme cases, through deliberate and systematic violations on the part of the state concerned. Thus the Draft Guidelines do not attempt to raise the role of companies to that of quasi-governmental agencies that can be held liable in lieu of the government of the country in which they operate, where the latter has the primary responsibility to act in accordance with human rights standards. The value of this position is reinforced by the fact that, to date, in the majority of documented cases of alleged abuse of human rights by companies, the latter have been found to be only indirectly involved as an apparent beneficiary of host state policy that violates human rights. Furthermore, it is hard to envisage a case where the MNE could violate human rights without being in some kind of joint activity with the state, or, at the very least, where the host state would have to turn a blind eye to the firm's activities.52 However, the Introduction to the Guidelines makes clear that MNEs cannot expect to be liable only in a residual capacity, based on a requirement that governments must fulfil all their human rights obligations before it would be appropriate to consider the responsibilities of the latter. MNEs will be liable in their own right for abuses committed by them.53

The fourth important feature of the Draft Guidelines is that they seek to rely on six different types of documents as sources of applicable standards: legally binding treaties and other instruments; non-binding guidelines adopted by international organisations; industry or commodity group initiatives; framework agreements between multinationals' and workers' organisations; self-imposed company codes of conduct which may be non-binding and NGO or union model guidelines. Thus the Draft Guidelines are an amalgam of binding and non-binding norms derived from other instruments, creating a synthesis of pre-existing human rights standards from which further evolution can occur. They are not intended to "freeze" standards at the present state of practice.54 A further consequence of this approach is that the substantive content of the Draft Guidelines is fairly wide, and goes beyond a narrow list of specific human rights norms. Thus the Draft Guidelines can be divided into a number of different types of provisions.

First, there are those which cover "traditional" civil and political human rights issues, namely: the right to equal treatment;55 the right of security of persons as concerns corporate engagement in, or benefit from, "war crimes, crimes against humanity, genocide, torture, forced disappearance, hostage-taking, abuses in internal armed conflict and other international crimes against the human person.";56 rights of workers dealing, in particular, with the prohibition on forced or slave labour,57 the non-use and abolition of child labour,58 and freedom of association;59 respect for other civil and political rights, such as freedom of movement, freedom of thought, conscience and religion and freedom of opinion and expression.60 Secondly, there are provisions reflecting the main economic social and cultural rights including: the provision of a safe and healthy working environment;61 compensation of workers with remuneration that ensures a "lifestyle worthy of human existence for workers and their families in the context of their circumstances";62 protection of collective bargaining;63 respect for the social, economic and cultural policies of the countries in which companies operate;64 respect for the rights to health, adequate food and adequate housing and other economic social and cultural rights such as rights to primary education, rest and leisure and participation in the cultural life of the community.65 No distinction is made as to the relative importance of these so-called "first" and "second" generation human rights. Indeed, as the Preamble explains, the Draft Guidelines are based on the, "universality, indivisibility, interdependence and interrelatedness of human rights..."66 This approach also covers the so-called "third generation" rights of collective solidarity, as expressed through the inclusion, in the Draft Guidelines, of the right of development and other community based rights such as the right to self-determination and protection of the rights of indigenous peoples.67

A fourth group of provisions can be said to deal with the special problems created by the operations of MNEs for the realisation of the types of rights listed above. Thus the Draft Guidelines deal with a specific issue that has arisen in a number of cases, namely, the operation of security arrangements for companies. Such arrangements must, "observe the law and professional standards of the country in which they operate so far as those laws do not conflict with international human rights standards."68 This general principle is further elaborated in the attached commentary, which requires companies to observe the emerging best practices evolving in this field through various codes of conduct, particularly the UN Principles on the Use of Force and Firearms and the UN Code of Conduct for Law Enforcement Officers. Companies are further urged not to supplant the state military and law enforcement services but only provide for their own preventive or defensive services.

Other provisions that can be added to this category are: the duty to respect national laws, regulations, administrative practices and the rule of law,69 and the final saving provision which makes clear that "nothing in the present Guidelines shall be interpreted as restricting or adversely affecting human rights recognised in international law, national or state law, or the activities of companies."70 Not only does this provision offer a rule of interpretation favourable to the effective protection of human rights, but it also emphasises that the operations of companies can observe higher standards than the minimum standards required by the Guidelines.

A fifth, and final, group of substantive provisions go beyond a conventional human rights based agenda and belong more to a general corporate social responsibility code. This reflects the fact that many of the sources, referred to as contributing to the Draft Guidelines,71 constitute more general codes of business ethics, which, by their nature, will deal with social issues not usually described as human rights issues. Thus, for example, the Code requires that companies shall act in accordance with fair business, marketing and advertising practices and should take all reasonable steps to ensure the safety and quality of the goods and services they provide.72 This introduces general consumer protection standards into the Guidelines, hardly a "human rights" issue. Other such "add on" social responsibility provisions include a prohibition against bribery73 and obligations with regard to environmental protection.74

It was mentioned above that the legal status of the Draft Guidelines is yet to be settled. Much here depends on the goodwill of states.75 There are arguments in favour of, and against, a binding code.76 The main advantage of a voluntary instrument is that it could
be used in conjunction with existing voluntary corporate codes of conduct to develop a more comprehensive system of internal values to be observed by the company. This would need to be supplemented by an effective system of accountability within the company. However, the discussions on the Draft Guidelines have tended to favour a binding instrument, bearing in mind the past history of non-binding codes, the fact that many non-binding guidelines already exist and bearing in mind the need for developing practical methods for enforcing human rights standards against TNCs, especially where states might not do so given their need focus on attracting inward investment.77 In response, the Introduction to the Guidelines offers a middle way. It asserts that, "it would be unrealistic to suggest that human rights standards with regard to companies should immediately become the subject of treaty obligations" given that only some of the standards contained in the Draft Guidelines are binding treaty-based norms, and that the precise legal status, in the international legal order, of companies and other non-state actors remains uncertain. Indeed, even, " if the Working Group wishes to pursue a legally binding instrument or even a treaty, it would ordinarily start with some form of "soft law" exercise."78 This has been the normal pattern of operation in relation to the adoption of other binding human rights instruments.79 Hence, in the absence of state opinion to the contrary (perhaps an unlikely eventuality80), some transition from "soft" to "hard" law is more likely to occur, with the Guidelines being the first step in this process.

Connected with this issue is the question of how to give the Guidelines "teeth" through effective implementation and monitoring procedures. In this regard the Draft Guidelines require companies to adopt, disseminate and implement their own code of conduct or take adequate measures to afford at least the protections set out in the substantive provisions of the Guidelines.81 In addition, they shall monitor and verify their compliance in an independent and transparent manner which includes input from relevant stakeholders.82 This may be done by outside consultants in addition to internal procedures. Finally, companies shall assess their major activities to determine their human rights impact in the light of the standards contained in the Guidelines.83 Thus, the text of the Guidelines focuses on corporate implementation. In addition, the Guidelines could be used by other actors to assess corporate practice and performance in this area. For example, they could form the basis of industry wide codes; unions could use them as a benchmark for their expectations of company conduct; intergovernmental organisations outside the UN could apply them to develop their own standard setting instruments; governments could use the Guidelines as a model for legislation or administrative rules as part of the internal regulatory structure applicable to companies having a statutory seat in the country, or to help interpret legal standards; while the UN's human rights treaty bodies could apply the Guidelines to create additional reporting requirements about corporate compliance with the Guidelines.84

At its 53rd Session the Sub-Commission on the Promotion and Protection of Human Rights the Sessional Working Group recommended that its mandate be extended for a further three years and that the background reports and working papers be updated.85 Thus the debate goes on. Whatever the final outcome, this case study illustrates well the challenges ahead for any IGO that wishes to develop a new social responsibility agenda for companies. The process is a slow one and is most likely to create "soft law" obligations. However, for the reasons outlined above, this may lead, in time, to a "hardening" into positive rules of law. Equally, the adoption of a binding set of Guidelines cannot be entirely ruled out at this stage. Also of note is the envisaged use of the Draft Guidelines by other IGOs to develop their standards, and the use by the Draft Guidelines of already existing standards produced by other IGOs. In this a kind of "collective law of IGOs" seems to be developing, in which various organisations working in the field of corporate social responsibility cross-fertilise each other's initiatives by reference to one another's instruments.

(2) The Institutional Implications

From the preceding discussion it is clear that some kind of "proto-legal" or "quasi-legislative" activity is taking place in IGOs over the question of standard setting for corporate social responsibility.86 The institutional implications of these developments are considerable. For present purposes two questions in particular will be addressed: what do such developments tell us about the constitutional role of IGOs and, in particular, their relationship with nation-states, and, secondly, whether such standard setting initiatives will be truly effective in regulating corporate conduct.

The "Constitutional" Role of IGOs87

In their activities concerning corporate social responsibility, IGOs appear to have been given an "agency" by their member countries - endorsed by NGOs it seems - to fill out the terms of the "social contract" between such countries, as representatives of the communities found therein, and MNEs. This emergent phenomenon can be seen as some kind of "constitutionalisation" of IGOs. It has given rise to a debate as to the proper role of IGOs in the evolution of global economic and social rules and about the proper constitutional form that the development of such rules through IGOs should take. In part, it arises from increasing disquiet as to the role of the national state as the source of constitutional legitimacy in the emerging global economy and society.88 The basic question being asked is whether IGOs should take on the standard setting role in social issues hitherto undertaken by the national state, and, if so, how should they do this?

In answering this question it should be remembered that it contains at least two major dimensions. First there is a procedural dimension. This demands that IGOs conduct themselves in accordance with certain fundamental principles of good constitutional practice. In particular they must observe the "rule of law" by acting within their powers and by observing standards of due process in the resolution of differences.89 This issue appears to be relatively settled, in that no one seriously questions the need for IGOs to act within their procedural laws, though there may be debate about whether, as a constitutional matter based on the interpretation of the organisation's constitutive instrument, the IGO in question can adopt standards in the social field.

More fundamentally, notwithstanding the answer to the issue of whether the IGO has subject-matter jurisdiction over social issues, there is the second dimension of whether a particular organisation can legitimately take on the task of setting international standards. In undertaking such an activity, the IGO in question is being asked to mediate in numerous cross-cultural dialogues and thereupon to produce global rules not only on specific specialised issues - such as the case of trade in the WTO - but on social issues more generally. Even organisations set up apparently to deal with social questions - of which the ILO is the leading example - must face up to this process of mediation. That raises numerous further questions: is the organisation sufficiently open to all interested parties or groups such that it carries a degree of participatory legitimacy? 90 Does it undertake a proper process of agenda setting such that it carries a degree of transparency? To whom is the IGO accountable? To member governments, to civil society, to MNEs, to no one? The organisation must be constitutionally recognised and to do so it must justify itself to those who are interested in its actions.91

Against this background there are at least two main strands of response to the above question. The first stems from the "normative liberal approach" mentioned in the introduction, which has its origins in the constitutional liberal tradition of Western political economy, having as its emphasis the need to preserve market freedom and the rule of law.92 The second derives from the "functionalist regulatory" approach, also mentioned in the introduction, which has its sources in social and political theories that see regulation as an important function of government and which does not necessarily see the market mechanism as an appropriate method of social and economic organisation.93 Each approach will construct a different idea as to the proper function of IGOs in the field of standard setting.

Thus, the first approach, as exemplified in the writings of Ernst-Ulrich Petersmann, advocates a new, free trade oriented, human rights revolution in the WTO. 94 Following the tenets of German "Ordo-liberalism",95 he argues that the new economic constitution of the global economic system is best served by an international rule of law based on the fundamental human right to free trade.96 This right should appear not only in the law of the WTO but also as a directly effective individual right enforceable before the national courts of member countries.97 Thus the constitutional role played by the WTO is that of a body aimed at entrenching fundamental economic freedoms which are then observed by nation states. This approach presupposes the continuing strength of the national legal order and does not see in global economic integration the end of the fully functional nation state.98 The IGO is, therefore, only a source of ordering rules which its members will observe at the local level. It does not substitute itself for the local: subsidiarity is at the heart of the project. However, it is a subsidiarity of means and not principles. The latter are clearly to be developed in concert by states acting through the WTO, which becomes a kind of proto-global legislature seeking to entrench free trade by allowing markets to develop as fully as possible.99 In this process it also becomes a body setting up a fundamental norm that seeks to limit national sovereignty in that, once the "human right" of free trade is embedded in the WTO "constitution", Members cannot depart from it in their national legal order. It thus seeks to prevent future national governments from reneging on that right, thereby preserving the protection of free markets for the indefinite future.

There is a strange symmetry between this position and that taken by those seeking to regulate corporate behaviour through international standards. Though their aim is quite distinct from that of the normative liberals, they too see in IGOs the source of new legislative rules. What is different is a greater scepticism towards the beneficial effects of free market capitalism. Thus their model of the "constitutional" IGO is not so much one of facilitating market evolution, but that of market regulation. The IGO is not, therefore, the guardian of private economic rights but their controller. In the more critical conception, the very system of capitalism may itself be subjected to evaluation as a system that regularly denies fundamental human rights.100 This approach appears to have less faith in the ability of national legal orders to protect fundamental social and ethical standards than the liberal approach has in the role of national law in its project. It is the perceived failure to preserve, or, in the case of developing and transitional economies, to introduce, national rules controlling business in the social and ethical fields that has prompted calls for IGOs to do this instead. Furthermore, the assumption is that social and ethical rules will trump free trade rules. They are to be of a higher order to those rules.

Thus both of the above approaches seek to use IGOs as a source of new ordering principles, but they differ on the ability of national legal orders to implement them once adopted. There is, however, one point over which there appears to be a growing consensus. It seems widely accepted that IGOs, as currently constituted and run, are lacking in real democratic legitimacy. Thus, both normative liberals101 and regulatory functionalists102 agree that civil society groups, as embodied in NGOs, need fuller representation in the organs of IGOs and that the deliberations of IGOs should be open and subject to public scrutiny. This is a matter that has led to IGO responses that increase the participation of NGOs, albeit informally in some cases.103 The major remaining issues concern whether NGOs should act merely in a consulting capacity or have a more active part in decision-making and in the scrutiny of IGO practices, and whether all, or only some, NGOs should be permitted to take an active part, given that not all NGOs represent wide constituencies and that they will vary in their levels of professional competence.104

The interesting observation here is that those who support greater international economic freedom, and its attendant economic integration, do not problematise the power of the state. This suggests that it is correct to surmise, as de Sousa Santos does,105 that the nation-state is de-centring itself on some but not all issues. That is not the same as saying that the state is withering away in the face of global capital. In fact the call for global ethical business standards is in reality a call for the re-regulation of the socio-economic sphere in the nation state. Thus too much should not be read into, or expected from, the "global standards movement". National action is still essential to the cause of re-regulation, with the global dimension remaining a "longstop" of minimum standards below which no state could fall.

The Problem of "Effectiveness"

Finally, the issue of effectiveness must be grappled with. In a thought provoking article,106 Professor Thomas Waelde argues that the quest for "effectiveness" in the regulation of the practices of MNEs, especially in relation to environmental and human rights practices, reflects the "activist" lawyer's concern to apply law in order to change the world. He attributes much of the concern in this area to Western middle class professional value systems and their inherent desire for social improvement. However, such sentiments, when confronted with the realities of market based regulatory economics may actually do very little. He cites the rise and fall of the New International Economic Order as an example of such "ineffectiveness". Furthermore, such initiatives may be even further challenged by the apparent loss of state power vis-à-vis the global economy which, in turn, is said to move public international lawyers, working in foreign affairs departments and academies, to the level of intergovernmental collaboration with the prospect of global regulatory agencies regaining that lost power. By comparison,

"international business lawyers, who structure the transnational transactions of their clients, the chief actors of the global economy, are less worried over the loss of state regulatory power. Their guiding concepts - a global lex mercatoria, international arbitration, global types of transactions and commercial terms that have become uniform by business practice and not by state fiat - can live with waning state powers more comfortably."107

He concludes by saying that effectiveness depends very much on the degree to which those who are regulated are actively involved in the process of making new international norms and that the resulting instruments reflect their interests. Thus treaties that reinforce existing values are more likely to be effective than those that seek to introduce new ones.

Leaving aside the question whether it is actually true that the nation-state is loosing its regulatory power in the face of global economic integration, a matter which, as was argued in the preceding sub-section, may be doubtful, and the characterisation (caricature?) of different types of international lawyers and their interests (is it not possible for an international business lawyer both to serve his/her clients interests, but feel outrage at flagrant abuses of corporate power, or for a public service lawyer, or, even, a law professor, to be insensitive to any but commercial stimulants?), the important point made is that of the pre-conditions for legal effectiveness. In this regard, it is important not to forget that MNEs themselves are at the forefront of developing corporate social responsibility standards. It is their codes that form a significant source for international instruments. This could be dismissed as a cynical ploy to capture the agenda. On the other hand, it opens the way to an evolution in dialogue among expert groups, and other interested stakeholders, which can offer a line towards consensus. Inevitably there will be trade-offs between commercial values and other values, but that is not the same as saying that one must dominate the other at all costs. Surely, even Milton Friedman will concede that a corporation cannot pursue profit by committing genocide or by using slave labour?108 Indeed, the main thrust of opposition to corporate social responsibility is not so much that it interferes with profitability, though this is asserted, but that it is the responsibility of politicians to regulate corporations and of corporations to follow the law. Corporate managers should not be expected to make decisions outside their proper sphere of competence.109 Consequently, if the standards set by IGOs offer clear benchmarks below which no ethical firm can fall, and can ensure that these standards will be observed, even in countries which do not take such minima seriously (because they represent a consensus about absolute principles of good conduct), then there is in fact less clear water between the proponents and critics of corporate social responsibility than may be imagined. The project being undertaken here is not the replacement of the market with command and control regulation, but the recognition that corporations can, as human institutions subject to human failings, act improperly. The global nature of their operations requires a more global approach to standard setting. Equally, a more active role for the nation state should not be ruled out.

(3) Concluding Remarks

This paper has sought to consider the role of IGOs in the process of developing new, human rights oriented, norms of corporate social responsibility. It has developed an argument based on an identifiable distinction between at least three main ideological positions: the "hard libertarian", the "normative liberal" and the "regulatory functionalist". Each takes a different position on the need for, and the extent of, international standard setting activity in this area. However, at least among the latter two positions, an apparent consensus is emerging that some kind of international minimum standard for good corporate behaviour should be in place. It has also been noted that a considerable amount of binding and non-binding normative documentation has emerged and that certain substantive policy trends can be discerned from this. The more unsettled issue is how far the state should divest itself of responsibilities for regulation in this field.

The fact that the normative liberal position allows for directly effective economic freedoms to be enforced before national courts and tribunals suggests that the regulatory power of the state is far from removed in the liberal project for global economic freedom. Rather, the state is reordered towards the guarantee of such freedom. At the same time the possibility of regulation for social purposes, such as environmental protection or the protection of fundamental human rights and freedoms, is not ruled out, although the precise relationship between trade freedoms and social regulation is not well thought through. Consequently, some of the views attributed to this approach are misrepresented as being against human rights based corporate social responsibility standards. In other words normative liberals are easily, and in the present author's view wrongly, characterised as "hard libertarians" to the detriment of a proper discussion of the relationship between trade and other values in the development of national and international economic and social policies, and of the role of IGOs in this process.

By contrast the "regulatory functionalist" perspective over-estimates the weakness of the state to act in the social arena, perhaps as (a rhetorical?) device to encourage the development of alternative supranational rules through IGOs. Here the relationship between state and IGO approaches to social regulation must be more clearly worked out so as to avoid the displacement of the state as a significant regulatory actor. This might very well harm the furtherance of the social goals involved, as states could all too easily point to international fora as the proper places to deal with certain questions. International codification must not be allowed to replace the continuing responsibility of states in these areas. It can only be of use where the state fails to develop, or apply, its own policy in accordance with international standards. The primary role of the state in this area should be reasserted.

In the light of this ideological discussion, the work of the UN Sub-Commission on the Draft Guidelines is far from easy. The wide definition of what counts as "human rights" in the substantive provisions of the Guidelines, shows that this initiative is strongly influenced by issues that might not be seen, at least on a philosophical level, as properly within the idea of "human rights". Indeed, it can be argued that the current draft is, in some respects, not too far away from the content of the original UN Draft Code of Conduct for TNCs. In this, the Draft Guidelines will be hard to sell to normative liberals, in that they tend towards the regulatory functionalist position, giving international sanction to the need for a wider base of social obligations on the part of TNCs. In addition, the assertion of the primacy of the state in the obligation to respect and uphold international human rights standards, given the wide definition of what this entails, must imply a recognition of the continuing role of the state as regulator. The Draft Guidelines are not very clear on what this role is, given that they are addressed to companies. Perhaps it will prove necessary, with time, to flesh out this issue, and to clarify what measure of discretion states have in relation to the implementation of the regulatory policies mentioned in the Guidelines. After all, if TNCs are to observe such policies then the substance of those policies must be clear. It is here that some kind of balancing between trade freedoms and regulatory discretion needs to be determined. It may well be that the UN Sub-Commission feels that this is not necessary, given that its remit, in this instance, is to examine the human rights obligations of companies, not states. However, it is very hard to see how one can be done without the other. If it is not done here, then it will be done elsewhere, in other IGOs or at state level.

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1 The term "globalisation" is not one used with much favour by the author, given its increasingly wide parameters and the apparent lack of an agreed content that is uniform across the various disciplines that have used this term. The phrase "international economic integration" is more precise as an expression of the activities of international business that are said to generate economic "globalisation". For a critique of the term see further: Jan Aart Scholte Globalization: a Critical Introduction (Basingstoke, Palgrave, 2000); P.Hirst and G.Thompson Globalization in Question (Cambridge, Polity Press, 2nd ed, 1999). See to for a critique of the notion of the "global corporation" P.N.Doremus et.al. The Myth of the Global Corporation (Princeton, Princeton University Press, 1998)
2 See for example the Human Rights Watch website at www.hrw.org and see further the papers in Menno T.Kamminga and Saman Ziz-Zarifi Liability of Multinational Corporations under International Law (The Hague, Kluwer Law International, 2000).
3 This phrase is used to make clear that there remains a great deal of disagreement over the precise extent of this issue. Indeed, there are equally strong voices arguing that the whole question of international corporate social responsibility is much exaggerated and may well lead to policies that will harm the beneficial effects of international business activity: see David Henderson Misguided Virtue: False Notions of Corporate Social Responsibility (Wellington, New Zealand Business Roundtable, 2001).
4 See further Thomas Donaldson The Ethics of International Business (Oxford, Oxford University Press, UK Paperback Ed, 1992) and Peter Muchlinski "International Business Regulation: An Ethical Discourse in the Making?" (forthcoming).
5 On which see further John H.Jackson The Jurisprudence of the GATT and WTO (Cambridge, Cambridge University Press, 2000) ch.21 "World trade Rules and Environmental Policies: Congruence or Conflict?" and E-U.Petersmann "Human Rights and International Economic Law in the 21st Century: The Need to Clarify Their Inter-relationships" 4 JIEL 3 (2001).
6 See Donaldson op.cit. note 4 and Naomi Klein No Logo (London, Flamingo Harper-Collins, 2000) as examples of each approach. The term "regulatory functionalists" is borrowed from Martin Loughlin's Public Law and Political Theory (Oxford, Clarendon Press, 1992). It seeks to denote a tendency, which encompasses many shades of political opinion, with the common feature of an acceptance of governmental regulation, and a degree of scepticism towards the market as an appropriate method of social and economic organisation.
7 For a collection of essays written from a socialist perspective see R.Burbach, O.Nunez and B.Kagarlitsky Globalization and its Discontents: The Rise of Postmodern Socialisms (London, Pluto Press, 1997). On the other hand, Henderson op.cit. note 3 sees this reformist process as motivated by a misunderstanding of the market mechanism and hostility to capitalism, especially on the part of certain NGOs. This is itself open to dispute.
8 See further UNCTAD International Investment Agreements: Flexibility for Development UNCTAD Series on issues in international investment agreements (New York and Geneva, United Nations, 2000).
9 See J.Dunoff "The Misguided Debate Over NGO Participation at the WTO" 1 JIEL 433 (1998)
10 See World Bank Group "Corporate Social Responsibility and the World Bank Group" (Washington DC, Business Partnership and Outreach Group, Briefing Note 6, November 2000) and S.Schlemmer-Schulte "The World Bank and Human Rights" 4 Austrian Review of International and European Law 230 (1999).
11 See generally John Jackson The World Trading System (Cambridge Mass, MIT Press, 2nd Ed, 1997); Michael Trebilcock and Robert Howse The Regulation of International Trade (London, Routledge, 2nd Ed, 1999).
12 See UNCTAD Bilateral Investment Treaties in the Mid-1990s (New York and Geneva, United Nations, 1998).
13 See MAI Final Negotiating Text 24 April 1998 available at http://www.oecd.org/daf/investment/fdi/mai/maitext.pdf . For analysis see Peter T Muchlinski "The Rise and Fall of the Multilateral Agreement on Investment: Where Now" 34 International Lawyer 1033 (2000); Sol Picciotto "Linkages in International Investment Regulation: The Antinomies of the Draft Multilateral Agreement on Investment" 19 U.Pa.J.Int'l.Econ.L. 731 (1998); David Henderson The MAI Affair: A Story and its Lessons (London, RIIA, 1999).
14 See further UNCTAD Social Responsibility UNCTAD Series on issues in international investment agreements (New York and Geneva, United Nations, 2001) esp. at pp.37-40. See too UNCTAD Employment Series on issues in international investment agreements (New York and Geneva, United Nations, 2000); UNCTAD Environment UNCTAD Series on issues in international investment agreements (New York and Geneva, United Nations, 2001); P.T.Muchlinski "The Social Dimension of International Investment Agreements" in J.Faundez, M.Footer and J.J.Norton, eds Governance, Development and Globalisation (London, Blackstone Press, 2000) p.373 at pp. 386-8 and sources cited therein. For a full inventory of corporate codes of conduct see OECD Trade Committee Codes of Corporate Conduct: An Inventory (Paris, OECD, 1999).
15 See foe example the NGO codes reproduced in UNCTAD International Investment Agreements: A Compendium (New York and Geneva, United nations, 2000) Part Four. See, in particular, the Amnesty International UK Business Group Human Rights Guidelines for Companies (London, Amnesty International, 1998).
16 For example the UK Ethical Trading Initiative: http://www.ethicaltrade.org
17 This Convention entered into force on 15 February 1999. See OECD Doc DAFFE/IME/BR(97) 20 8 April 1998 or http://www.oecd.org//daf/nocorruption/20nov1e.htm.
18 See for an overview UNCTAD Employment op.cit. note 14 and ILO website at http://www.ilo.org .

19 See for example O.A. Elias and C.L.Lim The Paradox of Consensualism in International Law (The Hague, Kluwer Law International, 1998) at pp.230-2.
20 Ibid.
21 See for example the discussion of Article 19 of the Energy Charter Treaty (environmental aspects) by Thomas Waelde in "Sustainable Development and the 1994 Energy Charter Treaty: Between Pseudo-Action and the Management of Environmental Investment Risk" in F.Weiss, E.Denters and P. de Waart (Eds) International Economic Law with a Human Face (The Hague, Kluwer Law International, 1998) pp.223-70; and see T.Waelde "Non-conventional Views on "Effectiveness": The Holy Grail of Modern International Lawyers: The New Paradigm? A Chimeria? Or a Brave New World in the Global Economy?" 4 Austrian Review of International and European Law 164 (1999).
22 See Government of Canada Voluntary Codes: A Guide for their Development and Use (Ottawa, March 1998) at p.27 also available on http://strategis.ic.gc.ca/volcodes ; Kernaghan Webb "Voluntary Initiatives and the Law" in R.Gibson (ed) Voluntary Initiatives: The New Politics of Corporate Greening (Peterborough Ont, Broadview Press, 1999) pp.32-50.
23 This is precisely what Henderson fears. He would deny that such a trade-off is possible and that it would lead to over-regulation and loss of market freedom. See Henderson op.cit. note 3.
24 This sub-section and the next draw on parts of another paper by the author entitled "International Business Regulation: An Ethical Discourse in the Making?" (forthcoming).
25 UNCTAD Social Responsibility op.cit. note 14 at p.5.
26 OECD Guidelines for Multinational Enterprises (Paris, OECD, 2000) chapter II "General Policies". The remaining chapters include "Disclosure", "Employment and Industrial Relations", "Environment", "Combating Bribery", "Consumer Interests", "Science and Technology", "Competition" and "Taxation".
27 See UN Global Compact http://www.unglobalcompact.org
28 See Muchlinski "Social Dimension" op.cit. note 14 at pp.373-4. See too Henderson op.cit. note 3 at pp.29-44.
29 UNCTAD Social Responsibility op.cit. note 14 at p.11.
30 See Muchlinski "Social Dimension" op.cit. note 14.
31 Ibid. at pp.377-9.
32 See for example the ILO Tripartite Declaration of Principles Concerning Multinational Enterprises and Social Policy 1977, the ILO Declaration of Fundamental Principles and Rights at Work 1998 discussed in Muchlinski ibid. at pp. 382-3
33 See for example NAFTA Article 1114.
34 See, for examples, UNCTAD Social Responsibility op.cit. note 14 at pp.25-35.
35 Thus the UNCTAD study on Social Responsibility contains a section on "Development Obligations" in the international investment agreements it surveys: see ibid. at pp.17-21.
36 Muchlinski "Social Dimension" op.cit. note 14 at pp.376-7. See for example the WTO TRIPS Agreement Articles 65-66 and the OECD Guidelines for Multinational Enterprises op.cit. note 26 chapter on "Science and Technology". See too UNCTAD Transfer Pricing UNCTAD Series on issues in international investment agreements (New York and Geneva, United Nations, 1999).
37 UNGA Resolution 41/128 4 December 1986. See Boaventura de Sousa Santos Toward a new Common Sense: Law Science and Politics in the Paradigmatic Transition (London, Routledge, 1995) at pp.357-8. For the authors original position on this issue see P.T.Muchlinski ""Basic Needs" Theory and "Development Law"" in Francis Snyder and Peter Slinn, eds, International Law of Development (Abingdon, Professional Books, 1987) p.237. For a more recent discussion see Koen de Feyter World Development Law (Oxford, Intersentia, 2001) at pp.20-6.
38 De Feyter ibid. para.38 at p.22.
39 See de Sousa Santos op.cit. note 37 and Muchlinski op.cit. note 37.
40 On which see further P.T. Muchlinski "Towards a Multilateral Investment Agreement (MAI): The OECD and WTO Models of Sustainable Development" in F.Weiss, E.Denters and P.De Waart International Economic Law with a Human Face (The Hague, Kluwer Law International, 1998) p.429.
41 See the UN Global Compact note 27, the Amnesty International Guidelines op.cit. note 15 and see further UNCTAD Social Responsibility op.cit. note 14 at pp.40-44.
42 Muchlinski "Social Dimension" op.cit. note 14 at pp.380-2 and see OECD Guidelines for Multinational Enterprises op.cit. note 26 "Disclosure" and OECD Principles on Corporate Governance 1999 http://www.oecd.org/daf/governance/principles.htm.
43 See further Draft Universal Human Rights Guidelines for Companies: Introduction UN Doc. E/CN.4/Sub.2/2001/WG.2/WP.1.(2001) at paras. 22-6; available from http://www1.umn.edu/humanrts/links/omig.html (hereafter: Introduction). This document is currently under revision. Henderson would contest this perception: op.cit. note 3.
44 See S.C.Res 1998/8 of 20 August 1998. For discussion of the background to these initiatives see further David Weissbrodt "The Beginning of a Sessional Working Group on Transnational Corporations within the UN Sub-Commission on Prevention of Discrimination and Protection of Minorities" in M.T.Kamminga and S.Zia-Zarifi (eds) Liability of Multinational Corporations Under International Law (The Hague, Kluwer Law International, 2000) p.119-138. The Sub-Commission changed its title to that stated in the text in 1999.
45 See Principles Relating to the Human Rights of Companies UN Doc. E/CN.4/Sub.2/2000/WG.2/WP.1 25 May 2000 Annex; also available on the UN High Commission for Human Rights website:
unhchr.ch/huridocda/huridoca.nsf/FramePage/Subject%transnational%20En?
46 See Draft Universal Human Rights Guidelines for Companies: Addendum I UN.Doc. E/CN.4/Sub.2/2001/WG.2/WP.1/Add.1. (2001) available from http://www1.umn.edu/humanrts/links/omig.html (hereafter: Draft Guidelines ). This document is currently under revision. For the Report of the Geneva Seminar see UN Doc. E/CN.4/Sub.2/2001/WG.2/WP.1/Add.3. (2001) available form the same website as the Draft Guidelines.
47 See Introduction at paras. 27-8.
48 Draft Guidelines at section I. Art.21.
49 Introduction at paras.18-21. For an illustrative example of such a strategy, applied for the purposes of avoiding a foreign legal liability see the facts of Adams v Cape Industries [1990] Ch. 433 (CA).
50 See Report of the Sessional Working Group on the Working Methods and Activities of transnational Corporations on its Third Session UN Doc. E/CN.4/Sub.2/2001/9 14 August 2001 at para.27, available at unhchr.ch/huridocda/huridoca.nsf/FramePage/Subject%transnational%20En? (Hereafter Sessional Working Group). See too David Weissbrodt, Bret Thiele, Mayra Gomez and Maria Kruger "A Review of the Fifty-Third Session of the United Nations Sub-Commission on the Promotion and Protection of Human Rights" Netherlands Quarterly of Human Rights (2001).
51 Draft Guidelines section A. "General obligations"
52 For a fuller discussion of this problem see Peter Muchlinski "Human Rights and Multinationals - Is there a Problem?" 77 International Affairs 31 (2001).
53 Introduction at para.6.
54 Ibid. para.29.
55 Draft Guidelines Section B. Art.3.
56 Ibid. Section C.Art.4.
57 Ibid. Section D. Art.6.
58 Ibid. Art.7.
59 Ibid. Art.10.
60 Ibid. Section E.Art.14.
61 Ibid. Section D. Art.8.
62 Ibid. Art.9.
63 Ibid. Section D. Art.10.
64 Ibid. Section E. Art. 11.
65 Ibid. Section E. Art. 13.
66 Ibid. Preamble Recital 8.
67 Ibid. Section E. Art.11. and Commentary at (a)-(c).
68 Ibid. Section C. Art.5.
69 Ibid. Section E. Art.11.
70 Ibid. Section H. Art.20.
71 On which see Draft Universal Human Rights Guidelines for Companies with Source Materials Un Doc. E/CN.4/Sub.2/2001/WG.2/WP.1/Add.2 (2001) available on http://www1.umn.edu/humanrts/links/omig.html. A revised version is in preparation.
72 Draft Guidelines Section F. Art.15.
73 Ibid. Section E. Art.12.
74 Ibid. Section G. Art. 16. It has been argued, however, that a right to a clean and healthy environment is a human right. This is open to dispute. See generally M.Fitzmaurice "The Contribution of Environmental Law to the Development of Modern International Law" in J.Makarczyk (ed) The Theory of International Law at the Threshold of the 21st Century (The Hague, Kluwer Law International, 1996) p.909 at pp.909-14.
75 See Sessional Working Group at para.19.
76 See further Introduction at paras. 34-43, on which this discussion draws.
77 Sessional Working Group op.cit. note 50 and see David Weissbrodt, Bret Thiele, Mayra Gomez and Maria Kruger "A Review of the Fifty-Third Session of the United nations Sub-Commission on the Promotion and Protection of Human Rights" Netherlands Quarterly of Human Rights (2001). On the past history of voluntary codes see P.T.Muchlinski "A Brief History of Regulation" in Sol Picciotto and Ruth Mayne (eds) Regulating International Business (London, MacMillan Press/Oxfam, 1999) p.47, and P.T.Muchlinski Multinational Enterprises and the Law (Oxford, Blackwell Publishers, revised paperback edition, 1999) ch.16.
78 Introduction at para. 40.
79 See ibid. paras.41-43.
80 However, the UN Millennium Social Forum has indicated its support for a legally binding set of guidelines: UN GAOR, 54th Sess., Agenda Item 49(b), at 11: UN Doc. A/54/959 (2000).
81 Draft Guidelines Section H. Art. 17.
82 Ibid. Art. 18.
83 Ibid. Art. 19.
84 Introduction at paras. 53-67.
85 Sessional Working Group
86 Indeed, not only IGOs but non-state actors appear as significant contributors. See further the essays in G.Teubner (ed) Global Law Without a State (Aldershot, Dartmouth, 1997)
87 This section draws on the author's paper cited at note 4.
88 See further Damian Chalmers "Post-nationalism and the Quest for Constitutional Substitutes" 27 J.of Law and Society 178 (2000); de Sousa Santos op.cit. note 37 especially chs 2 & 4.
89 See further E-U Petersmann op.cit. note 5 at pp.24-5; Phillipe Sands and Pierre Klein Bowett's Law of International Institutions (London, Sweet & Maxwell, 5th ed, 2001) pp.292-6.
90 This in turn raises the issue of whether civil society as represented by NGOs should be involved in IGO activities: see Petersmann ibid. at pp.35-7. See too for a cautious acceptance of NGOs as observers but not decision-makers David Henderson The MAI Affair: A Story and its Lessons (London, Royal Institute of International Affairs, 1999) at pp.57-60.
91 See further Chalmers op.cit. note 88 at pp.206-16.
92 See further Razeen Sally Classical Liberalism and International Economic Order (London, Routledge, 1998) and see Martin Loughlin Public Law and Political Theory (Oxford, Clarendon press, 1992) ch.5.
93 Loughlin ibid. ch.6.
94 Petersmann op.cit. note 5.
95 On which see further Sally op.cit. note 92 ch .6.
96 Petersmann op.cit. note 5 at pp.31-33.
97 Ibid. at pp.33-4. In this Petersmann follows the "bottom-up" approach advocated by the German ordo-liberal Ropke and more recently by Jan Tumlir: see Sally op.cit. note 92 chs 7 & 8.
98 Indeed, as de Sousa Santos asserts from a post-modern perspective, while the nation state may be being de-centred as the focus of legal activity in the globalisation process, it remains in charge of that process. It can just as easily re-centre itself in certain areas for example, protection of TNC rights or political surveillance: op.cit. note 37 at pp.278-9
99 It should be noted that the Ordo-liberal position is distinct form that of the Anglo-Saxon liberal tradition, in that it does not accept the notion of markets as "spontaneous orders" but, rather, that markets tend towards failure if they are not maintained through controls over private economic power especially through anti-trust controls: Sally op.cit. note 92 at pp.109-10, 113.
100 See de Sousa Santos op.cit. note 37 at pp.359.
101 See Petersmann op.cit. note 5 at pp.35-7; "John H. Jackson The Jurisprudence of the GATT and WTO (Cambridge, Cambridge University Press, 2000) ch.21. " World Trade Rules and Environmental Policies: Congruence or Conflict?".
102 See De Feyter op.cit. note 37 at p.240.
103 Jeffrey Dunoff "The Misguided Debate over NGO Participation at the WTO" 1 JIEL 433 (1998); Daniel Esty "Non-Governmental Organisations at the World Trade Organisation ; Cooperation, Competition or Exclusion?" 1 JIEL 123 (1998). See, for other IGOs, Steve Charnovitz "Two Centuries of Participation: NGOs and International Governance" 18 Mich.J.Int'l.L. 183.
104 De Feyter .op.cit. note 37 ch.7. and see Henderson op.cit. note 13 at pp.57-60; Dunoff ibid ; Esty ibid.
105 See de Sousa Santos at note 37.
106 Thomas Waelde op.cit. note 21.
107 Ibid. at p.197.
108 Introduction at para.7.
109 See Henderson op.cit. note 3 at pp.4-5.