Law for Int?rnational Busin?ss
Th? fram?rs of th? Chart?r of th? Unit?d Nations, lik? thos? of th? Cov?nant of th? L?agu? of Nations, hav? provid?d for an ag?ncy whos? principal function is to apply l?gal t?chniqu?s in th? r?solution of int?rnational controv?rsi?s and probl?ms. This ag?ncy is th? Int?rnational Court of Justic?, which is d?scrib?d as on? of “th? principal organs” and as “th? principal judicial organ” of th? Unit?d Nations (D?utsch, 2002, pp.15).
Th? primary function in Int?rnational Law of th? Int?rnational Court of Justic? is to maintain int?rnational p?ac? and s?curity. Th? m?ans by which this function is to b? carri?d out fall into four sourc?s of int?rnational law: 1) Int?rnational conv?ntions (g?n?ral known as tr?ati?s), wh?th?r g?n?ral or particular, ?stablishing rul?s ?xpr?ssly r?cogniz?d by th? cont?sting Stat?s; 2) Int?rnational custom, as ?vid?nc? of a g?n?ral practic? acc?pt?d as law; 3) Th? g?n?ral principl?s of law r?cogniz?d by civiliz?d nations; 4) Judicial d?cisions. (D?utsch, 2002, pp. 17)
It is ?vid?nt that th?s? cat?gori?s ar? int?rr?lat?d. For ?xampl?, th? tr?ati?s ar? s?ttl?m?nt of disput?s and in th? Int?rnational customs may b? ?xp?ct?d to r?duc? f?ar and g?n?rat? confid?nc?, th?r?by h?lping to d?v?lop a f??ling of g?nuin? community among compani?s, which in turn may facilitat? th? furth?r d?v?lopm?nt of institutions for th? maint?nanc? of a prosp?rous, ord?rly organiz?d busin?ss r?lations.
N?v?rth?l?ss, most of th? historically r?cord?d syst?ms of law hav? b??n d?v?lop?d by a combination of thr?? proc?ss?s: (1) Habitual adh?r?nc? of th? m?mb?rs of th? community to c?rtain lin?s of conduct (custom); (2) ?xpr?ss ?nactm?nt of standards of b?havior binding on all th? m?mb?rs of th? community to whom th? ?nactm?nt appli?s r?gardl?ss of th?ir cons?nt (statutory l?gislation); (3) R?p?tition and g?n?ralization of d?cisions mad? by th? d?cision-making authoriti?s (such as courts) with binding ?ff?ct in particular controv?rsi?s (pr?c?d?nt or cas? law). Sinc? int?rnational law has d?v?lop?d in a community of ind?p?nd?nt stat?s, th?r? has b??n no singl? organ poss?ss?d of authority to r?solv? by ?xpr?ss ?nactm?nt or by adjudication with binding ?ff?ct th? clash?s of policy and int?r?st that fr?qu?ntly occur b?tw??n groups of stat?s. (Fisch?r, 2002, p.12) Th?r? is no world l?gislatur?. Tr?aty-making, although it is of gr?at importanc? in suppl?m?nting th? rul?s of g?n?ral int?rnational law, is not an ?ntir?ly ad?quat? substitut? for l?gislation, sinc? tr?ati?s ar? binding only on stat?s which agr?? to b? bound by th?m, and v?ry f?w tr?ati?s hav? had univ?rsal acc?ptanc?.
As a l?gal cr?ation, a busin?ss ?nt?rpris? do?s not poss?ss an inh?r?nt right to ?xist. Corporations ar? grant?d th?ir ?xist?nc? by th? human soci?ti?s within which th?y ar? chart?r?d. Th? corporation’s chart?r and th? laws gov?rning its op?rations form th? l?gal contract b?tw??n th? soci?ty’s r?al p?opl? and th? cr?at?d busin?ss p?rson. Th? corollary of this pow?r of l?gal cr?ation is a soci?ty’s ability to r?vok? a corporation’s chart?r or, ?ff?ctiv?ly, to “kill” th? ?nt?rpris?. Th? justification for such an action springs from th? rational? for th? corporation’s initial cr?ation. Fundam?ntally, a soci?ty sanctions a corporation’s ?xist?nc? if th? ?nt?rpris? (1) will cr?at? som?thing us?ful for th? soci?ty and (2) will not har m th? soci?ty or, if harm is don?, th? us?ful good outw?ighs th? harm. (Bridg?, 2004, pp. 23) Rationally, what soci?ty should grant, or sustain, th? op?rational lif? of a corporation that cr?at?s no good or, ?v?n wors?, activ?ly harms mor? than h?lps that soci?ty?
Writt?n l?gal r?quir?m?nts constitut? an ?xplicit “floor” for corporat? b?havior. Ind??d, national laws could b? tak?n as th? ?mbodim?nt of a soci?ty’s standard for ?thical corporat? conduct. This position, how?v?r, ?ncount?rs two chall?ng?s. First, a nation’s constitut?d laws could r?quir? un?thical actions. Just as individual p?rsons may act un?thically, national gov?rnm?nts may adopt laws bas?d on un?thical principl?s. In such cas?s, should a corporation knowingly violat? an un?thical law? What ?thical standards should b? us?d to judg? wh?th?r a national law d?mands un?thical action? This issu? aris?s mor? fr?qu?ntly for int?rnational ?nt?rpris?s than for corporations doing busin?ss in only on? country. Oft?n national laws not only diff?r but may, in fact, dir?ctly conflict, forcing ?nt?rpris?s to choos? to follow on? l?gal standard whil? violating th? oth?r. A corporation’s choic? of action should obviously b? bas?d on som? moral norm oth?r than th? law wh?n two or mor? mutually ?xclusiv? l?gal standards conflict.
In most syst?ms of law, such disput?s ar? usually r?f?rr?d to judicial tribunals for s?ttl?m?nt; th? d?cisions of such tribunals, wh?th?r or not th?y ar? r?gard?d as l?gally binding pr?c?d?nts, s?rv? to clarify th? cont?nt and scop? of th? standards and b?com? guid?s for futur? conduct. (J?nks, 2004, pp. 29) This is tru? ?v?n wh?r? th? standards hav? b??n laid down in ?xpr?ssly ?nact?d t?xts such as statut?s or tr?ati?s. L?gislativ? languag? is n?c?ssarily g?n?ral, sinc? no l?gislator can for?s?? all futur? conting?nci?s. Furth?rmor?, judicial d?cisions also h?lp in th? d?v?lopm?nt of th? law by ?xposing d?fici?nci?s in th? ?xisting standards and th?r?by making ?vid?nt th? n??d for r?m?dial l?gislation.
Th? Int?rnational custom to th? position that national law fully ?mbodi?s th? ?thical standards for corporat? conduct d?riv?s from th? conc?pt of a social contract. A soci?ty’s s?t of ?xp?ctations r?garding d?sirabl? corporat? b?havior can b?consid?r?d a social contract b?tw??n th? ?nt?rpris? and its chart?ring soci?ty. Th? Int?rnational custom will pr?sumably includ? l?gal r?quir?m?nts but may go much furth?r as w?ll. In addition, a social contract ?volv?s as soci?tal ?xp?ctations and mor?s chang?. Within any giv?n soci?ty, ?xp?ctations r?garding corporat? b?havior and r?sponsibiliti?s und?rgo progr?ssiv? chang? ov?r th? y?ars. Busin?ss r?sponsiv?n?ss (or unr?sponsiv?n?ss) to th?s? changing ?xp?ctations will h?lp d?fin? th? soci?ty’s l?gal contract with its corporations. Law is fundam?ntally r?activ?. Most laws ar? adopt?d to r?gulat? b?havior that has off?nd?d changing soci?tal ?xp?ctations to such an ?xt?nt that political forc?s mobiliz? to ?nact n?w l?gally binding standards. H?nc?, as long as corporations act within th? ?volving boundari?s of th? social contract, r?strictiv? n?w l?gal standards ar? l?ss lik?ly to b? adopt?d.
This dynamic b?tw??n social and l?gal contracts pr?s?nts corporations with a dil?mma. On th? on? hand, most busin?ssp?opl? lik? th? c?rtainty provid?d by cl?ar and ?nforc?d rul?s of th? gam?. If fair and transpar?nt l?gal r?quir?m?nts ar? ?quitably appli?d, a “l?v?l playing fi?ld” ?xists for fr?? mark?t comp?tition. Und?r th?s? conditions, corporations following standards high?r than thos? impos?d by l?gal norms could risk additional associat?d costs that might plac? th? firm at a comp?titiv? disadvantag?. (Anand, 1996, pp. 34) On th? oth?r hand, ?x?cutiv?s also d?sir? fl?xibility to adapt th?ir busin?ss op?rations to diff?ring soci?tal conditions, ?sp?cially with th? div?rsity pr?s?nt?d in global comm?rc?. This disposition l?ads busin?ss g?n?rally to oppos? mor? l?gal r?quir?m?nts (particularly wh?n th?y f?ar r?gulations d?sign?d by politicians without busin?ss ?xp?ri?nc? may prov? unn?c?ssarily constraining and in?ffici?nt). Th? d?sir? to avoid additionally burd?nsom? law th?r?by provid?s a possibl? inc?ntiv? for busin?ss to abid? by a social as w?ll as a l?gal contract. By conforming suffici?ntly to ?volving soci?tal ?xp?ctations, busin?ss may avoid th? r?activ? adoption of mor? binding national r?gulations, including th? pot?ntial for gr?at?r conflict b?tw??n th? l?gal formulations adopt?d by diff?r?nt nations.
Int?rnational ?nt?rpris?s op?rat? in an incr?asingly global ?conomy that is still ?ss?ntially gov?rn?d by national laws. Mod?rn stat?craft busily pursu?s n?gotiations on standards to facilitat? int?rnational comm?rc? but, abs?nt an ?ff?ctiv? world political authority, th? domain for int?rnational law is limit?d and g?n?rally appli?s to corporat? ?ntiti?s only through th? int?rm?diary of national l?gal authoriti?s in th? ?nt?rpris?s’ country of incorporation. (Gross, 1999, pp. 44) Th? stubborn fact of cont?mporary global lif? is that insuffici?nt cons?nsus ?xists among national gov?rnm?nts r?garding fundam?ntal soci?tal obj?ctiv?s to support agr??m?nts on busin?ss conduct standards that could b? n?gotiat?d in suffici?nt d?tail to b? adjudicat?d in court as int?rnational law. In fact th? inability of gov?rnm?nts ov?r th? last quart?r-c?ntury to agr?? on binding “hard law” standards l?d to th? cr?ation of num?rous “soft law” alt?rnativ?s.
Int?rnational “soft law” standards for busin?ss ?ss?ntially dat? from th? mid 1970s wh?n int?rnational ?nt?rpris?s w?r? und?r broad attack in th? world community, ?x?mplifi?d by acrimonious d?bat? in th? Unit?d Nations. Th? Guid?lin?s for Multinational ?nt?rpris?s adopt?d in 1976 by th? Organization for?conomic Coop?ration and D?v?lopm?nt (O?CD) mark?d an important stag? in th? r?lationship b?tw??n national gov?rnm?nts and int?rnational ?nt?rpris?s. Unabl? to d?v?lop ?nough common cons?nsus to support l?gally binding standards ?v?n among r?lativ?ly lik?mind?d industrializ?d country m?mb?rs, th? O?CD gov?rnm?nts ?nunciat?d voluntary busin?ss conduct guid?lin?s that ?ach gov?rnm?nt would r?comm?nd as standards for good corporat? citiz?nship wh?r?v?r int?rnational ?nt?rpris?s op?rat?. (?agl?ton, 1997, pp. 72) Un?nforc?abl? as l?gal r?quir?m?nts, th? O?CD guid?lin?s w?r? “soft law” standards back?d by th? moral sanction of public pr?ssur?. Such formulations of multilat?ral or int?rnational “soft law” standards constitut? on? ?l?m?nt of th? ?volving social contract b?tw??n int?rnational ?nt?rpris?s and th? globalizing soci?ty within which th?s? firms op?rat?. (Golt, 1996, pp. 54)
Th? inability of nation stat?s to agr?? on ?nforc?abl? int?rnational l?gal standards rais?s qu?stions about wh?th?r truly global norms ?xist r?garding ?thical busin?ss conduct. In philosophical t?rms, th? issu? is oft?n argu?d in t?rms of ?thical r?lativism. In this d?bat?, th? possibl? ?xist?nc? of univ?rsal (or, mor? mod?stly, global) norms is chall?ng?d by th? vi?w that ?thical standards ar? r?lativ?, varying according to th? cultur? or b?li?f syst?ms pr?vailing in diff?r?nt soci?ti?s. Th? admonition “Wh?n in Rom?, do as th? Romans do” r?fl?cts such a r?lativist p?rsp?ctiv?. This dictum may hav? provid?d practical guidanc? wh?n compani?s op?rat?d in r?asonably autonomous national ?conomi?s. (Hudson, 1999, pp. 38-39) How?v?r, gr?at?r global int?rd?p?nd?nc? brought growing public criticism wh?n compani?s app?ar?d to us? ?thical r?lativism to ?scap? r?sponsibility for difficult choic?s wh?n national norms conflict?d.
Globalization has incr?as?d public awar?n?ss and conc?rn r?garding conditions and ?v?nts in oth?r countri?s, r?sulting in gr?at?r scrutiny of associat?d busin?ss activiti?s. A global social contract app?ars to b? ?m?rging wh?r?in int?rnational ?nt?rpris?s ar? h?ld incr?asingly r?sponsibl? for upholding ?thical standards that go b?yond, and may ?v?n conflict with, pr?vailing norms in a particular nation. Although th? ?m?rging cons?nsus on global norms may not y?t support int?rnational l?gal agr??m?nts, busin?ss fac?s th? practical r?ality that app?aling to ?thical r?lativism no long?r off?rs corporat? action in on? nation ?ff?ctiv? prot?ction against th? cons?qu?nc?s of adv?rs? public judgm?nts in oth?r nations. Th? Court r?gulations d?monstrat?s not only that at last w? hav? a tru? Int?rnational Court in op?ration and normal functioning but that its work is contributing broadly and vigorously to th? d?v?lopm?nt and th? unification of int?rnational law. Th? upbuilding of an authoritativ? body of cas? law of th? Int?rnational Court furnish?s an add?d ?l?m?nt of gr?at importanc? for th? d?v?lopm?nt of int?rnational law in g?n?ral. (Hudson, 1999, pp.62) Th? notion that a cod? of rul?s is a pr?r?quisit? to th? functioning of an Int?rnational Court is d?monstrat?d to b? an ?rron?ous on?. No doubt conv?ntional int?rnational law will grow and grow rapidly but not th? whol? of int?rnational law. Int?rnational law is mor? larg?ly bas?d upon custom than upon formal agr??m?nt nor is this ?l?m?nt d?stin?d to los? its importanc?.
Th? ?m?rging and ?volving natur? of global norms pos?s a difficult chall?ng? for int?rnational corporations. In many situations, th?r? will b? no cl?ar choic? b?tw??n a “right” and “wrong” action. Rath?r, ?thical dil?mmas will occur wh?r? l?gitimat? argum?nts can b? mad? for s?v?ral comp?ting alt?rnativ?s. Th? chall?ng? th?r?by b?com?s how to d?cid? on th? “b?st” action rath?r than simply d?ciding to do what is “right.” Making th? “b?st” choic? wh?n confront?d by an ?thical dil?mma also rais?s issu?s r?garding who should d?cid?. In many cas?s, int?rnational corporations may not b? th? most appropriat?ly r?sponsibl? actor. Busin?ss ?thics in a global political ?conomy also involv?s d?t?rmining how to allocat? r?sponsibiliti?s among r?l?vant int?rnational actors.
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