1 Doreen Lustig, Veiled Power: International Law and the Private Corporation 1886-1981, Oxford University Press, 2020, 256 pp., ISBN 9780198822097, £80.00
Since the end of the Cold War, an increasing amount of ink has been spilled over the role of the multinational corporations (MNC) in international law. Whilst some have extolled the virtues of the FDI and technology transfers that sometimes accompany the arrival of MNCs, others have increasingly criticized the lack of accountability mechanisms under international law, as well as the standing provided to MNCs under bilateral investment treaties. Where many accounts converge however, is in the idea that international law has only started to become relevant to MNCs as recent as the end of the Cold War, and that international law has largely failed at regulating them. Professor Doreen Lustig’s book ‘Veiled Power: International Law and the Private Corporation, 1886-1981’ begs to differ.
The role of the MNC for the history of international law has recently started to receive much more attention, as a move to look beyond states, key scholars and international institutions as vectors of change in the history of international law is increasingly being called for.1 Doreen Lustig, an Associate Professor at Tel Aviv University, had previously written on the need to move beyond the ‘statist bias’, and devote more attention to the ‘lower echelons of power’ in the historiography of international law.2 Clearly, the private corporation is one of those actors increasingly being made to stand in the limelight. For example, besides for new work on the
1 J. Katz Cogan, ‘A History of International Law in the Vernacular’, JHIL, forthcoming.
2 D. Lustig. ‘Governance Histories of International Law’, in M. Dubber and C. Tomlins (eds.), The Oxford Handbook of Legal History (2018), 859.
2 already well-covered histories of the great Western chartered companies3, the linkages between MNCs and international law in the 19th and 20th century are now also receiving increasing attention: the journal Diplomatica’s special issue on the role of MNCs as diplomatic actors and Christopher Casey’s monograph dealing with the history of diplomatic protection can serve as two recent examples.4
Lustig’s monograph, which builds upon her J.S.D. dissertation at New York University, fits in neatly
with this growing chorus. The monograph challenges the presentist bias and the ‘failure narrative’
concerning MNC regulation, and wants to show the central role that international regulation has played in the history of private corporations. To prove this point, the author develops her argument through four in-depth case studies: the investment of the American Firestone Company in Liberia during the interbellum period, the industrialist cases at Nuremberg, the expropriation of the Anglo-Iranian Oil Company in 1951, and the rise of the MNC as a subject worthy of international concern in the 1970s (p. 3). Using these cases, Lustig aims to address the lack of literature on the history of corporate regulation in international law. It is clear, and confirmed in the acknowledgements, that Lustig has drawn inspiration from Martti Koskenniemi’s ‘Helsinki School’ of thought. Not only does she align the periodization of her book with what Koskenniemi has taken as the birth of the discipline of international law in the latter quarter of the 19th century,
3 A. Phillips and J.C. Sharman, Outsourcing Empire: How Company-States Made the Modern World (2019).
4 H. Ruël, ‘Multinational Corporations as Diplomatic Actors: an Exploration of the Concept of Business Diplomacy’, (2020) 2 Diplomatica 1; C. Casey, Nationals Abroad: Globalization, Individual Rights, and the Making of Modern International Law (2020).
3 she also engages with her Finnish mentor’s recent preoccupation with the interlinkages between market and public power, property and sovereignty.5
In the first two substantive chapters, Lustig zooms in on the African continent. First of all, she tracks the rise and fall of the chartered company during the Scramble for Africa. This is exemplified by the Royal Niger Africa, an erstwhile chartered company that after losing its charter in 1900 was reformed into the Niger Company, Limited (and eventually absorbed into Unilever).
In this chapter, Lustig convincingly shows how the transition from chartered to privately incorporated companies should not be seen primarily as a change from informal to formal empire, but rather as a transition to a different modality of informal and flexible alliance between government and the private corporation (p.26-27). For while the privately incorporated company mostly moved to the background of the state-centric international legal order, depriving the companies of their sovereignty-related responsibilities meant they could henceforth concentrate on their commercial endeavours. An example of such a commercial endeavour is discussed in chapter three: the 1920s arrival of the Firestone Tire and Rubber company in Liberia. The chapter itself focuses on the Slavery Convention 1926 and the International Labour Organisation’s 1930 Forced Labour Convention. Lustig shows how both of these conventions put the onus of abolishing and outlawing slavery and forced labour on the state. This, she notes, might well have worked for a strong imperial power intervening in the practices of private enterprises, but was not well suited to deal with the situation of a strong private company in a weak state. Tracking
5 M. Koskenniemi, ‘Sovereignty, Property and Empire: Early Modern English Contexts’, (2017) 18 Theor. Inq. Law 355.
4 League of Nations discussions on forced labour and practices similar to slavery in 1920s Liberia, the author illustrates how international lawyers recognized the enforcement problems that arose from the cocktail of a weak state and an unruly corporation, but did not find a meaningful way to address this issue (p. 67).
In the next two chapters, Lustig proceeds with the history of international criminal law, by discussing the industrialist trials at Nuremberg against leading figures of the Flick Concern, I.G.
Farben and Krupp. Extensively making use of the archival records produced by the United States Office of Chief Counsel for War Crimes, Lustig takes aim at the prosecution and tribunal’s focus on prosecuting leading figures of the German conglomerates, rather than fully developing a theory of business responsibility. Lustig makes her case by comparing two conceptions of the state: the Hobbesian idea of the monolithic state on the one hand, and Franz Neumann’s conception of the Nazi regime as a Behemoth, comprising four pillars (the NSDAP, the army, the bureaucracy and the industrialists) that ruled the state, on the other hand. Lustig faults the tribunal for its implicit focus on the Hobbesian conception, treating it as a failure to recognize the growing power of private enterprises (p. 110-111). This theme is further expanded upon in the fifth chapter, where Lustig reveals how some organizational features of the corporate entity were scrutinized (e.g. monopolization practices), whilst some others (e.g. the corporate entity as a subject of criminal responsibility) were not. For Lustig, Nuremberg clearly cast a long shadow over subsequent debates on questions over criminal responsibility in international law, and she criticizes the limited and incomplete allocation of responsibility that flowed from the decisions (p.
142).
5 In the last two substantive chapters, Lustig turns towards the nascent international investment regime. Chapter six is devoted to a case study of the Abadan Crisis (1951-1954), during which the Mossadegh government nationalized the Iranian oil industry, including the Anglo-Iranian Oil Company. The case serves as an example of how the idea of the corporation as acting in the private domain, free from external intervention, could be turned against the West by a weaker actor. When the case was brought before the ICJ, the British attempt to have the concession agreement between the AIOC and the Iranian government recognized as being of an inter-state nature comprehensively failed. Western disappointment with ICJ decisions did not end there. In chapter seven, Lustig discusses the Barcelona Traction case, where the ICJ, to the dismay of many, ruled that Belgium did not have the right to exercise diplomatic protection on behalf of the Belgian majority shareholders of a Canadian company that had run into problems in Spain. Lustig sees this case as seminal for the move towards bilateralism in the investment law regime of the 1970s. Whilst all multilateralization attempts had failed, Western-Europeans and then Americans switched towards using bilateral investment treaties. The New International Economic Order’s attempts to transform international economic relations notwithstanding, the West had succeeded in dictating rules compatible with its investors’ interests (p. 219).
In a concluding chapter, Lustig ties all previous chapters together, by reiterating the point that it is wrong to believe that international law only became relevant for the regulation of MNCs in the 1990s. For as soon as the modern discipline of international law came into existence, it was
6 relevant for the corporation. By using concepts such as sovereignty that set the state centre- stage, ‘costs and responsibilities [were allocated] in ways that proved quite beneficial to the interests of businesses and powerful states’ (p. 227). International law was there then for the corporation, all along.
There is much reason to praise this work. At a time when the fragmentation debate in international law remains hotly debated, Lustig has succeeded in tying together different sub- regimes to produce a compelling argument. Likewise, Lustig has well navigated one of the key difficulties associated with contextual legal history, namely the sheer amount of different sources.
She does not only address the relevant (English-language) legal literature, but also engages with legal theory (e.g. the debate on the nature of the Nazi state), political history (e.g. on Liberia, p.
43-45), and business history (e.g. on economists’ interest in the business corporation in the 1960s, p. 195-99). The author, a lawyer by training, also actively engages with older secondary sources, as well as archival sources (especially for her treatment of the industrialist trials), which will undoubtedly help to address an audience beyond the legal community. Finally, the book clearly fits in the growing trend for a history of international law that goes beyond the state-centric paradigm and the perspectives of key jurists, to include a larger number of relevant actors.
Some minor points of critique should be mentioned. Some chapters break new ground better than others. For example, while the author has written a highly original narrative of the industrialist trials (chapters four and five), she mostly falls back to the secondary literature when
7 it comes to the international investment law regime, and the links she draws between investment law and the New Haven School of legal thought are yet to be fully elaborated in future contributions (as the author aims to do, see p. 180). Secondly, as lawyers, we tend to focus on the final product in our writing, but often do not explain well enough how we came to these conclusions in the first place. Given that the author draws on case studies to make her point, it could have been useful to explain more why the particular cases were chosen, and how they compare to cases that are not addressed. For example, why was the case of the Anglo-Iranian Oil Company (which was mentioned most often in post-war Anglo-American investment law literature) chosen, but not the nationalization of the Suez Canal Company (which was the primary example used in German and French literature)? Here, the abundant literature on case-selection in social sciences more broadly could have been of much use.6 Finally, the book should also be seen as an invitation towards further research on the role of the MNC in the history of international law: the wide-ranging sub-title of the monograph notwithstanding, the author’s case-studies and sources deal foremost with the Anglo-American sphere, which means that further research into the interactions between MNCs and international law for other countries is called for.
Despite these remarks, it needs to be stressed that Lustig has produced a compelling, and well- documented, narrative. Scholars of international law as well as legal historians and legal theorists will find much to their interest in this monograph, which deserves to be read widely.
6 For example, see A. George and A. Bennett, Case Studies and Theory Development in the Social Sciences (2005).
