International Regulation of Multinational Corporations

Abstract

The purpose of this paper is to explore the role of multinational companies in zones of conflict. This issue has become increasingly sensitive over the last several years, particularly due to the issue of “conflict diamonds” coming from Angola and Sierra Leone, the proceeds from whose sales served to fund insurgency in these countries. The role and responsibilities of international corporations in this area have been studied. Do they initiate conflict? Do they prolong conflict? Can they play a role in mitigating or ending conflict? Where do gaps exist in the current international regulatory and policy framework? Are the tools that companies currently deploy sufficient? Are they necessary? How can we find ways forward to fill these crucial gaps? This paper seeks to provide a blueprint for tackling such questions.

Business and Peace: Sketching the Terrain

“…Companies operating in areas experiencing violent conflict face the potential for the loss of physical, financial, and human resources, and threats to their reputations and goodwill in regions where relationships tend to be very important (Nelson, 2000). For example, during a conflict, firm buildings, machinery, and supplies may be confiscated by governments or militia groups for military purposes (Tripathi, 2005). Beyond direct security costs and the suspension of production, businesses face the opportunity cost of funds related to lost investment opportunities (Nelson, 2000).…”

“…Businesses also potentially face litigation costs associated with conflict. Stakeholders have filed a number of suits in the United States under the Alien Tort Claims Act claiming corporate wrongdoing during conflicts by multinational companies operating in Burma (Tripathi, 2005) and Africa (Heil, 2002). Such cases, even if successfully defended, will likely have tremendous financial and reputational costs.…”

Entrepreneurs, firms, and global wealth since 1850

“…In India, market conditions have been identified as one explanation why India's powerful and rich merchants in the seventeenth and eighteenth centuries left manufacturing in the hands of small artisans, pointing to fragmented markets, inadequate transport infrastructure, lawlessness and disregard for property rights. 53 These constraints were relaxed as the British colonial regime imposed political stability and promoted transport infrastructure, but a well-established argument in the literature on nineteenth century India has maintained that the small scale of the domestic market retarded the growth of a modern machinery industry. 54 Yet it was often foreign firms, or ethnic minorities, which took advantage of expanding a sixth dimension called Indulgence versus Restraint in 2010.…”

Displacement and dispossession: redefining forced displacement and identifying when forced displacement becomes pillage under international humanitarian law

“…Significant research carried out into the root causes of displacement clarifies that while military engagement may be the pretext, pillage, or illegal appropriation is frequently the real objective of civilian displacement (Le Bilion 2001;McGregor 2009;Reno 2009aReno , 2009bBallintine and Nitzschke 2003 et al;Tripathi 2005). Extrapolation of information across numerous studies and conflict data sources, furthermore, establishes that pillage or illegal appropriation is a root cause of conflict-induced migration globally (Adhikari 2013;Engel and Ibáñez 2007;Maher 2015;ACLED 2015).…”