By NTINA TZOUVALA
Review of Veiled Power: International Law and the Private Corporation, 1886-1981, by Doreen Lustig
New York, NY: Oxford University Press, 2020
On the 1st of December 2020, the anti-Trump corporate lawyer Neal K. Katyal put forward in front of the US Supreme Court an argument that seemingly troubled even the ultra-conservatives of the Court. Katyal argued that there is no general rule of corporate liability under international law, and, therefore, even US corporations cannot be held liable under the Alien Tort Statute (ATS) for gross human rights violations abroad. The case concerns Nestle and Cargill aiding and abetting child slavery in their supply chains. Katyal’s argument relied heavily on international (as opposed to domestic) legal argumentation. In rebutting the plaintiffs’ argument that in reference to the ATS international law controls what constitutes a substantive violation, but domestic US law who can be held responsible, he countenanced that international law has a comprehensive theory of its subjects, and the private corporation is simply absent. Katyal referred to the notable absence of German corporations from the list of indictments in the Nuremberg trials. If even German cartels (which once captured the US political imagination as being uniquely complicit in, if not outright responsible for, Nazi aggression and crimes) were not criminally responsible, how can letting US corporations off the (legal) hook be legally, morally, and politically suspect?
At a certain level, Katyal’s argumentation was simply an abuse of the method of deduction. The absence of criminal liability for corporate wrongdoing does not by itself say much about tortious liability. In fact, Timothy Webster has recently argued that the jurisprudence of Japanese courts provides qualified support for such liability on the part of Japanese zaibatsu that engaged in practices of forced labour. Second, the absence of indictments in Nuremberg is emphatically not the same as arguing that international law did not provide for corporate criminal liability. After all, an amicus brief by Yale Law School scholars showed evidence of corporate liability for the crime of slavery that directly contradicts Katyal’s line of argument. If, however, Katyal is abusing deduction, he is doing so in a way that rhymes with earlier abuses. This is hugely consequential. After all, “legal doctrine” is nothing but a collection of logical fallacies equipped with an army.
Doreen Lustig’s impressive monograph, Veiled Power: International Law and the Private Corporation, 1886–1981, documents the events, debates, and argumentative maneuvers that made legal propositions such as Katyal’s possible and plausible (if not necessarily successful). Lustig sets out to question the common mantra that international law(yers) only became interested in the corporation after the 1990s due to campaigns concerning the human rights abuses of transnational corporations (223). Adopting a historical approach that pays close attention to the content and structure of international legal debates, Lustig shows that international law has often been called upon to pronounce on corporate (mis)conduct, but that it repeatedly sublimated the subjectivity of the corporation under other, more conventional subjects. This sublimation is performed through the form of the corporate veil that subsumes the corporation into the state for certain purposes (4), but also through the infrastructure of modern international investment law that subsumes transnational corporations under the figure of the (imagined to be individual) investor (14). Within this architecture, corporations enjoy international legal subjectivity and rights under international investment law, but they juridically disappear from the international legal arena when it comes to binding legal obligations. As Lustig observes laconically toward the end of the book, “This framing enabled the allocation of costs and responsibilities in ways that proved quite beneficial to the interests of businesses and powerful states” (227).
To understand how we found ourselves in this political and jurisprudential tangle, Lustig revisits a series of discrete but important events in the history of international law and the transnational corporation. Her account begins with the revival of the chartered company in the final quarter of the 19th century. This was, not coincidentally, also the time of rapid capitalist expansion (17), the scramble for Africa (21), and, if we follow Koskenniemi’s periodization, the rise of international law as we know it today. She traces in particular the tensions and synergies between state and corporate authorities in the process of imperial expansion in Africa. In this context, the Royal Niger Company emerged as a pioneer of imperialism only to have its charter revoked at the turn of the 20th century and be replaced by Britain as a formal colonial power.
What Lustig documents is essentially the entanglement of private and public authority, of state sovereignty and (capitalist) economic activity in which tensions and contradictions are reconciled in the unity of the imperial endeavor. Juridically speaking, this unity-in-contradiction was materialized through the changing functions of concessionary agreements: concessions granted chartered companies control over territory, which was later absorbed into the parent-state that, in turn, perpetuated the presence of the corporation in the region through new commercial concessions (26-27).
This was hardly a unique story. As Matthias Goldmann has shown in the context of the German colonisation of Namibia, Rebecca Monson in regard to the Pacific, and scholars of settler colonialism in relation to ongoing colonial encounters in Australia, Turtle Island, Aotearoa New Zealand, and Palestine, private rights (especially over land) and capitalist economic activity justify sovereign claims only to then be subsumed, mystified, and reified by sovereign authority. Indeed, this process of de-internationalization of the corporation that Lustig documents is, arguably, one link in a much longer chain of subsumptions under the state-form that came about with the rise of contemporary international law in the late 19th century.
Even though Lustig shies away from this broader conversation, her exposition of how this process of de-internationalization worked in specific instances is nothing short of masterful. Chapter 3 is dedicated to the dealings of the League of Nations with the Firestone Company in Liberia and its involvement in an economy of slavery and forced labour. The interwar period witnessed not only the revival of transnational anti-slavery movements, but also a series of initiatives to translate these abolitionist aspirations (and, occasionally, panics, for example in relation to “white slavery”) into the language of international law. In 1927, the Slavery Convention came into force. Article 5(3) made private actors invisible by placing responsibility for the suppression of slavery at the hand of the territorial state and by omitting any direct prohibition of private forced labour (35-36).
This distribution of responsibility posed the European colonial governments as paradigmatic, in a way that, as Lustig explains, did not correspond to the economic and political structures of Liberia (43-49). As rumours about the Firestone Company’s use of forced and slave labour grew, the League became involved by setting up the Christy Commission to investigate the situation. Lustig documents how the Commission reinscribed the distinction between the public and the private, placing responsibility for the eradication of slavery with the former (55-56). This is not the only way of dealing with private corporations either as a matter of logical necessity or of historical record. After all, the Brunot Report, published in 1932, painted a much more comprehensive—and bleak—picture of Liberia’s economic and financial dependency on the Firestone Company, especially through debt and credit. By turning its gaze to this thick web of economic relations, the Brunot Report, Lustig argues convincingly, exposed the inadequacy of the inter-state framework that the League otherwise adopted (67).
One reason this inter-state framework was inappropriate, but also intuitively plausible, was that the increased bureaucratization of the corporation in Liberia (and beyond) rendered harmful practices almost impossible to pinpoint and attribute (57). This was not the last time questions of corporate bureaucracy, corporate responsibility, and international law would intersect. The judges, prosecutors, and defense lawyers at Nuremberg would also draw (implicitly or explicitly) upon competing theories of the state, political economy, and bureaucratic hierarchy to decide whether prominent German industrialists were guilty of crimes against humanity, and even the crime of aggression.
If we were to evaluate the Industrialists’ Trials based on the convictions secured, sentences handed down, and time served, we would inevitably conclude that they were an abject failure, or perhaps more accurately what Grietje Baars has aptly called “capitalism’s victor’s justice.” Lustig’s distinctive contribution to this debate is that she situates the fiasco of Nuremberg’s encounter with the corporation within her broader narrative of the disappearance of the corporate form in international law in a detailed and juridically impeccable manner.
For Lustig, Nuremberg reaffirmed the primacy of the state, conceptualized as being a unitary Leviathan even as it condemned aggressive war (109). This conclusion was in stark tension with the “economic case” for the war that both the Soviet Union and, perhaps more surprisingly, the United States embraced at the time. As the argument went, the Second World War had been caused by the collusion between German monopolies and the German state apparatus, as the former sought territorial expansion to access (slave) labour and (plundered) resources. Franz Neumann, the Frankfurt School intellectual who fled Nazi Germany and ended up working for the US Office of Strategic Services (the CIA’s predecessor), offered the US prosecutors a non-Leninist (but nevertheless broadly Marxist) political theory that had the potential of grounding responsibility of non-state actors for Nazi aggression and atrocities. Neumann conceptualized Nazi Germany as a capitalist political formation in which the unitary authority of the state and of the rule of law had ceased to exist. Instead, four different axes of Nazi authority—the party, the army, the bureaucracy, and the industrialists—competed and cooperated in ways that produced unimaginable destruction and suffering, but not coherent, centralised authority (78-84).
In two detailed chapters, Lustig documents the rise and fall of Neumann’s theory as it encountered a much more traditional understanding of the state and the complexities of corporate bureaucracy. In this important re-reading of Nuremberg’s legacy, Lustig posits that the trials of the industrialists adopted a firmly statist approach to war and atrocity (110). Criminal responsibility became imaginable only if it could be linked directly to state action, especially in light of the fact that the monopolistic corporations were not charged with any crimes.
What remains somewhat peripheral to Lustig’s account is that this failure of international criminal law did not necessarily exhaust the legal engagement of the Allies with German monopolies. The US occupation’s anti-cartelization program, with all its severe limitations, especially in light of the Cold War, is only mentioned in passing (112). This elusive presence raises its own questions about the role of international law in (not) thinking seriously about corporate monopolies in the 21st century. Written in the present age, Lustig’s own emphasis on international criminal law perhaps tells us more about our own failures than those of our ancestors. It is we and not them who prioritize so heavily notions of post-facto, individualised criminal responsibility to the detriment of more comprehensive visions of social reorganisation.
If anything, the book at hand indirectly shows how recent this narrowing down of our disciplinary horizon has been. In her dealing both with the Anglo-Iranian Oil Company (AIOC) and the New International Economic Order (NIEO), Lustig illustrates how post-colonial states were able to mobilize—with varying degrees of success—conventional international legal argument for unconventional purposes, especially regarding their right to regulate and even expropriate transnational corporations without the home state intervening lawfully. Arguably, the British and US-sponsored coup against Iran’s Mossadegh also points at some of the limitations of these legal strategies, while also turning the tables on regarding who is considered to be a ‘rogue’ actor in international law (174-175). Not all responses to these challenges were, however, based on brute force. We can think of the neoliberalization of the international (legal) order as a process in which violence and legal reform coexisted in a continuum. The coup and the investment treaty both created the world we inhabit today.
Lustig is more interested in the latter. In fact, the contemporary implication of her history revolves around her argument that international investment law arose as the response of capital-exporting states to the somewhat successful attempts by post-colonial governments to use the corporate veil to their advantage (178). Thanks to investment law, and especially investor-state dispute settlement, the corporation benefits from a double sublimation. With regard to human rights, environmental, and other obligations, it remains invisible to international law, as it benefits from the corporate veil and from a displacement of its obligations to the territorial state (178). However, the corporate veil became irrelevant for the purposes of benefiting from the ever-expanding protections of the field. To do so, the corporation had to be sublimated within the somewhat amorphous category of the “foreign investor,” which is often equated with the figure of the individual, thereby being rendered more palatable and even worthy of specialized protection. Lustig does not necessarily explore in detail the implications of this second sublimation, not least because her book concludes in 1981, over a decade before the dramatic proliferation of bilateral investment treaties and of the jurisprudence of investment tribunals. She is, nonetheless, right in her overall diagnosis: this marginality of the corporation in international law is evidence of the disciplinary conceptual bias in its favor (222).
One overarching question haunts Lustig’s impeccable engagement with her materials: are these acts of conceptual disappearance entirely contingent, the products of conscious choices of men (and, nowadays, the occasional woman), or is there something about the corporate form that makes these juridical tricks easier to perform and, more fatefully, difficult to avoid? Veiled Power is largely silent on this front. This is a telling silence. In her introductory pages, Lustig asserts that the turn to history in international law has largely neglected economic agents and institutions (8). This claim tells us more about the academic norms and aesthetics prevalent in leading US universities, where Lustig completed the doctorate that forms the background of this book, than about the actual state of the literature. In the past decade, both Marxist and postcolonial lawyers have increasingly been turning their attention to economic actors in general, and the corporation in particular. Acknowledging this omission is important, and not primarily for reasons of comprehensiveness. Rather, these critics have argued—to translate their arguments into Lustig’s idiom—that the corporation is so prone to vanishing in international law because the corporate legal form is in itself an exercise in disappearance and mystification.
Unsurprisingly, the specific social relations that are being mystified through the corporate form vary somewhat: it is the capitalist relations of production for Baars, imperialist domination for Pahuja and Saunders, and racial domination and exploitation for Pahuja. In claiming novelty and “backing up” this claim by ignoring this literature, Lustig misses a valuable opportunity to articulate her own argument more sharply, to tell us if she thinks this is a story of choice and agency or if there is something deeper, and that, by implication, not all legal arguments in regard to the private corporation are born equal. Perhaps, as we are confronting the task of taming corporate power in our times, we will come to realize that not being there first—that others sharing the same worries, anxieties, and hopes—is actually not a curse, but a blessing.
Posted on 5 March 2021
NTINA TZOUVALA is Senior Lecturer at the ANU College of Law. She is the author of Capitalism as Civilisation: A History of International Law (Cambridge University Press, 2020).
