Humanity Constrains Loyalty : Fiduciary Duty, Human Rights and the Corporate Decision Maker

This paper considers whether the values contained within the idea of human rights have normative priority over economic values as they are inscribed in shareholder-oriented interpretations of the duty of loyalty in corporate law. While stakeholder theorists have sought to expand the ambit of the fiduciary duty to include a broad range of stakeholder interests, this paper shifts the frame of debate: it proposes that the range of corporate fiduciary loyalty is constrained by human rights as normative values that are distinct from the strictly economic values that are given priority in the shareholder primacy approach. This constraining effect occurs in decision making and in appraisals of decisions taken quite apart from whatever fiduciary loyalty is thought to demand as a matter of positive law. In other words, human rights are ‘parents' of corporate law, rather than the other way around. The paper begins by considering a mixed question of law and ethics: does a loyal corporate fiduciary have the freedom to make decisions concerning human rights for the specific regard of non-shareholders, or must the loyal fiduciary treat human rights concerns in ways that are instrumental to enhancing stockholder wealth? By shifting the focus away from what law places inside the ‘urn' of fiduciary duty (i.e. away from the debate over what categories of interests the fiduciary is given permission by law to consider), this paper reveals the ‘negative space' that shapes the range of fiduciary duty from the outside. This novel approach reconfigures the contours of the shareholder-stakeholder debate by examining the constraints on the fiduciary duty concept within the larger normative ecosystem in which it resides. Recognizing these prior normative constraints, corporate law should expect only the ‘reflective loyalty' of flesh-and-blood decision makers, and it should not demand mechanistic or algorithmic approaches to corporate loyalty that are tantamount to a compliance-obligation