Multinational Enterprises and State Sovereignty Under International Law

Socio-economic and political writers view the changing relationship between states and multinational enterprises (MNEs) from vastly different perspectives - exemplified in recent years by such dramatic and extreme titles as The Secret Empire: How 25 Multinationals Rule the World on the one hand and The Myth of the Global Corporation on the other. In legal terms, this apparent contradiction can be explored by assessing the impact of MNEs on state sovereignty. Arguments that MNEs are usurping national sovereignty and overruning the state should not be taken at face value. Rather, an understanding of the nature of sovereignty and the different conceptions of sovereignty is crucial in determining the extent of the threat (if any) posed to stages by MNEs. A theoretical examination of sovereignty and reassessment of its role in international law can thus provide a basis for more practical proposals in relation to the appropriate balance for regulation of MNEs at national and international levels.Before considering the interaction between MNEs and states, it is therefore necessary to determine a defintion of MNE and examine the meaning of sovereignty. Moreover, that meaning must be justified and explained in light of the development of international law. Following a discussion of whether absolute sovereignty can be maintained under international law, this article turns to the relationship between MNEs and states. In particular, the characterisation of MNEs as 'global' and the impact of MNEs on state sovereignty are examined. The next part of this article focuses on how MNEs are presently treated under international law, and considers some of the existing codes of conduct affecting MNEs. Finally, alternative approaches to sovereignty and MNE regulation are assessed