OxBHR Hybrid Seminar: Corporate Governance & International Law

Abstract:           

Stakeholder activism by NGOs, consumers, employees and others can incentivize corporate managers to comply with international law on climate change, armed conflict, human rights and access to medicine, among other issues. But familiar difficulties with collective action impede the success of stakeholder enforcement of international law. Similar challenges compromised the ability of shareholders to monitor corporations; these same problems similarly jeopardize the ability of stakeholders to monitor corporate compliance with international agreements, principles, and other institutions.

This Article synthesizes the insights of corporate governance with the challenges of international law. Descriptively, it identifies both a problem and solution: Stakeholders are rationally apathetic because they confront high per capita costs (information, coordination and conflict) but low per capita benefits. But this Article explains how sequential stakeholder activism provides incentives for more stakeholder activism. Actions by one group – such as consumers, employees, suppliers, financial institutions or the media – can lower detection, verification and transmission costs while increasing the benefits each stakeholder receives from enforcement by socializing stakeholders to share preferences, thereby reducing conflict and coordination costs. Critically, international law converts particularized company wrongdoing into violations of global norms – thereby offering economies of scale to stakeholders. Stakeholder enforcement of international law has two distinct audiences: the corporation that is persuaded to change and fellow stakeholders who are persuaded to act. Enforcement is a chain reaction.

Normatively, this Article addresses the implications of stakeholder enforcement for how lawyers and scholars imagine the international legal order. It answers two questions exposed by the phenomena of stakeholder enforcement: (1) Is it “enforcement”? and (2) When is it preferable to courts or political processes? It answers the first by adopting an interdisciplinary approach to contextualize stakeholder enforcement against traditional international law enforcement practiced by courts and intergovernmental political processes. Despite their differences in form, all three approaches qualify as enforcement because they increase its benefits while lowering its associated costs. This Article answers the second question by using comparative institutional analysis to explore how well the three enforcement strategies achieve the following functions: deterrence, punishment, and reparations. This Article concludes that stakeholder enforcement is especially valuable for deterrence but has limited value for punishment and almost no value for reparations to victims.

Speaker:

Kish Parella is the Class of 1960 Professor of Ethics and Law at Washington and Lee University School of Law. Virginia, United States where she teaches contracts, torts, corporate compliance, business associations, international business transactions, and corporate social responsibility, among other courses. She is an expert on business and human rights and has advised representatives of government agencies, international organizations, corporations, non-profits, and UN working groups on various issues of business and human rights. She serves on the Board of Directors for Corporate Accountability Lab, a non-profit organization dedicated to using legal strategies to hold corporations accountable for human rights abuses.  She also serves on the Board of Directors for the Global Business & Human Rights Scholars Association and is a member of the Editorial Board for the Business & Human Rights Journal.  She recently joined the Executive Council of the American Society of International Law. Professor Parella is also an International Research Fellow at the Oxford University Centre for Corporate Reputation, Said Business School, Oxford University.  Prior to entering the legal academy, she practiced international litigation and arbitration at Cleary Gottlieb Steen & Hamilton LLP.

Her latest work relevant to this seminar is found here.

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About Oxford Business and Human Rights Network & Discussion Group

The Oxford Business and Human Rights Network (OxBHR) aims to provide a forum for critical and interdisciplinary debate on issues of business and human rights. We seek to bring together academics, civil society, businesses, and practitioners for the discussion of corporate accountability for human rights violations. We have organised events that have inter alia addressed important debates on corporate complicity in human rights violations; access to remedy for victims of business-related abuses; developments and challenges in the implementation of corporate respect for human rights; regulatory developments around the UN Guiding Principles on Business and Human Rights and the development of a binding treaty; emerging trend towards human rights due diligence; multi-stakeholder initiatives, disclosure and reporting mechanisms; and developments in (strategic) litigation against corporate (human rights) abuse. We aim to welcome theoretical, doctrinal, empirical, and policy-oriented contributions from all relevant disciplines, covering business and human rights issues across the world and industries. The OxBHR organises public events as well as invite-only meetings to discuss work in progress, draft papers, and grant proposals.

Ayako Hatano is the convenor of the Oxford Business and Human Rights Network & Discussion Group in the 2023/24 academic year. Professor Kate O’Regan is the academic supervisor of the OxBHR.

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