Cornell Law Review
Conventional wisdom expects that international law will proceed through a “state pathway” before regulating corporations: it binds national governments that then bind corporations. But recent corporate practices confound this story. American corporations complied with international laws even when the state pathway broke down. This unexpected compliance leads to three questions: How did corporations comply? Why did they do so? Who enforced international law? These questions are important for two reasons. First, many international laws depend on corporate cooperation in order to succeed. Second, the state pathway is not robust, then or now. It is therefore vital to identify alternatives to the state pathway in order for international laws – on human rights, climate change, labor rights, corruption, and other issues – to reach corporate boardrooms, C-Suites, offices, and supply chains.
This Article synthesizes two traditionally separate fields – public international law and corporate governance – to offer a descriptive account of how corporations incorporate international law into board governance, management decision making, and contractual relationships. It offers three case studies in climate change, human rights, and sustainable development that reveal important incentives and mechanisms for international law compliance that are neglected under the traditional view. It explains that corporations comply in order to manage risks, appease stakeholders, and advance corporate purpose and strategy. Proxy advisors, investors, civil society actors, and even peer corporations enforce international law when a government actor will not. Normatively, these insights enrich academic debates concerning the operation and effectiveness of international law. On a policy level, this Article offers three recommendations for designing international agreements in order to encourage corporate compliance: facilitate comparability, create indicators, and identify corporate-purpose compatibility. It applies these lessons to two international agreements in development: (a) treaty on business and human rights, and (b) treaty on pandemic prevention and preparedness.
Kishanthi Parella, International Law in the Boardroom, 108 Cornell L. Rev. 839 (2023).