Understanding Corporate Legal Personhood: Past and Present

On Friday, February 2, the Mellon Sawyer Seminar on Corporations and International Law welcomed Professor Erika George of the University of Utah College of Law, and Professor Natasha Wheatley of Princeton University for a two-hour roundtable discussion on issues ranging from the history of corporate legal personhood to the responsibilities of business enterprises to respect human rights.

George, whose research focuses on the obligations of private actors under public international law, opened with a brief discussion of her paper, which examines the effectiveness of rankings and reporting in bridging a global governance gap that often places human rights at risk. Wheatley, a historian whose research explores the conceptual history of rights, sovereignty and legal personality, introduced her paper, which explores how nations as legal persons can possess and defend rights. Wheatley touched on what it means to historicize international law, arguing that the best way to think about it is on the axes of time and place. She explained that adopting this theoretical framework elucidates how disciplinary cultures in different countries can shape our conception of collective rights over time.

Central to the conversation was the notion of sovereignty and its relationship to international law. As Wheatley described it, “in both imperial and interwar Central Europe, many jurists argued that the region’s particularities in terms of multiple languages, cultures, and religions required a reimagining of international law that was more fluid and less defined by territory.” Professor George built on this debate by describing the modern challenges of developing accountability mechanisms for a company like Facebook that has users making up one seventh of the world population and no government or any semblance of sovereign authority on which to impute liability for human rights abuses.

George expressed optimism in a seemingly novel approach to holding corporations accountable for human rights abuses. But, her proposal to adopt a rankings and reporting mechanism was met with some skepticism. One seminar participant asked about the perverse incentives that an emphasis on disclosure could produce. Put simply, business enterprises might be encouraged to report their human rights abuses without actually incorporating a rights-based approach to their business practices, knowing that they will move up in the rankings anyway. Other participants asked whether the regulatory framework of the ranking and reporting mechanism would come from national or international law, emphasizing potential enforcement challenges. George maintained that her research led her to conclude that business enterprises are most responsive to investor decisions. “A company is more likely to change its behavior when an investor raises questions than when consumers protest,” she said, adding “the closer human rights gets to looking like a material concern on the margin of profits, the more likely things will begin to change.”

Ultimately, Friday’s discussion brought into focus the rigidity of international law when thinking about how best to adapt to the contemporary rights and responsibilities of non-state collectives. Both scholars agreed that the concept of corporate legal personhood has yet to be clearly defined. The question is how to make international law more responsive to this evolving definition in a way that encourages businesses to incorporate human rights and holds them accountable for socially irresponsible practices.