National Regulation of Multinational Enterprises: An Essay on Comity, Extraterritoriality, and Harmonization

Abstract

This Essay seeks to lay out a conceptual model or matrix for analyzing the application of national laws to MNEs. This matrix seeks to answer the following questions: When should a legislator in a home or host country seek to apply a national law to MNEs operating in her country on an extraterritorial basis (the "enterprise approach")? When, on the other hand, should she be content with applying the law only to the part of the MNE within her country's territory (the "entity approach")? As we shall see, these questions have both a normative and a positive aspect. Parts II to IV of this Essay then apply the model developed in Part I to specific areas of law. Part II involves applications where the entity approach is preferable, with occasional deviations on the basis of comity. The examples are drawn from areas of private law such as contracts and torts. Parts III and IV involve applications where the enterprise approach is preferable. Part III discusses applications in which the preferred approach is the extraterritorial extension of a country's laws to the MNE on a unilateral basis. The examples are drawn from criminal law (corruption), labor law, bankruptcy and tax. Part IV analyzes situations in which the preferred approach is harmonization of the relevant laws in an appropriate international forum. Examples are taken from constitutional law (discrimination), antitrust, and trading with the enemy law. Finally, Part V concludes by recommending the establishment of a World Investment Organization to facilitate discussion of the areas in which harmonization is the preferred approach.