OPINION: Private Legal Transplants: Bright and dark nature of an unnoticed phenomenon

As you know, the Juris Diversitas Blog has tended to publish only informational blogs. We hope, over the next year, to branch out to include more opinion-oriented and scholarly posts, online discussions, etc. With that in mind, we're happy to post the following contribution from Tomaso Ferrando (PhD Student, Sciences-Po Law School):

Private Legal Transplants: Bright and dark nature of an unnoticed phenomenon

Only few months ago, the social image of prominent transnational enterprises such Apple and HP was threatened by media reporting several violations of labor rights by Foxconn, the main contract manufacturer for such electronics companies, whose factories are located in the People's Republic of China. In the light of the potential commercial repercussions, Apple and Foxconn invited the Fair Labor Association (FLA) into the factories where Apple’s products are built, relying on the fact that Apple had just joined the Association in January 13. After more than a month of investigation, the FLA 'revealed serious and pressing noncompliances with FLA’s Workplace Code of Conduct, as well as Chinese labor law' and claimed that both Apple and Foxconn 'have agreed to ongoing assessments by FLA in order to ensure that labor practices meet FLA standards and remain in compliance for the long term.' From a legal perspective, that means that a private agreement concluded between the two enterprises and a private association would determine – if enforced and respected - the substitution of the current Chinese working standards with the legal architecture privately defined by the FLA, i.e. the creation of an ad hoc intra-national legal order whose boundaries will be represented by the Foxconn's gates.

More recently, the Brazilian lower house and the Senate approved the 'Lei Geral da Copa', according to which the ban on Alcoholic drinks in Brazil's stadiums introduced in 2003 as part of the Supporters' Statutes will be lift in occasion of the Confederation Cup and the World Cup. Will the law be signed by President Dilma, an ad hoc juridical order will be applied only in the stadiums that will host the two competitions, and only for the time of the events. Welcomed with great satisfaction by the FIFA secretary general Jerome Valcke, the bill will create a sub-system of law limited in time and space, but, more importantly, which will be entirely determined by the need for the state to respect the private agreement concluded between the Brazilian Government and the Fédération Internationale de Football Association, and by the interest of this latter not to breach the agreement just concluded with Anheuser-Busch, the Budweiser's producer. Whether European supporters may be used to have a beer while watching their sport idols confronting each-other, Brazil was in the process of following a different path, but it appears to have eventually bowed to the content of a private agreement concluded between other parties.

It is my opinion that the cases that have just been described, although apparently dissimilar and unrelated, represent two of the many situations in which a private agreement intervenes to shape and modify national legal orders. In particular, it can impose a specific behaviors to one of the private parties of the deal, or require a legislative intervention in order to accommodate the interest of private parties. In both cases, I claim, an instrument of private law is utilized as a proxy for legal transplant and the creation of special areas of law, some sort of Legal Special Zones (LSZ), where the applicable law differs from that what can be found beyond its gates, and where the juridical competence is often attributed to alternative mechanism of dispute.
Whether I do welcome an effective diffusion of higher production standards that could lead to a raise to the top of the existing legislations, I cannot affirm the same about the use of sovereign prerogatives in order to modify and shape national legal orders according to the content of a private agreement. Private legal transplant appears, therefore, characterized by a bright and a dark side. Therefore, the proliferation of private proxies of legal transposition and their role in the expansion of a homogeneous legal order that does not accept any tuning, require jurists to interrogate the current phenomenon and define its content, but above all to propose new theories that move beyond the traditional conception of legal transplant as nation-to-nation imitation.

As the Foxcon and FIFA examples demonstrate, globalization is everything but a static and well-defined phenomenon, a complex process that involves a plurality of actors and a multitude of fields. Extremely reluctant to be constrained within defined borders, so much that Anthony Giddens defines it as a 'term that we use frequently but which is poorly conceptualized'[i], globalization can be decomposed in a plurality of sub-processes, everyone involving and influencing different aspects of life. Therefore, following the scheme traced by Boaventura de Sousa Santos[ii] and Duncan Kennedy,[iii] it appears more appropriate to talk of globalizations rather than of a single globalization, a plurality of phenomena based on the individualization of a model of reference by the main economic and political power which is then expanded beyond its own frontiers in order to become universal.[iv] In this sense, globalizations are acts of universalization and homogenization, where law and culture play a fundamental role as tools and objective of change and standardization, legitinate coercive power capable of impacting legal diversity and sovereign autonomy.

After forty years in which global legal transplant has been defined has a state-to-state relationship based on prestige, power or imitation, one new piece seems to be part of the global puzzle of legal standardization, which pushes aside the traditional idea of transplant as the simple moving of a rule or a system of law from one country to another, or from one people to another one'.[v] This reduced perception of legal transplant, in fact, can fit into a global order based on nation states and international organizations, but it cannot be adapted to the current post-modern scenario where global, national and local orders interact with each other, cultural distinctions are becoming blurred, where private is occupying the space once occupied by the public, and where transnational enterprises (TNEs) cut across continents with little geographical attachment.

Embedded in dogmatic immobility, we tend to remain entrapped in the idea of a private contract as an agreement that only incidentally is touched by the public sphere, but certainly does not define its content, so that we miss the process by which production agreements, codes of conduct, and norms of corporate social responsibility are made of norms and means of coercion that are transferred from one legal order to the contract (a different legal context), where they can represent the new term of reference for people's behaviors. On the other side, a full comprehension of globalization requires to go beyond the private-public distinction as an untouchable dogma. Only then we can realize that certain clauses contained in investment contracts concluded between TNEs and national governments, such as ad hoc fiscal agreements, the definition of property or of the working hours, the obligations to provide full access to natural resources or stabilization clauses that crystallize law, are much more than private law. They are the fast track through which a particular legal narrative, that of private property, individuality, commodification of nature, and the supremacy of private interests is expanded and universalized, piercing the sovereign veil and going beyond the idea of a public national legal order.

The thick network of legal tools that allows transnational enterprises to extend their power through national frontiers and to take advantage of the immobility of the nation state, requires jurists to reconsider the boundaries between legal domains, and to develop a new theory of legal transplants which does not look at the source, but at the mechanisms of exercise of power. We have to abandon the the idea of a global community of public legislators that autonomously and independently issue coercive norms that bound their citizens, and shift to a complex picture where coercive measures are the product of the encounter between the private and public, or between private actors more and more integrated on a global level. In the last thirty years, legal formants and legal narratives produced in core countries according to capitalistic economic needs have been detached from their own background and moved upward to a global scale, so to constitute a new global economic order, a law-non-law with no clear source nor geographical location, which is however territorialized any time it is respected and or coercively enforced.[vi]

As I have anticipated, private legal transplant appears as a double-faced phenomenon. On its bright side, it takes place when mother corporations or buyers impose their own standards of conduct and internal norms on private counterparts, so much that the latter become internal legal systems governed according exogenous dispositions. Legal standards are raised and social, environmental or labor guarantees strengthened by means of private agreement, although the provision of alternative dispute mechanism risks to counterbalance the potential of the move and to subtract important aspects of social life from public scrutiny. On its dark connotation, PLT takes the form of investment agreements concluded by global investors and nation states, with or without the legal umbrella of a Bilateral Investment Agreement. Despite its private nature, in fact, the content of the agreement becomes juridically binding for the state as sovereign entity, and often requires it to exercise its prerogatives in a way that respect and does not violate its clauses, even if that means to adapt the national legal order and its institutions according to the content of the contractual obligations. It is happening with labor law, environmental prescriptions, access to natural resources and even the conception of private property, and the risks of arbitration and a negative awards certainly represent an extra constraint over states' margins of appreciation.

While the potential – doubtful - of private-to-private legal transplant has become to be discussed in the frame of Corporate Social Responsibility and global governance (although with little debate on the risks of a complete privatization of an issue of public concern),[vii] the private-to-public appears completely overlooked despite its extreme relevance due to its implication on national sovereignty, democracy, legitimacy and participation. In this last scenario, in fact, the contractual codification of a specific legal discourse and norms (included the principles of lex mercatoria, a law/non-law which has longly be struggling for a legitimation and condemned to the vicious circle of legal autopoiesis), receives a formal  investiture and becomes national law, despite its clear private origins. A strong and creative effort on the side of critical jurists is therefore urgently needed, which starts from the reconsideration of the artificial separation between fields of law.

In conclusion, although the Foxconn and FIFA cases might seem irrelevant or exceptional, they are the evidence of a constant tendency toward the privatization of the content of binding law. As the modern merchants of law, private actors appear as the proxies of legal and cultural transformation,[viii] producers of a new legal reality that goes beyond mere economic transactions, and whose pervasive effects require a deep understanding and a strong dose of critical analysis. Therefore, a general theory of PLT has to be proposed, one that provides a platform for a future and analytical application of this new creative thoughts to other concrete cases of transnational relationships.

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[i] Giddens A., 2009, Sociology, 6th edition, Polity Press, London.

[ii] De Sousa Santos B., 2009, A Non-Occidentalist West, Theory Culture Society, SAGE, Los Angelese, London, New Delhi, and Singapore, Vol. 26 (7-8): 103-125.

[iii] Kennedy D., 2006, Three Globalizations of Law and Legal Thought: 1850-2000, in The New Law and Economic Development, Trubek D., Santos A. (eds), Cambridge University Press.

[iv] De Sousa Santos B., 2009, Beyond Abyssal Thinking, From global lines to ecologies of knowledges, Eurizine.

[v] Alan Watson, Legal Transplants: An Approach to Comparative Law (Second Edition ed. 1993).

[vi] P. Legrand, On the singularity of Law, 47 Harv. Int’l LJ 517 (2006).

[vii] Muir Watt H., 2012, Private International Law as Global Governance: Beyond the Schism, from Closet to Planet, PILAGG launching paper, available from http://blogs.sciences-po.fr/pilagg/files/2011/11/HMW-PILAGG-Launching-Paper-Revisited.pdf.

[viii] Dezalay I., Marchands de droit: la restructuration de l'ordre juridique international par les multinationales du droit, Fayard, 1992.