Academic

Transnational Corporate Constitutionalism: The U.N. Global Compact, the OECD Guidelines for Multinational Enterprises and the Emergence of a Constitutional Order for Economic Enterprises

Larry Catá Backer

Abstract: The convergence of public and private law has emerged as one of the great legal issues of the 21st century. It touches everything from the regulation of state activity, to the character and effect of the activities of non-state actors?and particularly those amalgamations of authority organized as juridically distinct persons. At its core, it implicates issues of the character and nature of the state, the state system, and the division of power?political, economic, religious, social and cultural?among a number of actors of which the state is only one. Economic entities are increasingly seen as state-like actors requiring regulation at a transnational level; states seek to participate in domestic and foreign markets as economic rather than as political actors. Large multinational enterprises are increasingly able to self regulate. Simultaneously, the nature of the legal order among states and the principles within which states may constitute themselves have become increasingly regularized?the community of nations has begun to move from an acceptance of constitution as a means of organizing political communities to constitutionalism as a system for the regulation of the organization of non-state communities with political authority. This paper engages emerging principles of transnational constitutionalism as a basis for the organization and integration of economic enterprises. For that purpose, the paper considers the role of two influential efforts in the construction of a global enterprise constitutionalism?the United Nations Global Compact system and the Organization for Economic Cooperation and Development Guidelines for Multinational Enterprises. The paper starts with context, examining the rise and character of the conceptual elements of transnational constitutionalism and its applicability to functionally distinct communities?like that of business enterprises. It then examines the development of and current efforts to ?operationalize? the Global Compact and the Guidelines for Multinational Enterprises as two related substantive regulatory frameworks for the transnational governance of economic actors. It suggests their utility as a basis for a constitution of enterprise regulation. It also sketches the constitutional elements of these efforts and their potential limitations as constitutionalist frameworks. The paper ends with an analysis of the utility and effectiveness of these related normative frameworks as a basis for the elaboration of a transnational enterprise constitutionalism and as a regulatory framework for its implementation.

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The body corporate, as concept and reality, has served society well as a basis for human organization. The use of the anachronism is deliberate. It is meant to suggest the broadest possible conception of corporation as an ordering unit for all manner of social organization, from the state, to subordinate economic and civil societies, to the organization of religion. (Kantorowicz 1957). Ancient notions were brought to what became the United States, where, for example, a body corporate and politic was defined as a ?collection of natural persons joined together by voluntary action, or legal compulsion, by the authority of an act of a legislature consisting of either a special charter or of a general permissive statute to accomplish some purpose, either pecuniary, ideal, or governmental. The phrase "and politic" gives it public corporation status for political purposes as an administrative agency of civil government in a defined territory, and invests it with subordinate and local powers of legislation.? (Foundations of Colonial America 1973, 3:2586).

Extremely flexible and malleable, it has provided the foundation for all efforts to reify aggregations of individuals?from religion and ethnicity, to corporations and the state. This was famously expressed in the work of Harold Berman. (Berman 1983, 215). It was assumed a century ago in the United States that

The legal nature of the ordinary corporation has been dwelt upon because it is in exactly the same sense in which legal personality is attributed to it that the State, its creator, is conceived of by the analytical jurist as a person. Both are collectivities, both are regarded as the subjects of legal powers, that is, entities which possess and have the legal right to exercise these powers. In fundamental conception they are, as persons, identical in character. They differ only in respect to the extent of their powers and the legal source whence their powers are deemed to be derived. (Willoughby 1924, 36).

Political, religious, and economic communities, especially?when organized as states, religious bodies (under a variety of names), and corporations?have defined themselves through organizing instruments that specify those rules and principles that define the community and thus define the form of the corporate body, like a skin. In the form of constitutions, these organizing instruments embody the legitimacy (legality) and supremacy of these norm systems for the communities they define. ? It is customary now to ascribe the legality as well as the supremacy of the Constitution. . . . Two ideas are thus brought into play. One is the so-called ?positive? conception of law as a general expression merely for the particular commands of a human lawgiver, as a series of acts of human will; the other is that the highest possible source of such commands, because the highest possible embodiment of human will, is ?the people??. (Corwin 1955, 3-4).

The elaboration of human communities within these corporate bodies has always faced two fundamental problems. The first relates to the scope and nature of its internal organization; the second relates to its place among other organizations, and more specifically the rules under which the larger community is governed. Over the last two centuries something of a bare consensus had formed respecting the management of those problems. The problem of internal organization became the principal issue of constitutional law. The problem of external relations became the principal issue of trans-corporate relations. Yet, neither problem could be adequately managed without acknowledging a third problem, one that became acute in the last two decades, relating to the relationship among dissimilar corporate bodies simultaneously operating within the same territory and made up of natural and corporate persons with multiple loyalties.

The traditional solution was simple, yet elegant. It relied on the elaboration of a series of principles which produced systems of hierarchies of authority, legitimacy and power within which all bodies corporate could fit. The parameters of these principles and the system it has given rise to are well known. The popular understanding of the concept of power hierarchies grounded on the state as the great nodal point between the organization of power within a defined geographic territory, and among the communities of such organized territories was well established at the beginning of the last century. (Willoughby 1924, 30). Thus, Westel Willoughby argued, that the generally accepted view was that a ?State may be conceived of as itself the sole source of legality, the fons et origo of all those laws which condition its own actions and determine the legal relations of those subject to its authority.? (Id., at 30).

At the apex of authority and legitimacy was the political will of a territorially defined group of natural persons organized into states and asserting their collective authority through a governmental apparatus. Beneath this authority existed all other bodies corporate?at least those subject to the coercive power of the state. This idea was particularly strong with respect to the institutional presence of an entity, even a religious entity, within a state. In the United States, for example, the Edmunds Tucker Act of 1887, among other things sought to disincorporate the Church of Jesus Christ of Latter Day Saints. (Edmunds Tucker Act 1887). The disincorporation was affirmed by the United States Supreme Court. (The Late Corporation of the Church of Jesus Christ of Latter-day Saints v. United States 1890).

There were important exceptions and accommodations as well?principal among them were for religious bodies corporate which could exist within and beyond the state, but whose political authority was closely cabined by and expressed through state power. (Backer 2008). Within these hierarchies of authority and legitimacy, the issues of corporate organization, legitimacy and operation could be organized to minimize conflict and further efforts toward the creation of a global system of governance. As a consequence, issues of constitutionalism tended to be ordered by the corporate body?s place in the hierarchy of authority. The problem of internal organization of inferior bodies was always subject to the management of superior bodies corporate?and ultimately of the state. Among states, the issue of internal organization was a function of the will of the people thereof. In their relations with other states, the community of states appeared to be moving towards communal norms, more or less enforced among the community of nations, but all were free to deal with inferior corporate bodies in their own way. This is now manifested in principles of transnational constitutionalism (Backer 2009), through which the community of constitutional actors institutionalizes systems for self-regulation through the elaboration of communal rules to regulate constitutional legitimacy among its members. (Backer 208).

The manifestation of this ordering in the formation of aggregations of economic power organized as corporations was especially apparent. ?In other words, a corporation is a constitutional arrangement in which individual choices are expressed and group decisions are made. Secondly, and simultaneously, corporations operate within a wider constitutional setting in which the state has responsibilities and powers in relation to individual citizens, groups, and organizations.? (Bottomley 2007, 54-55). As such, the ?external aspect of constitutionalism deals with the relationship between the corporation, on the one hand, and the state and society, on the other.? (Id., at 55).

States were organized through a constitution that memorialized the will of the people thereof and produced a legitimate government whose scope, powers, and operations were authoritatively organized and limited through the process and substantive limits of that instrument. (Backer 2009). Other bodies corporate could exist only under the higher law represented by these political constitutions and then only to the extent that the government organized under the constitution of the state permitted it through legitimately enacted statute; the only legitimate corporation was one recognized as such by the state and organized under rules create by state law. (Blumberg 1993, 3-4). John Marshall famously suggested in an early American Supreme Court opinion that ?a corporation is an artificial being, invisible, intangible, and existing in contemplation of the law.? (Trustees of Dartmouth College v. Woodward 1819). Thus, Stephen Bottomley could speak of a constitutional law for states and also of a constitutional law for other bodies corporate. ?It has been suggested that ?a constitution both recognises and reinforces the place of individual constituents within the institution, and also constitutes them as a group or collective. Constitutionalism therefore directs our attention to what it is that unites these individuals rather than just what separates them.? (Bottomley 1997). Melvin Eisenberg?s famous insight is oft repeated: ?Corporate law is constitutional law; that is, its dominant function is to regulate the manner in which the corporate institution is constituted, to define the relative rights and duties of those participating in the institution, and to delimit the powers of the institutions vis-à-vis the external world.? (Eisenberg 1969, 4). This is an ancient concept, with echoes in Hobbes. (Hobbes 2001, ch. 22). He understood that ?Some regular systems are absolute and independent, subject to nobody but their own representative; they are all commonwealths . . . . All the other regular systems are dependent ·or sub- ordinate·, i.e. subordinate to some sovereign power to which every one is subject as is also their representative.? (Id., at 103). Yet such ?constitutional law? would be understood in ways distinct from that of political constitutions in its relation to superior corporate bodies, and principally the state.

However the gulf between concept and reality has always existed?and no more so than currently. Control of corporate bodies, and especially their subordination to the state has proven to be difficult. Even at the height of the golden age of state power, there was a sense that simple vertically constructed hierarchies of control among the many forms of corporate organization were impossible. Herbert Spencer?s insight about the relationship of state to aggregations of economic power within its borders remains powerful and accurate. ?Our industrial organization, from its main outlines down to its minutest details, has become what it is, not simply without legislative guidance, but to a considerable extent, in spite of legislative hindrances.? (Spencer 1860, 196).

That insight is truer now than when made a century and a half ago. Janet Dine has suggested how even the concession theory can be understood as liberating the corporation from its creators. She has described a view that ?sees the company as something distinct from the contracting partners' original compact but seeks to show that, in coming together and using the corporate tool, the contractors have created an instrument that has a real identity separate from and quite distinct from the original contracting partners. The company, if you like, 'floats free' from its founders and becomes a separate person with its own interests. Inherent in this approach is a distinction between the notion of the origins of a company and its dynamic existence after foundation.? (Dine 2000, 26). These problems of order, hierarchy and control have become acute over the last several decades. The framework of economic globalization, based on global private actor driven markets not impeded by the parochial regulations of states, have begun to pose challenges to the traditional state centered system?at least conceptually. David Schneiderman has noted that ?Neo-liberalism and its institutional partner, the investment rules regime, aim to institutionalize model of constitutional government intended primarily to facilitate the free flow of goods, services, capital and persons unimpeded across the borders of national states.? (Schneidermann 2008, 2). This is to be accomplished through ?an interlocking network of rules and rule making structures?an ?investment rules regime??that place substantive limits on state capacity in matters related to markets.? (Id.).

In the form of multinational enterprises, corporations now appear as bodies corporate with an authority approaching that of states within the ambit of their own powers. The largest and most geographically dispersed among them can now claim an autonomy from state power unimaginable a generation ago. (Iwai 1999; Backer 2006). These enterprises have been considered by some as serious objects of international law. (Backer 2006a). Some consider that the framework for the regulation of such enterprises, as a body, has now moved well beyond the framework grounded in the supremacy of state-based political authority to merit an autonomous constituting framework of its own. (Ruggie 2009) (hereafter RUGGIE 2009 Report A/HRC/11/13). Ruggie notes that ?...most States have adopted measures and established institutions in certain core areas of business and human rights, such as labour standards and workplace non-discrimination. But beyond that, the business and human rights domain exhibits considerable legal and policy incoherence...? (Id.).

In a related vein, Gunther Teubner now speaks forcefully of an emerging regime of corporate constitutions critically distinct from Professor Eisenberg?s understanding of a generation ago. (Teubner 1988). Teubner speaks to a metamorphosis of the economic corporation and of the transformation of corporate codes of multinational enterprises from mere soft law?an appendage of the international relations of state, to first rank constitutional exercises in their own right. He suggests that ?corporate codes are emergent legal phenomena in the constitutionalisation of private governance regimes. Unlike when they were first spawned, they are no longer mere public relations strategies; instead they have matured into genuine civil constitutions.? (Teubner 2009). Corporate personality now occupies a space beyond the state, one that might well permit the aggregation of these actors into a distinct body corporate, with its own supra organization constitution. We return to Professor Eisenberg?s insight in new form in which the constitutionalism of corporate actors is no longer understood as subordinate and dependent on the superior constitutionalism of the state but is instead autonomous as both its internal constitution and also as to the development and adherence to supra constitutional frameworks, a form of societal constitutionalism developed for the community of global, supra national, corporate actors. Indeed, the evolution of a regulatory framework for corporations beyond the state fits nicely into developing understandings of societal constitutionalism as a new and more flexible form of the old formalist, state referential and law based notions of constitutionalism. (Sciulli 1992).

The rise of transnational corporate constitutionalism represents a return, as well, to a world order in which positive law can again be effectively and legitimately separated from organic law. Positive law remains the province of the state. While organic law assumes a different character. It can represent the aggregated norms under which the affected community governs its affairs. The difference is better understood in languages other than English as between derecho (direito, droit) and ley (lei, loi). ?a lei régia liga-se somentante à vontade do rei, não tendo relevo o seu conteúdo substancial; o direito é, ao contrário, o fruto da experiència de vida de uma comunidade e registra em si soluções mais équas que, cotidianamente, a comunidade fez suas.? (Grossi 2004, 49). It suggests in new form the great argument of the 18^th century between notions of the legitimacy of constitutional expression as ?the conscious formulation by a people of its fundamental law . . . and the older traditional view in which the word was applied only to the substantive principles to be deduced from a nation?s actual institutions and their development.? (McIlwain 1940, 3).

The thesis proposed here is that economic entities are increasingly seen as state-like actors requiring regulation at a transnational level. Large multinational enterprises are increasingly less dependent on states for their internal regulation. Simultaneously, the nature of the legal order among states and the principles within which states may constitute themselves have become increasingly regularized?the community of nations has begun to move from an acceptance of constitution as a means of organizing political communities to constitutionalism as a system for the regulation of the organization of non-state communities that are distinct from and exercise authority over their members. As a consequence, it is now possible to speak of two new and distinct constitutional phenomena, both of which will be sketched out in what follows. The first is the development of principles of transnational corporate constitutionalism that mimic those of state centered constitutionalism. The second is the elaboration of an institutional framework for transnational corporate constitutionalism, which posits both an autonomous community of corporations and the institutional mechanisms for the development of rules for their organization and behavior. The internal constitutions of corporations are increasingly sourced from outside the state, both as to its internal corporate governance and its external relations with other actors. The external constitution of corporations is increasingly tied to supra-national systems as corporations become the subjects of an international regulatory community existing alongside that of managing states. This is the essence of transnational corporate constitutionalism, whose form is only hinted at today.

I. Internal Governance: Principles of Transnational Corporate Constitutionalism.

A. From Public to Corporate Constitutionalism.

There was a time when international law played little role in the way in which a sovereign nation-state ordered its constitutional system, and then applied that ordering internally. That was especially the case with respect to the application of the process rules of a nation?s constitution, and the division of authority between the two principal elected branches of state?the executive and legislative?and the judicial power to oversee that division. To some extent that idea is still true?the United States Congress would have found it incomprehensible had its proceedings against President Clinton in 1999 been interpreted as in violation of either some supra-constitutional norm or a set of international norms and treaties with paramount authority over the matter, or, for that matter, whether the decision in Bush v. Gore (2001), which decided the 2000 U.S. Presidential election in favor of George H.W. Bush, amounted to a usurpation of constitutional power. (Discussed in Backer 2002).

But times have changed. I have argued that since the end of the Second World War, a new transnational legal order has been seeking both authority and legitimacy with respect to control over the normative framework and limitations within which nation-states may elaborate their national constitutional systems. (Backer 2008). Constitutionalism has, for the last century or so, sought to provide a basis in theory for legitimating certain forms of state organization within territorially based political communities. (Backer 2009). Constitutionalism serves as a basis for classifying the form of state systems of governance. (Henkin 2004). Its object is twofold?to develop an ideal of governance forms and to judge the legitimacy of a constitutional system against this ideal. (Okoth-Ogendo 1993). As such, as a legal and political subject, constitutionalism can be understood as a worldview. That worldview produces an ideology that can be divided into five parts:

Constitutionalism is: (1) a system of classification, (2) the core object of which is to define the characteristics of constitutions (those documents organizing political power within an institutional apparatus), (3) to be used to determine the legitimacy of the constitutional system as conceived or as implemented, (4) based on rule of law as the fundamental postulate of government (that government be established and operated in a way that limits the ability of individuals to use government power for personal welfare maximizing ends), and (5) grounded on a metric of substantive values derived from a source beyond the control of any individual. (Backer 2009).

An example of the extent of that change was observable in 2009, when the international community condemned the ouster of the Honduran President by its Legislature and Judiciary on grounds that their interpretation of their own constitution was flawed, and thus flawed, also illegitimate. (Cassel 2009).

Much of the substance of the great debates between constitutionalist systems now tends to center on the framework of substantive values that ought to be incorporated in legitimate constitutional systems. Indeed, much of the great variations in constitutionalism currently arise from great differences in constitutionalist ideology, in those metrics of substantive values on which classifications are understood, the characteristics of constitutions are assigned values, legitimacy is understood and rule of law is framed.

The substantive values represented within a constitutionalist system can be grounded on any number of legitimating value systems?each competing with the others for the allegiance of the greatest number of states. (Backer 2008a). Nationalist constitutionalism focuses on traditional sources of constitutional values within territorially constituted and distinct states, with the United States as an important example. (Rubenfeld 2004). Transnational constitutionalism, in contrast, sources legitimating constitutionalist values in transcendent values originating outside of, but still binding states. (Backer 2008). The predominant source of such transnational values is derived from the consensus of the community of nations, understood as common constitutional traditions of the community of nations or as the expression of international consensus in international conventional law or customary international law (Hirschl 2004), and as such can be described as secular transnational constitutionalism. (Backer 2008). But it may be understood as derived from a divine source, and in this form understood as theocratic constitutionalism. (Backer 2008a) Alternatively, it might be grounded in rational universalism, as were constitutional systems grounded in Marxist Leninist theories. (Backer 2009a).

Still, these value systems of constitutionalism are all grounded on the fundamental postulate of rule of law?that states ought to be organized to avoid tyranny or despotism by grounding state action in law and by limiting the reach of such lawful state action on the basis of values reflecting the values of the political collective. (Coomaraswamy 1993). ??Constitutionalism is thus a written constitution per se surrounded by a cloak of unwritten principles, values, ideals, procedures, and practices.? But not all values are constitutionalist. The racist values of fascism, the militarism of Imperial Japanese constitutionalism, and the despotism of ?big man? African dictatorships grounded in some sort of values ideology are not legitimately constitutionalist. The key to values in constitutionalism, like that of rule of law in constitutionalism, is to avoid despotism or tyranny.? (Backer 2009a, quoting in part Vlasihin 1989 and citing Gregor 1969, 241-82; Biney 2008, 129-159).

Thus, constitutionalism is more than the sum of internal efforts to memorialize any old governance framework, but instead provides a disciplining ideology the purpose of which is to constrain the choices available to any ?body corporate? that seeks to operate as a ?legitimate? state within both its own community of members and also the community of nations. Legitimacy is a critical component of the constitutionalist ideology, determining the scope of action permitted other states under international law or the rights of its citizens to rebel against an illegitimately constituted state. ?Constitutions are distinguished from constitutionalism?the latter serving as a means of evaluating the form, substance, and legitimacy of the former.? (Backer 2009). Constitutionalism, then, provides an important normative framework against which a ?body corporate? may be judged by its peers and overturned by its subordinates.

The late 20^th century has seen the migration of these ideas from the realm of public corporate bodies?states?to other corporate entities, principally those organized to engage in economic activity. Globalization has thrust corporations out from within the borders of the states that have sought sole rights to their regulation. It should be remembered that a century ago, influential commentators suggested that there was no reason to believe that corporations licensed in one state of the United States might be able to operate within the borders of another. (Willoughby 1904). He could observe without reservation that ?the interstate comity clause of the federal Constitution which we have been discussing does not necessitate the recognition by the several States of corporations created by any of the other States.? (Id., at 282).

A century later it is common to speak of a corporation substantially impeded by national borders. ?Corporate governance is a problem area that is discussed today globally. The word?and indeed the concept?is Anglo-Saxon. In the European continent, both the word and the concept were more or less unknown until the middle of the 1990s.? (Hopt 2007, 81). The contours of this phenomenon and its most important values contours?that is its constitutionalization above the state level?is in its infancy. Yet, the outlines of its principles can be discerned. For Marxist theory a similar result is possible?grounded in an insight that capital has been liberated from the state by modern globalization, and with it the regulatory power of the state?now outsourced and elaborated in new forms. (Robinson 2004, 75).

Like states, corporations were traditionally assumed to be the sole regulatory province of those political entities within whose jurisdiction they operated. As the state served as the source of the public character of the entity, only that law could be said to impose general obligations on the stakeholders intimately connected with the governance of the organization. Specific obligations, of course, remained a vital part of private law (through contract). But these specific obligations gave no rights as against the entity to others. Nor was the corporation obligated to comply with behavior norms with respect to its conduct or governance beyond those mandated by the state through law. All of this was in accord with the core notions of rechtstaat notions and substantive constitutional law principles that flared out like a sort of legal supernova for a brief burst at the conclusion of the last World War in 1945. Moral obligations, better understood as either corporate social responsibility, were consigned to marketing departments or understood as charity. (Described in Backer 2006a). Just as states had no obligation and little incentive to comply with hortatory international declarations, corporations and other juridical persons had little incentive to comply with norms that were not imposed by law, nor to acknowledge the power of purported stakeholders with no legal connection to the entity. Governance, in effect, was firmly grounded in government.

Within states, the normative foundations of the regulation of corporations, the substantive rules limiting the scope of corporate constitutionalism, is dependent, in turn, on the nature of the relationship between superior entity (the state) and its corporate subordinates:

Justifications for regulation closely follow the theories underpinning companies. The concept of correction of market failures follows the transaction cost economics theories, which share with legal contractual theories a call for minimum interference with contractual decision making. Concession and communitaire theories make companies open to state regulation and permit a conceptualisation of the company with a 'social conscience'. Thus both types of theory have significant regulatory consequences. It is noticeable that only the latter theories permit the use of companies as a direct social engineering tool or a method of distributive justice. The absence of such a direct use is replaced in the contractualist theories by the notion that profit maximisation for shareholders involving economic growth will best serve the world; 'To address poverty, economic growth is not an option: it is an imperative.? (Dine 2000, 107).

The view was confined to internal governance. The possibility of external relations of corporations was either considered the object of state regulation, or a matter to be determined between states in the course of their international relations. There was no notion of the possibility of a community of corporations subject to a set of autonomous global values that might limit their power to organize themselves or to act. There was only the notion of corporations as sub-constitutional constructs of a constitutionally superior body corporate?the state.

Global regimes of free movement of capital, services, goods, and to some extent, labor, have changed all that. Left to themselves, corporations could become global self regulators, moving operations and assets to suit their aggregate taste for regulation. States conversely, would become manufacturers of regulation for consumption by corporations interested in these wares. (Backer 2006). Or corporations could become an autonomous source of their regulation within the confines of their activities and relationships with other enterprises. (Backer 2007). Li-Wen Lin has suggested some reverse leakage of these governance norms, from enterprise back to the states in which they may be effective. (Li-Wen Lin 2009). Once corporations are understood as not merely (or principally) property in the hands of shareholders, the dynamics of institutional self-consciousness and autonomy serve to liberate these entities?not only from their shareholders (that own them) but also from the state (that purports to regulate them exclusively).

But the global effects of corporate self regulation, especially among the largest multinational corporations, grounded only in conformity to applicable rules of organization, produced a reaction (Muchlinski 2007) in some ways as significant as that produced by the lawful but unpalatable activities of Germany and Japan under their respective pre-War constitutions. (Backer 2008). As such, global economic activity called for the construction of a globally harmonized framework for the organization of corporations as well as for their behavior within the community of corporations operating across borders. These internal and external drivers effectively moved the issue of corporate governance up from the state and produced a number of principles that now can be said to serve as the foundations of corporate constitutionalism.

B. Toward Principles of Corporate Constitutionalism.

What are the values that might be understood as having constitutional effect for corporations? The values themselves echo those that have arisen within transnational constitutionalism applied to states. Transnational constitutionalism stresses a set of basic values. These include popular sovereignty, mass democracy, rule of law, due process, and human dignity. Vlasihin thus argued that

?Constitutionalism is thus a written constitution per se surrounded by a cloak of unwritten principles, values, ideals, procedures, and practices. Without attempting to list the entire file of attributes of American constitutionalism, let me single out the key ones. Making up the core of constitutionalism are the ideas of ?popular sovereignty? and a social contract as the source of the government; the principles of republicanism, federalism, separation of powers, and government limited by law; respect for the rights and liberties of citizens and the protection of private property; the rule of law and the supremacy of the Constitution; and independence of the judiciary and judicial review.? (Vlasihin 1989, 258).

Michel Rosenfeld suggested that ?in the broadest terms, modern constitutionalism requires imposing limits on the powers of government, adherence to the rule of law, and the protection of fundamental rights.? (Rosenfeld 1994, 3). Put another way, ?Constitutionalism is a political ideology that consists of various principles and assumptions about the dual nature of the individual as private person and public citizen, the nature of the state, and the nature of the complex set of relationships between the individual and the state.? (Harris 1991, 986).

The foundational ideal is the drawing of principled limits to the assertion of governmental power. Among the most influential theorists of this project is Louis Henkin, who suggested a list of principles substantive and procedural rights and organizational frameworks that distinguished constitutionalist states from states with constitutions. (Henkin 1993; Henkin 1990). Another influential author in this vein is András Sajó (2008) and Hannah Arendt (1977). Others privilege one or another element of the Henkin list. Daniel Lev (1993) privileges process as the basis of constitutionalism. Frank Michelman (2005) looks to what he describes as the values of freedom, individual rights, limited government and rule of law). These expand the general consensus reached after the Second World War that constitutions served a limiting purpose. (McIlwain 1947, 21-22). Charles McIlwain famously noted that ?constitutionalism has one essential quality: it is a legal limitation on government.?

For its part, the constitutional principles of corporate governance reflect these broad normative approaches. These principles are constitutional, or have constitutional effect in the same sense that governance principles have that effect in contemporary Marxist Leninist systems; ?[w]hat is new is the way in which ideological campaigns have been transformed into a means of legal discourse.? (Backer 2006b). There are a large number of sources for these principles. Thus, for example, the International Standards Organization has sought to develop a framework for understanding the limits and nature of corporate power within the scope of their activity. (ISO 26000). Religious institutions have also participated in the detachment of the organizing principles of corporate governance from the state. One of the most active in recent years has been the Catholic Church. (Benedict XVI 2009; Backer Aug. 15, 2009).

Despite a large number of sources, a consideration of which is left for later in this essay, many of the values frameworks generated by these sources overlap to a considerable extent. The foundational values track the core values of political constitutions: inclusion, democracy, rule of law, and human rights. They cover both the process and values rules within which corporate government can be legitimately organized and operated. They also specify the appropriate division of authority between corporations and the state. An excellent conceptual exposition can be found in the work of the Special Representative to the U.N. Secretary General on the issue of human rights, transnational corporations and other business enterprises and the formulation of the ?protect, respect, and remedy? framework.

Full post as published by Law at the End of the Day on September 21, 2009 (boomark / email).