The Effect of New Technologies on the Structure and Decision Making Process of Multinational Enterprises and Their Liability for Human Rights and Environmental Breaches
Multinational enterprises (MNEs) are at the centre of international business activities and play an important role in the world economy’s positive developments. However, they have long been accused of violating human rights and environmental regulations that harm people and societies. Several efforts have been made to solve the problems and make MNEs accountable and liable for their harmful actions. MNEs operate on a group-based managerial structure, while each constituent company within a group is subjected to local company laws and other regulations. This complicated internal structure has made it very difficult to establish the overall group liability for the torts of companies within the group. Although the legal structure based on company law has not changed for a long time, the internal structure decision-making processes within MNEs are undergoing a considerable transformation with the recent technological developments, such as big data, artificial intelligence, and distributed ledger technologies. Most recent case law and regulatory options regarding the liability of MNEs still consider them with their dated structure. This approach prevents victims of MNE adverse actions from reaching satisfactory solutions. The effects of new technologies must be considered while discussing any legal actions and introducing regulations towards accountability and liability of MNEs for their human rights and environmental breaches. This article provides an extensive analysis of the effects of new technologies on contemporary internal operations and the structure of MNEs, provides examples of current human rights and environmental violations, and discusses the suitability of current laws and regulations for solving liability problems.
Yeni Teknolojilerin Çok Uluslu Şirketlerin Yapısı ve Karar Verme Süreçleri ve İnsan Hakları ve Çevre İhlallerinden Sorumluluğuna İlişkin Tartışmalara Etkisi
Multinational enterprises (MNEs) have been very influential in global business activities since their emergence at the end of the 19th century. During the 20th century, they moved to the centre of international economic activities. They entered the 21st century with a strengthened place due to the help of digitalisation and an ever-more globalised f inancial world. In the current global economic structure, conducting business through MNE formation is almost essential for success. Thus, more powerful MNEs have emerged recently; additionally, incumbent MNEs have become more influential.
MNEs have complex ownership structures, including full ownership, majority shareholding, joint venture, minority shareholding, and several control-enabling agreements within their networks. This complex control and managerial structure is very dynamic and evolves with technological development and becomes even more complicated over time. However, company laws all over the world treat each company as a separate legal entity, which is supported by the limited liability of owners towards the company. Additionally, local company laws almost always require a new company to be established when MNEs enter a new country for business purposes. As a result, the characteristic structure of MNEs can be described as having an integrated group-based economic and management structure, but several legal personalities are subjected to different laws and regulations. Owing to the dynamic nature of the business world, the global business environment is going through another phase of reformation thanks to techno logical developments in recent years. Big data, artificial intelligence, distributed ledger technologies, and other recent developments are transforming business operations. These new technological tools make the distinction between business and legal conduct even more superficial.
MNEs have long been accused of violating human rights and environmental regulations that harm people and societies. MNEs’ human rights violations took various forms, changing in parallel with economic, political, and technological developments. Accusations of MNEs’ harmful activities have peaked in recent years, and many MNEs have been subjected to human rights breach claims in courts. Their environmental harms have recently been the subject of numerous reports and legal claims.
This remarkable evolution towards more globalised MNE activities created criticism as companies evade liability through their complicated legal, economic and managerial structures. Due to this structure, reaching parent compa nies for their subsidiaries’ breaches of human rights and environmental laws is almost impossible. Several efforts have been made to solve the problems and make MNEs accountable and liable for their harmful actions. However, all liability discussions based on legal separations and decision-making processes are ineffective and fail to solve group liability problems. MNEs operate and conduct their business using a unified data governance centre, and this data is used exclusively to make decisions at almost every level.
Within this legal and economic structure, using courts to make MNEs’ liabilities almost impossible due to the difficulty of finding responsible decision-makers in this complex decision-making process. All the old and new tools, such as piercing the corporate veil, parent liability regulations for control, supply chain due diligence, human rights reporting, and other similar laws and regulations, are inefficient because determining individual companies and decision makers within MNEs is almost impossible. Most recent case law and regulatory options regarding the liability of MNEs still consider them with their dated structure. This approach prevents victims of MNE adverse actions from reaching satisfactory solutions. The effects of new technologies must be considered while discussing any legal actions and introducing regulations towards accountability and liability of MNEs for their human rights and environmental breaches.
Overall, the arguments regarding the liability of MNEs are made from several legal approaches, such as international law, tort law, company law, and human rights law. Several soft law initiatives and corporate self-regulation have also been widely introduced. These efforts can be divided into two categories. The first category is to prevent breaches and harm, and it is mainly discussed under accountability, a concept derived from public law, meaning an obligation to meet basic procedural standards to protect fundamental rights. The second category is to punish MNEs and remedy the victims and is mainly categorised under liability. This article provides an extensive analysis of the effects of new technologies on contemporary internal operations and the structure of MNEs, provides examples of current human rights and environmental violations, and discusses the suitability of current laws and regulations for solving problems.