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Transnational law is perceived in this sphere as a third sphere of regulation, alongside domestic laws and public international law. In fact, it is argued that transnational has been carved from its two other counterparts by mutual agreement. Even so, transnational private law is wholly predicated on public law-related regulation, without which it is rendered meaningless. The transnational legal sphere is occupied by both state and non-state actors where, however, state actors cannot employ their law-making authority as leverage. States are happy to operate within this sphere as equals to non-state actors and are content to waive privileges otherwise existing under domestic and international law. Although there is some tendency for the transnational legal sphere to become a haven for activities that are unconstitutional, it is hoped that these are exceptional instances.
The notion of transnational law means different things to different people. It is instructive that it was coined by an international lawyer, yet its greatest manifestation is in the field of cross-border private transactions and dispute resolution. It equally enjoys a significant presence in the domain of international criminal law, but not in human rights, for good reason. In fact, international criminal law scholarship has been split among two rifts, although until the late 1900s this was very much a unified discipline. Transnational criminal law effectively signifies one of the most significant problems of treaty law; namely, the transposition of criminal definitions, penalization, sanctions and enforcement in domestic legal orders. While some international offences are viewed as wholly independent from domestic laws (e.g. crimes against humanity and genocide), most others generally require the mechanisms of states to produce any tangible outcomes. Traditional treaties alone are clearly insufficient and so a new brand of multilateral agreements emerged whereby only the broader contours of the offence are defined and in equal manner the type of penalization, sanctions and enforcement are left to the particular exigencies of each state party in accordance with its legal system. This is predicated on the so-called ‘functional equivalence’ doctrine. For example, the 1997 OECD Bribery Convention simply provides that States parties must adopt ‘effective, proportionate and dissuasive sanctions’ against legal persons, recognising that legal persons do not incur criminal liability in all States.
The type of transnational law that works well for non-core international crimes is abhorrent in the domain of international human rights. Functional equivalence is tantamount to cultural relativism, whereby states would be free to fit human rights (definitions and enforcement) around their own biased laws and practices and given that most states in the world are undemocratic and generally violate their people’s rights, the very idea of human rights would be destroyed.
In the domain of private law, the turn to transnational law a shift from more to less state regulation, chiefly through a process of self-regulation. The key question here is how this is to be achieved. One way is through one or more multilateral treaties. This is an attractive proposition, albeit it suffers from the existence of a world fragmented by reason of politics, finance and industrialization. This in turn gives rise to mistrust among unequal entities and at best can only achieve results among like-minded states. The second way is through a gradual and paced process of harmonization, typically by reference to model laws or other soft law. In both cases, the driving force behind these processes can only be actors that derive a clear benefit from less state regulation and intervention. But let us be clear in that the very idea of self-regulation is in fact an emanation of (some) regulation, as without it self-regulation is anarchical and meaningless. Self-regulation ultimately relies on the enforcement mechanisms of states in the event of bad faith and unresolved conflict. As a result, it is wrong to conceive of this process as private, nor is it correct to assume that in an era of state capitalism private actors are the only drivers of transnational legal processes. States are apt investors, traders, entrepreneurs and have shown a keen willingness to submit disputes with non-states actors to arbitration and alternative dispute mechanisms (ADR). Hence, the self-regulation of otherwise private relationships outside the framework of national laws and legal systems, is only possible through the permissive medium of public law, as well as international law (where appropriate). This further demonstrates the complexity of transnational law and characterizes it not as a system embedded in the absence of law – as is conveniently thought – but rather as a confluence of laws and legal spheres of regulation.
This article will proceed as follows. Section 2 discusses the process whereby the two original spheres gave way to the creation of the sphere of transnational legal regulation. Its various subsections describe the space provided by each of the two original spheres and the competing interests involved in the final carve. Section 2 undertakes an assessment of how transnational private law effectively operates, by direct reference to its end users.