Desperately seeking the civil society: the new challenge of the multinational companies

Abstract

Purpose

Multinational corporations (MNCs) entering into so-called state contracts in developing countries, notably in extracting industries or infrastructures, typically find themselves seeking a long-term commitment from a state whose life expectancy might be shorter than the duration of the contract. To address this uncertainty, MNCs have devised additional legal layers and brought additional parties to state contracts, causing a contractual inflation with contradictory aims. On the one hand, they have sought to blur the notion of third party, so that they could assert their contractual rights vis-à-vis more stakeholders. On the other hand, they have carefully avoided a total disqualification of this very notion to keep the civil society away from the negotiation table. Nowadays, the threat that the host states used to represent has been substantially reduced, but MNCs are now exposed outside of state contracts, for it is precisely the lack of contractual commitment on the part of the civil society that is a potential challenge to their activities. Accordingly, they are now forced to seek the endorsement of the very actor they ostensibly ignored in the past. The purpose of this paper is to describe this sinuous evolution of the state contract and to discuss the challenges it announces.

Design/methodology/approach

In the first part, the authors analyze the legal bubble that has prospered throughout the past decades, resulting in a dilution of the state as a party to the contract. In the second part, they describe the emergence by default of the civil society that this phenomenon has triggered. They discuss their findings and conclude in the third part.

Findings

In the past decades, state contracts have consistently progressed in the direction of an increased weakening of the state vis-à-vis its private contractors. For MNCs, this decline is far less favorable than it seems, for it enables the civil society to fill the gap and to claim a role that as disturbing as it is disproportionate, considering its uncertain legal nature.

Research limitations/implications

Despite its evanescent content and contours, it is probably this civil society itself that will draw the new frontier of the state contract. What it will be is yet to be determined however.

Practical implications

MNCs lack the legal power to turn the civil society or some of its emanations into a legal person, let alone compel it to actually “sign” state contracts. But for their bargaining power vis-à-vis host states remains as strong as ever, they may ultimately force their sovereign interlocutors to do so.

Originality/value

The civil society has been extensively studied, but never as the legal person MNCs would like it to be.

Citation

Lemmet, L.-C. and Medjad, K. (2018), "Desperately seeking the civil society: the new challenge of the multinational companies", Society and Business Review, Vol. 13 No. 1, pp. 27-38. https://doi.org/10.1108/SBR-06-2017-0039