Corporations as Citizenship, the next step in corporate personhood

In this thoughtful piece, Luis Chinchilla Fuentes proposes an alternative to the standard corporate personhood theory to address issues of accountability and the lack of corporate moral obligations to local communities: “corporate citizenship” – understood not only through a state-oriented model of citizenship, but also through a global citizenship model.

Nowadays, corporations enjoy one of the most treasured distinctions of the legal systems, that of personhood. The “legal fiction theory” explains how a company has similar rights to a natural person, but not its limitations. All western legal systems recognize corporations as intangible, abstract, and autonomous legal persons. Corporate autonomy implies that a corporation's legal personhood will protect the assets of its shareholders through what is known as the “corporate veil”. When the fictional personhood of the corporate persona and the corporate veil are combined with the liberal idea of rights, it creates what Sheryl Hamilton calls the metaphysical person, an entity that inhabits two dimensions at once.1 The metaphysical nature of the corporation allows them to be nimble economic juggernauts with little to no repercussions when carrying out their activities. 

The Lake Agrio case exemplifies the unbounded nature of the corporate persona. In 1964, Texaco obtained authorization to explore and eventually exploit petroleum in Ecuador’s Lake Agrio.2 Texaco then created a subsidiary called TexPet to carry out its activities in Ecuador. From 1972 to 1993, TexPet was the only company exploiting petroleum in Lake Agrio, producing 1.3 to 1.7 million barrels of crude oil during those years. Even though Texaco—through TexPet—was aware of the soil degradation and water contamination produced by untreated waste water and had developed a guide for wastewater treatment in the United States, Texaco did nothing to stop releasing wastewater into the ecosystem in Ecuador. Due to a change in the Ecuadorian political landscape and increasing pressure from communities adjacent to Lake Agrio, Texaco withdrew all assets from Ecuador and transferred well control to a public company called Petroecuador. Suddenly, affected individuals had nowhere to go to hold Texaco—now Chevron-Texaco—accountable. After a decades-long legal battle fought in New York, USA and Quito, Ecuador, the Ecuadorian National Court of Justice ruled in favor of Lake Agrio’s communities, awarding them over 8 billion USD.  However, plaintiffs cannot enforce the adjudication because there are no assets to seize in Ecuador and because no other country has accepted the competence to execute the Ecuadorian ruling.4 

Standard corporate personhood theory cannot address this issue.Thus, I argue that we must enlarge corporate personhood through citizenship to limit corporate metaphysicality and to reduce their jurisdictional unboundedness. This is what I call “corporate citizenship”.  

The concept of citizenship has universal appeal. As Keith Faulks highlights, it appeals to a plethora of political ideologies. The concept entails individual rights and collective obligations.5 Popular expressions like “it takes a village to raise a kid” or the African proverb “the child who is not embraced by the village will burn it down to feel its warmth” illustrate the risks of not assuming collective responsibility over every member of society. The liberal idea of a person alone is ill-suited when applied to governance. By contrast, citizenship has proven its worth as a governance approach for over two millennia.6 Corporate citizenship can give companies a sense of belonging to whatever jurisdiction they operate in and may increase accountability. 

The current business incorporation system could serve as a birth certificate to determine “corporate nationality”; however, it must be paired with substantial reforms to corporate law. The idea of corporate citizenship proposed here can only be fully realized when the citizen’s moral obligations are translated into positive law. Relying on self-regulation alone can only get us so far. For instance, the Inter-American Court of Human Rights has already stated that environmental protections vis-à-vis human rights require robust legal frameworks and rigorous enforcement and accountability procedures for wrongdoers.7 In other words, self-regulation mechanisms without adequate accountability could lead to greenwashing

I acknowledge that if the idea of corporate citizenship ever wants to get off the ground, we would need to start by building an international consensus. Nonetheless, as is the case with contemporary citizenship, each country must have enough leeway to establish the legal requirements for corporate citizenship and the rights and duties attached to it.8 For instance, states may decide to allow corporate citizenship as soon as a company is incorporated; others may want to wait for a period, perhaps as an analog to citizenship for humans, i.e., at 18 or 21 years. Further, countries might want to follow ius solis or ius sanguinis rules to citizenship and nationality. In the latter case, every subsidiary is also a citizen of that country. Countries might allow companies to hold dual citizenship or not. Because every country has different requirements for exercising the rights attached to its citizens, it is natural to think that each country might want to follow those same conventions. Depending on their political system, countries may allow companies different degrees of political participation. Countries with constitutional dispositions on economic, social, and cultural rights may focus more attention to developing new obligations to companies based on a citizenship model. 

I understand how contentious idea of increasing corporate agency and morality through citizenship may be. To those worried about granting “full citizenship” to corporations, the response is that citizenship and the rights attached to it are never absolute. For example, one could confer temporary residency status to newly incorporated foreign companies or create a limited model of citizenship with restricted access to certain rights. 

However, my proposal does not rest on state-oriented corporate citizenship alone. I believe that corporations—especially transnational corporations—must also be acknowledged as global citizens. Global citizenship complements state-oriented citizenship.9 Global citizenship evokes a duty to care above all frontiers. An exemplary universal citizen cares for everyone, regardless of where they live. While the contemporary standard regarding business and human rights is that of "do no harm", the business narratives around those same issues put consumers in the spotlight and pressure them into buying sustainable goods. The prevalent business narratives not only further individualize environmental problems but also do not punish companies who still produce unsustainable goods. While I believe it would be impossible to reach an international agreement on global citizenship, I do believe that governments can influence corporate practices by funding or partnering with corporations who behave as global citizens. Although, this does not require strenuous legal reforms, it has very clear limits. Therefore, it must be complemented with state-oriented citizenship. 

I believe that by enlarging corporate personhood thought a citizen approach we can increase the moral obligations of companies in the communities where they operate, and we can also hold them accountable when it is necessary. For now, we can only wonder what would have happen if Texaco was considered a global citizen and TexPet an Ecuadorian citizen. Perhaps US courts may not be as prone to use the forum non conveniens rule, or perhaps TexPet would never behave as it did because of its moral obligations or stronger state supervision. Regardless, today we can start putting in place new and highly-contextualized mechanisms to reduce the abstract and elusive nature of corporations by exploring “corporate citizenship”.  

[1] Sheryl Hamilton, Impersonations: troubling the person in law and culture (Toronto [Ont.]: University of Toronto Press, 2010) at 47, 48.

[2] Lake Agrio is an Ecuadorian Canton east of Quito, Ecuador’s capital. It is located in the Ecuadorian Amazonia south of Colombia. It has a land area nearly twice as big as Toronto.

[3] Justo Corti Varela, “Les instruments d’exécution des décisions de justice dans les affaires environnementales internationales sont-ils efficaces ? Réflexions à partir de l’affaire Texaco-Chevron” (2013) 34 L’Observateur des Nations Unies at 193.

[4] Kathia Martin-Chenut & Carmen Perruso, “El caso Chevron-Texaco y el aporte de los proyectos de convención sobre crímenes ecológicos y ecocidio a la responsabilidad penal de las empresas transnacionales” [The Chevron-Texaco case and the contributions of the draft convention on ecological crimes and ecocide to the criminal responsibility of transnational companies] in Humberto Fernando Cantú Rivera, ed, Derechos humanos y empresas: Reflexiones desde América Latina [Human rights and Business: Reflections from Latin America] (IIDH, Instituto Interamericano de Derechos Humanos, 2017) 355 at 355–62.

[5] Keith Faulks, Citizenship (London: Routledge, 2000) at 1–3.

[6] Ibid at 19.

[7] Inter-Am Ct of HR, Advisory Opinion OC-23/17 (2017) (Ser A) No. 23 at 154.

[8] Faulks, supra note 5 at 10–11.
[9] Juan Antonio Horrach Miralles, “Sobre el concepto de ciudadanía: historia y modelos” [About the concept of citizenship: history and models] (2009) 6 Factótum 1 at 9.

A man with short black hair, a blue shirt and glasses standing in front of a blue skyLuis Chinchilla is a Honduran attorney, graduated as the second-best student of the Faculty of Legal Science, the National Autonomous University of Honduras in 2015. He was a current O'Brien Fellow who concluded his McGill LLM in Environment in May 2022. Mr. Chinchilla's academic interests lay at the intersection of human rights, businesses, and sustainable development.

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