The hidden costs of law in the governance of global supply chains: the turn to arbitration

Abstract

This paper makes an important and unique contribution to the Special Issue by problematizing the neglected role of law in the governance of global supply chains and the hidden costs resulting from this neglect. In Part I we argue that existing efforts within domestic and international law are ineffectual in holding transnational corporations accountable along their supply chains. The turn to private transnational mechanisms of governance, such as arbitration, is a direct response to this governance gap. However, in Part II we criticize international investment law and arbitration for their one-sided nature that privileges corporations over states and civil society. Adopting a critical political economy approach, this paper examines how efforts to address corporate social responsibility through international investment law and arbitration do not substantively uproot dominant ontologies or restructure power relations between corporations, states, and civil societies. Instead, we argue that these reforms contain hidden costs to transparency, participation, and accountability by empowering private transnational governance through arbitration, while further locking-in states to the operations of foreign corporations and the dictates of transnational capitalism.