International Law Institutions and the Control of Multinational Corporate Economic Violations: the Role of Fianancial and Arbitral Mechanism.

Abstract

Abstract Some investors, including multinational corporations (MNCs), engage in economic crimes and illegal activities without facing accountability, often due to inadequate oversight. These investors wield significant power and operate across multiple jurisdictions, requiring collective efforts from international institutions, states, and private actors to address these challenges. While oversight and control mechanisms exist, some remain underutilized. This study examines the role of international law in addressing investors’ economic misconduct through financial and dispute settlement mechanisms. It explores whether international financial institutions (IFIs), such as the International Finance Corporation (IFC), and dispute resolution centers, particularly the International Center for Settlement of Investment Disputes (ICSID), can effectively regulate and respond to such activities. The study considers the strengths of IFIs, including insurance and guarantee organizations, in curbing illegal financial practices through preventive measures, such as contractual power, and assesses the role of arbitration institutions and arbitrators in resolving disputes and deterring future violations. Oversight remains a key focus at the financing stage, whereas arbitration primarily involves greater control at a later stage, emphasizing the complementary roles of these mechanisms. By examining the potential of the IFC and ICSID, this research highlights their respective capacities as leading institutions within the World Bank framework. While the study focuses on these institutions due to their prominence, its analysis may be applicable to other international financial and arbitration mechanisms addressing similar challenges.