BOOK I. Chapter the eighteenth. Of CORPORATIONS.
This chapter is about death — and the attempt to outlaw it. Blackstone puts it right out there in his first paragraph on the legal concept of incorporation: “[A]s all personal rights die with the person . . . it has been found necessary . . . to constitute artificial persons, who may maintain a perpetual succession and enjoy a kind of legal immortality.” p. 455. Corporations are the law’s end run around the grave.
Nowadays we worry whether our legal system is treating corporations too much like real people by giving them political rights, and whether multinationals are using their economic power to undermine state policies. Or, from the other side of the ideological spectrum, we worry that inflexible and corrupt state governments are keeping creative businesses from bringing us all the liberty and prosperity we might otherwise enjoy. In other words, we worry that corporations are either insufficiently or overly regulated by law. But Blackstone reminds me that law’s original relation to corporations was not regulatory but creative, and that the creative goal was not to make something equivalent to a natural human person but something crucially different: “a person that never dies.” p. 456.
Blackstone captures so well the dull monotony of mortality – and the restless drive to escape its quotidian demands. Law’s “artificial persons” are the answer to the “inconvenient if not impracticable” necessity of keeping up with death by “investing a series of individuals, one after another, with the same identical rights.” p. 456 Here is the way off the treadmill of maintenance so maddeningly required by mortal limits – the need every morning to wake up and replace the holders of legal rights, powers, and duties who have kicked off overnight. Without such deathless legal bodies, the entire structure of legal rights, powers and duties either dies with their current mortal placeholders or must be constantly reconstituted – the way breakfast must be set out, lunch packed, dishes washed, bed made, dinner planned – over and over and over again. Corporations exist to transcend all that – not only to outlast their transient constituents, but to provide a different, perhaps superior, vessel for the obligations, rights and powers law generates, replacing a dodgy mass of doomed human individuals with something more like an epic feature of the natural world through which we mortals temporarily plod, “in like manner as the river Thames is still the same river, though the parts which compose it are changing every instant.” p. 456.
Perhaps carried away by the prospect of his beloved common law’s triumph over death, Blackstone makes what is surely the most radical claim in the eighteen chapters I’ve read so far. He is careful to say that common law corporations require at least the implied consent of the King. p. 457. But after nodding to the hierarchy of state and corporate power, he proceeds to flatten it by explaining that the King himself is a corporation: “Corporations sole consist of one person only and his successors, in some particular station, who are incorporated by law, in order to give them some legal capacities and advantages, particularly that of perpetuity, which in their natural persons they could not have had. In this sense the King is a sole corporation.” p. 457 (see also p. 460) So law makes corporations with the consent of the sovereign, but law also makes the sovereign. Who’s your daddy?
There is a less sensational, but in a way more surprising, aspect of Blackstone’s view that law incorporates the king. Nowadays, we tend to think that public governments and private companies are very different kinds of entities. But once upon a time, it seems, the legal roles of “these artificial persons” were not entirely dissimilar. From Blackstone’s outlook, business corporations and sovereign governments appear as two members of a larger class of legal characters. One of his first examples of a common law corporation is the city of London. P. 460. He explains that corporate rules and regulations “are a sort of municipal laws of this little republic.” P. 456. So in Blackstone’s chapter, corporations’ ideal existence not only distinguishes them from natural individuals, it aligns them with governmental collectives.
Disagreement about the legal roles of nations, corporations and individuals surfaced recently in a U.S. appellate court’s split decision on corporate liability for international human rights violations. The case involved allegations that European oil companies instigated and supported the Nigerian government’s violent suppression of protests against the oil companies’ activities there. In Kiobel v. Royal Dutch Petroleum Co., 621 F.3d 111 (2010), the question was whether a corporation can be held to pay damages for injuries that constitute human rights abuses under international law.
The majority of the Kiobel panel (Judges Cabranes and Jacobs) held that a U.S. statute that creates liability for human rights abuses under international law does not extend to corporate defendants. The majority opinion points to the fact that no international court sitting to hear claims of human rights violations has ever imposed liability on a corporation. For example, Hitler’s notorious corporate partner, I.G. Farben, was not prosecuted at Nuremberg. According to the Kiobel majority, that omission indicates that corporate liability for acts like torture, genocide and slavery is simply not a traditional norm of the “law of nations,” i.e., customary international law.
Judge Leval dissented, arguing that holding corporations to pay for human rights violations is both consistent with customary international law and necessary to protect fundamental human rights under an international legal regime. According to Judge Leval, the absence of corporate defendants in international human rights tribunals does not reflect any hesitation to make corporations pay damages for human rights violations of international law. Rather, it is a function of those courts’ criminal justice jurisdiction and the traditional view that corporations are not appropriate targets for criminal prosecution and punishment. In most countries corporations cannot be criminally punished. The thinking is that only natural individuals can suffer from — and thus justify — punishment. But holding corporations liable to pay damages for injuries they cause is widely accepted. After all the goal of such damages is not to punish the perpetrator but to compensate the victims. So, corporations’ absence from international courts set up to criminally punish human rights violations doesn’t indicate that international law fails generally to ground corporate liability.
Both the majority and dissenting opinions cite Blackstone, but unsurprisingly their focus is on the section of the Commentaries that deals explicitly with the law of nations. Book 4, Ch. 5. I think Blackstone’s chapter on corporations has something to offer, too.
One paragraph in the chapter appears to support the Kiobel majority’s conclusion that corporations are exempt for liability for acts like torture and genocide. Besides asserting the traditional view that corporations are not proper subjects for criminal punishment, Blackstone goes further. He suggests it would be similarly absurd for a corporation to “maintain, or be made defendant to, an action for battery or such like personal injuries.” P. 464 For Blackstone this limit apparently flows from corporations’ ideal status: “for a corporation can neither beat, nor be beaten, in its body politic.” Id.
The majority in Kiobel, however, does not rely on the notion that corporations lack all personal injury liability, and with good reason. This particular aspect of Blackstone’s view of corporations was rejected long ago. Under garden variety tort law, corporations are generally considered liable for personal injuries. As the U.S. Supreme Court explained well over a hundred years ago:
“An action may be maintained against a corporation for its malicious or negligent torts, however foreign they may be to the object of its creation or beyond its granted powers. It may be sued for assault and battery . . . .”
First Nat’l. Bank of Carlisle, Pa. v. Graham, 100 U.S. 699, 702 (1879).
Indeed the Kiobel majority opinion itself concedes that “corporations are generally liable in tort under our domestic law.” 621 F.3d at 117. So Blackstone’s point that corporations – as imaginary bodies – can neither inflict nor sustain personal injuries creates no modern day bar to corporate liability for international human rights violations.
On the other hand, Blackstone’s observation of the closely related legal status of corporations and sovereign governments supports such liability. This point goes to the traditional understanding of corporations’ legal role and their consequent fit within the structures of international law.
According to the Judges Cabranes and Jacobs, corporations are not liable for human rights violations under international law because “[f]rom the beginning . . . the principle of individual liability for violation of international law has been limited to natural persons – not ‘juridical’ persons such as corporations.” 621 F.3d at 119. But, of course, international law was primarily constructed not for individual liability but for another kind of “juridical persons,” i.e. nation states. And Blackstone’s chapter points out that corporations are in some ways more like those other artificial “bodies politic” that are the traditional parties to international law, than they are like the natural individuals who have only recently been deemed appropriate subjects for prosecution under the “law of nations.”
This is more than a nice conceptual point. It emphasizes that (from the beginning) international law was built to find ways to hold legally unified collective entities responsible for their acts as collectives. For that matter, the focus on collective social action is still apparent in the limited bases for liability under customary international law. Even the modern additions of genocide, torture, and slavery bring to the list acts distinguished not entirely by their badness, but also by the salience of their collective aspect. Unlike, say, murder, genocide and slavery are at their core offenses by an organized collective group against another group for collective aims. And while torture may be practiced by random individuals, its has historically been understood and practiced as a means of enforcing collective power.
Both the opinions in Kiobel focus on whether corporations’ differences from individual persons somehow exempt them from the liability only recently extended to individuals under international law. It seems worth considering also what corporations have in common with the traditional subjects of “the law of nations.” Blackstone suggests that nations and corporations share a common legal conceptual genus. Among other things, both outlast and transcend the limits of natural personhood.
In a sense, the Kiobel majority seems to have misjudged what kind of human limit the legal structure of incorporation was built to surmount, transposing immortality into moral impunity. There is a kind of Faustian logic at work here. But I doubt that Judges Cabranes and Jacobs meant to embrace doctrinally the tragic connection between mortality and moral accountability. It may be that only beings with a consciousness of their own capacity for death and pain can be morally culpable for inflicting those fates on others. (“Tyger, tyger burning bright . . . .” ) And Blackstone notes (with a wink) that a corporation “has no soul.” p. 465. But whatever their traditional metaphysical or moral status, corporations have always been subject to many kinds of legal rights and legal responsibilities. What’s more, it is clear from Blackstone’s discussion that even in the eighteenth century, it was understood that corporations do not just naturally possess certain legal rights and liabilities, but were artificial legal creations shaped to be the holders of certain kinds of legal powers and liabilities.
In this context, Blackstone seems to have slipped his usual role as formalist icon to appear as a kind of realist precursor. In what is probably the most famous piece of realist writing ever, Felix Cohen railed against judges’ metaphoric approach to determining whether a state court could adjudicate a corporation’s liability by asking whether the corporation had “come into the state” rather than, “Is it the right policy to allow a corporation to be sued in this particular court”? Transcendental Nonsense and the Functional Approach, 35 Colum. L. Rev. 809 (1935). Writing 150 years earlier, Blackstone repeatedly hammers the point that corporations have no real corporal existence, as “invisible” constructs “existing only in intendment and consideration of law.” p. 464.”
In a way, Blackstone’s chapter goes beyond Cohen. From Blackstone’s perspective, the problem with using metaphoric presence to determine jurisidiction is not that a corporation has no real singular body that can be located geographically inside a state’s territory the way natural people can. The problem is that both corporations and states are imaginary legal creations — made precisely to transcend the limits of embodied personhood. Once you recognize that the state sovereign is every bit as much a legal fiction as Exxon, you see that natural people can’t be “in” a state any more than corporations can.
In a deeper sense, of course, Blackstone confirms Cohen’s main point: we have a choice. Because corporations and states are not natural beings but creations of law, they can be whatever legal actors make of them. For that matter, like the king, all parties to lawsuits are first and foremost creations of law, whether they inhabit natural bodies, corporate structures or geographic territories. Jurisdictional rules for corporations in civil litigation in the United States can be – and since Cohen wrote, have been – reconstructed in ways that make physical presence within a state’s geographic boundaries unnecessary to establish legal liability. See, e.g., International Shoe Co. v. Washington, 326 U.S. 310 (1945).
Likewise, we should be clear that deciding corporations cannot be sued for damages when they violate international human rights norms is a choice – not the natural result of a necessary relation between corporations and international law. As Cohen said in the 1930s, it’s not that a corporation’s metaphorical similarity to — or difference from – an individual human being determines its legal liabilities, but the other way around. Legal liability is part of what shapes corporate nature. As with personal jurisdiction in the twentieth century, so with international human rights law in the twenty-first. Law makes the corporation, not the other way around. The irony is that this message comes through Blackstone. In the realm of legal immortality, I guess even arch-antagonists of legal realism are realists now.