chapter  1
Multinational corporations, states and international regulation: Historical background
Pages 17

Different nomenclatures have been used to describe MNCs over the years. Apart from “multinational corporation (MNC)”, the concept has variously been referred to as “transnational corporation (TNC)” and “multinational enterprise (MNE)”. The different names have been used in attempts to encapsulate the nature of MNCs in an appropriate definition. In practice today, these names are used interchangeably and it will serve no useful purpose to distinguish between them. Since there is no legal instrument ascribing a definition to MNCs, defining the concept may not be possible with any degree of accuracy.1 Muchlinski therefore suggests that it may be helpful to show how MNEs2 differ from uninational companies (a

company incorporated and domiciled in only one country). In the first place, MNCs operate their assets and control their use across national borders unlike uninational companies whose operations remain within national borders. The organisational structure of an MNC is such that it allows managerial control to reach across national frontiers despite the different national identities of the various operating units within the group. MNCs also have a distinct competitive advantage with their ability to trade across borders not only in respect of finished products but also in factor inputs, such as technical knowhow and managerial skills, between affiliates and third parties.3 Other legal commentators have also tried to define the concept. Wallace describes a “multinational enterprise” as: “an aggregate of corporate entities, each having its own juridical identity and national origin, but each in some way interconnected by a system of centralised management and control, normally, exercised from the seat of primary ownership”.4 Kamminga describes an MNC as “a legal person that owns or controls production, distribution or service, facilities outside the country it is based”.5 According to Dine, “multinational and transnational companies do not exist as an entity defined or recognised by law. They are made up of complex structures of individual companies with an enormous variety of interrelationships”.6 In an attempt to ascribe a legal definition to MNCs, the moribund, United Nation’s Norms on Responsibility of Transnational Corporations and other Business Enterprises with regard to Human Rights7 provides in its paragraph 20 that

The term “transnational corporation” refers to an economic entity operating in more than one country or a cluster of economic entities operating in two or more countries – whatever their legal form, whether in their home country or country of activity, and whether taken individually or collectively.