Extraterritoriality by Other Means: How Labor Law Sneaks across Borders, Conquers Minds, and Controls Workplaces Abroad
Arthurs, Harry, Stanford Law & Policy Review
Labor lawyers generally believe that each country's labor law, for better or worse, expresses its fundamental values and reflects its historic experience; that states can neither import nor export labor law because of the unique characteristics of each country s legal and industrial relations systems; (1) and that the doctrine of extraterritoriality (2) shields each state's labor law from the intrusion of others, thus ensuring that each can pursue its social and economic development in the manner it thinks best. While labor lawyers who hold these views are genuinely respectful of national sovereignty, some also chafe under its restrictions. They believe that the extraterritoriality doctrine unduly limits the capacity of a state to protect the labor rights of its own citizens while they are employed abroad. They are also concerned that a state cannot punish the businesses it has incorporated for engaging in exploitative labor practices when operating in foreign countries, thereby harming workers in those countries as well as undercutting labor standards at home. (3)
This Article challenges this state-centered description of labor law and impoverished view of extraterritoriality. It suggests that transnational flows of technology and capital, goods and services, and ideas and information have brought in their wake changes in political economy and social relations that have transformed regimes of public and workplace governance in all countries. It proposes that the extraterritoriality doctrine operates, if at all, only in the formal sense of not allowing one state to overtly project its law into the territory of another. But extraterritoriality does little to prevent the rules governing employment relations in one country from taking root elsewhere, from shaping foreign labor market norms, institutions, and practices, and from being reproduced, in their original or mutant forms, in foreign systems of labor law. The result is the extraterritorial projection "by other means" of labor law and policy--a form of extraterritoriality that has the potential to enhance as well as undermine labor standards in global enterprises.
This challenge, in turn, rests on two premises.
The first is that all workplaces tend to generate their own law. (4) The "law of the workplace" thus comprises not only state labor law but also (and more importantly) formal contractual understandings; workplace customs explicitly acted on and implicitly accepted as binding by workers and managers; and low-visibility behavioral norms embedded in operating manuals, daily routines, and workplace cultures. The law of the workplace has long been understood by industrial relations practitioners and socio-legal scholars to exist apart from-and sometimes in contravention of--state law. Indeed, given the unwillingness or incapacity of states to regulate the labor practices of transnational corporations, such corporations are relatively free to develop their own normative regimes. The law of the workplace is therefore not unduly influenced by national legal systems, though for their own reasons corporations may choose whether and to what extent they will comply with the local law of the countries in which they operate. Consequently, to describe labor law as operating extraterritorially is only to identify one more way (amongst many) in which it departs from the formal state-centered paradigm of law to which most jurists subscribe.
The second premise is that "labor" is not a discrete domain of law and policy. (5) While a central preoccupation of labor law is indeed to regulate the balance of power between workers and employers, many of the factors that actually determine that balance are not conventionally perceived to be "labor" related. Trade and taxation, homeland security and health insurance, and insolvency and immigration laws and policies (to name but a few) have profound effects on labor markets in general, and therefore on particular economic sectors, enterprises, and workplaces. …