This second chapter on transnational approaches to grand corruption looks at other ways to pressure corrupt governments when internal controls like the judiciary or auditors don’t work. It looks at individual or “smart” sanctions for human rights violations or grand corruption in the US, EU, UK, Canada and elsewhere. It then considers cases based on extraterritorial jurisdiction, private standards and certifications, and conditions placed by international development banks and agencies as sources of pressure and redress.

This chapter of the handbook compares the major moral sanctioning behaviors of blame and punishment from two perspectives: their cultural history and their underlying psychology. The author draws a dividing line between two phases of human evolution – before and after human settlement – and proposes that, before that watershed, moral sanctions were informal, nonhierarchical, and often mild, akin to today’s acts of moral blame among intimates. Soon after settlement, hierarchies emerged, in which punishment took hold as a new form of sanctioning, typically exacted by those higher up in the hierarchy, and eventually by institutions of punishment. The author reviews the empirical evidence on the cognitive and social processes underlying each of these sanctioning tools and proposes that their distinct cultural histories are reflected in their psychological properties we can observe today. Whereas blame is, on the whole, flexible, effective, and cognitively sophisticated, punishment is often more damaging, less effective, and can easily be abused – as in past and modern forms of institutional punishment.

The opening chapter lays the foundation for a comprehensive exploration of sanctions. It traces their historical evolution, categorizes episodes, and unveils a comprehensive typology. The chapter dissects multilateral and unilateral sanctions, secondary and extraterritorial measures, and various types, revealing strategic diversity and broad consequences. Effectiveness, especially in US sanctions, is assessed, highlighting the US’s significant role in shaping global sanctions and their impact.

Utilizing the theoretical framework of transnational legal orders (TLOs), this chapter treats two master questions in global governance: What are the limits to the power of the UN Security Council? Can rule-of-law (ROL) norms constrain UNSC powers? First, we outline a research design with emphasis on its documentary and unique internal empirical sources. Second, we sketch an interpretive narrative of UNSC engagement from the early 1990s to the present with ROL in three areas of UNSC action: peacekeeping, sanctions, and force. Third, we offer a new conceptual approach by proposing that ROL in the UNSC manifests itself in three dimensions: discourse, procedure (or rules), and structures. These dimensions come into play both internally, within the UNSC itself, and externally, in ROL institution-building in and between states, as well as in post-conflict zones, with a rather gray area between (e.g., when the UN peacekeeping missions are themselves subject to ROL oversight for the behavior of their personnel). Fourth, we examine the emergence of micro-TLOs under construction within the UNSC itself. We conclude with reflections on the potential for empowering elected members of the UNSC and weaker states in the UN to press ROL norms on the UNSC as a springboard for ROL global governance via the UNSC.

This chapter explores how the Indian state asserts its digital sovereignty through digital public goods, including the Unified Payment Interface (UPI), which is overseen by the National Payments Corporation of India (NPCI), an entity governed by the Reserve Bank of India. This chapter demonstrates how, as part of the “India Stack,” indigenous digital payment design, architecture, and governance mechanisms allow for accessible, secure, and interoperable transactions in a mobile-first, open API-based payment network. This significantly reduces India’s dependence on foreign financial systems and protects it from shocks that could result from foreign sanctions (e.g., US economic sanctions of Russia in 2014 impacting MasterCard and Visa users in Russia). However, such a system is not without potential drawbacks, some of which include the dominance of foreign entities (e.g., Google Pay) on UPI as well as state-sanctioned monopolies that may minimize civil society participation and market competition. Besides interoperability and risk mitigation, the authors also advocate a multi-stakeholder governance model for the national digital payment system to bolster public ownership and institutional checks and balances.

This chapter delves into the question of the impact of extraterritorial and secondary sanctions on private contractual relations. It opens with a discussion of the characterisation of extraterritorial and secondary sanctions as potential legal or factual impediments to the performance of contractual obligations. A detailed analysis of the case law follows, bringing to the fore some degree of reluctance on the part of judicial authorities to allow operators to suspend the performance of their contractual obligations or to terminate contractual relations on account of their exposure to extraterritorial or secondary sanctions, at least in the absence of sanctions or force majeure contractual clauses. The chapter also explores the potential tension between such sanctions, on the one hand, and measures – commonly referred to as blocking statutes – enacted by states or by the EU to thwart their effects, on the other hand. A discussion, in this respect, of the relevant case law reveals a quest for a balance between policy objectives and economic soundness and shows the existence of incongruent views on the compatibility of sanctions clauses with blocking statutes.

Sanctions are intrinsically complex. Implementation of sanctions regulations often entails navigating an extremely dynamic environment consisting of numerous restrictions and prohibitions, difficulties in interpretation, inconsistent measures adopted by imposing jurisdictions and countermeasures. This has been evident following the sanctions against Russia, often described as unprecedented in scale. The more frequent resort to sanctions further means that an increasing number of international contractual relationships are affected. Financial institutions operating globally are particularly impacted. This is exacerbated by the use of secondary sanctions which remain a controversial foreign policy tool and even subject to countermeasures, for example, blocking statutes. Consequently, financial institutions and other economic operators with an international presence, torn between two conflicting regimes, face an unsolvable legal dilemma. This uncertainty extends to the termination of contracts involving persons or activities subject to secondary sanctions. Although in most cases international (financial) contracts contain sanctions clauses (often under force majeure provisions), it remains unclear whether these can be relied on, especially where the institution’s own jurisdiction opposes secondary sanctions. This chapter presents in more detail what are the practical challenges in sanctions implementation. It focuses on financial institutions and provide recommendations on how such challenges could be addressed.

Chapter 10 provides an overview of the role and functions of private enforcement within regulatory regimes and the availability of redress. It draws attention to different ‘models of legal responsibility’ upon which regulatory regimes rely in allocating and distributing legal rights and duties between those who are subject to regulation and those whom regulation is intended to protect (‘regulatory beneficiaries’). This chapter is the most legally focused chapter in the volume, selectively highlighting several features of the institutional and enforcement context in which regulation occurs. Examples are private litigation, collective redress mechanisms, the role of courts as authoritative and final interpreters of the law and ‘alternative’ avenues for redress.

This chapter addresses the weaknesses of tax penalties in current law as deterrents of high-end tax noncompliance and describes how Congress could introduce tax penalties that vary depending upon taxpayers’ means. The chapter begins with a discussion of the possible motivations for individual tax compliance, including potential adverse consequences of noncompliance and, specifically, civil tax penalties. It then considers why current civil tax penalties often fail to deter high-end tax noncompliance. Finally, the chapter presents means-adjusted tax penalties as a new approach to the design of civil tax penalties, illustrates this approach with several examples, and addresses additional concerns.

Modern capitalism and globalisation rely on the free movement of capital across borders. Article 63 of the Treaty on the Functioning of the European Union is unusual in applying not just to movement between Member States, but also to capital movements between Member States and third countries. It makes all measures which deter foreign investment unlawful, unless they can be shown to serve a public interest aim and be proportionate. Those principles have been applied to rules on land ownership, taxation and also to golden shares: a mechanism by which governments retain an influence over privatised strategic industries. That influence, because it serves the public interest and not profit, is considered by the Court of Justice likely to deter investors. The implicit view that any constraints on companies which hinder their profit-making are prima facie contrary to Article 63 is controversial. On the other hand, the Treaty also recognises the need for many restrictions on free movement of capital, to protect the cohesion of tax systems, or as part of sanctions or measures against money laundering.

Chapter 3 establishes the nexus between South African policies on the Treaty on the Non-Proliferation of Nuclear Weapons (NPT) and their defiance thereof, and the continued parallel development of nuclear weapons. Drawing on recently declassified documents, I trace the national position of the South African government on NPT accession and the application of IAEA safeguards over the 1980s. Most importantly, the focus lies on domestic decision-making and how a small number of people in the South African government decided whether to sign the NPT. This also includes a careful analysis of Pretoria’s relations with the US government under President Ronald Reagan and related exchanges with the IAEA Secretariat under its Director-General Hans Blix, developing in parallel over the period from 1981 to 1988.

With a focus on the African Union, this chapter examines the Security Council’s practices when interacting with regional organisations in collaborative peace operations. The Security Council plays a critical role in two ways: (i) it identifies security threats and the required responses, and it authorises UN missions to deal with them; and (ii) it determines the role, if any, to be played by regional organisations and authorises the action they can take to address threats to peace in their regions. Africa is both the site of conflicts that have necessitated UN peace operations or the Council’s authorisation of enforcement actions, as in Libya in 2011, and home to that regional organisation which has engaged the most with the United Nations in maintaining international peace and security. The overarching argument of this chapter is that – notwithstanding changes in the post-Cold-War international political landscape and the rise of other voices from the periphery – the status of the Security Council as custodian of the collective security system remains undiminished. Its centrality and primacy have not been challenged or usurped by the African Union or other regional organisations.