Alec Stone Sweet
The Westphalian state, at least in its ideal-typical form, provides a model of political organization that resolves many of the fundamental questions concerning the relationship between boundaries, territory, jurisdiction, citizenship, and nationhood. It does so by equating state sovereignty with the internal control and external autonomy of national governments. Among other things, this formulation implies the organizational capacity to police borders, to determine what moves in and out. It implies that the state's law and organizations authoritatively govern the activities of those who live or act within state territory. And it implies that the state is legally constrained, in its relations with other states, only by rules upon which it and other states have agreed.
The Westphalian state may never have actually existed. Conceptually, political control—an actual or an asserted state of affairs—and sovereignty—a purely juridical concept—are not one and the same; empirically, they need not be related at all. In this paper, I argue that sovereignty and control are detaching from one another rapidly, at least with respect to transnational commercial activity. In the past three decades, a growing and increasingly cohesive community of actors—including firms, their lawyers, and arbitration houses—have successfully created a transnational space. 1 The space is comprised of a patchwork of private jurisdictions, of rules and organizations without territory, an offshore yet virtual space. These are islands of private, transnational governance.
The paper is divided into two parts. In the first, I discuss, in an abstract way, obstacles to the emergence of a stable network of traders engaged in relatively