An Interdisciplinary and Comparative Examination
- Corporations, Globalisation and the Law series
Chapter 7: Liability Options Beyond the Group Liability Discussion
7. Liability options beyond the group liability discussion Introduction As discussed in the first part of this book, the strict principles of company law have caused problems in the MNEs’ tort liability context. Therefore scholars and regulators are searching for relief of the MNEs tort problems outside the narrow sphere of group liability discussions as alternatives to deadlock in company law principles.1 Here I wish to discuss some examples of alternative solutions suggested, within commercial law, to the MNEs’ tort liability problems: mandatory insurance, parent guarantee for subsidiaries’ debt, and changes in insolvency laws. Also, I will briefly mention some options within company law: directors’ duties and disclosure requirements. As a wider alternative to accountability and liability problems, corporate social responsibility (CSR) movements and voluntary code of conducts will be discussed in more detail. Options within Commercial and Company Law The preference in favour of involuntary creditors in insolvency can be considered as a solution to tort liability problems for group of companies. Leebron and Thompson have argued that financial creditors should be deferred to tort claimants in a liquidation procedure.2 Professor Davies also suggested that, in some jurisdictions, part of a solution to the group problem is to be found in insolvency law, where the court may be given discretion in certain circumstances to bring a solvent company in the group into the insolvency of another company in that group.3 However, this option is very superficial because changes in in- 1 Easterbrook, Frank H. and Fischel, Daniel R., The...
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