¹ See the Seventh EU Directive (Consolidated Group Annual Accounts) 83/349/EEC of 13 June 1983, OJ(EC) [1983] L 193/1, Art 1.1. See the article by the Forum Europaeum Corporate Group Law, “Corporate Group Law for Europe”, 1 EBOR (2000) 167Google Scholar. See also: Corporations Act 2001 (Australia) ss 46 and 47.

² The so-called “Beherrschungsvertrag” as defined in Art 291.1 of the German Aktiengesetz.

³ See s 50AA(2)(a) of the Corporations Act 2001 (Australia) and also Kluver, J., “European and Australian proposals for corporate group law: a comparative analysis”, 1 EBOR (2000) 287Google Scholar. In that article the author refers to the identical provisions of s 50AA of the now repealed Corporations Law (Australia).

⁴ See “Corporate Group Law for Europe”, supra n. 1.

⁵ See Emmerich, V. and Sonnenschein, J., Konzernrecht, 5th ed. (München: Beck 1993) at p 81.Google Scholar

⁶ Lubbe v. Cape plc commenced in the English High Court in 1997. The main issue litigated in this case so far was whether the action should be stayed on forum non conveniens grounds. An application to stay the proceedings was granted by Mr Michel Kallipetis QC, sitting as a Deputy Judge of the High Court on 12 January 1998 (unreported). That decision was reversed by the Court of Appeal on 30 July 1998 [ 1998] CLC 1559; [1999] I L Pr 113. After the number of plaintiffs grew from 5 to over 3000, the application for a stay was renewed. It was granted by Buckley J [2000] 1 Lloyd's Rep 139 and that decision was upheld by a Court of Appeal that was differently constituted from the first Court of Appeal [2000] Lloyd's Rep 139. Finally, the House of Lords in [2000] 1 WLR 1545 upheld the first Court of Appeal decision and reversed the second Court of Appeal decision, thereby refusing a stay of the English proceedings.

⁷ It also operated a factory making asbestos-related products in Italy through an Italian subsidiary. Claims were also made by Italian plaintiffs against the parent, but since that litigation was covered by the Brussels Convention of 1968, the issue of forum non conveniens did not arise.

⁸ The history of the various companies involved is set out in the judgment of Evans LJ in the first Court of Appeal decision at [1999] I L Pr 113 at para. [10].

⁹ See Muchlinski, P., “Corporations in International Litigation: Problems of Jurisdiction and the United Kingdom Asbestos Case”, 50 International and Comparative Law Quarterly, ICLQ (2001) 1CrossRefGoogle Scholar, at pp. 8 and 9.

¹⁰ [2000] 1 WLR 1545 at 1550.

¹¹ As was done in Adams v. Cape Industries plc [1990] Ch. 433, where American plaintiffs brought asbestos-related claims before a US Federal District Court in Texas against the English parent company.

¹² Ibid, at 1563.

¹³ See Accident Rehabilitation and Compensation Insurance Act 1992 (NZ) s 17.

¹⁴ James Hardie & Co Pty Ltd v. Hall (1998) 43 NSWLR 584.

¹⁵ See Connelly v. RTZ Corporation (No 2) [1998] AC 854; Lubbe v. Cape plc [2000] 1 WLR 1545.

¹⁶ Lubbe v. Cape plc [2000] 1 WLR 1545.

¹⁷ See The Broken Hill Proprietary Co Pty Ltd v. Dagi [1996] 2 VR 117.

¹⁸ Decision of Garland J, 31 July 1998 (unreported). Appeal dismissed by Court of Appeal [1999] All ER (D) 102 (Judge and Tuckey L JJ).

¹⁹ Ngcobo v. Thor Chemical Holdings Ltd (unreported) 9 October 1995 (Court of Appeal) referred to by Evans LJ in the first Court of Appeal decision in Lubbe [1999] I L Pr 113, para. [22].

²⁰ See O'Keeffe, J., “Environmental Issues in Corporate Transactions in the United Kingdom”, (1999) ICCLR 344.Google Scholar

²¹ Counsel informed the Court of Appeal that under South African law an employee was prohibited from bringing an action for injury suffered at work. Injured employees could obtain compensation from a statutory compensation fund: Transcript of Proceedings, 15 February 1999, at pp. 5 and 6. This was a reference no doubt to the Workman's Compensation Act 1941 (SA). Compare the New Zealand position described in James Hardie & Co Pty Ltd v. Hall (1998) 43 NSWLR 584, where liability in Australia was denied because there was no common law right of action in New Zealand, the place of wrong.

²² F Suppl 842 (SDNY 1986). The decision was upheld by the US Court of Appeal for the 2nd Circuit at 809 F. 2d 195 (2nd Cir 1987).

²³ Ibid., at 867 per Keenan J.

²⁴ Baxi, U., “Mass Torts, Multinational Enterprise Liability and Private International Law”, 276 Recueil des cours (1999) 305, at pp. 355-356Google Scholar. A similar (and more successful) submission in favour of the English forum selected by the plaintiffs was made on behalf of the South African government in its intervention before the House of Lords in Lubbe v. Cape plc [2000] 1 WLR 1545, see Muchlinski, supra n. 9, at pp. 18-19.

²⁵ See Council Regulation (EC) No 44/2001 on Jurisdiction and the Recognition and Enforcement of Judgments in Civil and Commercial Matters (the “Brussels Regulation”) OJ [2001] L 12/1 (16.1.2001) Articles 2 and 60.

²⁶ See British South Africa Co v. Companhia de Moçambique [1893] AC 602.

²⁷ For a description of its origins, see Anton, A. E., Private International Law, 1st ed. (Edinburgh: Green 1967) at pp. 148–154.Google Scholar

²⁸ See Gulf Oil Corp v. Gilbert 330 US 501 (1947); Piper Aircraft v. Reyno 454 US 235 (1981).

²⁹ Spiliada Maritime Corp v. Cansulex Ltd [1987] AC 460. From England the principle has spread to other countries in the Commonwealth of Nations, see Dicey, & Morris, , The Conflict of Laws, 13th ed. (London: Sweet & Maxwell 2000) Vol. 1 para. 12–011Google Scholar. Australia has adopted a more restrictive form: Voth v. Manildra Flour Mills Pty Ltd (1991) 171 CLR 538.

³⁰ For a survey of international practice, see Fawcett, J. J., Declining Jurisdiction in Private International Law (Oxford: OUP 1995) passim.Google Scholar

³¹ Brussels Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters 1968.

³² Lugano Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters 1988.

³³ Council Regulation (EC) on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters 44/2001 coming into force on 1 March 2002 and replacing the Brussels Convention, except in relation to Denmark.

³⁴ As regards the situation where the alternative forum lies outside those countries, see: Re Harrods (Buenos Aires) Ltd [1992] Ch. 272 holding that forum non conveniens is available in such a case, and Dicey & Morris, supra n. 29, at para. 12.018. The decision in Re Harrods is criticised by P. Muchlinski, supra n. 9, at pp. 12-14.

³⁵ The formula adopted by the High Court of Australia in Voth v. Manildra Flour Mills Pty Ltd (1991) 171 CLR 538.

³⁶ The formula adopted by the House of Lords in Spiliada Maritime Corp v. Cansulex Ltd [1987] AC 460.

³⁷ (1994) 33 NSWLR 414 at 419 (NSW CA, Australia). See also the similar remarks made by Lord Goff of Chieveley in Connelly v. RTZ plc [1998] AC 854, at 873.

³⁸ See McShannon v. Rockware Glass Ltd [1978] AC 795, where Scottish workmen suing their English employer in England in respect of injuries suffered at their workplace in Scotland were referred back to Scotland.

³⁹ Connelly v. RTZ plc [1998] AC 854.

⁴⁰ Lubbe v. Cape plc [2000] 1 WLR 1545.

⁴¹ 454 US 235 (1981).

⁴² Ibid., at 252 per Marshall J.

⁴³ Ibid., at 256.

⁴⁴ Ibid., at 254.

⁴⁵ See Baxi, supra n. 24.

⁴⁶ See Delgado v. Shell Oil Co 890 F. Suppl. 1324 (SD Tex 1995); Polanco v.H B Fuller Co 941 F. Suppl. 1512 (D Minn 1996); Iragori v. United Tech Corp 46 F. Suppl. 2d 159 (D Conn 1999) (where interestingly the plaintiff, although a US citizen, was denied “deference” because of long-term residence abroad); Jota v. Texaco Inc 157 F. 3d 153 (2d Cir 1998).

⁴⁷ See, for a critical discussion of the US practice: Marlowe, C. M., “International Forum Non Conveniens”, 32 Inter-American LR (2001) 295Google Scholar. Referring a plaintiff to a judicial system where he or she may not be afforded adequate legal representation may be a violation of the right to “a fair and public hearing within a reasonable time” in relation to his or her civil rights under Article 6(1) of the European Convention on Human Rights: see the remarks by Lord Bingham of Cornhill in Lubbe at 1561. See also: the UN Convention on Civil and Political Rights 1966, Art 14.

⁴⁸ Lubbe v. Cape plc [2000] 1 WLR 1545 at 1561 per Lord Bingham of Cornhill, at 1566-1567 per Lord Hope of Craighead; Voth v. Manildra Flour Mills Pty Ltd (1990) 171 CLR 538 at 561 per Mason CJ, Deane, Dawson and Gaudron JJ. See also: James Hardie & Co v. Grigor (1998) 45 NSWLR 20 (NSW CA).

⁴⁹ ILA, Report of the 69th Conference, London, 2000, Committee on International Civil and Commercial Litigation, at p. 160.

⁵⁰ Preliminary Draft Convention on Jurisdiction and Foreign Judgments in Civil and Commercial Matters adopted by the Special Commission of the Hague Conference on Private International Law, 30 October 1999, Art 22.3. This provision prohibits discrimination “on the basis of the nationality or habitual residence of the parties”. In the light of the decision in Iragori, supra n. 46, this is a useful addition.

⁵¹ Supra n. 49, para. 67.

⁵² See Report by Peter Nygh and Fausto Pocar on the Preliminary Draft Convention, August 2000, at p. 90.

⁵³ See Brussels Regulation Art 60; Preliminary Draft Convention Art 3.2.

⁵⁴ [1893] AC 602.

⁵⁵ As explained by the House of Lords in Hesperides Hotels Ltd v. Muftizade [1979] AC 508, at 536 per Lord Wilberforce. See also: Dagi v. Broken Hill Proprietary Co (No 2) [1997] 1 VR 428, at 441 per Byrne J. (Supreme Court of Victoria, Australia).

⁵⁶ See Leflar, , McDougal, and Felix, , American Conflicts Law, 4th ed. (Charlottesville, Va.: Michie 1986) § 44.Google Scholar

⁵⁷ Cf. Brussels Regulation Art 22.1.

⁵⁸ [1997] 1 VR 428.

⁵⁹ Ibid., at 441-442.

⁶⁰ Ibid., at 442-443.

⁶¹ Ibid., at 443-444.

⁶² Civil Jurisdiction and Judgments Act 1982 (UK) s 30(1).

⁶³ Jurisdiction of Courts (Foreign Land) Act 1989 (NSW) s 3 abolishing the Mozambique Rule in its entirety.

⁶⁴ Law Reform (Miscellaneous Provisions) Act 1955 (ACT) s 34(1).

⁶⁵ See supra n. 56.

⁶⁶ (1998) 43 NSWLR 554 at 579-80 per Sheller JA.

⁶⁷ As to the meaning of this term, see the discussion at pp. 52-53 above.

⁶⁸ In using the word “derivative liability” I am aware of the criticism made by Blumberg, P. I. in The Multinational Challenge to Corporation Law (OUP 1993) at pp. 238–239Google Scholar of the use of that term. But, unlike him, I am only concerned with liability and not rights and want to use a relatively short-hand term. The notion of “vicarious liability” does not fit outside the law of employment and agency, see ibid, at 239. The point is that the parent or other corporation is affixed with the liability of the offending subsidiary.

⁶⁹ The re-formulated claim for the plaintiffs as cited by Lord Bingham of Cornhill in Lubbe v. Cape plc [2000] 1 WLR 1545 at 1551,

⁷⁰ See Sithole v. Thor Chemical Holdings Ltd and Cowley [1999] All ER (D) 102. The second defendant was described in the judgment as “the chairman and controlling shareholder of Thor” who “took an active part in the management of the companies in the group of which Thor was the holding company”: Transcript p. 2.

⁷¹ [1897] AC 22.

⁷² Blumberg, supra n. 68, at p. 59. But what is the difference with Mr. Salomon incorporating his failing enterprise? See the discussion of Salomon's case by Rogers AJA in Briggs v. James Hardie & Co Pty Ltd (1989) 16 NSWLR 549 at 568-569. For a defence of the continued relevance of limited liability even within corporate groups, see: L, Bergkamp and Wan-Q, Pak, “Piercing the Corporate Veil: Shareholder Liability for Corporate Torts”, 8 Maastricht J. of European and Comparative Law (2001) 167.Google Scholar

⁷³ As to whether these terms bear separate meanings or are synonyms, see the discussion by Ramsay, I. M. and Noakes, D. B. in “Piercing the Corporate Veil in Australia”, 19 Company and Securities Law Journal, C&SLJ (2001) 250 at 251.Google Scholar

⁷⁴ See Rixon, F. G., “Lifting the Veil between Holding and Subsidiary Companies”, 102 Law Quarterly Review, LQR (1986) 415, esp. at p. 423Google Scholar; Png, C. A., “The Fraud Exception to the Rule in Salomon's Case”, 1 International and Comparative Corporate Law Journal, ICCLJ (2001) 409, at 412.Google Scholar

⁷⁵ [1990] Ch. 533.

⁷⁶ Ibid., at 544.

⁷⁷ For an example, see: Smith, Stone and Knight Ltd v. Birmingham Corporation [1939] 4 All ER 116.

⁷⁸ In New Zealand, it seems, the same applies: see Goddard, D., “Corporate Personality – Limited Recourse and its Limits”, in Grantham, R. and Rickett, C., Corporate Personality in the 20^th Century (Hart 1998) 11–63.Google Scholar

⁷⁹ (1998) 43 NSWLR 554, at 579-584 per Sheller JA with whom Beazley and Stein JJA agreed. See also Briggs v. James Hardie & Co Pty Ltd (1989) 16 NSWLR 549, at 577, per Rogers AJA.

⁸⁰ Attitudes towards “lifting the veil” vary considerably in that country; for a discussion of the US case law, see Haar, B., “Piercing the Corporate Veil and Shareholders' Product and Environmental Law in American Law as Remedies for Capital Market Failures”, 2 EBOR (2000) 317.Google Scholar

⁸¹ 837 F. Suppl. 1128 (ND Ala 1993 – Pointer CJ).

⁸² It is interesting to note that under Australian law a control situation does not exist merely because two entities jointly control the outcome of decisions of another entity: Corporations Act 2001 (Australia) s 50AA(3).

⁸³ Ibid., at 1133 per Pointer CJ citing 1 Fletcher Cyclopedia of the Law of Private Corporations § 41 at 603 (Perm ed. 1990).

⁸⁴ Blumberg, supra n. 68, at p 92. See also First National City Bank v. Banco Para El Comercio Exterior de Cuba 462 US 611 at 629-632 (1983) per O'Connor J.

⁸⁵ AMC 2123 (USDC – ND Illinois – McGarr DJ).

⁸⁶ Ibid., at 2194.

⁸⁷ Grosskommentar zu Aktien Gesetz 1975 311 Anm. 20.1. It would seem that although in principle the law applies to the German subsidiary of a foreign corporation, there are practical difficulties in enforcing any such obligation: see Zimmer, D., “Ende der Konzernhaftung in ‘internationalen’ Fallen”, IPRax [1988] 187.Google Scholar

⁸⁸ See Hommelhoff, P., “Protection of Minority Shareholders, Investors and Creditors in Corporate Groups: the Strengths and Weaknesses of German Corporate Group Law”, 2 EBOR (2001) 61, at pp. 71-73.Google Scholar

⁸⁹ See: Sohysiński, S. and Szumański, A., “Shareholder and Creditor Protection in Company Groups under Polish Law”, 2 EBOR (2001) 245Google Scholar; Sándor, T. and T, Sárkozy, “Regulatory approaches to groups of companies in Hungary”, 2 EBOR (2000) 263Google Scholar; Petrović, S., “The Legal Regulation of Company Groups in Croatia”, 2 EBOR (2000) 281.Google Scholar

⁹⁰ [1976] 1 WLR 852, at 860.

⁹¹ 1978 SLT 159, at 161, per Lord Keith of Kinkel.

⁹² [1990] Ch. 433 at 536 per Slade LJ delivering the judgment of the Court.

⁹³ (Note) [1987] AC 45 at 64. Cited with approval by Slade LJ in Adams v. Cape Industries plc at 538.

⁹⁴ In re Union Carbide Corporation Gas Plant Disaster at Bhopal, India, 634 F. Suppl. 842 (SDNY 1986). See Muchlinski, P. T., “The Bhopal Case: Controlling Ultrahazardous Industrial Activities Undertaken by Foreign Investors”, 50 Modern Law Review, MLR (1987) 545, at 570-572.CrossRefGoogle Scholar

⁹⁵ Union of India v. Union Carbide Corporation (1989) 1 SCR 128.

⁹⁶ See Baxi, supra n. 24, at p. 394.

⁹⁷ Union of India v. Union Carbide Corporation (1989) 3 SCR 730 at 733.

⁹⁸ Blumberg, supra n. 68, at 92. See also, Easterbrook, F. H. and Fischel, D. R., The Economic Structure of Corporate Law (Harvard UP 1991) at pp. 56–57Google Scholar for a similar view.

⁹⁹ Ibid., at 123.

¹⁰⁰ Ibid., at 135-138.

¹⁰¹ Ibid., at 137.

¹⁰² Ibid., at 137-138.

¹⁰³ Hansmann, H. and Kraakman, R., “Toward Unlimited Shareholder Liability for Corporate Torts”, 100 Yale LJ (1991) 1879.CrossRefGoogle Scholar

¹⁰⁴ This solution is basically that favoured by the authors, ibid., at 1897.

¹⁰⁵ The authors assume that individual shareholders are likely to be small in number and wealthy, ibid., at 1900. See for detailed and convincing criticism, Bergkamp and Pak, supra n. 72, §8.

¹⁰⁶ Ibid., at 1919-1920.

¹⁰⁷ Easterbrook and Fischel, supra n. 98, at p 58.

¹⁰⁸ Lowenfeld, A., “National Jurisdiction and the Multinational Enterprise”, in: International Litigation and the Quest for Reasonableness (Oxford: Clarendon 1996) at 105-106.Google Scholar

¹⁰⁹ See the remarks of Rogers AJA in Briggs v. James Hardie & Co Pty Ltd (1989) 16 NSWLR 549 at 578-579. See also, Blumberg, P., The Multinational Challenge to Corporation Law (OUP 1993) ch. 6Google Scholar; Muchlinski, supra n. 9, at p. 16.

¹¹⁰ Blumberg, supra n. 68, at 142-144.

¹¹¹ See Hommelhoff, supra n. 88, at pp. 71-73, referring to the TBB case, BGHZ 122, 123. Hommelhoff, ibid., at p. 73, queries whether as a result of that decision “the pendulum … has swung too far in favour of parent companies”. See, for examples of the application of this rule: Haar, supra n. 80, at p. 350.

¹¹² Supra n. 103, at 1921-1923.

¹¹³ Supra n. 108, at 88-89. A similar policy in favour of the rights of the plaintiff is advocated by Baxi, supra n. 24 above, at pp. 379-383 with a possibly even wider choice of laws.

¹¹⁴ In this connection one may note the proposal of the European Group for Private International Law for a European Convention on the Law Applicable to Non-Contractual Obligations (reported in 65 RabelsZ (2001) 550). In Article 12.1 the Draft proposes that the habitual residence of a corporate body “shall be taken to be the place where its central administration is situated”.

¹¹⁵ Kropholler, J., Internationales Privatrecht, 4th ed. (Tübingen: Mohr Siebeck 2001) § 55 I 3b.Google Scholar

¹¹⁶ See Zimmer, D., “Private International Law Aspects of Business Organisation in Europe”, 1 EBOR (2000) 585, at p 599.Google Scholar

¹¹⁷ See, Dicey & Morris, supra n. 29, Vol II at para. 35.038.

¹¹⁸ See Distillers Co (Biochemicals) Ltd v. Thompson [1971] AC 458.

¹¹⁹ [1997] 1 VR 42S.

¹²⁰ [1999] CLC 533 (Wright J QBD). This followed the decision by the House of Lords in Connelly v. RTZ Corp plc [1998] AC 854, that the English courts should not decline jurisdiction on the ground of forum non conveniens because the plaintiff would not obtain justice in Namibia. Ironically in the end result, the claim by Mr. Connelly was defeated because it was statute-barred under both English and Namibian law.

¹²¹ Ibid., at 538 per Wright J.

¹²² See supra n. 19. Since the matter was settled, those allegations were never proved.

¹²³ The re-formulated claim for the plaintiffs as cited by Lord Bingham of Cornhill in Lubbe v. Cape plc [2000] 1 WLR 1545, at 1551,

¹²⁴ [1999] I L Pr 113 at para. [55].

¹²⁵ (2000) 173 ALR 665 at para. [68] per Gaudron, McHugh, Gummow and Hayne JJ. The Court rejected the argument that the members of the International Rugby Federation Board had breached a duty of care to individual players of the Rugby Union Code in failing to pass bye-laws that would minimise the risks involved in playing that game.

¹²⁶ See the summary by Lord Bingham of Cornhill in Lubbe v. Cape plc [2000] 1 WLR 1545, at 1555 of the matters to be considered on the “first segment” of the issues arising on the question of forum non conveniens, namely those specifically concerning the parent company.

¹²⁷ For a similar approach in the United States, see Haar, supra n. 80, at pp. 336-340. See also Baxi, supra n. 24, at pp. 400-401.

¹²⁸ [1998] AC 854 at 870, referring to the Namibian time bar.

¹²⁹ Connelly v. RTZ Corp plc [1999] CLC 533, at 545. His Lordship also referred to the unre-ported decision of the Court of Appeal to similar effect in Durham v. T & N plc I May 1996 Court of Appeal (Bingham MR, Evans and Ward LJJ) (unreported). It is interesting to note that Evans LJ sought to distinguish that case in the first Court of Appeal decision in Lubbe [1999] I L Pr 13 at para. [23] where he took a different view. But Lord Bingham (as he had by then become) in the House of Lords was non-committal on this point.

¹³⁰ (1998)43 NSWLR 554.

¹³¹ Ibid., at 576-577. No liability existed in New Zealand because of s 17 of the Accident Rehabilitation and Compensation Insurance Act 1992 (NZ) prohibiting the bringing of actions for damages at common law.

¹³² [1998] CLC 1559; [1999] I L Pr 113.

¹³¹ [1999] I L Pr 113 at para. [55], per Evans LJ with whom Millett and Auld L JJ agreed.

¹³⁴ [2000] 1 Lloyd's LR 139, at 161, per Pill LJ with whom Aldous and Tuckey L JJ agreed.

¹³⁵ [2000] 1 WLR 1545 at 1557, per Lord Bingham of Cornhill.

¹³⁶ (1998) 45 NSWLR 487.

¹³⁷ Ibid., at 515. The disagreement is recited in the joint judgment as it did not affect the outcome of the decision.

¹³⁸ (2000) 173 ALR 675 at 694.