ABSTRACT
The liability of parent companies for wrongdoing within subsidiaries is an old topic. Modern discussions tend to extend the potential liability of the parent to wrongdoing within the whole supply chain (or, even, the value chain), thus embracing liability for the actions of contractors and sub-contractors. The legal mechanism at the centre of traditional discussion is piercing the veil of the subsidiary company – a mechanism not obviously apt for contractors. In any event, UK law set its face firmly against piercing the veil in Adams v Cape Industries (Court of Appeal, 1990), even though the claimants were tort victims and thus non-adjusting creditors.
Almost immediately thereafter, however, the UK courts began to develop a tort theory of parental liability for wrongdoing within subsidiaries. This was derived from the assertion of the relevant degree of managerial control over the subsidiary by the parent and so depended on the level of control exercised (or, perhaps, claimed by the parent) over the subsidiary’s activities …
Davies, Paul L, Corporate Liability for Wrongdoing within (Foreign) Subsidiaries: Mechanisms from Corporate Law, Tort and Regulation (January 2023), NUS Law Working Paper No 2023/007; NUS EW Barker Centre for Law and Business Working Paper 23/01.
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