My Past Study of Master Thesis
General Framework: disregarding the legal personality
In my past studies of master thesis, I recognized that it is indeed necessary to hold the principle of limited liability shared by shareholders and companies, whilst there shall be an exception for tort victims since they cannot contract with companies for further security providing by personal unlimited liability or specific economic interest of one valuable property before accidents[1]. It is a typically American legal thinking, but more precise than the currently legal developments of disregarding legal personality in Europe. Even the 12th of EU Directive of Company Law lacks the arrangement of piercing the corporate veil in some specific circumstances.
Shortly speaking, my past studies can be easily separated into three parts:
Risk and its distribution : law and social change
Firstly, the new phenomenon of globalization and its result of global risk mainly caused by global enterprises present a problem how to distribute the tort risk among shareholders, group of companies, and victims. Is the old assumption that a company had conducted its activities on the territory of its registered state still suitable? Or we are living in the age of global enterprises and global coordination of production? Since the foundation of corporate law has dramatically changed, the corporate law shall be subsequently changed.
The distinction between controlling shareholders and investing shareholders
However, what is the new direction of reforming law? Again, we shall be back to the original structure of shareholders and companies and find that the relations between two parties in big companies are investors and managers. Thus, once the parent company can effectively control its subsidiaries, it should be deemed as the managers, not the investors who can enjoy the benefit of limited liability.
My possible invention: value chain as a scope of liability
Is it enough to solve the problem? No, we shall go further to explore the process of producing the risk of product or environment, and we will find that it is reasonable to define the scope of unlimited liability by using the notion of value chain[2] in terms of management to grasp the whole process of producing risk. Only including the whole relevant process of risk producing, we can draw a safe line between the acceptable risk and the unacceptable risk in modern society.
Effectively enforcing the distribution of risk: Recognition and Enforcement of Foreign judgment
Do we reach the end of solving this problem? Unfortunately, there is still a problem arising from how to effectively enforce the risk distribution among the whole group of companies set up around the world. The first remedy is to try to find an available International Convention relating to companies’ liability. The answer is no, except the possibility of using Brussels Convention in Europe[3]. The second remedy is to using the scheme of recognition and enforcement of foreign judgment to allow one powerful state’s decision can be recognized and enforced if this decision includes the protection of referred state’s victims. Therefore, we find the common ground of positively recognizing and enforcing the foreign judgment by common risk materialized in countries involved, instead of weak reasons in terms of reciprocity or obligation prevailing in the common law countries.
[1] Someone would claim that insurance could provide the additional protection, while I wonder the limits of insurance and the unprecedented accidents that would be excluded by insurance because a lack of suck kind of common risk group.
[2] Value chain means the whole process of a new product from research, development, design, manufacturing, to marketing and retailing. Maybe this idea is initiated by me, however, I am not really sure whether there are similar notions involved in the world. After all, without knowledge of management, it is almost impossible to get this idea.
[3] And its effect is nevertheless limited in Europe even it is available to use.
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