Environmental Piercing of the Corporate Veil: The Norwegian Supreme Court Decision in the Hempel Case
European Company Law, Vol. 7, pp. 154–160, 2010
13 Pages Posted: 28 May 2010 Last revised: 1 Aug 2011
Date Written: May 27, 2010
In this exciting meeting of environmental and traditional company law interests, a fundamental question is what the case - legally speaking - actually is about. Costs are imposed on a parent company based on the subsidiary’s polluting activity - and first and foremost that of the subsidiary’s predecessor. The legal basis cited in the Hempel case is the Norwegian Pollution Control Act Section 51. However, this provision does not designate the parent company of the subsidiary responsible for the pollution as a possible addressee for the claim. Does this case only concern interpretation of the provision, or is this - at least also - a type of piercing of the corporate veil?
The concept of piercing of the corporate veil is neither clearly defined nor generally agreed upon, not in Norwegian law and definitely not in a comparative European perspective. In this paper the result and the grounds of the Norwegian Supreme Court decision are discussed and sought placed in the broader legal landscape. The Hempel case represents something different in the piercing of the corporate veil debate. Some legal and economic consequences of the decision are indicated, including whether the decision may be perceived as an unlawful restriction on the free movement of capital or the freedom of establishment according to the EU Treaties. If followed up on by the Norwegian Supreme Court (and not torpedoed by the Court of Justice of the European Union), this case may provide an incentive for business that could prove to be one small step in the direction of better environmental protection.
All comments are welcome, including information about relevant cases from other jurisdictions!
Keywords: Piercing of the corporate veil, environmental protection, pollution, clean-up, parent company, subsidiary, merger, demerger, Norwegian Pollution Control Act
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