Parental Liability for Externalities of Subsidiaries: Domestic and Extraterritorial Approaches

39 Pages Posted: 7 Oct 2014 Last revised: 15 Sep 2016

See all articles by Linn Anker-Sørensen

Linn Anker-Sørensen

University of Oslo, Faculty of Law, Students

Date Written: October 7, 2014

Abstract

This paper offers a structural tool for examining various parental liability approaches for the externalities of its subsidiaries, meaning in the context of this paper, the negative environmental impact of their operations. In order to conclude that the parent is liable for externalities of subsidiaries, one must be able to bypass the corporate privileges of separate legal personality and limited liability, either within traditional company law or within alternative approaches offered by notably tort and environmental law. The overall acceptance of companies within groups as single entities, instead of recognition of their factual, often closely interlinked economic relationship, is a well-known barrier within traditional company law. The situation is exacerbated by the general lack of an extraterritorial liability approach and of enforcement of the rare occurrences of such liability within the traditional company law context. This paper explores various liability approaches found in jurisdictions worldwide mainly based on mapping papers from the international Sustainable Companies Project. The author introduces a matrix in order to systemize the different approaches, distinguishing between three levels: domestic and extraterritorial; statutory and judicial; and indirect and direct liability. A proper distinction between the different liability approaches can be valuable in order to identify the main barriers to group liability in regulation and in jurisprudence.

Suggested Citation

Anker-Sørensen, Linn, Parental Liability for Externalities of Subsidiaries: Domestic and Extraterritorial Approaches (October 7, 2014). Dovenschmidt Quarterly 102-118 (2014) ; University of Oslo Faculty of Law Research Paper No. 2014-36; Nordic & European Company Law Working Paper No. 14-06. Available at SSRN: https://ssrn.com/abstract=2506508 or http://dx.doi.org/10.2139/ssrn.2506508

Linn Anker-Sørensen (Contact Author)

University of Oslo, Faculty of Law, Students ( email )

Oslo
Norway

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