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Summary Company Law UoN - Piercing the Corporate Veil
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Tortious Liability1. Leading case about direct duty of care (Chandler)
a. Lady Justice Arden’s points:
i. Parent and subsidiary have same/similar business
ii. Parent has ‘superior knowledge’
iii. Subsidiary’s system of work is unsafe
iv. Parent foresaw that the subsidiary would rely on its ‘superior
knowledge’
b. Court emphasised that this was not about piercing the corporate veil,
however, the outcome was the same
2. Narrow Application (Thomas)
a. This was because:
i. Not a similar business
ii. No ‘superior knowledge’
b. Mentioned Caparo:
i. Harm to employees foreseeable
ii. Relationship of proximity between the parent and subsidiary’s
employees
iii. Fair, just and reasonable to impose duty of care
3. Expansion of Chandler (Vedanta)
a. Training, monitoring and enforcement was relevant
b. Claims can be made by residents, not just employees
c. Claims against UK parent companies with subsidiaries abroad rejected (Royal
Dutch Shell and Unilever)
i. UK-based corporations are not held responsible for their actions
abroad. This may seem unjust especially considered situations where
there are tort victims and environmental damage involved
d. Parent company owes a duty of care when (Unilever, responsible for own risk
management):
i. Taken over management of subsidiary
ii. Provided subsidiary with relevant advice
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