The document discusses several key issues related to corporations in conflict of laws: 1. A corporation is a legal entity distinct from its owners or shareholders, and is domiciled in the country where it is incorporated. However, a corporation can have more than one residence based on where its central management is located. 2. When determining liability between a parent and subsidiary corporation, the law of the place where the subsidiary is incorporated typically applies. 3. A corporation's internal affairs like management and decision making are generally governed by the law of its place of incorporation, but another country's law may apply if obligations or rights are being asserted in that other country.

1. CORPORATIONS
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2. Importance in conflict of laws
• Corporation is a body of individuals, or even a single
individual, regarded by law as being distinct from the
individual's) who have created it, and who own, run and
manage it.
• Piercing the Corporate Veil-
• If the question is whether a holding company is liable for
the liabilities of subsidiary, it is suggested that the
question should be determined by applying the law of
place where the subsidiary is incorporated as the real
question involves the determination of the subsidiary, or
the lex fori if the question is regarded as the determination
of the identity of the real defendant in the proceedings.
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3. ‘Domicile and ‘Residence’ of corporations
• -Company is domiciled in the country under whose law it is
incorporated; and is resident where its central management and
control is exercised.
• Taxation-Residence-UK-
• The house of Lords held in Swedish Central Railway v. thompson,
that a corporation may have more than one residence.
• X is a company incorporated in the Cayman islands. The company is
formed solely for the purpose of constructing and working a railway
station in Sweden, but after the railways station has been built it is
leased to a Swedish company. Meetings of the both the board and
shareholders are held in Sweden or London, by rotation. There are
equal numbers of English and Swedish shareholders and directors.
The company is resident in both England and sweden.(1925) AC 495
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4. Capacity and internal management of a company:
• X is a company incorporated in south Africa. The bulk of the company’s
business consists in exploiting South African diamond mines, and the
head office is at Kimberly. There are both south African and English
directors, and separate meeting held weekly in Kimberley and London.
The day-to-day management of the company’s affairs is conducted by
the south African directors at Kimberley, but major policy decisions are
made by majority of all directors. A majority of the directors has always
resided in England. The company is resident in England. (De beers
Consolidated Mines v. Howe (1906) AC 455)
• International institutions-international body
• Government Companies-( when new directors were appointed to a
Spanish govt company by the govt. estd by General Franco, after he
attained power at the end of the Spanish Civil War, they were held to
have been validly appointed as the British government had recognized
that Govt. as the de facto govt. in that area of Spain.
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5. • When a company incorporated in England entered into a contract in California,
and under California law a shareholder was liable to third parties for the
liabilities of the company in proportion to his holding in the company it was held
that the shareholder could not be held liable in an English court because of the
provisions of Californian law; it was English law which determined whether and
to what extent a shareholder of a company incorporated under English law could
be held for the liability of a company; and holding a shareholder liable in
proportion to his shareholding was contrary to the basic concepts of limited
liability under English law. (Risdon Iron and Locomotive works v. furness (1906)
1 KB 49 CA
• When a contract was entered into in France by Paris branch of a Russian Bank,
which had been dissolved by the Russian Govt., it was held that Paris branch
could not be sue the debtor even though under French law the branch and bank
continued to exist as France had not recognised the new Russian Govt, and
consequently, did not recognise the law dissolving the bank.(Banque
Internatonale de Commerc de Petrograd v. Goukasow (1923) 2 KB 682.
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6. Bumper Development Corp vs. Commr of Police of
the Metroplis (1991) 4 ALL ER
• Practice-parties- foreign party- entitlement to sue
in English Court-foreign legal institution-institution
having no animate content- Hindu temple-
whether institution having sufficient legal
personality entitling to it sue in English courts-
• By a writ issued on 24 sept 1982, plantiffs,
…claimed against defendants, …..delivery of a
twelfth century bronze sculpture of siva, kine of
Dancers, Known as Nataraja,
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7. Technip v. sms
• There are five main protagonists in these appeals, the
appellant, Technip, a company incorporated in France,
Coflexip, also incorporated in France, the Institut Francais
du Petrol (referred to as IFP) which through its subsidiary
ISIS, a company incorporated in France, was a
shareholder in Technip and Coflexip, South East Asia
Marine Engineering and Construction Ltd. (referred to as
SEAMEC), a company incorporated and registered in
India and finally the respondents who are the
shareholders of SEAMEC. SEAMEC is a subsidiary of
Coflexip in the sense that Coflexip through a chain of
wholly owned subsidiaries controls the majority
shareholding in SEAMEC.
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8. • The question which arises for consideration in these appeals is
whether Technip acquired control of SEAMEC through Coflexip in
April, 2000, or in July, 2001? There is no dispute that if Technip
controls Coflexip then it also controls SEAMEC and if there has been
a change of control of SEAMEC then Technip would be bound to offer
to purchase the shares of the minority shareholders in SEAMEC in
accordance with the provisions of the Securities And Exchange Board
of India (Substantial Acquisition of Shares and Takeover) Regulations,
1997 (hereinafter referred to as the Regulations). The importance of
the date of control/acquisition is because of the price of the shares
payable on such public offer. In this case the price of SEAMEC
shares in April 2000 was Rs. 238 per share which was much higher
than the price of Rs. 43.12 per share in July, 2001. Technip had not
made any public announcement at all, either in April 2000 or in July,
2001.
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9. • Admittedly both Coflexip and Technip were incorporated according to
and under the laws of France; They are therefore 'domiciled' in
France. Normally, we would resolve any issue relating to their internal
affairs by applying the law of their domiciled, in this case French Law
(See: Hazard Brothers & Co. v. Midland Bank Ltd. 1933 AC 289, 297;
Metliss v. National Bank of Greece & Athens, SA: [1961] AC 255). But
by that token it is equally true that SEAMEC which was incorporated
in India would be governed by Indian law and that is what SAT held:
• "SEBI has viewed (sic) that since Technip and Coflexip are French
companies, matters relating to them should be decided in accordance
with French law. To the said extent SEBI is correct. SEBI has no
jurisdiction to regulate takeovers and acquisitions taking place outside
India. But certainly SEBI has jurisdiction to regulate substantial
acquisition and takeovers of companies in India".
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10. • To quote from Kuwait Airways Corporation
v. Iraqi Airways Co. (2002) UKHL 19.
• "The jurisprudence is founded on the
recognition that in proceedings having
connections with more than one country an
issue brought before a court in one country
may be more appropriately decided by
reference to the laws of another country even
though those laws are different from the law
of the forum court."
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11. • . This general rule regarding determination of status by the lex
incorporations will not apply when the issue relates to the
discharge of obligations or assertion of rights by a corporation
in another country whether such obligation is imposed by or
right arises under statute or contract which is governed by the
law of such other country.
• The distinction is brought out in the case of National Bank of
Greece and Athens S.A. and Metliss: 58 A.C. 509. A Greek
Bank had issued mortgage bonds to persons in U.K. in pounds
sterling. The bonds were guaranteed by another bank. Both
the issuing bank and the guaranteeing bank were incorporated
under Greek Law. The.
• "
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12. • guaranteeing bank was subsequently amalgamated with a
third Greek company and a new company was formed. A bond
holder sued the new company seeking to enforce the
guarantee. Under the Greek law there was a moratorium
imposed on payments by the new bank. It was held by the
House of Lords that the status of the new bank would be
decided according to the law of the of the original guarantor
company and the new company which was Greek law. It was
found that according to Greek law the new company succeeded
to the assets and liabilities of the guarantor company. The
question then was whether the English Courts would recognize
the moratorium as debarring the bond holder from enforcing
his rights under the bond. It was not in dispute that the bond
was governed by English law. It was held that the evidence of
the effect of the Greek moratorium in Greece was therefore
irrelevant
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13. • This was an English debt and the obligation to pay it, its quantum and the
date of payment, are all governed by English law which will not give effect to
the Greek Moratorium," (pg. 529)
• 21. The claim of the bond holder was accordingly allowed.
• Consequent upon the decision of the House of Lords a new Greek law was passed
retrospectively modifying the terms of the amalgamation, so that the new bank was no
longer required to discharge the original guarantor's dues to the bond holders. The
House of Lords in Adams v. National Bank of Greece S.A. 1961 A.C. 255, 282 again
rejected the new bank's submission that it was not liable on the bonds. It was held that
what was sought to be enforced was not "a Greek right, but a right arising under a
contract under English law". It was held:
• "It is well settled that English law cannot give effect to a foreign law which discharges
an English liability to pay money in England and the appellants' contracts were English
contracts under which they were to be paid in England".
• 23. Although the law of the Bank's domiciled determined its status as a debtor, it could
not determine the liability of the defendant on a contract subject expressly to English
law.
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