5. Corporate Attribution and Liability
Reading:
- Pettet’s Company Law, chapter 2 pages 43-48 (section 2.1 from 2.1C ‘Corporate liability for torts and crimes’ to the end of
section 2). NB: you may have read these pages as part of your reading last week. Note too that since publication Okpabi v
Royal Dutch Shell has been considered by the Supreme Court – I will review their decision with you in class.
Further reading:
- General rules of attribution
- Law Commission, Corporate Criminal Liability and Options Paper, (June 2022) – chapter two. Available online:
https://s3-eu-west-2.amazonaws.com/lawcom-prod-storage-11jsxou24uy7q/uploads/2022/06/Corporate-
Criminal-Liability-Options-Paper_LC.pdf
- Payne, Jennifer, ‘Corporate Attribution and the Lessons of Meridian’ in PS Davies & J Pila (eds), The
Jurisprudence of Lord Hoffmann (Oxford: Hart Publishing, 2015). Available at SSRN:
https://ssrn.com/abstract=2444732
- Tort
- Ian Fletcher, ‘Fraudulent trading, ex turpi causa, and directors’ duties: the Supreme Court rulings in Bilta (UK)
Ltd (in liquidation) v Nazir (No. 2)’ (2016) 29(1) Insolvency Intelligence 12.
- J Goudkamp, ‘Duties of Care and corporate groups’ (2017) 133 (Oct) Law Quarterly Review 560
- Martin Petrin, ‘Assumption of responsibility in corporate groups: Chandler v Cape plc’ (2013) 76(3) Modern Law
Review 589
- Criminal law: identification doctrine
- Eilis Ferran, ‘Corporate Attribution and the directing mind and will,’ (2011) 127(Apr) Law Quarterly Review 239
- Law Commission, Corporate Criminal Liability and Options Paper, (June 2022) – chapter three. Available
online: https://s3-eu-west-2.amazonaws.com/lawcom-prod-storage-11jsxou24uy7q/uploads/2022/06/Corporate-
Criminal-Liability-Options-Paper_LC.pdf
- Criminal law statutory intervention
- S Copp and A Cronin, ‘New models of corporate criminality: the development and relative effectiveness of
“failure to precent” offences (2018) 39(4) company Lawyer 104.
- Anna Donovan, ‘Systems and Controls in Anti-Bribery and Corruption,’ in Iris Chiu (ed) The Law on Corporate
Governance in Banks (2015, Elgar Financial Law and Practice), 236
- James Gobert, ‘The Corporate Manslaughter and Corporate Homicide Act 2007 – thirteen years in the making
but was it worth the wait?’ (2008) 71 Modern Law Review 413.
- Virginia Maurer, ‘Corporate Governance as a Failsafe Mechanism Against Corporate Crime’ (2007) 28(4)
Company Lawyer 99
- Ministry of Justice, ‘Bribery Act 2010: Guidance About Commercial Organisations Preventing Bribery,’ available
online at: https://www.justice.gov.uk/downloads/legislation/bribery-act-2010-guidance.pdf
General rules of attribution......................................................................................................2
Tort.......................................................................................................................................... 3
Primary liability for torts......................................................................................................3
Duty of care to subsidiary employees.................................................................................6
................................................................................................................................................ 6
Criminal law: identification doctrine.......................................................................................10
Criminal law statutory intervention.........................................................................................14
Corporate Manslaughter and Corporate Homicide Act 2007.............................................14
Bribery Act 2010............................................................................................................... 16
,General rules of attribution
Problem arises: companies have to act through employees
● One company can have employees, diff levels of seniority, diff levels of authority granted
to them
● When will companies be liable for the acts of employees?
○ Board of directors
○ Lower status employees usually taking the culpability
○ Finding corporate culpability can be problematic bc employees who do not have
authority act anyways
● When will companies be liable for subsidiary actions?
When will a company be liable for the acts of third parties?
Meridian Global Funds Management Asia Ltd v Securities Commission [1995] 2 AC 500, [506]
● Whether or not knowledge or acts re: security filing can be attributed to the
company
○ Someone fairly low on the corporate hierarchy ladder could still have
knowledge attributed
● (Lord Hoffman):
● ‘Any proposition about a company necessarily involves a reference to a set of
rules. A company exists because there is a rule (usually in a statute) which says
that a persona ficta shall be deemed to exist and to have certain of the powers,
rights and duties of a natural person. But there would be little sense in deeming
such a persona ficta to exist unless there were also rules to tell one what acts
were to count as acts of the company. It is therefore a necessary part of
corporate personality that there should be rules by which acts are attributed to
the company. These may be called the rules of attribution.’
Note: a company is a set of rules that have created a company, now we need to think about the
set of rules tha allow a company to be liable for something
Meridian three rules of “attribution”
1. Primary rules
○ Expressly set out in the constitution (board has authority to XYZ) or can be
implied by company law (e.g. unanimous decision of shareholders is a decision
of the company)
■ Constitution: outlining who will be responsible, authority, for what purpose
■ Or Implied by company law
2. General rules
○ General rules of agency by which the acts of agents will count as the acts of the
company. Also, general rules by which the company will be liable for those acts
or omissions e.g. ostensible authority and vicarious liability in tort.
■ Applies to individuals, just not company law questions
, 3. Special rules
○ Was the rule in question intended to apply to a company – if so, how?
Whose act was for this purpose intended to count as the act of the company?
Matter of interpretation.
■ If the first two rules are insufficient, we may need to fashion a special rule
of attribution
■ Context is everything
■ In this category of cases:
● Look at the substantive rule in question: was it intended
to apply to a company at all? → and if so, the court can
fashion this special rule of attribution, asking itself whose
act (for the purpose of the rule) was intended to count as the
act of the company
Whose acts count and for what legal purpose? Three legal contexts:
1. Contract law – when is a company bound by contract?
2. Tort – what company law issues arise in attaching primary + subsidiary liability?
3. Criminal law – how is a company liable for the criminal acts of third parties?
a. Note might see some changes in that activity
Tort
Avenues for corporate liability
● Vicarious liability (saw this last year)
○ The natural person is primarily liable and the company is vicariously liable,
having created the risk that the tort would be committed. Company liable
alongside the individual.
● Primary/direct liability
○ The natural person’s acts that give rise to liability in tort are attributed to (count
as the acts of) the company.
■ Does primary liability in a corporate context give rise to →
questions abt the defence of illegality?
● Subsidiary liability
○ The parent company owes a direct duty of care to a third party harmed by its
subsidiary.
Primary liability for torts
A company can be primarily liable for torts if the acts of a natural person are attributed to it,
even if the company did not authorise those acts
The company as the wrongdoer: Jetivia v Bilta
● Jetivia v Bilta (UK) Limited [2015] UKSC 23
○ Lord Sumption:
■ The search for a test of a company’s direct or “personal” liability has
sometimes been criticised as a distraction or an artificial
Reading:
- Pettet’s Company Law, chapter 2 pages 43-48 (section 2.1 from 2.1C ‘Corporate liability for torts and crimes’ to the end of
section 2). NB: you may have read these pages as part of your reading last week. Note too that since publication Okpabi v
Royal Dutch Shell has been considered by the Supreme Court – I will review their decision with you in class.
Further reading:
- General rules of attribution
- Law Commission, Corporate Criminal Liability and Options Paper, (June 2022) – chapter two. Available online:
https://s3-eu-west-2.amazonaws.com/lawcom-prod-storage-11jsxou24uy7q/uploads/2022/06/Corporate-
Criminal-Liability-Options-Paper_LC.pdf
- Payne, Jennifer, ‘Corporate Attribution and the Lessons of Meridian’ in PS Davies & J Pila (eds), The
Jurisprudence of Lord Hoffmann (Oxford: Hart Publishing, 2015). Available at SSRN:
https://ssrn.com/abstract=2444732
- Tort
- Ian Fletcher, ‘Fraudulent trading, ex turpi causa, and directors’ duties: the Supreme Court rulings in Bilta (UK)
Ltd (in liquidation) v Nazir (No. 2)’ (2016) 29(1) Insolvency Intelligence 12.
- J Goudkamp, ‘Duties of Care and corporate groups’ (2017) 133 (Oct) Law Quarterly Review 560
- Martin Petrin, ‘Assumption of responsibility in corporate groups: Chandler v Cape plc’ (2013) 76(3) Modern Law
Review 589
- Criminal law: identification doctrine
- Eilis Ferran, ‘Corporate Attribution and the directing mind and will,’ (2011) 127(Apr) Law Quarterly Review 239
- Law Commission, Corporate Criminal Liability and Options Paper, (June 2022) – chapter three. Available
online: https://s3-eu-west-2.amazonaws.com/lawcom-prod-storage-11jsxou24uy7q/uploads/2022/06/Corporate-
Criminal-Liability-Options-Paper_LC.pdf
- Criminal law statutory intervention
- S Copp and A Cronin, ‘New models of corporate criminality: the development and relative effectiveness of
“failure to precent” offences (2018) 39(4) company Lawyer 104.
- Anna Donovan, ‘Systems and Controls in Anti-Bribery and Corruption,’ in Iris Chiu (ed) The Law on Corporate
Governance in Banks (2015, Elgar Financial Law and Practice), 236
- James Gobert, ‘The Corporate Manslaughter and Corporate Homicide Act 2007 – thirteen years in the making
but was it worth the wait?’ (2008) 71 Modern Law Review 413.
- Virginia Maurer, ‘Corporate Governance as a Failsafe Mechanism Against Corporate Crime’ (2007) 28(4)
Company Lawyer 99
- Ministry of Justice, ‘Bribery Act 2010: Guidance About Commercial Organisations Preventing Bribery,’ available
online at: https://www.justice.gov.uk/downloads/legislation/bribery-act-2010-guidance.pdf
General rules of attribution......................................................................................................2
Tort.......................................................................................................................................... 3
Primary liability for torts......................................................................................................3
Duty of care to subsidiary employees.................................................................................6
................................................................................................................................................ 6
Criminal law: identification doctrine.......................................................................................10
Criminal law statutory intervention.........................................................................................14
Corporate Manslaughter and Corporate Homicide Act 2007.............................................14
Bribery Act 2010............................................................................................................... 16
,General rules of attribution
Problem arises: companies have to act through employees
● One company can have employees, diff levels of seniority, diff levels of authority granted
to them
● When will companies be liable for the acts of employees?
○ Board of directors
○ Lower status employees usually taking the culpability
○ Finding corporate culpability can be problematic bc employees who do not have
authority act anyways
● When will companies be liable for subsidiary actions?
When will a company be liable for the acts of third parties?
Meridian Global Funds Management Asia Ltd v Securities Commission [1995] 2 AC 500, [506]
● Whether or not knowledge or acts re: security filing can be attributed to the
company
○ Someone fairly low on the corporate hierarchy ladder could still have
knowledge attributed
● (Lord Hoffman):
● ‘Any proposition about a company necessarily involves a reference to a set of
rules. A company exists because there is a rule (usually in a statute) which says
that a persona ficta shall be deemed to exist and to have certain of the powers,
rights and duties of a natural person. But there would be little sense in deeming
such a persona ficta to exist unless there were also rules to tell one what acts
were to count as acts of the company. It is therefore a necessary part of
corporate personality that there should be rules by which acts are attributed to
the company. These may be called the rules of attribution.’
Note: a company is a set of rules that have created a company, now we need to think about the
set of rules tha allow a company to be liable for something
Meridian three rules of “attribution”
1. Primary rules
○ Expressly set out in the constitution (board has authority to XYZ) or can be
implied by company law (e.g. unanimous decision of shareholders is a decision
of the company)
■ Constitution: outlining who will be responsible, authority, for what purpose
■ Or Implied by company law
2. General rules
○ General rules of agency by which the acts of agents will count as the acts of the
company. Also, general rules by which the company will be liable for those acts
or omissions e.g. ostensible authority and vicarious liability in tort.
■ Applies to individuals, just not company law questions
, 3. Special rules
○ Was the rule in question intended to apply to a company – if so, how?
Whose act was for this purpose intended to count as the act of the company?
Matter of interpretation.
■ If the first two rules are insufficient, we may need to fashion a special rule
of attribution
■ Context is everything
■ In this category of cases:
● Look at the substantive rule in question: was it intended
to apply to a company at all? → and if so, the court can
fashion this special rule of attribution, asking itself whose
act (for the purpose of the rule) was intended to count as the
act of the company
Whose acts count and for what legal purpose? Three legal contexts:
1. Contract law – when is a company bound by contract?
2. Tort – what company law issues arise in attaching primary + subsidiary liability?
3. Criminal law – how is a company liable for the criminal acts of third parties?
a. Note might see some changes in that activity
Tort
Avenues for corporate liability
● Vicarious liability (saw this last year)
○ The natural person is primarily liable and the company is vicariously liable,
having created the risk that the tort would be committed. Company liable
alongside the individual.
● Primary/direct liability
○ The natural person’s acts that give rise to liability in tort are attributed to (count
as the acts of) the company.
■ Does primary liability in a corporate context give rise to →
questions abt the defence of illegality?
● Subsidiary liability
○ The parent company owes a direct duty of care to a third party harmed by its
subsidiary.
Primary liability for torts
A company can be primarily liable for torts if the acts of a natural person are attributed to it,
even if the company did not authorise those acts
The company as the wrongdoer: Jetivia v Bilta
● Jetivia v Bilta (UK) Limited [2015] UKSC 23
○ Lord Sumption:
■ The search for a test of a company’s direct or “personal” liability has
sometimes been criticised as a distraction or an artificial
