The Corporation in Private International Law

The topic ‘The corporation in private international law’ is a broad one and of ever increasing and obvious importance as corporations function in a global economy regularly using subsidiaries, whether as local representative bodies forming part of a larger corporate group, or as special-purpose vehicles for particular investments and projects. Some jurisdictions, moreover, will only permit business to be conducted through a locally incorporated joint-venture, and/or insist on local nominee director arrangements.

Some significant foreign economic entities do not always take a recognisable corporate form, and yet their existence, and separate legal personality may be recognised by reference to the law of the place of their formation. Thus it was that the Arab Monetary Fund in 1990 was recognised to have legal personality and to be capable of bringing proceedings against its former director general and various banks, although this result was only reached after litigation through to the House of Lords, and then over the dissent of one Law Lord.² The particular complexity in that case was that the Fund was established by an agreement between 20 Arab States and Palestine which required ratification by separate signatory states.

Legal personality is an interesting concept, illustrated perhaps no more graphically than by New Zealand’s Awa Tupua (Whanganui River Claims Settlement) Act 2017 which gave to the Whanganui River in the North Island separate legal personality (s 14),³ with ss 18 and 19 of the same Act providing for the appointment of two individuals to represent the river. It was by this creative legal drafting that the Whanganui River settlement was able to be effected. But what if the river became involved in a transnational dispute? Say, for example, that an Australian marine biology company had contracted with it to provide consulting services in relation to the river’s health or some contamination. Could the river be sued in Australia for non-payment of fees? Would an Australian court recognise a claim brought by the river against the Australian company for negligent advice? And what about Australian tourists injured in extreme sports conducted on the river?

In a celebrated case, an Indian temple recognised as having legal personality in India was permitted to bring proceedings in England even though it would not have been able to do so if situated in England and Wales.⁴

Legal personality and the recognition of the juridical status of bodies engaged in transnational commerce, which may not always take a familiar corporate form, is only one of many issues that arise under my topic for this address. A ‘foreign company’ within the meaning of s 9 of the Corporations Act, for example, may be an unincorporated body.

Many practitioners will be familiar with the great complexities and challenges of cross-border corporate insolvency rendered at least more manageable by cross-border insolvency legislation based upon the UNCITRAL model law. But unlike the realm of transnational corporate insolvency, many important issues affecting corporations engaged in transnational commercial activity are dealt with by local (and in our case, largely common law) principles of private international law and choice of law rules.

Practitioners, however, may be rapidly befuddled by the fact that, even within common law jurisdictions, there is no necessary uniformity of choice of law principles. One example in the field of corporations is the question of whether the ability to bring a derivative suit in the name of the foreign corporation depends on the law of the company’s incorporation (the position which prevails in England) or, as a matter of procedure, by reference to the law of the forum (the position supported by a number of decisions of the Supreme Court of Queensland).⁵

Even where there is uniformity of choice of law principles, they may be overridden, or at least modified, by statute. And choice of law rules may evolve or need to be created to meet new facts situations.

Difficult questions may arise, for example, in respect of corporate capacity. Take a case where two Swiss corporations enter into a trading agreement governed by English law. One is sued by the other for breach of contract. Would it be a good defence for the defendant to say that the contract was only signed by one director in circumstances where Swiss law (as the lex incorporationis) required it to be signed by two directors? The Court of Appeal for England and Wales recently gave an affirmative answer to this question.⁶ But would it make any difference if only the defendant party was incorporated in Switzerland? If the contract had been partly performed, by reference to which system of law would issues of ratification be determined? By English law as the putative proper law of the contract, by the choice of law rule referable to questions of estoppel, or still by reference to the lex incorporationis?

Some history

Before exploring my topic further, it is first desirable to offer some necessarily abbreviated historical context as the history of the corporate device has, almost since its inception, been inseparable from the conduct of transnational economic activity.

The conventional view is that the first entities somewhat resembling modern corporations (although not quite as we know them) were the incorporated joint stock companies established by Royal Charter in the 16th and 17th centuries^.7 These charters tended to confer separate legal personality, limited liability and often a trading monopoly. In essence, they permitted the aggregation of capital from large pools of private investors to undertake activities deemed to be in the public interest but which could not be financed by the British government, and which often entailed significant risk. A great many of these early chartered companies were created for the purpose of international trade or foreign exploration.⁸

These privately owned incorporated bodies included not only trading companies such as the East India Company, but also a number of entities created to establish overseas British colonies and to conduct quasi-governmental functions on behalf of the Crown. It was a for-profit charter company, for example, that established the first legislative assembly in North America.⁹ Similarly, just across the ditch, the cities of Wellington and Nelson were established and settled by a joint-stock company.¹⁰ The early corporate device was not only a tool of private commerce, but also a vehicle for Britain’s colonial expansion.

The modern corporate form was only made available at large in the mid-19th century, with the passage of the Limited Liability Act 1855,¹¹ the Joint Stock Companies Act 1856¹² and the Companies Act 1862.¹³ These laws were not without controversy.¹⁴ Previously unincorporated joint stock companies could limit investors’ liability to some degree by express contract,¹⁵ but now full limited liability and separate personality were extended to all duly incorporated private entities.

These developments formed part of a pattern of legislative reform intended to encourage investment and meet the growing demand for capital of Britain’s industrial revolution.¹⁶ As industry capital requirements began to exceed what could be feasibly acquired by a partnership, many investors were reluctant to assume unlimited joint liability by investing in unincorporated joint stock companies, in which they had no managerial control and little ability to gauge the wealth of fellow shareholders.¹⁷ Thus, according to this account, the general regime of separate personality and limited liability was introduced primarily as an assurance to skittish investors, at a time when private investment was in high demand.

There were still two important developments to come, however, before the corporate device would reach its final form.
The first was a shift towards the issuing of fully paid-up shares. In the mid-19th century it was customary for shares to be issued with the majority of their nominal value not yet paid, meaning that a corporation could call upon the residual liability of its shareholders to meet any claims which exceeded the company’s assets.¹⁸ Over the next fifty years, however, this norm dissipated, and by the turn of the century ‘nearly all’¹⁹ shares were fully paid-up. This had the consequence that claims against corporations essentially became limited solely to the firm’s assets – a result that may not have been immediately apparent when general limited liability was first introduced.

The second, arguably more significant development was the birth of the corporate group. Many commentators have noted that when the general regime of corporate personality and limited liability was introduced in the mid-19th century, corporate groups were unheard of: incorporated entities were ‘not … generally authorized to own shares of other corporations.’²⁰ In the United States, the origin of the modern corporate group has been traced to legislative changes in New Jersey in 1890^,21 while in the UK the corporate group was not born until the inter-war period, when it arose from a ‘rigid application of the Salomon principle’.²² Whether there is a sound principled basis for affording separate legal personality and limited liability to parent companies as if they were natural persons is the subject of dispute, and has been canvassed elsewhere.²³ It is sufficient to note that this approach to corporate groups has long become entrenched in common law jurisdictions and for now appears to be beyond question.

Corporate agility and the lex incorporationis

The corporate form lends itself to self interested agility. Thus, we saw in the case of James Hardie the attempted transfer or hiving off of liabilities to one corporation, with assets remaining in another company which migrated to a different jurisdiction. Such conduct is scarcely novel.²⁴

Corporate migration may be driven by all different kinds of motivations: tax, regulatory, transparency etc. Similar considerations may influence decisions in relation to the incorporation of subsidiaries in a particular corporate group. So also the use of subsidiary corporations for particular endeavours.

The lex incorporationis – the law of the place of incorporation – will govern many issues that may arise in cases involving foreign corporations involved in litigation in Australian courts, including the capacity of the corporation, the functions and, importantly, the powers of its organs and officers.²⁵ In Base Metal Trading Ltd v Shamurin,²⁶ Tuckey LJ stated that:

‘A director’s duties to his company are inextricably bound up with … and must be governed by the place of the company’s incorporation. Any other result would create huge uncertainty and hamper the requirement for good corporate governance and proper regulatory control.’

A question to which I will return is whether the ability to pierce the corporate veil should be governed by the lex incorporationis or the law of the forum and, if the latter, by reference to reasons of overriding public policy or the operation of some choice of law rule?

As my old teacher and guru on all questions of private international law, Professor Adrian Briggs, has written:²⁷

‘From time to time it is suggested that this invariable reference to the law of the place of incorporation is unsuitable as the basis to govern or regulate a company which may have been incorporated in what one may think of as a registry of convenience, under the laws of which regulation is done with a noticeably light touch, and the rights of those who deal with the company are rather limited. Such thinking has led some systems to utilise the ‘social seat’, or ‘real seat’, as the factor which ties a company to a supervising law. So far as the common law is concerned, though, the lex incorporationis reigns supreme.’

To the extent that the law of the place of incorporation differs from that of the law of the forum, the former will only be of significance if it is pleaded and proved by a party and is not otherwise overridden by statute or the application of public policy.

A very important statutory provision in this respect is s 186 of the Corporations Act 2001 (Cth) which provides that:

‘Sections 180 to 184 do not apply to an act or omission by a director or other officer or employee of a foreign company unless the act or omission occurred in connection with:

(a) the foreign company carrying on business in this jurisdiction; or

(b) an act that the foreign company does, or proposes to do, in this jurisdiction; or

(c) a decision by the foreign company whether or not to do, or refrain from doing, an act in this jurisdiction.’

This section is a classic example of a statutory override of common law choice of law rules. Where s 186 applies, the duties of a director of a foreign company will be added to or at least need to conform with those in ss 180–184 of the Corporations Act.

This example also illustrates a theme of my Spigelman Oration delivered earlier this year entitled ‘Extraterritoriality in Australian Law’ in which I explored the increasing willingness of modern legislatures to regulate conduct which takes place abroad, including in some cases by foreign individuals or corporations, especially where that conduct affects Australia in some material way.²⁸ So that even if directors of a foreign corporation act in accordance with the law of the place where the particular company is incorporated, they and their company may still yet be obliged to comply with applicable Australian statutory law, including some which may be given extraterritorial operation.

Carrying on business and corporate presence

Legislative drafters often employ the expression ‘carrying on business’ (such as we see, for example, in s 186 of the Corporations Act) as a statutory hook, sometimes for the purposes of conferring jurisdiction on a Court or power on a regulator over a foreign corporation and sometimes for the purposes of imposing substantive obligations on such entities. As will be seen later in this address with reference to the recent, and I think continuing, Facebook litigation in the Federal Court, the expression ‘carrying on business’ in Australia has a degree of elasticity about it, and changes in the way business or at least particular kinds of business are carried on in a particular jurisdiction may have important consequences for foreign corporations.

The notion of ‘carrying on business’ in a particular jurisdiction is closely aligned to questions of whether a corporation can be said to be present in a particular jurisdiction. The territorial presence of a corporation in a particular jurisdiction may have relevance both in terms of amenability to suit in that jurisdiction and also to questions of enforcement of judgments or arbitral awards. So much is perhaps most famously illustrated by the facts of Adams v Cape Industries plc²⁹ (Adams v Cape).

Cape was an English company with an array of subsidiary companies which undertook mining activities in South Africa and sold and marketed asbestos in a number of other countries, including the United States. Its wholly owned marketing subsidiary in the United States was North American Asbestos Corp (NAAC), a company incorporated in Illinois. An earlier set of proceedings having been settled, a class action was brought in the Federal District Court in Texas by employees and ex-employees of a Texan factory which had used Cape asbestos. The defendants were Cape, NAAC and a number of other subsidiaries including Capasco: the global marketing subsidiary which, like Cape, was incorporated in England. Cape and Capasco did not participate in the proceedings, maintaining that the Court lacked jurisdiction over them, and Cape put NAAC into liquidation. Default judgment in a very substantial amount was duly entered and enforcement proceedings were brought in England.

Whether or not the judgment would be enforced in England depended (according to common law principles of enforcement of foreign judgments) on whether Cape and Capasco were present in the United States at the time of proceedings or whether they had submitted to the jurisdiction. On the question of presence, the Court indicated that a corporation was likely to be treated by the English court as present within a foreign jurisdiction only where either the corporation had established and maintained at its own expense in that other country a fixed place of business and had carried on from there its business for more than a minimal period of time through its servants or agents or through a representative; that presence could only be established where the corporation’s business had been transacted at or from the fixed place and, in order to ascertain whether the representative had carried on the corporation’s business or their own, it would be necessary to investigate his or her functions and relationship with the overseas corporation.

Most significantly for present purposes, the Court held that neither Cape nor Capasco were present in the United States by virtue of the presence in the United States of NAAC, the wholly owned marketing subsidiary. It had been contended that NAAC should be treated as Cape’s alter-ego in Illinois or, alternatively, that the corporate veil distinguishing NAAC from Cape should be lifted. At first instance, Justice Scott asked:³⁰

‘Is a parent company to be treated, for jurisdiction purposes, as resident in a country in which its wholly owned subsidiary is resident and carries on business? Should the answer be dependent on whether the subsidiary’s business is associated with and, in a group sense, a part of the business of the parent company?’

He answered these questions in the negative partly by reference to what Robert Goff LJ had said in Bank of Tokyo v Karoon,³¹ namely that:

‘Mr. Hoffmann suggested beguilingly that it would be technical for us to distinguish between parent and subsidiary company in this context; economically, he said, they were one. But we are concerned not with economics but with law. The distinction between the two is, in law, fundamental and cannot here be bridged.’

In dismissing an appeal, the Court of Appeal acknowledged that:³²

‘To the layman at least the distinction between the case where a company itself trades in a foreign country and the case where it trades in a foreign country through a subsidiary, whose activities it has full power to control, may seem a slender one.'

In Adams v Cape, the relevant corporations whose veils were sought to be lifted were Cape and Capasco, both English companies, and English law was applied to the issue. But what if those corporations had been incorporated elsewhere and the law of the place of incorporation took a more liberal approach to the lifting of the corporate veil. What law would have been applied by the English courts in those circumstances: the lex incorporationis or the law of the forum? Or changing the facts further, assuming Cape had assets in a different jurisdiction and enforcement of the judgment was attempted in that place, what law would have been applied?

The issue of what law governs questions relating to the corporate veil was noticed but not resolved by Lord Neuberger in VTB Capital plc v Nutritek International Corporation.³³ In the important 2013 decision of the United Kingdom Supreme Court of Prest v Petrodel Resources³⁴ where the issue was whether the corporate veil could be pierced in respect of seven foreign incorporated companies each holding property said to be associated with the husband in family law proceedings, English law was applied to answer the question. What the attitude of the law of the place of incorporation of each of the foreign companies had to say on the topic was not explored. A potential academic picnic was foregone!

Direct rather than derivative liability

In a speech on ‘Piercing the corporate veil’ just over a year ago,³⁵ James Allsop addressed a number of recent influential decisions of senior common law courts bearing upon the liability of parent companies for the misdeeds of their subsidiary entities – particularly those giving rise to claims for environmental damage and mass industrial torts. One was brought against British mining giant Vedanta Resources for environmental damage in Zambia;³⁶ a second against Shell for oil pollution in Nigeria;³⁷ and a third against the newly Irish multinational, James Hardie, for defective homebuilding products in New Zealand.³⁸

These decisions have broadly been interpreted to signal a more expansive approach by some common law courts to holding multinational corporations liable in tort for environmental damage and human rights abuses abroad.³⁹ They also form part of a longer-term trend away from seeking to pierce the corporate veil in a corporate group context (in order to establish what has been described as derivative liability) and towards a land of direct parent company liability^.40

Unlike derivative liability, direct liability involves holding the parent company liable not for the conduct of its subsidiary per se, but for its own acts or omissions, which are said to be an independent source of liability. In its most common tortious form, this involves claims that a parent company itself owed a duty of care to the plaintiffs to supervise the other entities within its corporate group, on the basis that ‘because the [parent company] could have prevented the harm, it should have done so’.⁴¹

The primary significance of Vedanta (although it arose in the context of a challenge to jurisdiction) lay in its illustration of the potential extension of a parental duty of care to non-employees and to the acts of foreign subsidiaries, together with the Court’s comments about particular business practices that might give rise to such a duty. In this context, Lord Briggs was emphatic that the parental duty of care is not a distinct category of common law negligence;⁴² the critical question would be whether Vedanta ‘sufficiently intervened in the management of the Mine owned by its subsidiary’ to have incurred a common law duty of care to the claimants.⁴³

Much has been made of comments in Vedanta to the effect that the existence of a parental duty of care may be supported where the parent company establishes group-wide policies or guidelines for its subsidiaries; where it takes active steps to see that those policies are implemented (for example, by training or supervision); or where it holds itself out to the public as exercising a certain degree of control over its subsidiaries^.44 The claimants relied on material published by Vedanta, including sustainability reports, in which it asserted responsibility for the establishment of appropriate environmental control and sustainability standards.⁴⁵ In light of these and other factors, the Court accepted that there was a real issue to be tried as to Vedanta’s liability in negligence, and therefore rejected the challenge to jurisdiction. In January 2021, Vedanta settled the claim brought by the Zambian citizens for an undisclosed amount.⁴⁶

The significance of these findings will be obvious. If a large multinational entity seeks to enjoy the benefits of holding itself out to maintain certain sustainability standards – for example, the benefits of attracting ‘ESG’ investment – it may face legal risk if it (or its subsidiaries) falls short of those standards.

The second of the recent cases, Okpabi, concerned two sets of proceedings brought against the British parent company of Royal Dutch Shell on behalf of two Nigerian communities comprising over 42,000 claimants. Both claims concerned environmental damage caused by repeated oil spills, which were said to render nearby natural water essentially unusable.

As in Vedanta, both Shell and its Nigerian subsidiary were sued in England^.47 Unlike in Vedanta, the subsidiary was initially successful in challenging the jurisdiction of the court, both at first instance and in the Court of Appeal – where the majority held that there was no arguable case that Shell owed the claimants a duty of care to protect against the actions of its subsidiary, and therefore that the subsidiary could not be served beyond jurisdiction.⁴⁸

The appeal by the Nigerian claimants was unanimously upheld in the Supreme Court. The issues in dispute were narrower than in Vedanta, and essentially went to the question of whether the claim against the parent company was arguable (so as to enable service out of jurisdiction upon the foreign subsidiary). As far as matters of jurisdiction are concerned, the most notable aspect of the judgment of the Supreme Court (delivered by Lord Hamblen) was its forceful insistence that, when determining an interlocutory challenge to service out of jurisdiction, a court will accept the claimant’s factual claims unless they are ‘demonstrably untrue or unsupportable’⁴⁹ – which will only be ‘in clear cases’.⁵⁰ The Supreme Court held that that both the primary judge and the Court of Appeal had erred in conducting a ‘mini-trial’ at the jurisdictional stage, and both were drawn into an evaluation of the weight of the evidence^.51

As for issues of multinational corporate liability more generally, perhaps the most significant passage of Lord Hamblen’s reasons was a development of obiter remarks made by Lord Briggs in Vedanta about the importance of the operational structure of a multinational group^:52

‘There is no limit to the models of management and control which may be put in place within a multinational group of companies. At one end, the parent may be no more than a passive investor in separate businesses carried out by its various direct and indirect subsidiaries. At the other extreme, the parent may carry out a thoroughgoing vertical reorganisation of the group’s businesses so that they are, in management terms, carried on as if they were a single commercial undertaking, with boundaries of legal personality and ownership within the group becoming irrelevant …’⁵³

This passage seems to contemplate the possibility of a form of ‘group liability’ or ‘enterprise liability’ in circumstances where a corporate group operates in practice as an integrated commercial enterprise. In Okpabi, Lord Hamblen held that there was a triable issue as to whether the internal structure of the Shell group was comparable to the ‘single commercial undertaking’ concept referred to by Lord Briggs in Vedanta, in which the ‘boundaries of legal personality … becom[e] irrelevant’^.54 In support of this argument, the claimants had relied on internal documents that were said to establish a ‘vertical’ managerial structure.

How such a claim might unfold in practice is not entirely clear. Yet we may soon find out: unlike Vedanta and other similar cases, Okpabi has not settled, and appears to be slowly proceeding towards trial. This may offer a rare opportunity to see the principles governing parental liability in tort applied on a final basis.⁵⁵

An important aspect of this shift in conceptual attack on parent companies towards direct tortious liability is that, according to the Australian and English choice of law rules for tort, the liability of the parent will be governed by the law of the place of the wrong. Conceptions of the existence and extent of a duty of care, and whether it may be owed by a parent company to employees of a foreign subsidiary, for example, or members of the general public, will invariably differ between jurisdictions, and could well erode the corporate veil otherwise than by the principles we are familiar with.

In this context, the Supreme Court confirmed in Vedanta that whether the parent company’s involvement in the operations of the copper mine gave rise to a duty of care towards Zambian locals would be a matter for Zambian law, and not English law.⁵⁶ This may not have made an enormous difference to the course of the litigation (if it had proceeded to trial), as Zambia inherited the common law of England.⁵⁷ However, it leaves open the possibility that, in similar matters, a parent company might be held to the stricter standards of negligence of foreign countries, or other fault-based civil claims under foreign legislation.⁵⁸ Of course, in many cases the substantive tort law (or equivalent) of a foreign developing nation may not be stricter than the law of the parent company. Nonetheless, there are strong policy reasons why the approach taken in Vedanta is preferable to applying the law of the parent company to determine the existence of a duty of care: as Peter Nygh argued, ‘[t] he latter view would lead to a migration of holding companies to ‘liability havens’’.⁵⁹

In a lecture delivered in 2016, Chief Justice Marilyn Warren argued that direct parent liability had ‘almost completely fallen off the radar^’60 in Australia, observing that:⁶¹

‘…the key difference between the English and Australian approaches is not so much the different tests applicable for duty of care, but rather a difference in attitude towards imposing direct liability on parent companies. The approach in the Australian cases is rooted in a reluctance in corporations law to lift the corporate veil, and thus sets the bar high for the parent– subsidiary relationship that would give rise to a duty of care on the part of the parent.’

Whether the decisions in Vedanta and Okpabi will place conceptions of direct parent liability back on the radar in Australia remains to be seen. The increasing sophistication and creativity of class action lawyers would point towards an affirmative answer to this question. Developments in parent company litigation in the United Kingdom have been lauded in some quarters as a ‘breakthrough’ for transnational corporate accountability,⁶² and decried by others as an ‘assault on UK PLCs for acts of subsidiaries’ and the rise of ‘class action tourism’.⁶³

The jurisdictional veil

Vedanta, Okpabi and James Hardie form part of an emerging trend of what I will refer to for simplicity as transnational corporate accountability litigation.⁶⁴ While the consequences of the corporate veil in multinational groups are well understood, less well recognised is the role that separate legal personality may play in erecting what has been termed a ‘jurisdictional veil’⁶⁵. The term essentially describes the way in which the structure of a corporate group may have the effect of, or be sought to be used as, ‘shielding’ at least certain (typically senior, asset-rich) companies in the group from the reach of courts and regulators in certain countries.

Cape and Capasco, in effect, took advantage of what I have referred to as the ‘jurisdictional veil’ by not appearing in the United States proceedings brought against them in the Adams v Cape litigation. Their decision not to appear was no doubt a calculated one, based upon the fact that they had no assets in the United States against which any default judgment could be enforced and their assessment as to the lack of enforceability of any default judgment against them in the United Kingdom on the basis of their lack of presence in that jurisdiction and their confidence that English courts would not pierce the corporate veil.

In a different forensic context, Vedanta, Okpabi and James Hardie each involved a preliminary challenge to the jurisdiction of the forum court on the basis that one or more of the defendant companies was incorporated and domiciled in a foreign jurisdiction, or that the dispute did not have a close enough connection to the country of the parent company.⁶⁶ In each case, the challenge was dismissed and the court assumed jurisdiction. The potential ‘jurisdictional veil’ was unavailing.

Such challenges by foreign corporations are familiar enough as litigation in a particular forum is resisted with a view to driving the litigation to a forum that is strategically more attractive to the defendants, or putative defendants. The attractions of a different forum may include real and/or perceived procedural advantages which, for a well-resourced defendant, may include the scope for delay, the lack of certain remedies or measures of damages and/or a weaker enforcement culture. This was the strategy deployed by Union Carbide in the Bhopal litigation. In a courthouse across the road from its corporate headquarters, Union Carbide successfully argued that the Texas court was not a convenient forum for it to defend a class action brought by thousands of badly injured Indian plaintiffs following the devastating explosion.

The legal environment of a developing country may be distinctly unfavourable to a poorly resourced plaintiff: there may be an ineffective system of legal aid funding, or a lack of necessary legal expertise in complex corporate or transnational litigation.⁶⁷ Moreover, it is often the case that the damage said to flow from the corporate activity or inactivity has occurred in developing countries where the rule of law may be weaker than in the forum of the parent company, and where public institutions may be inefficient, underresourced, or vulnerable to influence. In particular, where a country is heavily dependent on the public revenue from a particular industry, the independence and impartiality of public institutions may sometimes be seen to be open to question.⁶⁸

Many of the claims in what I have referred to as the emerging trend of transnational corporate accountability litigation were brought by foreign plaintiffs, in respect of the conduct of foreign subsidiaries, and at times governed by foreign law. In all of them, the first (and often only) major contest related to jurisdiction, with varying results. The importance of these preliminary challenges should not be underestimated: in many of the matters referred to, a generous settlement was reached once the challenges to jurisdiction were overcome.⁶⁹

In decisions such as Vedanta and Okpabi, there may perhaps be discerned a greater willingness by courts – together with legislators⁷⁰ and regulators – to extend the reach of their jurisdiction to address environmental and social harms caused by corporate conduct in foreign jurisdictions.

These developments are difficult to disentangle from changing public attitudes towards the responsibilities owed by corporate actors. There has, of course, been a shift of seismic proportions towards sustainable investing over the past decade – now universally denoted by the term ‘ESG’. That shift has brought with it a greater degree of public scrutiny on the environmental and human rights implications of corporate activity, and particularly the impact of various activities in a company’s supply chain. Increasingly, this scrutiny is not limited to the extraction of resources or the production of material goods, but also extends to the digital economy: consider, for example, public concerns about electoral interference using digital platforms,⁷¹ or artificial intelligence companies that use low-paid moderators in developing countries to filter for distressing content.⁷²

It may be noted that this jurisdictional veil may be deployed in different ways for different purposes. So far, I have focussed on a particular category of litigation involving allegations of corporate misconduct in developing countries: in cases such as these, the jurisdictional veil tends to be invoked to keep disputes out of the jurisdiction of the parent company in favour of the courts of the foreign subsidiary. In other circumstances, however, a jurisdictional veil may be relied upon in an attempt to shield a parent corporation from the jurisdiction of courts (or regulators) in foreign countries where the corporation derives income, thereby leaving no alternative but to seek relief in the country of the parent company. This has been the case, for example, in a number of recent disputes concerning digital platforms, to which I will soon return.⁷³

It must also be noted that the use of complex webs of companies in multinational corporate groups may present enormous challenges for regulators which, despite increasing international collaboration, remain essentially domestic in the scope of their powers and operations.⁷⁴ …there may perhaps be discerned a greater willingness by courts – together with legislators and regulators – to extend the reach of their jurisdiction to address environmental and social harms caused by corporate conduct in foreign jurisdictions.

Australia: an unknown quantity?

Australia remains somewhat of an unknown quantity when it comes to transnational parent company litigation. Although now almost three decades old, some guidance as to the approach of Australian courts to cases such as these may be found in two interlocutory decisions delivered by Justice Byrne in the Victorian Supreme Court concerning the Ok Tedi mining disaster in Papua New Guinea. Those decisions, delivered in 1995, concerned a jurisdictional challenge in proceedings brought by Papua New Guinean locals against BHP and a foreign subsidiary for widespread environmental damage caused by the discharge of industrial chemicals from the Ok Tedi copper mine.⁷⁵

For our purposes, the primary relevance of the Ok Tedi litigation is what was said about the so-called Moçambique principle in private international law, and its relevance in claims for environmental damage. That principle, which derives from the decision of the House of Lords in British South Africa Co v Companhia de Moçambique,⁷⁶ is to the effect that a common law court will not exercise jurisdiction in a claim for title, possession, trespass or nuisance to foreign land.⁷⁷It is a manifestation of the common law’s historical reluctance to intrude into the territorial autonomy of a foreign sovereign.

When the jurisdictional challenge first came before the Victorian Supreme Court, it was held that the Court lacked jurisdiction to entertain parts of the claims which related to trespass, nuisance, and negligently causing damage to foreign land. However, when the plaintiffs reformulated their claims to instead seek damages for the loss of amenity or enjoyment of the polluted lands and waters, a fresh challenge to jurisdiction failed.⁷⁸ This outcome was at the time described by one commentator as demonstrating that ‘jurisdictional obstacles, such as the Moçambique principle, [do not] necessarily pose insurmountable difficulties to a determined and imaginative plaintiff’ seeking recompense for environmental damage to land.⁷⁹ The following year, the parties reached an out-of-court settlement.

In the wake of Vedanta and Okpabi, it remains to be seen whether the current wave of corporate accountability litigation against parent companies in their home courts will reach Australia. Neither case appears to have yet been referred to in decisions of Australian courts. Yet, on its face, there are at least three features of the Australian legal landscape which have the potential to make it an attractive jurisdiction for litigation of this kind. Those features concern rules of long-arm service for foreign corporations, the divergence between the Australian and English tests for stay applications on the ground of forum non conveniens, and principles of substantive liability for parent companies.

First, rules of long-arm service in Australian courts tend to be relatively generous to plaintiffs commencing litigation against foreign corporations.⁸⁰ Significant changes in the past decade to rules governing long-arm service in most Australian courts have, generally speaking, made it easier for plaintiffs to establish jurisdiction over foreign defendants without the leave of the Court.⁸¹ Earlier this year the Federal Court Rules were amended to bring them into conformity with most other Australian jurisdictions, in that leave is not required to serve out of jurisdiction provided that the claim falls into one of a number of fairly broad categories. The practical effect of the scheme of long-arm jurisdiction in most Australian courts is that the focus of interlocutory jurisdictional battles shifts to the application of the forum non conveniens test, at the motion of the defendant, once service has been effected.

A second aspect of Australian law that might facilitate or encourage parent company litigation is that the principles governing forum non conveniens in Australia are famously more favourable to claimants than in other common law jurisdictions. Since the High Court’s decision in Voth v Manildra Flour Mills Pty Ltd,⁸² a defendant seeking a stay of proceedings on forum non conveniens grounds must demonstrate that the Australian court is a ‘clearly inappropriate forum’, rather than that there is a ‘more appropriate forum’ elsewhere. Although it may be open to question just how large the gulf between these two thresholds is in practice, this discrepancy will undeniably operate in favour of a foreign claimant attempting to resist a stay application.

It may also be noted that, where a claimant seeks to argue that they will not receive ‘substantial justice’ in the alternative forum, as was argued in Vedanta and Okpabi, one advantage of the ‘clearly inappropriate forum’ test is that its focus is squarely on the appropriateness (or otherwise) of the forum court. This may have the effect of allowing a court to assume jurisdiction while avoiding the need to engage in difficult assessments of the nature and quality of judicial process in a foreign country.

Third, and without delving into detail, as for questions of substantive liability there is no question that, as in England, an Australian parent company is capable of owing a duty of care in respect of the acts of its subsidiaries in certain circumstances.⁸³ The question of whether a company owes such a duty will turn on the facts of the case and the presence of ‘salient features’ of the kind discussed in Caltex Refineries (Qld) Pty Ltd v Stavar.⁸⁴

It has been argued that the application of principles of negligence to parent companies has been narrower in Australia than in England^,85 typically by reference to a series of Australian decisions in the late 1990s concerning asbestos exposure, and in particular, the decision of the NSW Court of Appeal in James Hardie & Co Pty Ltd v Hall⁸⁶ (James Hardie v Hall). However, it remains to be seen to what extent the ‘narrow’ approach of the late 1990s will continue to hold sway in the wake of Vedanta and Okpabi. In this context, it may be noted that the leading decisions of the 1990s were decided when the law of negligence in Australia was predicated on the ‘proximity’ test, which has since fallen out of favour.⁸⁷ Further, the dispositive reasoning in James Hardie v Hall, on closer examination, turned on notions of derivative liability rather than direct liability in negligence, and has been criticised for ‘confusing piercing the corporate veil… [with] the application of principles of tort to the parent as an individual’.⁸⁸

More recent guidance may be found in the 2018 decision of the NSW Court of Appeal in Strategic Formwork Pty Ltd v Hitchen,⁸⁹ in which no reference was made to James Hardie v Hall. In that case, Basten JA held that a parent company owed a direct duty of care because, in the circumstances, the parent and its subsidiary comprised a ‘single integrated business operation’ by reason of the active involvement of the parent company’s officers in the operations of the subsidiary.⁹⁰ While there was no transnational dimension to that case, it may demonstrate a willingness, in certain circumstances, to look beyond the legal structure of a business to the reality of its organisational structure.

Facebook Inc and loosening approaches to digital territorial connection

Let me now turn to another relevant recent development in Australian law, which, although decided in an entirely different context from the cases I have discussed thus far, similarly points towards loosening approaches to the ‘jurisdictional veil’ in litigation against corporations.

In Facebook Inc v Australian Information Commissioner⁹¹ (Facebook), decided in February last year, the Full Court of the Federal Court held that the Privacy Act 1988 (Cth), and the powers that it confers on the Australian Information Commissioner, are capable of applying to companies that have no physical presence in Australia. The principal significance of the case is that it considered what it means, within the context of the Privacy Act, for a company to ‘carry on business in Australia’ – a criterion which serves as the jurisdictional threshold for the application of the Privacy Act to foreign corporations.⁹²

The Facebook decision has been interpreted as having wide-reaching implications for multinational corporate groups, extending considerably beyond issues of privacy. That is because, as I have discussed, the phrase ‘carrying on business in Australia’ serves as a hinge not only for the extraterritorial operation of the Privacy Act, but also a number of other statutes. For example, large parts of the Competition and Consumer Act 2010 (Cth), including substantially all of the Australian Consumer Law, apply to conduct outside Australia by corporations ‘carrying on business in Australia’.⁹³ A foreign corporation carrying on business in Australia is also required to register with ASIC,⁹⁴ and therefore to appoint a local agent who can accept service on its behalf, essentially rendering the corporation amenable to suit in Australia.⁹⁵ Of course, it is not necessarily safe to assume that the phrase ‘carrying on business in Australia’ will bear the same meaning for every statute in which it appears. Statutory context will be an essential part of determining whether a corporation carries on business in Australia in any given case. Indeed, statutory context was critical to the reasoning of the Full Court in Facebook. In rejecting a submission that a company could not carry on business in Australia without a material physical presence in the country, Perram J emphasised that the central concern of the Privacy Act is ‘a non-material concept: information.’⁹⁶ As was said in Tiger Yacht Management Ltd v Morris:⁹⁷

‘The expression ‘carrying on business’ may have different meanings in different contexts: Luckins v Highway Motel (Carnarvon) Pty Ltd [1975] HCA 50; (1975) 133 CLR 164 at 178 (Gibbs J). So, care must be taken to understand the context in which the requirement is being considered. … when used to ensure a jurisdictional nexus as a matter of comity it will have a meaning informed by the requirement to ensure there is sufficient connection with the country asserting jurisdiction.’

The Facebook decision concerned the Cambridge Analytica privacy scandal that surfaced in 2018. The facts of that affair bear repeating. In short, Facebook was revealed to have allowed a third-party app developer to access the data of some 87 million Facebook users worldwide without their consent,⁹⁸ including over 300,000 Australians.⁹⁹ That data was then sold to a political consultancy firm which developed targeted political advertising for, among others, the Trump campaign in 2016.

In 2020, the Australian Information Commissioner commenced proceedings against both Facebook Inc, the parent company incorporated in the United States, and Facebook Ireland, a wholly owned subsidiary which directly provided the Facebook platform to Australian consumers.¹⁰⁰ The Commissioner alleged that both Facebook entities had contravened the Australian Privacy Principles by using information for a purpose other than that for which it was collected, and failing to take reasonable steps to prevent the unauthorised disclosure of the information.¹⁰¹ The parent company, Facebook Inc, applied to set aside service out of jurisdiction on the basis that there was no prima facie case, contending that it did not carry on business in Australia and therefore was not subject to the Privacy Act.

Facebook Inc asserted that only Facebook Ireland carried on business in Australia, and that Facebook Inc merely provided data processing services to Facebook Ireland pursuant to an agreement between the two companies. It pointed to the fact that no physical element of the parent company’s business was located in Australia – no fixed place of business, human instrumentalities, assets, agents, contractual counterparties or direct customers – and that no foreign corporation had previously been held to carry on business in Australia without the presence of any of those physical indicia.¹⁰²

This argument was rejected at first instance and on appeal. The Full Court held that, in the context of the Privacy Act, there was no requirement for any physical indicia of business activity to be in Australia for a company to carry on business in the country. Crucially, a sufficient territorial connection may be founded by non-physical activities which occur in Australia but are undertaken remotely, and which are ancillary to transactions that make up or support the business.¹⁰³ In the case of Facebook Inc, there was a prima facie case that the company undertook two activities in Australia as part of the services it provided to Facebook Ireland. First, Facebook Inc was responsible for installing ‘cookies’ on the devices of Facebook users – that is, according to my millennial staff, small pieces of locally stored data that make websites faster to use and facilitate the collection of information about the user. Second, Facebook Inc provided what was referred to as a Graph API to Australian app developers, which was essentially an interface allowing the third-party apps to use the Facebook login platform.

These activities went a considerable way to rebutting the ‘floodgates’ contentions advanced by Facebook before the Federal Court. Perram J emphasised that the case before the Court was distinguishable from cases where Australian users merely access websites hosted by foreign corporations,¹⁰⁴ while Allsop CJ flatly rejected the suggestion that the effect of the Court’s decision was to work an ‘unprecedented expansion’ to the concept of ‘carrying on business’.¹⁰⁵

It may also be noted that the Court took a commercially pragmatic view of the nature of Facebook’s business, resisting attempts to dissect its commercial activities into component parts or discrete steps. Allsop CJ, in particular, adopted a holistic approach to characterising the business carried on by Facebook Inc, and one which looked beyond its corporate legal structure to the commercial reality of its operations. Despite Facebook Inc’s attempt to narrowly characterise its relevant business as providing data processing services to Facebook Ireland, the Chief Justice described the business in a more global way, as the Facebook decision has been interpreted as having wide-reaching implications for multinational corporate groups, extending considerably beyond issues of privacy. one that centred on the monetisation of personal data – or, as his Honour plainly put it, ‘extracting value from information about people’.¹⁰⁶ As Freeburn and Ramsay have noted:¹⁰⁷

‘This approach did not require the lifting of the corporate veil between the two companies, but it avoided any artificial isolation, created by Facebook’s corporate structure, of Facebook Inc from the Australian jurisdiction in which it engaged in business activities.’

The Facebook case is not the only recent case to demonstrate the easing of territorial constraints with respect to foreign corporations which operate in the digital economy. In 2017, in Valve Corporation v Australian Competition and Consumer Commission,¹⁰⁸ which was a precursor of sorts to the Facebook case, the Federal Court held that Valve – an American online gaming platform which sold online computer game software to Australian customers – carried on business in Australia and therefore was exposed to liability under the Australian Consumer Law for various false or misleading representations made to Australian consumers. This conclusion was reached notwithstanding that the contractual agreement between Valve and its users nominated the law of Washington State as the proper law of the contract, and that Valve had no employees or subsidiaries in Australia (although it did operate data servers located in Australia).¹⁰⁹ Importantly, the Court also held that the representations giving rise to liability were made in Australia for the purposes of the Australian Consumer Law, despite that they were uploaded in Washington.

It remains to be seen what other digital or non-physical acts may create a sufficient territorial connection to bring a foreign corporation within the rubric of ‘carrying on business in Australia’. One thing that is clear is that an Australian court’s approach to this question will always be dependent on both statutory context and, importantly, the nature of the business in question.¹¹⁰ While the category of acts that might support a territorial connection are effectively unlimited, the trajectory of Australian litigation indicates that foreign businesses will need to be particularly alert to acts taken partially in Australia to ‘to collect, store, analyse, organise, distribute and deploy … information about people and their lives’.¹¹¹

These recent decisions also underscore the fact that broadening approaches to territorial connection in Australia have important consequences for multinational corporations not only in terms of amenability to suit in Australian courts, but also for the substantive liability that they may be exposed to under Australian law. In this context, many observers will likely take a keen interest in criminal proceedings currently underway in the West Australian Supreme Court, where Facebook – or Meta, as it is now known – voluntarily submitted on a ‘one time basis’ to jurisdiction in a private prosecution brought by Andrew Forrest for breaches of Australia’s anti money laundering laws. Forrest’s legal representatives have publicly claimed that this case represents ‘the first time [Meta has] conceded jurisdiction in the Australian courts’¹¹² (albeit in the markedly different statutory context of a criminal prosecution).

While the focus of this address has been on shifting judicial approaches to questions of territoriality and territorial connection involving multinational corporations, it may also be observed that these developments come at a time of increasing legislative willingness to regulate the acts of multinational corporate entities abroad. In delivering the Spigelman Oration in April this year, I spoke of the ‘increasing number of Acts of the Commonwealth and some State legislatures, regulating both civil and criminal activity, [which] are expressly stated to operate with a degree of extraterritorial reach’.¹¹³ Consider, for example, Division 70 of the Criminal Code Act 1995 (Cth) (Criminal Code), which extends to bribery of foreign public officials which takes place wholly outside Australia by Australian companies, and which was recently considered by the High Court in The King v Jacobs Group.¹¹⁴

Recent legislative developments also reveal an increasing legislative creativity in approaches to scrutinising the conduct of Australian corporate entities abroad, including by implementing transparency or disclosure-based schemes requiring companies doing business in Australia to publicly report on their activities in foreign jurisdictions. One example is found in the Modern Slavery Act 2018 (Cth), which requires large businesses to report annually on the risk of modern slavery in their operations, including in their overseas supply chains. To give another example, currently before the Australian parliament is the bluntly named ‘Treasury Laws Amendment (Making Multinationals Pay Their Fair Share – Integrity and Transparency) Bill 2023’. If passed, this bill would, among other things, establish a regime of corporate disclosure requiring multinationals with a presence in Australia to publicly disclose disaggregated, country by-country financial reports pertaining to their subsidiaries and overseas operations, with a similar operation to new corporate disclosure requirements in the European Union.

Conclusion

By way of conclusion, significant shifts can be detected in the orthodoxy both of separate corporate personality and notions of territorially based corporate liability. Changes can be seen in the broadening application of the ‘carrying on business’ test, with its various procedural and substantive applications; the trajectory towards direct parental liability in transnational corporate accountability litigation; lurking choice of law issues in the context of corporate groups; and perhaps most of all, an increasing legislative appetite for domestic reforms with far-reaching extraterritorial implications.

In this context, evolving trends in private international law rules appear to be informed by, or at least moving in tandem with, changing public attitudes towards corporate social responsibility, along with a confluence of other factors. Transnational corporate group structures are ever-growing in number, sophistication and complexity; the global digital economy is increasingly indifferent to territorial boundaries; and businesses are facing mounting public scrutiny on the environmental, social and human rights implications of corporate conduct abroad.

All of this means that in the years to come, private international law will play an increasingly critical role in determining the content and enforcement of obligations owed by corporations with a global presence. BN

ENDNOTES

^{1 The Chief Justice acknowledges the invaluable assistance of his researcher, Mr Sam Cass, in the preparation of this paper. A version of this address was also delivered to the 39th Annual Conference of the Banking & Financial Services Law Association in Queenstown, New Zealand.}

^{2 Arab Monetary Fund v Hashim (No 3) [1991] 2 AC 114.}

^{3 ‘Te Awa Tupua is a legal person and has all the rights, powers, duties, and liabilities of a legal person.’ In New Zealand, legal personality has also been conferred upon Te Urewera, a mountainous area on the North Island (see Te Urewera Act 2014 (NZ), s 11), and in 2017 the New Zealand government entered into a memorandum of understanding to confer legal personality upon Taranaki Maunga, or Mount Taranaki.}

^{4 Bumper Development Corporation Ltd v Commissioner of Police of the Metropolis [1991] 1 WLR 1362.}

^{5 See Martin Davies, Andrew Bell, Paul Le Gay Brereton and Michael Douglas, Nygh’s Conflicts of Laws in Australia (10th ed, 2019, LexisNexis Butterworths) at 35.39.}

^{6 See Integral Petroleum SA v SCU-Finanz AG [2015] EWCA Civ 144.}

^{7 See e.g., Phillip Blumberg, ‘Limited Liability and Corporate Groups’ (1986) 4 Journal of Corporation Law 574; Janet McLean, ‘The Transnational Corporation in History: Lessons for Today?’ (2004) 79(2) Indiana Law Journal 363. Other legal constructs with some of the attributes of corporations have been traced back as far as Roman times: see e.g., Robert W Hillman, ‘Limited Liability in Historical Perspective’ (1997) 54 Washington & Lee Law Review 615.}

^{8 Janet McLean, ‘The Transnational Corporation in History: Lessons for Today?’ (2004) 79(2) Indiana Law Journal 363 at 365.}

^{9 The Virginia Company of London, created in 1606 by royal charter issued by James I, established the first permanent British settlement in North America in the imaginatively named Jamestown. The company established a legislative assembly there in 1619.}

^{10 Although the New Zealand Company in fact did not receive a royal charter until afterwards, in 1841.}

^{11 18 & 19 Vict c 133.}

^{12 19 & 20 Vict c 47.}

^{13 25 & 26 Vict c 89.}

^{14 See generally Phillip Blumberg, ‘Limited Liability and Corporate Groups’ (1986) 4 Journal of Corporation Law 574 at 583ff.}

^{15 Henry Hansmann and Reinier Kraakman, ‘Toward Unlimited Shareholder Liability for Corporate Torts (1991) 100(7) Yale Law Journal 1879 at 1924.}

^{16 Paddy Ireland, ‘The Rise of the Limited Liability Company’ (1984) 12 International Journal of the Sociology of Law 239 at 245.}

^{17 Phillip Lipton, ‘The Introduction of Limited Liability into the English and Australian Colonial Companies Acts: Inevitable Progression or Chaotic History?’ (2018) 41(3) Melbourne University Law Review 1278 at 1293.}

^{18 Paddy Ireland, ‘Limited Liability, Shareholder Rights and the Problem of Corporate Irresponsibility’ (2010) 34(5) Cambridge Journal of Economics 837 at 844.}

^{19 Paddy Ireland, ‘Limited Liability, Shareholder Rights and the Problem of Corporate Irresponsibility’ (2010) 34(5) Cambridge Journal of Economics 837 at 855.}

^{20 Phillip Blumberg, ‘The Transformation of Modern Law: the Law of Corporate Groups’ (2005) Connecticut Law Review 605 at 607. See also Marilyn Warren, ‘Corporate Structures, the Veil and the Role of the Courts’ (2017) 40(2) Melbourne University Law Review 657 at 669; Peter Nygh, ‘The Liability of Multinational Corporations for the Torts of Their Subsidiaries’ (2002) 3 European Business Organization Law Review 51 at 65; Phillip Lipton, ‘The Mythology of Salomon’s Case and the Law Dealing with the Tort Liabilities of Corporate Groups: An Historical Perspective’ (2014) 40(2) Monash University Law Review 452 at 474.}

^{21 Phillip Blumberg, ‘The Transformation of Modern Law: the Law of Corporate Groups’ (2005) Conneticut Law Review 605 at 607.}

^{22 Paddy Ireland, ‘Limited Liability, Shareholder Rights and the Problem of Corporate Irresponsibility’ (2010) 34(5) Cambridge Journal of Economics 837 at 848 (referring to Salomon v A Salomon & Co Ltd [1897] AC 22).}

^{23 See e.g., James Allsop, ‘Piercing the corporate veil: recent international developments’ (Speech, 38th Annual Conference of the Banking & Financial Services Law Association, 20 September 2022) at [29]–[30]; Marilyn Warren, ‘Corporate Structures, the Veil and the Role of the Courts’ (2017) 40(2) Melbourne University Law Review 657 at 669–670, and the sources cited therein.}

^{24 See e.g., Adams v Cape Industries plc [1990] Ch 433. One recent example can be seen in the migration of Royal Dutch Shell from the Netherlands to the UK following the decision of the Hague District Court in Milieudefensie v Royal Dutch Shell, which required Shell to reduce its global carbon emissions by 45% (compared with 2019 levels) by 2030. Shell denied the two were related, although much media speculation has suggested the contrary.}

^{25 Carl Zeiss Stiftung v Rayner and Keeler Ltd (No 2) [1967] 1 AC 853 at 919. See also PT Ltd v Maradona Pty Ltd (1992) 25 NSWLR 643 at 655; Duro Feldguera Australia Pty Ltd v Samsung C&T Corporation [2015] WASC 484 at [82], quoted in Laing O’Rourke Australia Construction Pty Ltd v Samsung C&T Corporation [2016] WASC 49 at [33]; Integral Petroleum SA v SCUFinanz AG [2015] Bus LR 640 at 652, [39]; Mur Joint Ventures Bv v Compagnie Monegasque De Banque [2016] EWHC 3107 (Comm) at [16]. As to directors, see Konamaneni v Rolls Royce Industrial Power (India) Ltd [2002] 1 WLR 1269.}

^{26 [2005] 1 WLR 1316 at [56]. See also Shaker v Al-Bedrawi (Peter Gibson and Arden LJJ, Bodey J) [2003] 2 WLR 922; 1 BCLC 157; (2003) BCC 465 (pet. dismissed); [2004] 1 WLR 232. Compare Paramasivam v Flynn (1998) 90 FCR 489 at 503.}

^{27 Adrian Briggs, Private International Law in English Courts (2nd ed, 2023, Oxford University Press) at 692.}

^{28 See Andrew S Bell, ‘Extraterritoriality in Australian Law’ (Speech, 2023 Spigelman Oration, 27 April 2023).}

^{29 [1990] Ch 433.}

^{30 Adams v Cape at 475.}

^{31 [1987] AC 45 at 64, referred to in Adams v Cape at 477.}

^{32 Adams v Cape at 536.}

^{33 [2013] 2 AC 337 at 385. See also CH Tham, ‘Piercing the Corporate Veil: Searching for Appropriate Choice of Law Rules’ [2007] LMCLQ 22.}

^{34 [2013] 2 AC 415.}

^{35 James Allsop, ‘Piercing the corporate veil: recent international developments’ (Speech, 38th Annual Conference of the Banking & Financial Services Law Association, 20 September 2022).}

^{36 Vedanta Resources Plc and Another v Lungowe and Others [2020] AC 1045; [2019] UKSC 20 (Vedanta). Vedanta concerned a claim brought by over 1,800 residents of a rural district in Zambia for damage to their health and livelihoods as a result of the discharge of toxic waste into surrounding waterways by the Nchanga copper mine – said to be the second largest open cut mine in the world and the largest non-public employer in Zambia. The claim was brought against both the British parent company, Vedanta, and the Zambian subsidiary, which operated the mine.}

^{37 HRH Emere Godwin Bebe Okpabi and others v Royal Dutch Shell plc and another [2021] UKSC 3; 3 All ER 191 (Okpabi).}

^{38 James Hardie Plc v White [2019] 2 NZLR 49 (White). An application for leave to appeal in the New Zealand Supreme Court was dismissed in James Hardie Industries Plc v White [2019] NZSC 39.}

^{39 See e.g., E Ojeda, ‘Transnational Corporate Liability Litigation and Access to Environmental Justice: The Vedanta v Lungowe Case’ (2021) 4 LSE Law Review 224; Marilyn Croser, Martyn Day, Mariette Van Huijstee, Channa Samkalden, ‘Vedanta v Lungowe and Kiobel v Shell: The Implications for Parent Company Accountability’ [2020] 5 Business and Human Rights Journal 130; Cees Van Dam, ‘Breakthrough in Parent Company Liability: Three Shell Defeats, the End of an Era and New Paradigms’ (2021) 18(5) European Company and Financial Law Review 714.}

^{40 See Martin Petrin and Barnali Choudhury, ‘Group Company Liability’ (2018) 19 European Business Organization Law Review 771; Peter Nygh, ‘The Liability of Multinational Corporations for the Torts of Their Subsidiaries’ (2002) 3 European Business Organization Law Review 51 at 63.}

^{41 Peter Nygh, ‘The Liability of Multinational Corporations for the Torts of Their Subsidiaries’ (2002) 3 European Business Organization Law Review 51 at 64.}

^{42 Vedanta at [49]–[50], endorsing the remarks of Sales LJ in AAA v Unilever plc [2018] EWCA Civ 1532 at [36].}

^{43 Vedanta at [44].}

^{44 Vedanta at [52]–[53].}

^{45 Vedanta at [55], [58].}

^{46 ‘Vedanta mine settles Zambian villagers’ pollution claim’, BBC (online, 19 January 2021) <https://www. bbc.com/news/world-africa-55725305>.}

^{47 Okpabi at [7]. In addition to claims in negligence, the plaintiffs pleaded causes of action under Nigerian statutes.}

^{48 Okpabi and others v Royal Dutch Shell Plc and Shell Petroleum Development Company of Nigeria Ltd [2018] EWCA Civ 191 at [132], [206].}

^{49 Okpabi at [107], [110], [153].}

^{50 Okpabi at [110].}

^{51 Okpabi at [111]-[112].}

^{52 Vedanta at [51].}

^{53 The concept of an ‘undertaking’ as encompassing a corporate group is foundational in UK and EU competition law. Indeed, s 59 of the Competition Act 1998 (UK) defines an ‘undertaking’ as a ‘person’, although it has no further statutory definition. As was noted in BMW AG and Volkswagen AG v Competition and Markets Authority [2023] CAT 7 at [45] and [47], ‘The concept of an undertaking forms the basic ‘unit of account’ for European Union and United Kingdom competition law…it is undertakings that commit breaches. … In other words, an undertaking is an economic entity. There is a single undertaking, and not several undertakings, even if as a matter of law, the economic entity consists of several natural orlegal persons.’ This is, at least on one view, a form of ‘group liability’ which may arise when anticompetitive conduct is alleged.’}

^{54 Okpabi at [157].}

^{55 Another English decision in which these principles were applied on a final basis was Chandler v Cape plc [2012] EWCA Civ 525.}

^{56 Vedanta at [44]. A similar view has been expressed in obiter in Australia in James Hardie & Co Pty Ltd v Hall (1998) 43 NSWLR 554.at 576-577.}

^{57 See e.g., WL Church, ‘The Common Law and Zambia’ (1974) 6 Zambian Law Journal 1.}

^{58 In Vedanta, the claimants also advanced a claim (relying on expert evidence) on the basis of ‘faultbased liability under the [applicable] Zambian environmental, mining and public health legislation in connection with the escapes of toxic materials’: see at [44].}

^{59 Peter Nygh, ‘The Liability of Multinational Corporations for the Torts of Their Subsidiaries’ (2002) 3 European Business Organization Law Review 51 at 80.}

^{60 Marilyn Warren, ‘Corporate Structures, the Veil and the Role of the Courts’ (2017) 40(2) Melbourne University Law Review 657 at 686.}

^{61 Marilyn Warren, ‘Corporate Structures, the Veil and the Role of the Courts’ (2017) 40(2) Melbourne University Law Review 657 at 684.}

^{62 See e.g., Richard Meeran, ‘Multinational Human Rights Litigation in the UK: A Retrospective’ (2021) 6(2) Business and Human Rights Journal 255; Cees Van Dam, ‘Breakthrough in Parent Company Liability: Three Shell Defeats, the End of an Era and New Paradigms’ (2021) 18(5) European Company and Financial Law Review 714.}

^{63 John Ogilvie, Neil Blake and Alex Milne, ‘Class Action Assault on UK PLCs for Acts of Subsidiaries’ Herbert Smith Freehills (Webpage, 10 September 2018)<https://www.herbertsmithfreehills.com/latestthinking/class-action-assault-on-uk-plcs-for-acts-ofsubsidiaries>.}

^{64 In the late 1980s and 90s, courts in the United States, the UK, Canada and Australia began to hear claims against multinational corporate entities involving a grim assortment of industrial and environmental disasters in the developing world – early examples concerned, for example, the notorious Bhopal industrial disaster in India (In Re Union Carbide Corporation Gas Plant Disaster at Bhopal (1986) 634 F. Supp. 842); mercury poisoning and asbestosis in South Africa (Ngcobo and others v Thor Chemicals Holdings Limited (CA 9 October 1995, unreported); Lubbe v Cape Plc [2000] 1 WLR 1545; [2000] UKHL 41); oil spills in Ecuador (Aguinda v Texaco Inc (2001) 142 F Supp 2d 534, 554 (SDNY); Aguinda v Texaco Inc (2002) 303 F 3d 470, 480 (2d Cir)); uranium radiation exposure in Namibia (Connelly v RTZ Corporation plc [1997] UKHL 30, [1999] CLC 533); and the collapse of mining tailings dams in Papua New Guinea (Dagi v The Broken Hill Pty Co Ltd and Ok Tedi Mining Ltd (unreported, Victorian Supreme Court, Byrne J, 22 September 1995); Dagi v Broken Hill Pty Co Ltd [No 2] [1997] 1 VR 428) and in Guyana (Recherches Internationales Quebec v Cambior Inc. [1998] Q.J. No. 2554, para. 82 (Quebec Super. Ct. Aug. 14, 1998)).}

^{65 See Martin Davies, Andrew Bell, Paul Le Gay Brereton and Michael Douglas, Nygh’s Conflicts of Laws in Australia at [25.25]. The term ‘jurisdictional veil’ has been attributed to P Muchlinksi, ‘Corporations in International Litigation: Problems of Jurisdiction and the United Kingdom Asbestos Cases’ (2001) 50 ICLQ 1 at 17.}

^{66 Resistance to particular forums may take the form of challenges to jurisdiction or applications to stay proceedings on forum non conveniens grounds. Such resistance is more difficult in Australia than some jurisdictions because of our distinctive doctrine of forum non conveniens whereby a stay of proceedings commenced in Australia will only be granted where it is considered to be a clearly inappropriate forum: Voth v Manildra Flour Mills Pty Ltd (1990) 171 CLR 538.}

^{67 See Connelly v RTZ Corporation (No 2) [1998] AC 854 at 873–874; Lubbe v Cape plc [2000] 4 All ER 268 at 275, 280; cf McShannon v Rockware Glass Ltd [1978] AC 795. 1998] AC 854 at 873–874. [2000] 4 All ER 268 at 275, 280.}

^{68 Consider, for example, the remarkable historical episode involving the passage of legislation by Papua New Guinea to prohibit involvement in proceedings brought against BHP for environmental pollution at the Ok Tedi mine: see Dagi v BHP (unreported, Cummins J, Supreme Court, Vic, 20 September 1995); BHP v Dagi [1996] 2 VR 117.}

^{69 This was the case following the decisions in Vedanta; White; Lubbe; Ok Tedi; and Ngcobo, among others. For other examples, see Richard Meeran, ‘Multinational Human Rights Litigation in the UK: A Retrospective’ (2021) 6(2) Business and Human Rights Journal 255. This phenomenon is not new: see Andrew Bell, Forum Shopping and Venue in Transnational Litigation (Oxford University Press, 2003. at [1.35].}

^{70 This is particularly the case in EU jurisdictions: see, for example, France’s ‘Loi de Vigilance’ (Loi n° 2017-399 du 27 mars 2017 [Law No 201-399 of 27 March 2017] (France) JO, 28 March 2017), and similar legislative developments in the Netherlands (Wet Zorgplicht Kinderarbeid [Child Labour Due Diligence Law] (Netherlands) 14 May 2019) and Germany (Lieferkettensorgfaltspflichtengesetz [Act on Corporate Due Diligence Operations in Supply Chains] (Germany) 11 June 2021).}

^{71 Sarah O’Connor, Fergus Hanson, Emilia Currey and Tracy Beattie, ‘Cyber-enabled foreign interference in elections and referendums’, Australian Strategic Policy Institute (online, 28 October 2020) <https://www.aspi.org.au/report/cyber-enabled-foreigninterference-elections-and-referendums>.}

^{72 Karen Hao and Deepa Seetharaman, ‘Cyber-enabled foreign interference in elections and referendums ‘Cleaning Up ChatGPT Takes Heavy Toll on Human Workers’, Wall Street Journal (online, 24 July 2023)<https://www.wsj.com/articles/chatgpt-openaicontent-abusive-sexually-explicit-harassment-kenyaworkers-on-human-workers-cf191483>.}

^{73 See e.g., Valve Corporation v Australian Competition and Consumer Commission (2017) 258 FCR 190 (Valve v ACCC); Facebook Inc v Australian Information Commissioner [2022] FCAFC 9 (Facebook v AIC); Google Inc v Equustek Solutions Inc [2017] 1 SCR 824. See also, not in the context of digital services, James Hardie Plc v White [2019] 2 NZLR 49 and Tiger Yacht Management Ltd v Morris [2019] FCAFC 8.}

^{74 While it might be argued that questions concerning the reach of regulatory powers are questions of public law that do not, strictly speaking, fall within the scope of ‘private international law’, they often raise many of the same considerations of territorial links to jurisdiction: see e.g., Valve v ACCC; Facebook v AIC.}

^{75 Dagi v The Broken Hill Pty Co Ltd and Ok Tedi Mining Ltd (unreported, Victorian Supreme Court, Byrne J, 22 September 1995); Dagi v Broken Hill Pty Co Ltd [No 2] [1997] 1 VR 428.}

^{76 [1893] AC 602.}

^{77 See Hesperides Hotels Ltd v Muftizade [1979] AC 508 at 536.}

^{78 Dagi v Broken Hill Pty Co Ltd [No 2] [1997] 1 VR 428.}

^{79 See Melissa Perry, ‘Recent Developments: The Ok Tedi Decision – The Long Arm of the Jurisdiction of Australian Courts’ (1996) AMPLA Yearbook 555 at 564. See also Peter Nygh, ‘The Liability of Multinational Corporations for the Torts of Their Subsidiaries’ (2002) 3 European Business Organization Law Review 51 at 62-63.}

^{80 See Andrew Dickinson, ‘In Absentia: The Evolution and Reform of Australian Rules of Adjudicatory Jurisdiction’ in Michael Douglas, Vivienne Bath, Mary Keyes and Andrew Dickinson (eds), Commercial Issues in Private International Law (Hart, 2019) 13, 42.}

^{81 Michael Douglas and Vivienne Bath, ‘A New Approach to Service Outside the Jurisdiction and Outside Australia under the Uniform Civil Procedure Rules’ (2017) 44(2) Australian Bar Review 160 at 185 (final page).}

^{82 (1990) 171 CLR 538.}

^{83 CSR v Wren (1997) 44 NSWLR 463.}

^{84 (2009) 75 NSWLR 649.}

^{85 See Marilyn Warren, ‘Corporate Structures, the Veil and the Role of the Courts’ (2017) 40(2) Melbourne University Law Review 657 at 683ff; Chris McGrath, ‘Implications of the United Kingdom’s Approach for Parent Company Liability in Australia’ (2021) 38 Company and Securities Law Journal 577.}

^{86 (1998) 43 NSWLR 554. See also Barrow v CSR Ltd (Unreported, Supreme Court of Western Australia, Rowland J, 4 August 1988); Briggs v James Hardie & Co Pty Ltd (1989) 16 NSWLR 549 at 567-577 (Rogers AJA); CSR Ltd v Wren (1997) 44 NSWLR 463.}

^{87 See Sullivan v Moody (2001) 207 CLR 562 at [48].}

^{88 James Allsop, ‘Piercing the corporate veil: recent international developments’ (Speech, 38th Annual Conference of the Banking & Financial Services Law Association, 20 September 2022) at [61], referring to James Hardie v Hall at 584. It may also be noted that principles of derivative (rather than direct) liability were central to the reasoning in Barrow v CSR Ltd (Unreported, Supreme Court of Western Australia, Rowland J, 4 August 1988) and Briggs v James Hardie & Co Pty Ltd (1989) 16 NSWLR 549 at 567-577.}

^{89 [2018] NSWCA 54}

^{90 Strategic at [57], [60]. In that case, staff of the parent company were actively involved in the construction activities of the subsidiary; the officers of the subsidiary acted on the instruction of officers of the parent company; and officers of the parent company regularly conducted site inspections of the subsidiary’s operations.}

^{91 (2022) 289 FCR 217; [2022] FCAFC 9.}

^{92 See s 5B(3) of the Privacy Act.}

^{93 Competition and Consumer Act 2010 (Cth), s 5(1)(g).}

^{94 Corporations Act 2001 (Cth), s 601CD.}

^{95 Corporations Act 2001 (Cth), s 601CF-CG.}

^{96 Facebook at [70] (Perram J). See also at [5] (Allsop CJ). It has been suggested that a different conclusion might be reached in the context of the Corporations Act, for example: see Ian Ramsay and Mihika Upadhyaya, ‘Carrying on Business in Australia: A Study of Court Judgments’ (2020) 48 Australian Business Law Review 531 at 536-7.}

^{97 (2019) 268 FCR 548 at [50].}

^{98 Lloyd Freeburn and Ian Ramsay, ‘What Does it Mean to ‘Carry on Business in Australia’? An Analysis of the Full Federal Court decision in Facebook Inc v Australian Information Commissioner’ (2023) 52 Australian Bar Review 335 at 338.}

^{99 Facebook at [19].}

^{100 Facebook at [13]}

^{101 See Australian Privacy Principles 6 and 11.1(b), which are found in Schedule 1 to the Privacy Act. Section 15 of the Privacy Act prohibits an organisation from breaching the Australian Privacy Principles.}

^{102 Facebook at [69].}

^{103 See Facebook at [10] and [74].}

^{104 Facebook at [75]. See also Gebo Investments (Labuan) Ltd v Signatory Investments Pty Ltd [2005] NSWSC 544.}

^{105 Facebook at [11].}

^{106 Facebook at [3].}

^{107 Lloyd Freeburn and Ian Ramsay, ‘What Does it Mean to ‘Carry on Business in Australia’? An Analysis of the Full Federal Court decision in Facebook Inc v Australian Information Commissioner’ (2023) 52 Australian Bar Review 335 at 358.}

^{108 [2017] FCAFC 224.}

^{109 This last fact was accepted in Facebook as a relevant point of distinction between the two cases: see at [84].}

^{110 See Facebook at [74].}

^{111 Facebook at [3]. See discussion in Lloyd Freeburn and Ian Ramsay, ‘What Does it Mean to ‘Carry on Business in Australia’? An Analysis of the Full Federal Court decision in Facebook Inc v Australian Information Commissioner’ (2023) 52 Australian Bar Review 335 at 357.}

^{112 Micah Guiaoh, ‘Facebook concedes to Australia’s jurisdiction in a court battle with Andrew Forrest’, Australasian Lawyer (online, 20 October 2022)<https://www.thelawyermag.com/au/news/general/facebook-concedes-to-australias-jurisdiction-in-acourt-battle-with-andrew-forrest/424572>.}

^{113 In New South Wales, examples of legislation relevant to multinational corporations that is given express extraterritorial effect include the Biodiversity Conservation Act 2016 (NSW), s 12.25; Fair Trading Act 1987 (NSW), s 5A; Legal Profession Uniform Law 2014 (NSW), s 4; Building and Construction Industry Security of Payment Act 1999 (NSW) s 32E; Mining Act 1992 (NSW) s 387B; National Energy Retail Law 2012 (NSW) s 17; Pesticides Act 1999 (NSW) s 33; Petroleum (Onshore) Act 1991 (NSW) s 129A; Protection of the Environment Operations Act 1997 (NSW) ss 109 and 212B; Water Management Act 2000 (NSW) s 340D; and Work Health and Safety Act 2011 (NSW) s 155A. As for Commonwealth legislation, see Anti-Money Laundering and Counter-Terrorism Financing Act 2006, ss 6(c) and 26; Commonwealth Criminal Code Act 1995 (Cth) Pt 2.7, Div 15; Interactive Gambling Act 2001 (Cth), s 14; Competition and Consumer Act 2010 (Cth), s 5(1)(g); Privacy Act 1988 (Cth), s 5B(3), among many others.}

^{114 The King v Jacobs Group (Australia) Pty Ltd [2023] HCA 23.}