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Piercing the Corporate Veil of an Alien Parent for Jurisdictional Purposes: A Proposal for a Standard That Comports with Due Process
... The latter option seems longer, complex, expensive, and uncertain but somewhat rewarding. 12 Thus, to make it more accessible way of remedy the hindrances needs to be removed through international co-operation. ...
Imposing liability for extraterritorial wrongs by the Transnational Corporations (hereinafter TNCs) for violations of international norms can serve as an important relief for the affected parties. It has a considerable impact upon those who have suffered international wrongs by the TNCs. In the absence of any international court or tribunal providing remedies to individuals, the state courts can act as a principal mode of remedy for the claimants. There is a need to establish jurisdiction of the home state courts for accepting litigation against the TNCs for the extra territorial wrongs. The study of current state practice can help us move forward in establishing a more viable state jurisdiction against the international wrongs by TNCs.
In this Article, Professors Hansmann and Kraakman present a comprehensive case for imposing pro rata liability on shareholders for tort damages that exceed the value of a corporation's net assets. Unlimited liability, they argue, would mitigate the current regime's incentives to overinvest in hazardous industries and to underinvest in precautions. Contrary to the conventional wisdom, a well-crafted rule of unlimited liability could be imposed on both closely-held and publicly-traded corporations without inefficiently impairing capital formation. Rather, the most serious objections to unlimited liability are the difficulty of administering the rule across international jurisdictions, the incentive it would create to disaggregate industrial ownership, and the opportunity it might afford for irresponsible deployment of liability rules. None of these objections, however, seem sufficiently strong to outweigh the advantages of unlimited liability. The authors conclude that unlimited liability is also superior to alternative reforms such as liberalized veilpiercing, expanded officer and director liability, and requirements for minimal capitalization or insurance.
Corporate law scholars have recently called for the reconsideration of the doctrine of limited shareholder liability. Specifically, Professors Henry Hansmann and Reinier Kraakman have proposed that shareholders could be made liable for their pro rata share of a corporation's excess tort liability through changes in state tort law. In this Article, Professor Alexander argues that Professors Hansmann and Kraakman drastically underestimate the procedural obstacles that may frustrate their proposal's implementation or significantly increase its costs. Professor Alexander asserts that state courts will often lack personal jurisdiction over out-of-state shareholders who have insufficient contacts with the forum state apart from their shares in the liable corporation. Additionally, Professor Alexander argues that choice of law rules may require the forum court to apply the shareholder liability rules of the state of incorporation, and not of the state in which the tort occurred. Professor Alexander concludes with an evaluation of alternative means of imposing liability on shareholders through federal legislation. Professors Hansmann and Kraakman respond by offering a critique of Professor Alexander's doctrinal analysis of applicable personal jurisdiction and conflicts of law jurisprudence.
Int'l Psychoanalytical Ass'n, 59 F.3d
- Caruth V
Caruth v. Int'l Psychoanalytical Ass'n, 59 F.3d 126, 128 (9th Cir. 1995) (stipulating that the
burden on the defendant bears heavy weight in assessing reasonableness).