Risky Business: Enterprise Liability, Corporate Groups and Torts

  • 1 Research Fellow, Institute for Sustainable Development and International Relations (IDDRI), Sciences Po, Paris, FranceFrance
Glen Wright

Abstract

Corporate personality and limited liability have been the foundations of corporate law for most of its modern history. While these concepts greatly contributed to the early development of corporations, their application in the modern era is outmoded. Nowhere is this clearer than in ‘risky business’ scenarios, where a subsidiary is constituted for the purpose of shielding the corporate group as a whole from tortious liability arising from risky or dangerous activities. Tort victims generally must rely on ineffective and inconsistent common law and tort law doctrines in order to seek redress for torts committed against them, and a number of high profile cases have highlighted the flaws in such approaches. Many corporate law and tort scholars have commented on these flaws and a literature has developed proposing rational alternatives. This paper presents the case for adopting ‘enterprise liability’ in risky business situations, that is, treating the companies within a corporate group as one unified enterprise for the purposes of compensating tort victims.

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The Journal of European Tort Law (JETL) is the first law review to be dedicated to this important and dynamic area of European private law. It aims to contribute to the analysis and development of tort law in Europe by the publication of scholarly articles, comments and reviews.

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