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CAPE DISTRIBUTION LTD v CAPE INTERNATIONAL HOLDINGS PLC How a Parent Company May be Held Liable in Torts for the Negligence of its Subsidiaries

Abstract

Interestingly enough, despite the fact that over the years the English Courts have handed down a considerable number of judgments on the issue of the extent of liabilities that a parent company is required to shoulder on behalf of its subsidiaries, branches or any other legal entity under its umbrella and control, especially by virtue of their organisational connectivity between itself and its various units whether by virtue of contractual or non-contractual reasons, the commercial world still seems to be disregarding the legal effect of what is usually known as the doctrine of one economic unit. Recently, the High Court of Justice was required to re-visit the above mentioned doctrine in Cape Distribution Ltd v Cape International Holdings plc in which the principal issue was on insurer’s continuing obligations for an existing parent company and its absence towards its subsidiaries whether in order to protect the pension privilege of the employees of that subsidiary or otherwise. These and some of the related issues received the attention of the Supreme Court in re Nortel GmbH (in Administration) and related companies, in re Lehman Bros International (Europe) (in Administration) and related companies in which their Lordships made references to a large number of precedents in order to justify their judgment in Nortel. These cases also confirmed the connotation of the word “obligation” in law, and whether they have to emanate from contracts or conducts of the parties concerned.

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Authors

Portrait image of Professor Charles Chatterjee
Professor Charles Chatterjee
Senior Research Fellow, Global Policy Institute , UK

Professor Charles Chatterjee who studied law at the University of Cambridge and the University of London is a Barrister in England and Wales and has also acted as an arbitrator. A commercial law specialist (international) with special interest and knowledge in international organisations and their functions in addition to court experience in law as a practising barrister in England and Wales. A consultant to international organisations and private corporations in addition to conducting capacity building training programmes in various countries. Articles in IICJ: “Recognition and Enforcement of Arbitral Awards: How Effective is Article V of the New York Convention of 1958?” International In-house Counsel Journal Vol. 9, No. 36, Summer (2016), 1 “Decisions of ICSID Tribunals on Procedural Issues may not be Confused with their Awards” International In-house Counsel Journal Vol. 10, No 37, (2016) “CAPE DISTRIBUTION LTD v CAPE INTERNATIONAL HOLDINGS PLC How a Parent Company May be Held Liable in Torts for the Negligence of its Subsidiaries”, International In-house Counsel Journal Vol.11, No. 42, (2018)

Portrait image of Anna Lefcovitch
Anna Lefcovitch
Solicitor, Arcadis, UK

Anna Lefcovitch is currently employed as an in-house solicitor at Arcadis LLP, and has considerable experience in commercial and construction law. She studied law at University College London and London Guildhall University. She has been working as an in-house lawyer for 20 years.

Companies

Global Policy Institute

Academic Institution

Arcadis

Design & Consultancy for natural and built assets

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