Liability within Corporate Groups

Corporate Groups are a common phenomenon in modern economic reality. Nearly all big international companies are organised as a group of companies made up of individual legal entities within one group managing parent or holding company.

In such groups of incorporations, there is usually a separation between the management of the group - performed by the parent or holding company - and the everyday decisions of the subsidiaries. However, the parent company has managing power over its subsidiaries and the decisions of the subsidiaries are based often on a decision or an instruction from the parent company. In such case the subsidiaries do not only work exclusively for their own interests.

The question arising is now: Who is liable for a suit against a subsidiary in such a Corporate Group? There is a thin line between the separate personal identity of each corporation and reasonable fairness, which means that a corporation that is responsible for a claim has to pay compensation. Different jurisdictions have created very different solutions on certain points to solve this problem and to handle the liability within Corporate Groups.

The book shows the different approaches of English and German law dealing that problem and will draft a possible way to go for an European harmonisation.