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Access_open Parental Liability for Externalities of Subsidiaries

Domestic and Extraterritorial Approaches

Journal The Dovenschmidt Quarterly, Issue 3 2014
Keywords company law, group liability, comparative approach, liability matrix, statutory/judicial approaches
Authors Linn Anker-Sørensen
AbstractAuthor's information

    This paper offers a structural tool for examining various parental liability approaches for the externalities of its subsidiaries, meaning in the context of this paper, the negative environmental impact of their operations. In order to conclude that the parent is liable for externalities of subsidiaries, one must be able to bypass the corporate privileges of separate legal personality and limited liability, either within traditional company law or within alternative approaches offered by notably tort and environmental law. The overall acceptance of companies within groups as single entities, instead of recognition of their factual, often closely interlinked economic relationship, is a well-known barrier within traditional company law. The situation is exacerbated by the general lack of an extraterritorial liability approach and of enforcement of the rare occurrences of such liability within the traditional company law context. This paper explores various liability approaches found in jurisdictions worldwide mainly based on mapping papers from the international Sustainable Companies Project. The author introduces a matrix in order to systemize the different approaches, distinguishing between three levels: domestic and extraterritorial, statutory and judicial and indirect and direct liability. A proper distinction between the different liability approaches can be valuable in order to identify the main barriers to group liability in regulation and in jurisprudence.


Linn Anker-Sørensen
Research assistant in the Research Group Companies, Markets, Society and the Environment and its Sustainable Companies Project, Faculty of Law, University of Oslo (jus.uio.no/companies under Projects).
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