Lloyd's Maritime and Commercial Law Quarterly
Raising the corporate sail
FD Rose*
The recognition that companies have a separate legal personality from other persons involved with their activities raises the question whether disputes arising from company activities should, or should not, be determined by reference to corporate personality, and in particular whether the concept inhibits resort to persons other than the company. The broader picture reveals that corporate personality has a definite, but limited, role in deciding matters arising from company activities and that corporate personality is more concerned with enabling a company, as a legal person, to function alongside natural persons in commercial activities generally than in inhibiting claims.
Introduction
The best-known feature of company law, laid down in Salomon v A Salomon & Co Ltd,
1 is that, by incorporation, a company acquires status as a person recognised by law, and this creates a legal personality that is separate from the legal personalities of those who are involved, to whatever extent, in the setting up or subsequent operation of the company. However, despite the fundamental and long-established nature of the concept of corporate personality, it has always been, and thanks to recent decisions remains, a matter of controversy whether the law has a consistent approach to the circumstances in which the concept does or does not determine the outcome of a dispute. The objects of this article therefore have been threefold: to reconsider the operation of the concept; to do so with specific reference, when appropriate, to situations arising in a particular, namely maritime, context; and to consider these issues in the light of recent judicial reflections on the concept.
In a loose sense, the discussion concerns what may for shorthand be described as “company activities” (albeit that obscures the core question whether rights and liabilities attach to the company itself or to other persons who are in some way connected to it). The traditional perception of the effect of recognising corporate legal personality is that: where business activities are carried out involving companies, rights and liabilities attach solely to the company and not to persons interested in the company; but that in exceptional cases the position may be different. In fact, this image has always been overly simplistic, and unfortunately recent judicial reflections on the area have had a mixed effect on the clarity of the law. However, it is gratifying to note at the outset that maritime cases, which habitually provide different responses from those to be found under the general law, in this
RAISING THE CORPORATE SAIL
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