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Multinational corporate groups are now the world’s dominant economic institution. In the common law jurisdictions analyzed in this thesis, (the U.K., the U.S. and Canada) legal regulation has not kept pace with regulating the intragroup liability of corporate groups. This thesis focuses on the circumstances under which a subsidiary’s tortious liability should be attributed to the parent company. Through a comparative examination of the case law in the three-subject jurisdiction, this thesis investigates the common law’s attempt to set aside the principles of limited liability and separate corporate personality in order to hold a parent company responsible for its subsidiary’s liability. My multi-jurisdictional comparative analysis of the judicial approaches to allocating tortious liability vertically in corporate groups concludes that while veil piercing remedy is inconsistent in many ways with the economic realities of how parent and subsidiary companies are related, strong policy considerations nonetheless still support its use. Yet, this approach still does not fully address the liability deficit problem characteristic of corporate groups which the common law has been attempting to address through incremental adjustment. This, thesis, therefore calls for legislative correction of the liability deficit problem by making the following recommendations for reform: Parent companies should be required by law to assume the tortious liability of their wholly-owned or controlled subsidiaries, and that corporate groups should maintain intragroup liability insurance coverage where proceeds are payable to tort victims who suffer harm. The legislative proposal is not a bright-line rule in that where the subsidiary company is not wholly-owned but controlled, the courts will be responsible for making a decision as whether or not to set aside the two fundamental principles of corporate law in order to hold a parent company liable. Since the courts will still be responsible for deciding whether to pierce the parent’s veil, there is always the potential risk of judicial discretion to be exercised by the courts. In exercising that discretion, this thesis suggests that the courts should abandon the normal presumption of non-liability in favour of parent companies and adopt the economic reality test when faced with veil piercing inquiry involving partly-owned/controlled subsidiaries.
The relationship between law and economic development continues to perplex generations of scholars. This thesis adds to the query by embracing the iterative relationship between legal systems and markets as postulated by Milhaupt and Pistor; thereby, departing from law and finance theory which argues that past adopted legal systems are crucial for economic development. Law and finance theory is criticized based on the causal and proxy indeterminacy of law in achieving economic development, its discrepancies with corporate law practice, and various incoherent claims on juries and law in the twenty-first century. Milhaupt and Pistor’s framework grounded on the organization of a nation’s legal system, the functions of law in support of capitalist activity, and a state’s political economy embodying the supply and demand of law is used to understand how law is wielded in Africa’s giant quest for development.Institutional autopsies are conducted on pivotal corporate governance crisis events in Nigeria’s financial and petroleum sectors—Nigeria’s 2009-2010 banking crisis and the case of Moni Pulo v Brass—to understand Nigeria’s legal system and likely path to variation. Nigeria is revealed to be a centralized legal system, where the principal role of law is to coordinate market activity and one in which personal relationships play a vital part in her governance structure. The autopsies show there is a growing role played by state approved actors resulting in increased centralized and coordinative features of Nigeria’s legal system. It is hoped that this work assists in understanding the dynamic relationship between law and economic development in developing economies and serves as a foundation for future research on Nigeria’s political economy.