Cape Industries was a UK company, head of a group.
Its subsidiaries mined asbestos in South Africa and shipped it to Texas, where a marketing subsidiary, NAAC, supplied the asbestos to another company in Texas.
The employees of NACC became ill. They sued Cape and NACC in a Texas court. Here, not proved that NACC was Cape’s subsidiary.
In the present case, the tort victims tried to enforce the judgment in the UK courts.
The requirement, under conflict of laws rules, was either that Cape had consented to be subject to Texas jurisdiction (which was clearly not the case) or that it was present in the US.
Issue – Whether through the Texas Subsidiary , NAAC , Cape Industries PLC was present.
Held –
For that purpose, the claimants had to show in the UK courts that the veil of incorporation could be lifted and the two companies be treated as one.
In this case, the Court of Appeal held that for a company to have a presence in the foreign jurisdiction, both of the following must be established.
The company has its own fixed place of business (a branch office) in the jurisdiction from which it has carried on its own business for more than a minimal time.
The company’s business is transacted from that fixed place of business.
On the facts, the Court of Appeal held that Cape had no fixed place of business in the US such that recognition should not be given to the US judgment awarded against it.
whether it has authority to contract on behalf of the principal;
factors of relevance of carrying on the business;
did the UK company reimburse the representative for accommodation of staff.
Therefore, to prove an agency relationship, need to find a close degree of control so that the subsidiary is not running its own business.
