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20 July 2016
The Tribunal of Genoa recently issued a judgment analysing the corporate structure of a group of shipping companies. In particular, the court considered the liability of a local shipping agent where it was established as a subsidiary of the line carrier and alternatively where it was merely a branch office of the line carrier.
The dispute involved a claim put forward by a fruit trader for damage to a cargo of kiwi fruit transported by a Scandinavian line carrier from Italy to Dubai and Singapore.
Instead of claiming damages against the carrier based on a sea waybill issued by the carrier, the claimant addressed its claim against the shipping agent of the carrier – a company fully owned by the carrier and based in Italy. It maintained that the carrier (holding company) and its agent (subsidiary) should be held jointly liable for the carrier's obligations.
To support this argument, the claimant invoked Articles 2508 and 2509bis of the Italian Civil Code, according to which foreign companies with branch offices in Italy must comply with certain legal requirements, mainly regarding the publicity regime and the Companies Register. If a foreign company fails to meet these legal requirements, the branch office and persons acting in the name of the foreign company are considered jointly liable for the company's obligations.
The claimant argued that the corporate organisation of the line carrier should not be considered a common relationship between a carrier (holding company) and its agent (subsidiary). Rather, the shipping agency should be considered a branch office of the foreign carrier; and since the legal requirements for foreign companies had not been complied with, both entities should be held liable for the damage to the cargo.
The tribunal rejected the claimant's request and held that the rules invoked by the claimant apply only to foreign companies with a branch office (ie, an internal office or unit of the foreign company operating abroad) in Italy, and not to companies with a subsidiary in Italy. Even if a subsidiary is fully owned by the foreign holding company, it remains an autonomous entity with corporate personality and its own directors entitled to express the company's will within the limits of its articles of association.
The tribunal further confirmed that a limited liability company, which is fully owned by another company and therefore included in a wider organisation, is subject to the ordinary rules regarding limited liability companies. The mere existence of a group of companies implies only that the rules for groups of companies apply, but it does not give rise to any special liability of the subsidiary for the obligations of the holding company, or vice versa.
The tribunal referred explicitly to a general principle of Italian law (which is regularly affirmed by case law) according to which it is possible to demonstrate that behind a company's structure there are de facto arrangements or partnerships that may influence the company's conduct; however, such de facto relations cannot jeopardise the existence of the company itself as a limited liability company with corporate personality.
This general principle negates the argument that a limited liability company is merely a legal fiction created to conceal different corporate arrangements. A limited liability company cannot be construed as a mere branch office of a foreign company as opposed to an existing autonomous Italian company.
The tribunal's judgment is interesting as it clarifies that a shipping agent, which is a company fully owned by a foreign line carrier, cannot be held liable for the obligations of the holding company merely on the basis of the corporate control existing between the two companies of the same corporate group.
The decision is in line with prevailing Italian case law which considers corporate personality a sound legal principle in the context of modern trade and developed economies. It gives full expression to the rules on the limitation of company liability, even if a company is part of a group of companies. According to more general principles, the liabilities of a company can be extended to other companies or persons only in exceptional cases where an abuse of corporate personality can be established.
For further information on this topic please contact Brian Dardani at Dardani Studio Legale by telephone (+39 010 576 1816) or email (email@example.com). The Dardani Studio Legale website can be accessed at www.dardani.it.
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