The Dissolved Foreign Corporation
| Published date | 01 January 1955 |
| Date | 01 January 1955 |
| Author | Michael Mann |
| DOI | http://doi.org/10.1111/j.1468-2230.1955.tb00279.x |
THE DISSOLVED FOREIGN CORPORATION
A. THE RECOGNITION
OF
A
DISSOLUTION
QUESTIONS of the recognition to be accorded to a withdrawal of
corporate personality by a foreign legal system first became pro-
minent after the Soviets had decreed the nationalisation of Russian
Corporations dealing with banking, insurance, shipping, and the
“
key industries.” The decrees came before the Court of Appeal
in
1923
when they were construed as effecting the dissolution
of
the corporations
in
questionYa but the House of Lords was unable
to reach the same conclusion and reversed the decisions upon their
facts.s Although a decision
on
fact has
no
binding authority the
courts relied in subsequent cases
on
this negative interpretation
of
the decrees, and
it
was not until
Lazard Brm.
v.
Midland Bank
that their effect was seriously reconsidered. The House of Lords
now aided by more precise expert evidence distinguished its earlier
decisions
on
their facts, and held that a ban$ incorporated under
the law of Imperial Russia had been dissolved by the Soviet legis-
lation. Lord Wright, delivering the judgment
of
the House, then
declared that a dissolution under the law
of
the country
of
incor-
poration
I
must be recognised in England
:
‘Qnglish courts have
long
since recognised as juristic
persons corporations established by foreign law in virtue of the
fact of their creation and continuance under and by that law.
.
.
.
But as the creation depends
on
the act
of
the foreign
State which created them, the annulment of the act of creation
by the same power will involve the dissolution and
non-
existence of the corporation in the eyes of English law. The
will
of
the sovereign authority which created
it
can also destroy
it.
English law will equally recognise the one, as the other
fact.”
‘
1
In
Ratner
v.
London Joint City and Midland Bank
(1922)
98
T.L.R.
253
it
seems
to
have been assumed that the decrees had dissolved
a
Russian bank.
2
Russian Commercial and Industrial Bank
v.
Comptoir d’Escompte de Mulhouse
[1923] 2
K.B.
630;
Banque Internationale de Commerce de Petrograd
v.
Goukassou,
[1923] 2
K.B.
682.
8
Russian Commercial
and
Industrial Bank
v.
comptoir d’lscompte de Mulhouse
[1925]
A.C.
112;
Banque Internationale de Commerce de Petrograd
v.
Goukassou,
[1925]
A.C.
160.
4
Cf.
Wortley, “The Dissolution
of
Foreign Corporations
in
Private Inter-
national
Low,”
14
B.Y.I.L.
1
at pp.
%7
(1933)
where the cases are noted.
6
[1933]
A.C.
2.89,
affirmin
C.A.
[1932] 1
K.B.
617.
The effect
of
the decrees
had been questioned
in
%eutsche Bank und Disconto Gesellschaft
v.
Banqus
des Marchands
&
Moscou
(1932) 158
L.T.
364;
and admitted
as
effecting a
dissolution in
Russian and English Ban!,
V.
Baring Bros.
[1932] 1
Ch.
435.
6
Sometimes
known
as the corporation’s However, this
is
an
lmpreclse usage,
cf.
Cook,
The Logical and Legal Bases of the Conflict of
7
[1933]
A.C. at
p.
297.
This had alwaye been assumed to be the law,
e.g..
per
Scrutton
L.J.
[1923] 2
K.B.
at
p.
691.
lez: domicilii.”
LOWS
(1942),
pp.
207-10.
8
JAN.
1966
THE DISSOLVED FOREIGN CORPORATION
9
The recognition is granted regardless of the corporation having
had a branch office
in
England; regardless of the
majority of the shareholders having been British subjects
lo
;
and
(crucially) regardless of there having been
no
settlement of the
corporation’s affairs.’l This consistency is further marked by the
recognition being dated from the act of dissolution rather than
from the date when those concerned with the corporation’s business
in this country received actual
or
constructive notice thereof
.12
The power of dissolution can be effectively exercised by a govern-
ment recognised
de facto
if
the “corporate home” is within
territory under the effective control of that government.’’
It
should be noted that a foreign corporation’s compliance with
the English provisions as to oversea companies cannot affect its
corporate existence
or
decease, for the provisions are purely
administrative and have
no
concern with personality, though
manifestly
if
the English branch of a foreign corporation is regis-
tered as an English company
it
and the parent cannot become
commorientes,
since the existence of an English company can only
be determined
by
English law.
The purpose
of
this article is to examine some of the problems
to which recognition of a dissolution can give rise.14 This examina-
tion will deal mainly with the situation where a foreign corporation
has been annihilated without prior settlement of its affairs (as
in
the Russian cases), but many of the principles discussed will be
found of more general application,
or
assets
B.
THE
POSITION
AT
COMMON
LAW
I.
Litigation
A
dissolved corporation cannot bring an action for a
“non-
existent person cannot sue.”
l5
The corporation is legally helpless.
Where a person endeavours to bring an action in the corporation’s
name the proper course is for the defendant to satisfy the court
before trial that the plaintiff is non-existent, whereupon the action
will
be struck out, and all costs awarded against the solicitor who
8
Russian and English Bank
v.
Baring Bros.
[1932]
1
Ch.
435.
0
Lazard Bros.
v.
Midland Bank
[1933]
A.C.
289.
10
Russian and English Bank
v.
Baring Bros.
[1932]
1
Ch.
435.
11
Lazard Bros.
v.
Midland Bank
119331
A.C.
289.
la
Deutsche Bank und Disconto Ge8ellschaft
v.
Banque des Marchands de Moswu
(1932) 158
L.T.
364;
Lazard Bros.
v.
Midland Bank
[1933]
A.C.
289;
Burr
v.
Anglo-French Banking Corporation
(1933) 49
T.L.R.
405.
Re Russo-Asiatic
Bank
[1934]
Ch.
720;
Re Banque des Marchands de Moscou
[l952]
1
All
E.R.
1269.
*3
Bank
of
Ethiopia
v.
National Bank
of
Egypt
[1937]
Ch.
613,
esp. at p.
520;
Bunco de Bilbao
v.
Sancha
[1938] 2
K.B.
176.
14
There is little extra-judicial authority
on
thie subject. The best general
accounts
are: Lloyd,
The Law
of
nincorporated Associations
(1938),
pp.
195-9;
and Wortley,
op. cit.
16
Per
Eve
J.,
Russian and English Bank
v.
Baring Bros.
“321
1
Ch.
435
at
p.
443.
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