Concept of Legal Person and its Personality

Concept of Legal Person and its Personality

MATS LAW SCHOOLMATS UNIVERSITY, Gullu,Aarang(C.G)

LEGAL METHOD PROJECTONCONCEPT OF LEGAL PERSON AND ITS PERSONALITY

SUBMITTED TOMS.TOKMEM DOMING

AMAN GYAN DASB.A.L.L.B (hons.)SEMESTER- I

SUBMITTED ON6TH DECEMBER2012

CONTENTS ACKNOWLEDGEMENT LEGAL PERSON LEGAL PERSONALITY HISTORY LIMITATIONS INTERNATIONAL LEGAL PERSONALITY BIBLOGRAPHY

ACKNOWLEDGEMENTSI would like to thank my Legal Method teacher Ms.Tokmem Doming mam for giving me this special project CONCEPT OF LEGAL PERSON AND ITS PERSONALITY. And the entire faculty of my institute, who had always been there at my side whenever I needed some help regarding any information. They have been my mentors in the truest sense of the term. The administration has also been kind enough to let me use their facilities for research work. I thank them for this.The given project helped me a lot to understand the legal person, and legal Personality.Id also like to thank all the authors, writers, columnists and social thinkers whose ideas and works have been made use of in the completion of this project.

LEGAL PERSON

LEGAL PERSON, a body of men or of property which the law, in imitation of the personality of human beings, treats artificially as subject of rights and duties independent of its component parts. The classic example of a legal person is the corporation. Although the most familiar type of corporation is that engaged in business activities, history has witnessed corporations formed as the vehicle for charitable enterprises, cooperative non-profit-making enterprises, municipal and governmental operations, and religious and social activities. For example, in the classical Roman legal system, theuniversities corporate groups which possessed common treasuries and were endowed with a legal personality separate and distinct from that of their individual members included various municipal and religious, as well as industrial and trading, associations. The corporation has usually featured the following characteristics: a name common to the aggregate of its component individuals or properties; a life independent of the lives of its components; the possession of privileges or rights, liabilities or duties, which do not in here in its membership as individuals; and the divorce of ownership and management, with the authority of the managers to act as the agents and representatives of the corporation being conferred, limited, and determined not by the consent of the owners but by the law itself.

The law distinguishes between a natural and legal person. A natural person is any human being, with legal capacity commencing from the time of birth. A legal (artificial) person is an association of people or special-purpose fund (e.g. a foundation) that is recognized by law as having legal personality. It differs from other associations of people in that it possesses legal capacity and can appear before the courts as plaintiff or defendant ("Parteifhigkeit", i.e. capacity to be a party in court). A legal person is separate and distinct in law from its members and from their number or changeover. It is an independent legal entity and is in principle protected by basic rights. Its particular name is also protected by law against unauthorized use by third parties. It has the capacity to act and can thus acquire rights and create obligations with binding effect. It does this through its organs, which in the sphere of private-law labour relations are, depending on the form of company, the shareholders' meeting or company general meeting, the supervisory board, the management board or a managing director. It is recognized in case law that a legal person is liable for unlawful conduct on the part of its organs and must pay damages where appropriate.

There is a difference between a private-law and public-law legal person. The society or association (Verein) is regulated in the Civil Code as the basis of legal personality under private law. Other civil-law societies are the private limited company (GmbH), the registered co-operative society (eG), the public limited company (AG) and the partnership limited by shares (KGaA), all with their legal basis founded in separate statutes. Otherwise, in the absence of special regulations the provisions of the Civil Code and the Commercial Code are applied to supplement them. The state also can avail itself of a private-law legal person in executing its functions.

Public-law legal persons exist by virtue of recognition under public law and can be established only by statute or by an act of sovereignty (act of administration, executive order) on the basis of a statute.

LEGAL PERSONALITY

Legal personality(alsoartificial personality,juridical personality, legal entityandjuristic personality) is the characteristic of a non-living entityregarded by law to have the status ofpersonhood.

Alegal person(alsoartificial person, juridical person,juristic person, legal entityandbody corporate, also commonly called avehicle) has alegal nameand has certainrights, protections, privileges, responsibilities, andliabilitiesunder law, similar to those of anatural person. The concept of a legal person is a fundamentallegal fiction. It is pertinent to thephilosophy of law, as it is essential to laws affecting acorporation(corporations law) (the law ofbusiness associations).

Legal personality allows one or more natural persons to act as a single entity (a composite person) for legal purposes. In manyjurisdictions, legal personality allows that composite to be considered under law separately from its individual members or shareholders. They maysue and be sued, entercontracts, incurdebt, and ownproperty. Entities with legal personality may also be subjected to certain legal obligations, such as the payment oftaxes. An entity with legal personality mayshield its shareholdersfrompersonal liability.

The concept of legal personality is not absolute. "Piercing the corporate veil" refers to looking at the individual natural persons acting as agentsinvolved in a corporate action or decision; this may result in a legal decision in which the rights or duties of a corporation are treated as the rights or liabilities of that corporation's shareholders or directors. Generally, legal persons do not haveallof the same rightssuch as theright to freedom of speechthat natural persons have, although the Republic of Iran has become an exception in this regard.

The concept of a legal person is now central toWestern lawin both common-lawandcivil-lawcountries, but it is also found in virtually every legal system.

The Concept of International Legal Personality examines International Legal Personality (ILP) and its use in theories of international law. It firmly entrenches the concept of ILP in the broader context of the intellectual and socio-political trends against which these theories were shaped. It contains detailed studies of the work of ten of the most eminent scholars of international law and their use of ILP whilst also illustrating other important and enduring themes of international law. This account of the history of ILP not only offers alternatives to the traditional ideas concerning ILP, but also demonstrates how it has been and can be used in the re-conception of the moral-political identity of international law. The book contributes significantly to the study of the history and theory of international law, putting the concept of ILP into a new perspective by relating it to concepts of legitimacy, democracy, and justice in international governance.

HISTORY

In the common law tradition, only a person could sue or be sued. This was not a problem in the era before the Industrial Revolution, when the typical business venture was either a sole proprietorship or partnershipthe owners were simply liable for the debts of the business. A feature of the corporation, however, is that the owners/shareholders enjoyed limited liabilitythe owners were not liable for the debts of the company. Thus, when a corporation breached a contract or broke a law, there was no remedy, because limited liability protected the owners and the corporation wasn't a legal person subject to the law. There was no accountability for corporate wrongdoing.

To resolve the issue, the legal personality of a corporation was established to include five legal rightsthe right to a common treasury or chest (including the right to own property), the right to a corporate seal (i.e., the right to make and sign contracts), the right to sue and be sued (to enforce contracts), the right to hire agents (employees) and the right to make by-laws (self-governance).

Since the 19th century, legal personhood has been further construed to make it a citizen, resident, or domiciliary of a state (usually for purposes of personal jurisdiction). In Louisville, C. & C.R. Co. v. Letson, 2 How.497, 558, 11 L.Ed. 353 (1844), the U.S. Supreme Court held that for the purposes of the case at hand, a corporation is "capable of being treated as a citizen of [the State which created it], as much as a natural person." Ten years later, they reaffirmed the result of Letson, though on the somewhat different theory that "those who use the corporate name, and exercise the faculties conferred by it," should be presumed conclusively to be citizens of the corporation's State of incorporation. Marshall v. Baltimore & Ohio R. Co., 16 How. 314, 329, 14 L.Ed.953 (1854). These concepts have been codified by statute, as U.S. jurisdictional statutes specifically address the domicile of corporations.

LIMITATIONS

There are limitations to the legal recognition of legal persons. Legal entities cannot marry, they usually cannot vote or hold public office, and in most jurisdictions there are certain positions which they cannot occupy. The extent to which a legal entity can commit a crime varies from country to country. Certain countries prohibit a legal entity from holding human rights; other countries permit artificial persons to enjoy certain protections from the state that are traditionally described as human rights.

Special rules apply to legal persons in relation to the law of defamation. Defamation is the area of law in which a person's reputation has been unlawfully damaged. This is considered an ill in itself in regard to natural person, but a legal person is required to show actual or likely monetary loss before a suit for defamation will succeed.

Usually a natural person perpetrates a crime, but legal persons may also commit crimes. Conversely, at least under U.S. Law, nonpersons such as animals cannot commit crimes.

INTERNATIONAL LEGAL PERSONALITY

With the industrial revolution the foundations for a new world order were established throughout the Western world. With new technological advancements the world was not only becoming more efficient but also much smaller. Travel times were halved and people could interact with one other much faster than before. However, it was not only people that could travel faster; it was also ideologies, philosophies and business. As time went by the world was becoming more and more interconnected. Major changes worldwide would not be seen until the end of the Second World War. More importantly, through these technological advancements and spread of new ideas the concept of multilateral diplomacy surfaced. The League of Nations became its first temple. Unfortunately for its creators the world was not ready for the values of Liberalism/ Idealism which lead to the collapse of the League of Nations. This meant that the rise of International Law, a very important factor in multilateral diplomacy, had to be delayed until the end of the Second World War.

The end of the war saw Europe in ruins. Idealists and Liberals seized the opportunity to blame the Realist school of thought for the war. By doing so they ensured that the realists would not obstruct the foundation, or functioning, of the post-World War Two version of the League of Nations The United Nations. Though both sides of the Atlantic had similar views on what the post-World War Two world should look like, the eastern side of the Atlantic was dominated by Liberalism whereas the western side was dominated by Idealism. Both agreed that in order to prevent any escalation leading to a third war of even greater magnitude the world should be provided with an institution that could act as a world parliament. This was the reasoning behind the creation of the United Nations.

The reason why the United Nations Organisation is important when talking of International Legal Personality is because of the period following the Second World War, during which states received a characteristic of a non-human entity regarded by law to have the status of person hood. This legal personality attributed to states implied that they have a legal name, rights, protections, privileges, responsibilities and liabilities under law just as any person does.

It is important to understand that the status of international personality is not exclusively reserved for states. In modern days numerous international companies have received this status as well, simply due to the nature of their business (cross-border).

International legal personality cannot exist without International Law. As stated in an earlier paper, International Law is of great relevance to the interconnected and interdependent world because it acts as a universal set of rules and principles concerning the relations between sovereign states. Some areas where it has proved to be of great importance include: telecommunications and transport, international economic law, international crime and extradition, human rights, use of armed force, counter terrorism

Various parties with legal personality attributed to them act as a single entity for legal purposes. They can act independently of individual members, thus enabling it to sue or be sued, enter contracts, incur debt, buy property and most importantly pay various taxes. The idea of legal personality is not absolute. Sometimes there is closer attention paid to the individual agent involved in certain actions or decisions rather than the institution as a whole. Some of the most common examples of international personalities include: corporations, companies, sovereign states, international, organizations

This link between International Law and International Legal Personality is very important as its core purpose is to resolve international disputes. Like any legal system, international law is designed to regulate and shape behaviour, to prevent violations and to provide remedies for violations when they occur. Though the purpose of international law is noble and important, it is equally important to understand that without the legal personality international law would not be as efficient. For international legal personality enables individual states to be personified and as such facilitate legal procedure. Thus states could be taken to court or accused of breach of international law. Those wishing to take action against them can do so with the support of the clearly defined legal system. Whether concerned with an institution based in a sovereign state or a multinational corporation, there are several main features that help us identify the presence or absence of legal grounds for an institution to be granted this privileged status. Some of the main ones are:

1. The ability to access international tribunals to claim or to act on rights conferred by international law.

2. The ability to implement some or all of the obligations imposed by international law.

3. The power to make agreements, such as treaties, binding by international law.

4. To enjoy some or all of the immunities from the jurisdiction of the domestic courts of other states.

As mentioned earlier, the International Legal personality is not exclusively reserved for states. Some non-state actors have it as well. Most notably, the United Nations was founded on these principles. A good example is the reparation case of the International Court of Justice confirmed

That the United Nations was entitled to reparations in its own right for the death of one of its members while engaged in UN related business.3. The United Nations has the capacity to bring claims, conclude international agreements and to enjoy privileges and immunities from national jurisdictions. One could even argue that the Organisation has the power to impose resolutions on its member states. This is achieved by the Security Council which is the only body within the United Nations that can make legally binding resolutions. The Security Council is a prime example of how states recognize and respect the legal personality of the United Nations. States are aware that in case they refuse to accept the resolution passed by the Security Council, that same institution holds the legal right to take adequate measures, guaranteed by the statute of the United Nations, against the party that refuses to adopt the resolution. For an international organization to be considered eligible for International Legal Personality status it should at least have permanent association of states, with legal objects, have distinct legal powers and purposes from the member states and must be able to exercise power internationally, not only within its own domestic system. One important exception is the humanitarian organization the Red Cross. The International Committee of the Red Cross, based in Switzerland, has a unique status within international law as an inter-governmental organization and as a guardian of the Geneva Convention of 1949.

4. Advocating the protection of victims of armed conflicts. It is neither an international organization nor a non-governmental organization, but has a special legal status under the treaty law by virtue of its important function in upholding the protection of civilians in armed conflicts.

5. Sovereign states were the first to gain International Legal Personality, followed by non-state actors, such as international companies and certain non-government organizations, with individual people being the last to be considered as eligible for this privilege. Originally individuals were not considered to have the capacity to enjoy rights and duties under international law in their own right, but rather these were derived from the state to which they belonged.

However, there is no principle of international law that prevents individuals from being recognized as subjects of international law. With human rights becoming more popular the case of individual people not being recognized became even more important, especially in cases of an individual wishing to sue the state.

As previously mentioned various corporations conduct their businesses across numerous countries. Corporations interact with states and become legal entities under municipal law: sometimes they tend to negotiate with states from a position of great power; however most of them do not have this privilege. Instead they become entities under municipal law. Some countries might offer very favourable conditions with the purpose of attracting greater investment but sometimes corporations are closely linked with their home countries which may use these corporations to spread their own interests. This is very often seen in countries such as China uses its own banking system and construction firms to prove to the world that it is indeed a major and trust-worthy player on the international level. Examples of multi-national corporations in conflict with municipal law regularly occurs in the airline business where airlines frequently have to deal with various demands from governments around the world. For some, such as EU-US based airlines, it is extremely easy due to the Open Skies agreement in place giving total freedom to any airline to add flights or frequencies as it pleases. Africa is famous for being the most difficult area to do business, within the sphere of aviation. A good example came from Nigeria when the government was not satisfied with the equipment Delta Air Lines used on its route from Atlanta (Boeing B767-300ER) and it demanded a change to a much bigger and more technologically advanced aircraft (Boeing B777-200). Delta considered that there was not enough demand to increase the amount of seats offered and had no choice but to withdraw from the Nigerian market. Though Delta chose to withdraw it could have taken the case to court since both Delta and the Republic of Nigeria enjoyed International Legal Personality. More recently the European Union has introduced a new ecological tax on airlines operating within the continent. Several airlines based in the United States joined forces and took the European Union to court over the decision. With the Lisbon Treaty the European Union received the International Legal Personality which enabled the airlines to sue the Union. Here we can see a very interesting situation where a combination of companies sued a union of states over a decision it had made. It is important to note that the European Union is not as sovereign state, although it almost became one with the European Union constitution that was presented several years ago.

6. Besides corporations gaining greater legal personality as more of them expand their business

Beyond their national borders, a new trend has emerged. This trend is called corporate social responsibility. This new trend has forced international corporations to respect

Basic human rights and basic protection of the environment when operating in emerging markets. A very good example once again comes from China. Chinese companies have been accused of not caring enough for the environment and neglecting the work force while doing business in Africa. However, as China is looking to expand its business into Europe it had to adopt a new business strategy that would be on par with the European standards. China has chosen Serbia as its partner in Europe, which it will use in order to prove to the Western world that Chinese companies can be trusted and that they are no different than the Western ones. For example China will provide Serbia with soft loans and will assist in the re-construction of the thermal energy plant in Kostolac in addition to currently building a new bridge on the outskirts of Belgrade. Total Chinese investment in Serbia amounts to several billion Euros.

7. the most important aspect of Chinas involvement in Serbia is that it has adopted social corporate responsibility with its entry into the European market through Serbia.

8. This means that all new investments (such as the opening of new factories) are going to be ecologically friendly while workers will get all the rights and privileges deemed necessary by the Europeanstandards.One might consider that International Legal Personality has become a major success which proves that both states and non-state actors need it in order to function efficiently at the international level. In addition to this it is important to note that the idea of International Legal Personality is a concept of Western law which has now spread to more or less all legal systems. International Law provides actors at the international level with rules and guidelines on how to act. On the other hand International Legal Personality allows them to be punished should International Law be breached. The United Nations Organisation, the most successful aspect of multilateral diplomacy, is based on both International Law and International Legal Personality. Both of these have enabled the United Nations to act effectively as the parliament of the world where states can debate and discuss various issues. Frequently the United Nations, armed with International Law, has managed to prevent or postpone a conflict in various parts of the world.

BIBLIOGRAPHY

Books referred-1. SHARON HANSON, (2010) Legal Method, 3rd Edition.2. Fleur Johns (2008) International Legal Personality.

Websites Referred:1. http:// http://www.rakshakfoundation.org2. http:// http://www.law.georgetown.edu