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  1. #1
    Join Date
    Mar 2016
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    Default Can a Foreign Parent Company be Held Liable for Fines Against a Subsidiary

    Hello,

    This is Raviv, from Germany. I am a student and have a question to competent and international lawyers to complete my assignment.

    At first, If I've come to a wrong place, I am really sorry for that. So please accept my apologies at the beginning.

    I am aware that my question is specific and needs to be researched well, which I am also doing for a while, but I need to have some different perspectives to go into more depth. I hope you can help me. I don't expect to get long/tiring answers, instead I just need someone to show me different doors. Even 2-3 sentences of answer could assist me.

    I am also sorry for My English, if you can't understand my writing well. The event and thereafter the question are specified below:

    Let's say, a foreign company (from a country other than the US, such as German company) is doing commercial activities across the World. This German company has a subsidiary company situated in the US. One day, the subsidiary is sued by individuals/companies due to a fault during its activities. In the meantime, the subsidiary does not have any assets within the US.

    Sometime later, the subsidiary loses the case but it has no insurance or assets. Therefore, the plaintiffs who won the case decided to chase after the parent company in order to compensate their losses. However, as the parent company is German and situated in Germany and there is no reciprocity between the US and Germany, the plaintiffs cannot enforce the final decision of a US court in Germany.

    So what else can the plaintiffs do rather than trying to enforce the decision in German courts? For example, can they take action to prohibit the parent company doing business in Europe or other countries?

  2. #2
    Join Date
    Sep 2005
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    Default Re: Can a Foreign Parent Company be Held Liable for Fines Against a Subsidiary

    Quote Quoting raviv
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    Therefore, the plaintiffs who won the case decided to chase after the parent company in order to compensate their losses. However, as the parent company is German and situated in Germany and there is no reciprocity between the US and Germany, the plaintiffs cannot enforce the final decision of a US court in Germany.
    The question of what the plaintiffs can and cannot do in Germany is not an issue of U.S. law or international law. It's German domestic law.
    Quote Quoting raviv
    So what else can the plaintiffs do rather than trying to enforce the decision in German courts? For example, can they take action to prohibit the parent company doing business in Europe or other countries?
    The question of what they might be able to do in "other countries" is something that you will have to investigate under the laws of whatever countries you believe could be involved.

    As for the E.U., I suggest that you find a board or resource that focuses on E.U. matters and, after sharing enough facts that they might have a prayer of figuring out if any E.U. regulations apply, seeing if you can come up with a plausible way in which the plaintiffs might be able to obtain recourse through that union.

    If you want to discuss what a plaintiff might be able to do to recover money within the U.S. legal system, we may be able to make some suggestions.

  3. #3
    Join Date
    Mar 2016
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    2

    Default Re: Can a Foreign Parent Company be Held Liable for Fines Against a Subsidiary

    Thank you for your answer. I actually tried to mean that for example, the parent company is a manufacturer and seller (exporter) doing business all over the world. After the US court orders it to pay some amount of money and if it does not prefer to pay anything, as the decision of a US court cannot be easily enforced in Germany, then can plaintiffs take some other action to compensate their lossses, such as providing parent company not to do commercial activities in European countriesanymore? I guess I may need to look at whether there is a de facto or de jure agreement between EU and USA, right?

  4. #4
    Join Date
    Oct 2006
    Posts
    15,123

    Default Re: Can a Foreign Parent Company be Held Liable for Fines Against a Subsidiary

    Quote Quoting raviv
    View Post
    Thank you for your answer. I actually tried to mean that for example, the parent company is a manufacturer and seller (exporter) doing business all over the world. After the US court orders it to pay some amount of money and if it does not prefer to pay anything, as the decision of a US court cannot be easily enforced in Germany, then can plaintiffs take some other action to compensate their lossses, such as providing parent company not to do commercial activities in European countriesanymore? I guess I may need to look at whether there is a de facto or de jure agreement between EU and USA, right?
    The commercial sections of the Hague Convention might be a place for you to do some research.

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