In an earlier post, we had discussed the judgment of the England & Wales High Court in Chandler v. Cape plc, [2011] EWHC 951. In that case, the Court had held that in certain circumstances, a parent company would owe a duty of care to the employees of the subsidiary even in situations where the tests for lifting the corporate veil are not satisfied. This judgment has been affirmed today by...
Parent Company’s duty to employees of its Subsidiary
In an interesting judgment delivered earlier this month, Chandler v. Cape Plc. [2011] EWHC 951 (dt. 14/4/2011), it has been held that a parent company owes a duty of care to employees of its subsidiary. The decision contains a detailed analysis of the scope of the duty of care in such situations; and provides some indication that the existence of the corporate veil between the parent and its...
Confidentiality = Non-compete?
In India, there is a fair amount of debate regarding the enforceability of non-compete agreements given Section 27 of the Contract Act that invalidates contracts in restraint of trade. Recent developments in California may throw some further light on the issue. Oracle’s appointment of former HP-CEO Mark Hurd has given rise to litigation by HP. This report in the Wall Street Journal notes that...
The Court of Appeal Reaffirms the Sanctity of the Corporate Form
Few issues have proved to be more controversial than the strength of the principle that the company is a separate legal entity. The exceptions to the principle – commonly referred to as “lifting” or “piercing” the corporate veil – are both statutory and judge-made. The statutory exceptions are, in the main, not controversial. However, while there is agreement that courts are entitled to lift the...
The AIG Bonus Payments Controversy: Issues of Contract Law
There has been a significant outrage since the controversy over bonus payments to some AIG employees began about a week ago. One of the justifications of the AIG management for pressing on with the payments is that the company is legally obligated to pay their employees failing which it could be liable to suits for breach of contract. Although the controversy has taken a different shape owing to...
Non-Compete and Non-Disclosure Agreements: Are They in Restraint of Trade?
(In the following post, Venugopal Mahapatra and Gautam Bhatia discuss the Indian legal position regarding non-compete and non-disclosure clauses in employment and similar contracts in the context of a Bombay High Court decision. They also compare and contrast the Indian law on this topic with the position that prevails in the U.K.) V.F.S. Global Services Ltd. v. Mr. Suprit Roy is a December 2007...
Employment Restrictions on PSU Executives: How Valid Are They?
One of our regular readers points us to this news report: “Top level public sector executives, including directors and chief executives, will not be able to join private firms after retirement or resignation unless they get go-ahead from the government. If they decide to join, they may have to pay damages to the government for violation as per the bond or agreement signed with the department...
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