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§ 195. “Foreign Corporations.”

A corporation has been already defined; Note, § 182, supra, “Incorporation of Banks.” A corporation, according to the law of England, cannot be created except by royal charter, letters-patent, or Act of Parliament. Once duly constituted it is an artificial person, having the incidents of unity and perpetuity, capable of suing and being sued, holding property, performing acts, and having a domicile. Its domicile is


  ― 605 ―
its principal place of business, where the administrative work of the corporation is carried on. (Dicey, Conflict of Laws, 154.)

Foreign corporations, chartered for lawful purposes, have the right to carry on business within the British Dominions, subject to the conditions and requirements of local laws; this has been recognized by the comity of nations, as well as by conventions concluded between Great Britain and other countries. By the Anglo-French and Anglo-Belgian treaties of 1862, and by the Anglo-Spanish treaty of 1883, companies formed in one of the joint contracting countries, in accordance with laws in force therein, are entitled to exercise “all their rights” in the dominions of the other. Similar conventions have been entered into by Great Britain with Germany, Italy, Greece, and other nations, mutually securing to commercial and industrial companies the exercise of their rights throughout the possessions of the high contracting parties.

“The right of foreign and colonial corporations to carry on business in England, without any authority to that effect from Parliament or Government, has now passed unquestioned for so long that it may be considered to be established; and it is a very exceptional instance of liberality.” (Westlake, Priv. Internat. Law, p. 337.)

The term “foreign,” in the phrase now under discussion, is wide enough to cover not only corporations established by the laws of independent foreign States, but also corporations established by the law of Great Britain and by the law of every self-governing community within the British Empire. In short, “foreign” includes every corporation established beyond the limits of the Commonwealth.

A foreign company carrying on business in any part of the British Dominions, through a branch office situated there, is liable to be sued locally in the same manner as a local corporation. Thus, an American company, incorporated by American law in the United States, had a place of business in England, where it, de facto, carried on business, although its manufactory, and also its principal place of business, where the meetings of its directors and shareholders were held, were in America. The plaintiff claimed a sum of money as being due from the corporation to him as the balance of commission on the sale of goods. He commenced an action against the corporation and its agent in England, including both in the writ, and served two copies upon the agent, one for himself and the other for the corporation. It was held that the court would not, upon the ground that a foreign corporation cannot be sued in England, prevent the plaintiff from proceeding in the action; and also that, as the corporation had a place of business in England and traded there, it must be treated as resident there, and that the service upon its agent was sufficient. (Newby v. Van Oppen, L.R. 7 Q.B. 293; and it was similarly held in Haggin v. Comptoir d'Escompte de Paris, 23 Q.B.D. 519.)

The right of British and colonial courts to order the winding-up of companies not domiciled within their respective jurisdictions has been considered in a number of cases which have arisen in the United Kingdom, India, Australia, and New Zealand. In a New Zealand case it was held that the Court of Chancery in England has jurisdiction under s. 199 of the Companies' Act, 1862 (25 and 26 Vic. c. 89), to wind up an unregistered joint-stock company, formed, and having its principal place of business in New Zealand, but having a branch office, agent, assets, and liabilities in England. The pendency of a foreign liquidation does not affect the jurisdiction of the court to make a winding-up order in respect of the company under such liquidation, although the court will, as a matter of international comity, have regard to the order of the foreign court. It being alleged that proceedings to wind up the company were pending in New Zealand, the Court, in order to secure the English assets until proceedings should be taken by the New Zealand liquidators to make them available for the English creditors pari passu with those in New Zealand, sanctioned the acceptance of an undertaking by the solicitor for the English agent of the company, that the English assets should remain in statu quo until the further order of the Court. (Re Commercial Bank of India, L.R. 6 Eq. 517; followed in Re Matheson Bros. Limited, 27 Ch. D. 225; Digest of English Case Law, 111, 1674.)




  ― 606 ―

A banking company carrying on business in South Australia had a branch London, but was not registered in England. The company had English creditors and assets in England. Two petitions were presented in England to wind up the company, which had stopped payment, and on the hearing of the petitions an order was made appointing a provisional liquidator, and the further hearing was ordered to stand over for a time. The powers of the provisional liquidator were limited to the taking possession of, collecting and protecting the assets of the company in England. When the petitions came on again to be heard it appeared that a petition to wind up the company had been meanwhile presented in Australia, and a provisional liquidator had been appointed there, but it was not proved that a winding-up order had been made. It was held that there was jurisdiction, at the time when the petitions were presented, to make an order to wind up the company, and that the jurisdiction could not be affected by subsequent proceedings in Australia. A winding-up order was accordingly made, the order appointing the provisional liquidator being continued, with the same restrictions on the powers, the judge expressing an opinion that the winding-up in that court would be ancillary to a winding-up in Australia, and that if the circumstances remained the same, the powers of the official liquidator, when appointed, ought to be restricted in the same way. (Re Commercial Bank of South Australia, 33 Ch. D. 174.)

In the case of the Merchants' Bank of Halifax v. Gillespie, 10 S.C.R. (Can.) 312, the question was as to the validity of proceedings under the Dominion statute for the sole and principal winding-up of a joint stock company incorporated in England in 1874, under the Imperial Joint Stock Companies' Act, and never incorporated in Canada, but with its chief place of business in Nova Scotia, where it owned and operated extensive iron mines and works, constituting almost its whole assets, while it owned no real estate, but occupied an office in Great Britain. (Lefroy, Leg. Pow. in Canada, p. 629.) The Supreme Court held that an order could not be made under the Dominion law for the winding-up of the Company. In the same case, Henry, J., said:—“If the provisions of a Dominion statute, as in this case, contravene an English statute regulating an English incorporated company, such provisions would be ultra vires … It is possible that a company chartered in the United States or other foreign country doing business here might be wound up under the Dominion Act, if such could be done without interfering with the terms of the constituting articles, but I see serious difficulties in the way, even in such a case.”

The extent to which federal control may be exercised over foreign corporations, including those formed under Imperial law, may be thus summarized from the English and Canadian cases. They will be liable to federal taxation; they may be required to give security for the performance of their contracts; their property and assets within the Commonwealth may be protected and regulated, so as to secure the rights of creditors, and particularly the rights of citizens and residents of the Commonwealth; they will not and cannot be wound up or dissolved under Federal law. But should they not be able to pay their debts, their assets may be seized and placed in the hands of a Federal liquidator, charged with the duty to carry on a local liquidation ancillary to any principal winding-up that may be instituted in the country of their domicile. (The Merchants' Bank of Halifax v. Gillespie, 10 S.C.R. [Can.] 312; Allen v. Hanson, 16 Quebec L.R. 79; Re Briton Medical Life Association, 12 Ont. Rep. 441.)

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