Concept of Legal Person and its Personality

MATS LAW SCHOOL

MATS UNIVERSITY, Gullu,Aarang(C.G)

LEGAL METHOD PROJECT

ON
CONCEPT OF LEGAL PERSON AND ITS PERSONALITY

SUBMITTED TO
MS.TOKMEM DOMING

AMAN GYAN DAS

B.A.L.L.B (hons.)
SEMESTER- I

SUBMITTED ON
6TH DECEMBER2012

Concept of Legal Person and its Personality

CONTENTS

ACKNOWLEDGEMENT
LEGAL PERSON
LEGAL PERSONALITY
HISTORY
LIMITATIONS
INTERNATIONAL LEGAL PERSONALITY
BIBLOGRAPHY

ACKNOWLEDGEMENTS
I 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

Concept of Legal Person and its Personality

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

Concept of Legal Person and its Personality

formed as the vehicle for charitable enterprises, cooperative non-profitmaking enterprises, municipal and governmental operations, and religious
and social activities. For example, in the classical Roman legal system,
the universities 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

Concept of Legal Person and its Personality

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 privatelaw 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 (also artificial personality, juridical personality, legal

entity and juristic personality) is the characteristic of a non-living
entity regarded by law to have the status of personhood.

Concept of Legal Person and its Personality

A legal person (also artificial person, juridical person, juristic person, legal
entity and body corporate, also commonly called a vehicle) has a legal
name and has certain rights, protections, privileges, responsibilities,
and liabilities under law, similar to those of a natural person. The concept of
a legal person is a fundamental legal fiction. It is pertinent to the philosophy
of law, as it is essential to laws affecting a corporation (corporations law)
(the law of business associations).

Legal personality allows one or more natural persons to act as a single entity
(a composite person) for legal purposes. In many jurisdictions, legal
personality allows that composite to be considered under law separately from
its individual members or shareholders. They may sue and be sued,
enter contracts, incur debt, and own property. Entities with legal personality
may also be subjected to certain legal obligations, such as the payment
of taxes. An entity with legal personality may shield its
shareholders from personal liability.

The concept of legal personality is not absolute. "Piercing the corporate veil"
refers to looking at the individual natural persons acting as agents involved
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
have all of the same rightssuch as the right 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 to Western law in both commonlaw and civil-law countries, 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

Concept of Legal Person and its Personality

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

Concept of Legal Person and its Personality

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 (selfgovernance).

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

Concept of Legal Person and its Personality

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

Concept of Legal Person and its 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,

Concept of Legal Person and its Personality

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

Concept of Legal Person and its Personality

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.

Concept of Legal Person and its Personality

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 intergovernmental 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.

Concept of Legal Person and its Personality

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

Concept of Legal Person and its Personality

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

Concept of Legal Person and its Personality

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

Concept of Legal Person and its Personality

Books referred1. SHARON HANSON, (2010) Legal Method, 3rd Edition.

2. Fleur Johns (2008) International Legal Personality.

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