Facts: Cape Industries (D, head UK company) has subsidiaries that mined asbestos in South Africa and shipped it to Texas, where a marketing subsidiary, NAAC, supplied the asbestos to another company in Texas. The employees (P) of NACC became ill from asbestos (in Texas, residents of Texas) and sued D (and NACC) in a Texas court. Originating process was served on D in England, who elected not to take part in the proceedings. The court gave judgement and Ps sought to enforce the Texas judgement in England.
Issue: Was the US judgment enforceable in an English court? There was no voluntary submission, so the only possible basis of jurisdiction is the English company’s presence in Texas. Was Cape “present” i.e. “carrying on business” in Texas? This comes down to whether NACC was a subsidiary of Cape Industries.
Held: Here, it was not proved that NACC was Cape’s subsidiary. The US subsidiary was separate and distinct from its English parent company. The claimants could not enforce the US judgment in an English court. According to English law, a corporation will be present in a foreign country if it carries on business there at a fixed place and it has been carried on for more than a minimal period of time (also acceptable if the representative carries on foreign company’s business). However, the mere existence of a subsidiary is insufficient to create a “presence” unless it does conduct the business of the corporation exclusively and has authority to bind the corporation in contracts with third parties.
Following indicia for agency relationship:
Whether or not the fixed place of business from which the representative operates was originally acquired for the purpose of enabling him to act on behalf of the overseas corporation;
Whether the overseas corporation has directly reimbursed him for the cost of his accommodation at the fixed place of business; the cost of his staff;
What other contributions, if any, the overseas corporation makes to the financing of the business carried on by the representative;
Whether the representative is remunerated by reference to transactions, e.g. by commission, or by fixed regular payments or in some other way;
What degree of control the overseas corporation exercises over the running of the business conducted by the representative;
Whether the representative reserves part of his accommodation, part of his staff for conducting business related to the overseas corporation;
Whether the representative displays the overseas corporation's name at his premises or on his stationery, and if so, whether he does so in such a way as to indicate that he is a representative of the overseas corporation;
What business, if any, the representative transacts as principal exclusively on his own behalf;
Whether the representative makes contracts with customers or other third parties in the name of the overseas corporation, or otherwise in such a manner as to bind it; if so, whether the representative requires specific authority in advance before binding the overseas corporation to contractual obligations.