Challenging the place of incorporation rule

  • This article* considers the question of applicable law to corporations.
  • It shows that the conceptual transformation within the applicable law doctrine resembles related changes within the corporate law doctrine.
  • It argues that some corporate choice of law provisions — particular those to do with internal corporate affairs — have remained loyal to an outdated conception of the subjects and this needs to be reconsidered.

world scales

Which law governs a lawsuit between an Australian and a Chinese corporation with respect to a contract signed in Indonesia, under which the Chinese corporation transports goods to Brazil? Which law should govern a derivative claim of a New York resident who is a shareholder in an Australian corporation against a director in this corporation who resides in Germany?

Evidently, these examples bear a central significance to the contemporary corporate world. With the advances of technology, cross-border business and commerce, and the frequent mobility of people, the world has become very much a ‘small village’. Litigation cases involve parties from different jurisdictions which litigate disputes that occurred in different places. Corporations only enhance the ‘internationality’ of contemporary litigation. They tend to be transnational in nature, targeting potential customers on a global scale and conducting business in a wide range of locations.1

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