Piercing the corporate veil ?

Is there any European liability principle for the holding company for a defaulting subsidiary?

Under European law, there are no general rules whit respect to the liability of a holding company for the debts of its insolvent subsidiary.

The Council Regulation (EC) N° 1346/2000 of 29 May 2000 on insolvency proceedings only provides for a common framework for insolvency proceedings in the European Union (EU). The harmonised rules on insolvency proceedings intend to prevent assets or judicial proceedings being transferred from one EU country to another for the purposes of obtaining a more favourable legal position to the detriment of creditors (“forum shopping”).

Unlike the EU antitrust law which contains stipulations enabling liability claims against a holding company for debts of its subsidiary, the EC N° 1346/2000 does not contain such liability provisions.

Given the above, liability claims against holding company for the debts of its subsidiaries need to be examined only under the laws of the country where the subsidiary exists and has been declared bankrupt.

In Belgium, group liability may arise whenever a company controls or manages another company, and performs certain acts or omissions which are either contrary to the controlled or managed company’s corporate interests, or constitute a violation of the law (including torts law) or the controlled company’s by-laws.

Such liability is not, as such, linked to the structural relationship between group companies, or the shareholding, but to the fact that (in practice) one company, or its representatives, in ‘controlling’ or ‘managing’ another company, commits certain management faults. In some circumstances, the liability may also be extended to third parties (individuals and companies) that, although not ‘controlling’ or ‘managing’ the relevant company (or even being part of the same corporate group), have benefited from the acts or omissions leading to the group liability and were, or should have been, aware of the irregularity of such acts or omissions.