Disregarding the Salomon Principle: An Empirical Analysis, 1855-2014
39 Oxford J. Legal Stud. 16 (2019)
37 Pages Posted: 7 Mar 2019
Date Written: March 5, 2019
For over a century UK courts have struggled to negotiate a coherent approach to the circumstances in which the Salomon principle – that a corporation is a separate entity – will be disregarded. Empirical analysis can facilitate our understanding of this mercurial area of the law. Examining UK cases from 1885 to 2014, we created a final dataset of 213 cases coded for 15 different categories. Key findings confirm historical patterns of uncertainty and a low but overall fluctuating disregard rate, declining recently. Criminal/fraud/deception claims link strongly to disregard outcomes. Private law rates are low but tort claims have a higher disregard rate than contract. Individual shareholders are more susceptible to disregard than corporate shareholders. The English Court of Appeal plays a key role in successful disregard claims particularly in tort. In general, while disregard rates were very context specific, concerns about the diminished sanctity of the Salomon principle may be overblown.
Keywords: company law, corporate law, courts, empirical legal studies, veil piercing, veil lifting
JEL Classification: K10, K12, K13, K22, K41, K42, O52
Suggested Citation: Suggested Citation