CONCEPT OF LEGAL PERSONALITY AND

IT’S PERSONALITIES

Submitted To: Submitted By

Mr. Ankit Awasthi, Arsh Kaul, Roll No. 29
Professor Section C, Semester 1
B.A.L.L.B (Hons.)

LEGAL METHOD PROJECT

Date of Submission: 25TH OCTOBER 2018

Hidayatullah National Law University,

Raipur, Chhattisgarh.
 Declaration

I hereby declare that this research work titled “LEGAL PERSON AND IT’S

PERSONALITY”is my own

work and represents my own ideas, and where others’ ideas or words have been included, I

have adequately cited and referenced the original sources. I also declare that I have adhered

to all principles of academic honesty and integrity and have not misrepresented or fabricated

or falsified any idea/data/fact/source in my submission.

Arsh Kaul

Roll no. 29, Section C

Semester 1, B.A.L.L.B(Hons.)
 Acknowledgement

It gives me immense pleasure to write this project “LEGAL PERSON AND IT’S

PERSONALITY”.

Firstly, thanks to the Almighty who gave me the strength and determination to put all my

endeavors into this work.

Secondly, I’d like to thank our Legal Method faculty Mr Ankit Awasthi, for allotting such an

enlightening topic and for all the help and co-operation extended by her in helping scrutinize

the same.

Thirdly, I’d like to thank my parents and friends for all their constant support without which

this venture would not have been possible.

Last but not the least, I would like to thank my respected seniors for extending their help in

finding the information and articles required for the work.

Arsh Kaul

Roll no. 29, Section C,

Semester 1, B.A.L.L.B(Hons.)

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. I’d 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 ("Parteifähigkeit", 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 legal personality under private law. Other civil-
law societies are the private limited company (GmbH), the registered co-operative society , 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 (corporation’s 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
rights—such as the right to freedom of speech—that 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 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

business venture was either a sole proprietorship or partnership—the owners were simply liable for
the debts of the business. A feature of the corporation, however, is that the owners/shareholders
enjoyed limited liability—the 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 rights
—the 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). 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. These concepts have been codified by statute, as U.S.
jurisdictional statutes specifically address the domicile of corporations.

LIMITATIONS
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, 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.
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.

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.

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 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 China’s 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 are going to be ecologically friendly while workers will get all
rights and privileges deemed necessary by the European standards. 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 John’s (2008)
International Legal Personality.

Websites Referred:

1. http:// http://www.rakshakfoundation.org

2. http:// http://www.law.georgetown.edu