LEGAL METHOD PROJECT

CONCEPT OF LEGAL PERSONALITY AND

IT’S PERSONALITIES

Submitted To : Mr. Ankit Awasthi

Submitted By : Arsh Kaul

Roll No. : 29

Section : C

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

Date of Submission : 25TH OCTOBER 2018

Hidayatullah National Law University,

Raipur, Chhattisgarh.

Name : Arsh Kaul

Roll No.: 29 Section : C
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CONCEPT OF LEGAL PERSONALITY AND IT’S PERSONALITIES

Table Of Contents

Sn. Item Description Page Nos.

1 Declaration 2
2 Acknowledgement 3
3 Concepts of Legal Person And Its Personality 4-12
4 Bibliography 13

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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.)

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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 would 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 would 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.)

Name : Arsh Kaul

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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

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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

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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.

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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 (self governance).

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

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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

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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

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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.

5. 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.

6. 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

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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.

7. Besides corporations gaining greater legal personality as more of them expand

their businessBeyond their national borders, a new trend has emerged. This

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trend is called ‘corporate social responsibility’. This new trend has forced
international corporations to respectBasic 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.

8. 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.

9. This means that all new investmentsare going to be ecologically friendly while
workers will get all rights and privileges deemed necessary by the
Europeanstandards.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.

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BIBLIOGRAPHY

Concept of Legal Person and its Personality

Books referred :

1. 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

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