Chapter 4 - Do Corporations Have Rights Overseas?

Having demonstrated why corporations should have autonomy rights and suggested what kind of rights these should be, the remainder of this paper is taken up with comparing this ideal to the catalogue of rights which corporations in fact enjoy. In this chapter I will briefly review the status of corporate rights in four of the major common law jurisdictions of the world: the United States, the United Kingdom, Canada and New Zealand. In chapter 5 I will examine in greater detail the corporate autonomy rights that have the force of law in Australia.

1. United States

The country that has gone furthest in protecting the rights of corporations is the United States. A complete list of the constitutional rights to which corporations have been held entitled and disentitled in American decisions has been compiled in a recent article,1 and will not be reproduced here.2 These decisions have been marred by the courts' persistent failure to develop a conceptual theory of the corporation as a bearer of autonomy rights. Instead, constitutional rights have been applied to natural and corporate persons alike, absent any positive indication that the founding fathers intended otherwise. This approach has been criticised both by authors3 and dissenting judges:

The insistence on treating identically for constitutional purposes entities that are demonstrably different is as great a jurisprudential sin as treating differently those entities which are the same.4

On the few occasions when judges have raised the issue of the correct characterisation of corporate rights claimants, they have failed to find consensus with their colleagues or to set a precedent for future judicial examination of the topic. This is reflected in the apparent inconsistency of the conclusions to which the courts have come. For instance, a corporation has been held to have the right to trial by jury,5 while being unable to claim the privilege against self-incrimination.6 It is protected from double jeopardy,7 but can not claim the liberty guaranteed to persons by the 14th Amendment.8

The closest the United States Supreme Court has recently come to articulating a conception of the corporation as a rights-bearing entity is in the two leading decisions on corporations' First Amendment right to freedom of speech. In First National Bank v Bellotti9 and Austin v Michigan Chamber of Commerce10 the plaintiffs challenged the constitutionality of statutes that prohibited corporations from spending money to influence the outcome of public referenda or state candidate elections, respectively. In Bellotti the majority struck down the legislation on the ground that the First Amendment prevented the legislature from "dictating the subjects about which persons may speak and the speakers who may address a public issue."11 In Austin the legislation was upheld by the majority on the ground that corporate speech, although protected by the First Amendment, differed from individual speech, and could be regulated in order to prevent corporations from disseminating political opinions contrary to those of their members.12

The reasoning in both of these cases has been characterised as implicitly premised on a realist theory of the corporation.13 However the minority judges in both cases expressly relied on alternative conceptions of the corporation in reaching opposing results.14 This lack of consensus may be attributable to the inadequacy of each of the three major theories of corporate personality to support the recognition of corporate rights. Until the court develops a more suitable conception of the corporation, such as that developed in this paper, its prospects of reaching accord on the proper extent of corporate constitutional rights must be slim.

2. United Kingdom

Dicey's doctrine of Parliamentary sovereignty remains stronger in the United Kingdom than in any other common law jurisdiction. Traditionally, this has meant that citizens of that country have rights only to the extent that the Parliament does not override them:

Basic constitutional rights in this country such as freedom of the person and freedom of speech are based not on any express provisions conferring such a right but on freedom of an individual to do what he will save to the extent that he is prevented from doing so by the law.15

However while this suggests that all freedoms are equal at common law, in practice some freedoms are more equal than others. Apart from allowing persons a residual freedom to act as they wish within the bounds of the general law,

the common law is also solicitous of liberties: it acknowledges the importance of freedoms of speech and assembly, as well as of liberties of the person and rights of property.16

Judges have recourse to these liberties in interpreting legislation, exercising equitable discretions and (less overtly) in applying the common law.

Returning to the example of freedom of speech, this common law right has been applied in favour of a corporation in two English cases. In Verrall v Great Yarmouth Borough Council,17 the defendant opposed specific performance being granted of its contract with the plaintiff for the hire of a hall for the National Front's annual conference. Lord Denning granted specific performance "because of the importance of freedom of speech and freedom of assembly. These are among our most precious freedoms."18 Similarly, in Wheeler v Leicester City Council,19 the respondent refused permission for a rugby club to use a local ground for practice because some of its members had supported a tour to South Africa. Browne-Wilkinson LJ overturned the respondent's decision on the grounds that it interfered "with the fundamental right of the club and its members to freedom of speech and conscience."20

The traditional place of rights in the United Kingdom has changed since its accession to the European Convention on Human Rights. Although this convention does not form part of the law of the United Kingdom, it may be consulted in order to resolve any uncertainty or ambiguity in municipal law.21 It also affords complainants an avenue to challenge decisions of English courts that themselves infringe the convention. The best known such challenge, the Sunday Times case,22 happened to involve the rights of corporations. In that case a court order prohibiting the applicants from reporting on a negligence action against a drug company was held to infringe their freedom of speech under Article 10 of the convention. More recently, the European Court has expressly held that neither an applicant's status as a limited company nor the commercial character of its activities takes it outside the scope of Article 10.23

3. Canada

Since April 1982 the human rights of Canadian citizens have been protected by the Canadian Charter of Rights and Freedoms. Several provisions of this Charter also protect the autonomy rights of Canadian corporations. These currently include s.2(b) which guarantees "freedom of thought, belief, opinion and expression, including freedom of the press and other media of communication,"24 s.8 which grants freedom from unreasonable search and seizure,25 and s.11(b) which gives persons charged with an offence the right to be tried within a reasonable time.26

On the other hand, s.11(c) which limits the compellability of witnesses does not guarantee corporations the privilege against self-incrimination,27 and it is now clear that s.7 of the Charter protecting "life, liberty and security of the person" does not extend to corporations.28 It also seems that corporations do not enjoy the equality before and under the law guaranteed to "every individual" by s.15.29

As in the United States, the Canadian Supreme Court has traditionally "tended to reject or ignore arguments that sought to limit corporate recourse to the Charter protections."30 In more recent cases, some judges have supported or limited the extension of rights to corporations by reference to the theories of corporate personality discussed in chapter 1. However, also as in the United States, their persistent failure to agree on an appropriate conception of the corporation for this purpose has resulted in a body of law "increasingly torn by internal tension and contradiction."31

For instance, in R v Amway Corp.32 Sopinka J, delivering the judgment of the court, employed the fiction theory of the corporation in ruling that corporations are not entitled to the privilege against self-incrimination.33 In contrast, the majority's reasoning in Irwin Toy Ltd. v Quebec34 has been characterised as based on the contract theory of the corporation.35 Most recently, the court in R v CIP Inc.36 appeared to rely on a variation of the realist theory in extending to corporations the right to trial within a reasonable time.37 Again, it may be doubted whether this disparity of approach can be overcome without a more satisfactory conception of the corporation as a bearer of autonomy rights, such as that developed in this paper.

4. New Zealand

Unlike the United States Bill of Rights and the Canadian Charter, the Bill of Rights 1990 (NZ) is an ordinary Act of Parliament that may be expressly or impliedly overridden by the terms of other statutes.38 Section 29 of the Bill of Rights provides:

Except where the provisions of this Bill of Rights otherwise provide, the provisions of this Bill of Rights apply, so far as practicable, for the benefit of all legal persons as well as for the benefit of all natural persons.

To date the application of the Bill of Rights to corporations has only been tested with respect to two provisions. In Re "People"39 and Re "Penthouse US" Vol 19, No 540 the applicants argued that censorship restrictions on their magazines infringed the guarantee of freedom of expression in s.14 of the Bill of Rights. Although it was held in each case that s.14 did apply to corporations, neither applicant could establish an infringement of that section.

Similarly, in the Privy Council case of New Zealand Stock Exchange v Commissioner of Inland Revenue41 the plaintiff objected to being required to supply the defendant with details of its clients and their dealings on the grounds that this constituted an unreasonable search and seizure contrary to s.21 of the Bill of Rights. Although the court assumed that this section had application to the plaintiff, it was held not to be infringed as the search and seizure was reasonable.

At least one other provision of the Bill of Rights is likely to be held to extend to corporations. This is s.25(d) which grants accused persons the "right not to be compelled to be a witness or to confess guilt." Although a corporation cannot be a witness, it can confess its guilt through answering interrogatories or producing documents,42 which would appear to fall within the terms of the section. This accords with the pre-Bill of Rights case of New Zealand Apple and Pear Marketing Board v Master & Sons Ltd.43 in which corporations were held to be entitled to the privilege against self-incrimination. The significance of the codification of the privilege is, of course, that this case cannot now be reversed to bring New Zealand law into line with recent Australian authority.44

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