Shareholder Claims for Reflective Loss in Company Law and International Investment Law

This book examines shareholder claims for reflective loss (SRL) in company law and international investment law, two distinct areas of law that adopt different approaches. Reflective loss arises when shareholders suffer economic harm as a consequence of a direct loss to the company, resulting in a reduction in share value. 

Under company law, the no reflective loss rule generally bars shareholders from bringing direct claims for reflective loss, reserving recovery to the company. In contrast, international investment law commonly permits investor-shareholders to bring direct claims for reflective loss, a position consistently upheld by investment arbitral tribunals in investor–state dispute settlement (ISDS). 

The research in this book adopts a doctrinal and comparative methodology, drawing on national case law, national law rules, investment treaties and arbitral practice. It reveals that the interaction of company law and international investment law on SRL may raise significant procedural concerns such as double recovery, double duties (jeopardy) for the same wrongdoing, and prejudice to creditors and other shareholders causing broader social, economic, and legal implications for corporate accountability, consistency in dispute settlement mechanisms, and confidence in national legal systems and international investment law regime. 

To this end, this book offers practical, system-sensitive suggestions for addressing a compromise on the question of SRLwhich are based on a comprehensive analysis of contemporary company law rules and national case law of the jurisdictions: the UK, the USA, Germany and France, as well as investment treaties and ISDS case law. Together, these suggestions seekto balance investor protection with fairness, legal coherence, and the protection of all stakeholders. 

This book will be of interest to: (i) academics and students of company (corporate) law and international investment law, as it explores the theory, principles and policies underlying shareholder claims; (ii) judges, company (corporate) law practitioners, and in-house counsels, as it examines shareholder claims under comparative modern company (corporate) law rules and recent national case law; (iii) arbitral tribunals, arbitration law practitioners, in-house counsels in arbitration, as it analyzes investment treaty provisions and investment arbitration practices (recent ISDS case law) and iv) legislators, investment treaty drafters, and the other policymakers, as it offers practical suggestions for adopting or improving national law rules and investment treaty provisions. 

This book series is published by the Business & Law Research Network (BLRN) of Leiden University. This research and expertise network conducts research on various aspects of doing business in the field of corporate and insolvency law. BLRN focuses in particular on topics such as corporate governance, sustainable entrepreneurship, mergers and acquisitions, and restructuring and insolvency.