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When is a corporation a person? [Oct. 13th, 2010|10:29 am]

It seems to me that one of the recent recurring legal questions, and one that fascinates me, is the question of when a corporation is treated like a person, and when it isn’t.  It seems to be dependent on the nature of the question.

If it is a question of business or economics, corporations seem to default to receiving all the rights of individuals, but not always.  See the recent Supreme Court ruling on the freedom of speech rights of corporations in funding support advertisements in political campaigns, notably.  See also intellectual and other property rights, etc.

On the one hand, this makes sense when considering the historical origins of corporations — the pooling of resources from a group of individuals to further a common business goal.  Economically speaking, this is a good thing.  A group of people working together can be more efficient and leverage greater scale benefits than any one individual.  The corporation should be able to exercise the freedoms that any of the individuals would have, as it is in some sense, an extension of the individuals.  On the other hand, corporations are not, in fact, living (or natural) persons.  So, for instance, they are given different tax structures (but so are different individuals sometimes) because they are not subject to some taxes (like an inheretence tax) and get to write off certain capital expenses and development expenses (progress does benefit everyone).

But on matters of moral, ethical, and criminal conduct, it is exceedingly difficult to treat a corporation as an individual, as fundamentally, it is not.  A corporation is made up of many actors, and in theory operates only under the direction of its controlling members.  So there are many times where a corporation is not or can not be held responsible for the actions of the individuals inside, even when those actions are to guide the corporation in an immoral, unethical, or criminal way.  The example I came across this morning is a recent interpretation of part of a very old law (ancient by US standards), called the Alien Tort Statute.  Here a federal appeals court ruled that this 1789 only gave the US jurisdiction over the actions of individuals, and not of corporations.  See the Bloomberg writeup here. In brief, this law was designed to allow the US to prosecute crimes against international laws established in treaty.  It was fairly dormant for a long time until recent decades when it has been plied towards punishing corporations that in some way support or further regimes that engage in human rights abuses.  As further context, the ATS predates by some 30 years the notion that corporations have legal personhood, which only complicates things further, as current US Code reads: “In determining the meaning of any Act of Congress, unless the context indicates otherwise– the words “person” and “whoever” include corporations, companies, associations, firms, partnerships, societies, and joint stock companies, as well as individuals”.  Apparently it has been determined that the context of the 1789 law indicated otherwise.  For other sorts of examples, look at recent legal actions taken in response to the activities of Enron, BP, and several large banking institutions.

So I ask you – when is a corporation a person, and when is it not?

(P.S., to be clear on my stance and reveal any bias I may have, I think it is frequently a mistake to grant corporate personhood.  The same thing that makes corporations efficient economic entities — that corporations are greater than the sum of their parts — is the same thing that, to me, negates their personhood, and gives them power in other arenas influenced by economic activity, such as politics, law, religion and culture.  Of course, corporate personhood can be a double-edged sword, as it is also what allows corporations to sue and be sued, so I am not wholly against the concept, just that it it seems to me to have been stretched and extended beyond reason at times, mostly in favor of corporations.)

(P.P.S., this sort of

Mirrored from The Black Horse of the Blog World.