Document Type

Article

Publication Date

2024

Keywords

Corporate Law, Directive on Corporate Sustainability Due Diligence, European Commission, ESG, Delaware, Extraterritoriality, Caremark, International Law, Shareholder Suits, Brussels Effect

Abstract

This essay explores possible shareholder claims in the United States that may arise  if and when member states of the European Union implement the proposed Directive  on Corporate Sustainability Due Diligence. As a doctrinal matter, legal compliance  obligations for corporations incorporated in Delaware extend beyond the borders of  the United States. Under Delaware law, shareholders can bring viable fiduciary suits  against directors and officers when corporations violate applicable “positive law.”  This jurisprudence, principally aimed at ascertaining whether directors and officers  betrayed shareholders by engaging in or facilitating lawbreaking, is not limited to  complying with American law. As Delaware corporations expand their operations  globally, their compliance obligations necessarily include sources of non-American  law, including the laws of European nations. Interestingly, the Directive may require  American corporations to comply with international treaties that the political branches  of the United States have not incorporated as binding sources of domestic law. While  exploring scenarios where shareholder claims may be viable, this essay also highlights  several limiting principles that may constrain the Directive from opening the flood gate to shareholder suits in the United States.

Publication Citation

35 European Business Law Review 367 (2024)

Disciplines

Business Organizations Law | European Law | International Law | Law

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