Opinion ID: 2167196
Heading Depth: 1
Heading Rank: 5

Heading: Irish Company [9] Law

Text: Tomran asserts that when the Court of Special Appeals and the Circuit Court determined that Irish law applied, they were obligated to determine the way that foreign jurisdiction would rule under Maryland Code (1973, 2002 Repl.Vol.), Section 10-501 of the Courts and Judicial Proceedings Article. That provision states: Every court of this State shall take judicial notice of the common law and statutes of every state, territory, and other jurisdiction of the United States, and of every other jurisdiction having a system of law based on the common law of England. Specifically, Tomran contends that both the Circuit Court and the Court of Special Appeals created a rule that discriminates against parties who wish to have foreign law applied and that is impermissibly rigid in that it requires clear legal authority to provide the basis of any conclusion about the foreign jurisdiction's law. Conversely, Respondents argue that the lower courts carefully considered the legal analysis and factual allegations before it and that there is nothing in the relevant cases, statutes, or commentary to suggest that Ireland would recognize Tomran's ability to pursue a derivative action. We again disagree with Tomran's position. The Honorable Mr. Justice Ronan Keane, Chief Justice of Ireland, in his treatise on company law, provides a thorough explanation of the history of Irish company law: The general structure of Irish company law is closely modeled on that of England. The reason is obvious: the two countries had a common legal tradition and, after the Act of Union in 1800 and until 1921, all statute law affecting Ireland was enacted at Westminster. While there have been substantial changes in Irish company law since 1921, it was thought better to preserve the general structure inherited from the English, and such changes as have been made since 1921 have in many instances been based on changes in the neighbouring jurisdiction. Since the accession of Ireland to the European Economic Community in 1973, however, many changes have resulted from compliance with directives of the community, now the European Union, requiring the harmonisation of company law in the member states. Both parties agree that there is a lack of applicable statutory and case law in Ireland on the shareholders' right to maintain a derivative suit and recognize that the decisions of the English courts prior to Irish independence in 1921, although not precedential authority, are persuasive. To that end, Tomran relies upon three English cases from the nineteenth century as supporting its assertion that Irish courts would permit it to proceed: Bagshaw v. Eastern Union Ry. Co., [1849] 7 Hare 114 (addressing issue of whether the directors' appropriation of monies to a project separate from that for which they were raised was proper, and limiting Foss v. Harbottle, [1843] 2 Hare 461, to the proposition that if the offending act by the directors is an act that the shareholders could ratify, an action to impeach the board's action cannot be maintained); Great Western Ry. v. Rushout, [1852] 5 DeG. & Sm. 290, 309 (finding that beneficiaries of a trust of stock could seek an injunction to interfere with the internal management of the railway company when an unlawful application of funds is involved); and Binney v. Ince Hall Coal & Channel Co., [1866] 35 L.J. Ch. 363 (determining that the equitable mortgagee of shares has the authority to sue the company to protect the value of the shares). In response, Respondents note that none of the cases cited by Tomran addresses the issue of beneficial owners' ability to sue derivatively, but rather, the cases address other rights distinct from derivative rights. A close reading of the cases cited by the parties reveals that none of the cases cited provides any basis for the assertion that Irish courts would recognize a beneficial owner's right to maintain a derivative suit: Bagshaw and Great Western involved individuals seeking injunctions to redress alleged illegal acts by the boards, and Binney concerned an equitable mortgagee who sought an injunction to prevent the board from liquidating the share capital of its members. The issue before us is not what we believe the Irish court should hold when faced with this issue as Tomran urges, but rather what it would hold based on applicable laws and precedent. As the United States Court of Appeals for the Eighth Circuit noted, This Court must look to [foreign law] as it is and not as one might believe it ought to be. Carson v. National Bank of Commerce Trust and Savings, 501 F.2d 1082, 1085 (8th Cir.1974). We cannot conclude that Irish courts would grant beneficial owners the right to sue derivatively on behalf of corporations where there is no indication, even in dicta, that they have considered the issue. Our determination is consistent with the conclusion of Irish legal treatises that have considered the issue. See The Honorable Mr. Justice Ronan Keane, Chief Justice of Ireland, COMPANY LAW (Butterworths 3d ed.2000); Robert R. Pennington, COMPANY LAW, ch. 17 (Butterworths 7th ed.1995); Patrick Ussher, COMPANY LAW IN IRELAND, ch. 8 (London: Sweet and Maxwell 1986). Only Mr. Pennington states that Irish courts would permit a beneficial owner to proceed in a derivative suit, but he did not cite to any authority supporting his assertion. Therefore, in light of the dearth of any statutory or common law authority indicating that Irish courts are disposed to recognize the right of beneficial owners to sue derivatively, we are not persuaded that an Irish court at this time would hold that Tomran can sue derivatively under Irish law. [10]