In 2024, the Brazilian Supreme Court froze assets of a Starlink subsidiary because of non-compliance by X (formerly Twitter). What do Starlink and X have in common? The Brazilian Supreme Court’s answer was “Elon Musk.” His control, according to the court, made this a de facto economic group (grupo econômico de fato). In many contexts, that answer wouldn’t make legal sense; X and the Starlink sub were separately organized legal entities, whose boundaries are generally respected. Or are they? Read Overcoming Corporate Separateness to find out.
Multinational corporations are often organized into corporate groups or conglomerates, but these groups are not always formally defined in the law. US corporate law orthodoxy is that respecting the formal boundaries between corporations, parents and subsidiaries, etc. offers risk partitioning, predictability, and ease of compliance. Under this account, it makes sense to respect and even encourage organization of separate entities by jurisdiction, by company, by market.
But this article debunks two basic assumptions in US corporate law and comparative law. The first is the factual assumption that the exceptions are narrow. US corporate law and academic literature sometimes treat the formal boundaries as inviolable. This article presents the Brazilian counterexample. As early as 1937, Brazilian labor law imposed liability on parent companies in the employment context , driven by the structure of multinationals. Multinational parents were foreign; workers were Brazilian (P. 8).
Corporate law tends to be siloed, and US corporate law tends to leave employment and labor law out. The article also broadens the analysis by including labor and employment law and related concepts like the single employer or integrated enterprise. The article’s inclusion and analysis of both is a directional move, using frameworks from a system like Brazil’s to broaden what counts as corporate separateness. It is not just “piercing the corporate veil.”
The second assumption that the article challenges has to do with comparative law. The authors provide a concrete counterexample to assumptions about the direction of legal borrowing. A bias of the literature is that it often treats the Global South as the importer of law. But new conceptions of the corporate group originated in the Global South, predating their use in the Global North. See the driving example here, which is Portugal’s adoption of group liability modeled on Brazilian law. “[H]ow Mexico preceded France in adopting first priority of workers’ claims in insolvency” is another example that Pargendler explores in other work (Legal Heterodoxy in the Global South).
Not every reader will follow every twist and turn – or every variant in every studied country. But that’s okay. Not only is the broad debunking worth a read, but the particulars are interesting. Keep an eye out, for instance, for the Canadian octopus and the principle of reality. In sum, a piece with much to offer and well worth a read.
