Discussion On The Remedies Of Shareholders' Reflective Loss

Shareholders in the company may be subject to two different forms of damage.First,their shareholder rights may be directly harmed.These rights include the right to attend and vote at shareholders' meetings,as well as the right to share the company's remaining assets in liquidation.The second type of damage the company's shareholders may suffer is the company's loss.The wrongdoer's actions damage the company and,in turn,affect the company's overall value.In this case,shareholders often suffer losses because of the shrinking value of the shares they invest in.The shareholder's loss is called reflective loss.Reflective loss is an important concept in company law.Its significance is the reflection of the loss of the company at the shareholders' level,which is often reflected in the impairment of the value of the stocks held by the shareholders."Reflective loss" as a kind of actual loss suffered by shareholders,its compensation rules are very important for the protection of shareholders' interests.Whether a shareholder is allowed to claim compensation for "reflective losses" is an important issue for both corporate law and international investment law.Interestingly,however,in practice and related legal theory,the traditional views of domestic courts inimportant countries in the world's jurisdictions make the opposite conclusion on whether shareholders can recover the loss of share value(reflective losses)caused by corporate losses with international arbitral tribunal.To a certain extent,the international arbitration tribunal tends to allow shareholders to recover share price losses caused to shareholders due to the country's violation of the investment treaty.Domestic courts in various countries usually prohibit the provision of such compensation to shareholders based on the "no reflective loss principle".What is more noteworthy is that the British law has undergone corporate law reforms and it has,in practice,been the first of its kind in the statute for shareholders to seek relief for restitution losses-that is,through their unique unfair damage relief system and exceptions to the no reflective loss principle.The provision establishes a reflective loss compensation system to protect the interests of shareholders more comprehensively in special circumstances.The reason why domestic traditions and international arbitration choose two different paths is that the practice of domestic courts is based more on policy considerations,such as preventing claimants from receiving double payments,preventing double exposure to wrongdoers,and respecting the company's commercial decisions.As for international investment,since investment treaties are essentially contracts,the state promises to accept foreign investors' investment in exchange for more foreign investment.The role of the arbitral tribunal in this regard is to preserve the parties' autonomy.At the same time,it is also necessary for us to discuss the process and the reasons for the change in the attitude of the British law,in order to explore ways for shareholders to find remedies for reflective losses.This paper argues as follows:First of all,in the first chapter,based on the national company law traditions of various countries,this article explores the possibility of recovering reflective losses in domestic courts of various countries.In this chapter,first,this article reveals the meaning of the concept of “reflective loss”;secondly,it summarizes the “reflecive loss” claims adopted by company law in the major jurisdictions in the worldincludingFrance,Germany,the United States,and Hong Kong.Finally,the chapter explains the policy considerations that these countries have adhered to in adopting such a path.Second,in the second chapter,this article will focus on the most representative British position on the issue of reflective loss.Through the study of the law in the United Kingdom,we can clearly understand that the English law has traditionally adhered to the strict principle of no reflective losses.In spite of this,the author found that in recent years,the United Kingdom has provided a path for shareholder to compensate their reflective loss.Therefore,this chapter will first introduce the traditional “no reflective loss principle” in British law and talk about the change of their attitude;secondly,it will briefly introduce the UK's reflective loss compensation rule based on the unfair damage relief system;then,a brief analysis of the other exceptions to the UK's principle of "no reflective loss principle" is given.Finally,the reasons for the change in the attitude of the British legislators are analyzed.Then,in the third chapter,this article focuses on the treatment of reflective loss issues by arbitration tribunals in international arbitration.Different from domestic traditional legislation,the international arbitral tribunal adopts a completely different approach to compensation for reflective losses,that is,it tends to support shareholders' claim for compensation for reflrctive loss.In this chapter,first of all,we will explain the important position of international investment law;second,clarify that international investment law can be used as a conflict resolution method,and briefly introduce key cases of reflective loss to show the attitude of the arbitral tribunal to deal with reflection losses;finally,this paper will focus on analyzing the policy considerations of international arbitration tribunals in support of compensation for reflective loss,and provide relevant countermeasures on the issues arising therefrom.Finally,in the fourth chapter,this article aims to provide remedy paths for shareholders to recover reflective losses.After the discussion of the above three chapters,this article has been able to affirm that the reflective loss of shareholders is the loss that shareholders actually suffer,and it is necessary to provide remedy tothem.However,in the domestic laws of the major jurisdictions of the world,there are few remedial measures for such losses,which are inconsistent with the principle of civil law that "there is a loss if there is a remedy." At the same time,in international law,although the international arbitral tribunal tends to support shareholders in recovering reflective losses,the scattered jurisprudence does not form a systematic remedy for shareholders' reflective losses.In this chapter,this article will firstly summarize the conditions for shareholders to claim reflective losses under the international investment treaty from the perspective of international law.Secondly,from the perspective of domestic law,taking China as an example,we will explore the establishment of a remedy system for shareholder reflective in domestic law.