The Formation of the Law on Corporate Residence for Tax in De Beers Consolidated Mines v Howe (1906) and its Endurance: Importing and Exporting Ideas in Unique Historical Circumstances

An influential export of UK case law has been the law to establish corporate residence for tax and jurisdiction, as articulated by the House of Lords in De Beers Consolidated Mines Ltd v Howe [1906] AC 455.  This presentation will share the findings of research performed about the intellectual origins of the judicial test (‘central management and control’) that has caused De Beers to be viewed as a landmark decision in countries sharing a legal tradition with the UK.  Strong indications were found that key ideas were borrowed from the work of the German jurist, Friedrich Carl von Savigny.  The parallels between Savigny’s work on corporate domicile and the development of a judicial test in England for tax residence will be highlighted, as well as the difficulties that arose in the application of the test after the process of transplantation begun.

The decision in De Beers is less well known for the unique historical context and facts that gave rise to the dispute before the English courts.  The dramatis personae were no less than Cecil John Rhodes, chairman of De Beers and Prime Minister of the Cape Colony where the De Beers diamond mines were situated, and the Rothschild conglomerate who financed its operations and who were major shareholders that assisted in the establishment of a diamond syndicate in London in control of the global market. The House of Lords famously decided that the company, incorporated in the Cape Colony, was resident in London because it was centrally managed and controlled by its London directors, despite all of its diamond mining business being conducted at the Cape.  Research conducted in the private archives of the company revealed that incomplete facts were before the English courts concerning its South African directors, especially Rhodes, which arguably may have altered the outcome and the impact of the decision on others.  The decision ought to be appreciated and evaluated in light of the uniqueness of the company. During the fiscal years in dispute De Beers was involved in various projects for colonial advancement in Southern Africa and featured prominently in the war with the Boer Republics (1899-1902) in which the company’s resources were applied. Finally, during a period of acrimony in England towards Rhodes in the aftermath of the war in South Africa, the case was heard before the English courts after his death in 1902.

A sandwich lunch will be available from 12.30. The meeting will begin at 1pm.