Globalization can be a double-edged sword. Business practices are now crossing borders just as quickly as software, commodities, or flat television screens. Corporate executives enjoy the good and the bad.
One idea the U.S. seems to be exporting is that of class action lawsuits against companies. Indeed, corporate officers and directors are becoming more exposed to personal liability and other actions in other companies, according to a Directors & Officers (D&O) insurance expert with American International Group.
One June 30, for instance, Italy adopted legislation to allow consumer class action lawsuits. Germany did so two years ago. Canada passed its version of Sarbanes-Oxley several years ago, Steve Whalen, executive vice president of AIG Executive Liability told Directorship.com.
Court venues for actions are spreading all over. “Our original perspective was that if you served on a board in a foreign country, that would be the only place you’d see liability. But there are many alternatives for overseas plaintiffs now,” Whalen said.
The takeaway: Of course, AIG is trying to sell you more D&O insurance. But they claim that they are averaging 12 to 15 new clients every month because of the spread of class action and personal liability legislation in countries other than the U.S. If so, it might be worth checking with your counsel about new overseas risks. These days, boards are starting to use counsel independent of their company so they might want to check, too.
