In any event, the four necessary conditions for the implementation of the doctrine, which are common in principle to all the countries mentioned above, are as follows:
"[...] First, a breach of a fiduciary duty by a fiduciary, such as an officer or a lawyer; second, involvement to the extent that it encourages the violation; Third, there is some causal connection to the violation, to an expansive extent compared to the tests of causality used in non-faith contexts; Fourth, guilt to a degree that exceeds negligence alone" (Amir Licht , "Great Power and Great Responsibility: Lines of Responsibility of a Controlling Person," Yoram Danziger 663, 669 (Limor Zer-Gutman and Ido Baum eds., 2019); for further elaboration, see: Licht, pp. 433-451).
- Thus, when these four conditions are met, the doctrine allows, in principle, to impose liability on the intervening foreigner. In this context, it should be said that with regard to the imposition of liability for compensation for damage caused, as a rule, the foreigner who intervenes in liability jointly and severally with the trustee is liable, to the extent that the injured party suffered one inseparable damage (Licht, at pp. 478-479; compare: the Kossoy case, at pp. 288-283 and 288-289). In this context, it should be emphasized once again that the imposition of liability on the third party is conditional, as stated, on a breach of fiduciary duty by the fiduciary. Therefore, in the absence of a breach, no cause of action will arise and there will be no cause of action against the third party (see, for example, the case law in Delaware: Kihm v. Mott, No. 2020- 0938, 2021 WL 3883875, *24 (Del. Aug. 31, 2021)).
- However, it should be clarified that – liability is separate and liability is separate. Thus, it should be noted that on the one hand, the intervening foreigner does not have a duty of fiduciary duty towards the beneficiary or the company, and the doctrine serves to impose mere liability, only "as if" the intervening foreigner bore a fiduciary duty himself (Licht, at p. 408; Dubai Aluminium Company Ltd.v. Salaam, 2002 [UKHL] 48, 141-142). In other words, it is possible to demand that the intervening stranger bear the responsibility of the believer, but not to fulfill the obligations of the believer. However, on the other hand, the intervening foreigner may bear responsibility even when the trustee himself does not bear it, for example, due to an exemption granted to him by society or a compromise made with him (Andrew F. Tuch, M&A Advisor Misconduct: A Wrong without a Remedy?, 45 J. Corp. L. 177, 201-202 (2021) (hereinafter: Tuch)). In other words, the imposition of liability on the intervening foreigner is contingent on the breach of duty by the trustee, but not on the fact that the trustee actually bears responsibility for this breach.
- It should also be noted that in English law it is customary to use various terms that describe the degree of involvement required of the third party, such as procurement and inducement (which are intended to express causing or solicitation), dishonest assistance (which is intended to express dishonest assistance) or Actually Participating (which is intended to express an actual partnership). At the same time, the distinction between these situations is quite complex, as is the degree of guilt to be pointed out (Licht, at pp. 418, 426-427, and 445; Amir Licht, "The Golden Bridle – An Officer Who Receives Payment from the Controlling Shareholder: The Liability" at the end of a sentence (04.05.2017)).
- In this context, it should also be said that, as in Delaware, English case law has discussed many situations that amount to prohibited involvement in a breach of fiduciary, and some would even say that such situations are endless. Thus, for example, it is possible to mention, just for the sake of example, the bribery of an officer or the preparation of documents intended to facilitate the smuggling of the assets of the main infringement (Licht, at p. 439). In addition, the condition of causation is also interpreted quite broadly, so that the plaintiff must show that the actions of the intervening foreigner had some causal effect on the violation and its consequences, but no more than that (ibid., at p. 441).
- For the sake of completeness, I will note that in foreign case law it is possible to locate cases in which liability is imposed on corporations that were involved in a breach of the fiduciary duty of an officer, for example when the officer takes a business opportunity of the company through a corporation he owns or competes with the company through such a corporation. Similarly, there are cases in which directors involved in a breach of fiduciary duty are held liable by the corporation in which they served (ibid., at pp. 428-431 and 440). In this last context, it should be emphasized that this is not necessarily a lifting of the veil, but rather a separate doctrine, the conditions for its operation are different (Amir Licht, "A Monkey Named Michael – Controlling Shareholder's Responsibility for a Director's Conduct at the Bottom of the Pyramid," point at the end of a sentence (March 30, 2015)).
The Law in Delaware
- The term given to the doctrine referred to in Delaware is "Aiding & Abetting [a breach of a fiduciaty duty]" and is based, in essence, on a tortious construction based on the tort of causing an unlawful breach of contract (Licht, at p. 410, supra note 1294; see, for example, the Columbia Pipeline case, at p. 470, where Vice-Chancellor Laster relied on the Restatement (Second) of Torts § 876 (Am. Inst. 1979)). It is worth noting that in recent years, more and more shareholders and derivative plaintiffs have been making use of this doctrine, which, as noted, makes it possible to impose legal liability on many and varied parties that are involved, to one degree or another, in breach of the duties of the company's officers (Asaf Eckstein & Roy Shapira, Compliance Gatekeepers, 41 Yale J. on Regul. 469, 502 (2024) (hereinafter: Eckstein and Shapira); Tuch, on page 199).
- The judgment in the case of RBC (RBC Capital Markets, LLC v. 129 A.3d 816 (Del. Ch. 2015) (hereinafter: the RBC case) given in 2015 may serve as an appropriate example of the expansionary trend that Delaware is pursuing in this context. In that case, by virtue of this doctrine, liability was imposed on economic consultants who gave an opinion to a company that was acquired as part of a merger transaction, so that they were obligated to compensate the shareholders in a total sum of tens of millions of dollars. In the meantime, it was determined that the economic advisors led the board members into looting and caused them to be negligent in the process of selling the company, while concealing their personal interest in the transaction. It should be emphasized that the economic advisers were liable, even though a duty of care and not a duty of fiduciary duty was breached (but see that in Delaware the distinction between them is quite complex: paragraph 86 above; Danziger and Rahum-Twig, pp. 34-35; In re The Walt Disney Co. Derivative Litig. v. Eisner, 906 A.2d 27, 65 (Del. 2006)), and although the directors themselves did not bear actual responsibility, this was in view of the exemption granted to them (the description of the facts and determinations is taken from Tuch's article, at pp. 200-202, as well as from Danziger and Rahum-Twig's article, at pp. 34-35).
For the sake of completeness, it should be noted that the imposition of liability for the failure to disclose a conflict of interest of a party involved or an intermediary in a transaction is not unusual in the Delaware case law, and it can also be found in subsequent rulings (in this regard, see: Morrison v. Berry, No. CV 12808-VCG, 2020 WL 2843514 (Del. Ch. June 1, 2020); Tuch, pp. 203-204; Joseph P. DiCarlo, Revving-up Revlon in the Wake of Rural Metro: A Call for Direct Liability on Financial Advisors, 48 Seton Hall L. Rev. 871, 889 (2018)).
- The conditions required for the imposition of liability by virtue of the Aiding & Abetting doctrine were recently summarized in the opinion of Vice-Chancellor Glasscock, as follows:
"To state a claim for aiding and abetting of fiduciary duty, a plaintiff must allege ")i) the existence of a fiduciary relationship, (ii) a breach of the fiduciary’s duty, (iii) knowing participation in the breach, and (iv) damages proximately caused by the breach"" (BV Advisory Partners. LLC v. Quantum Computing Inc., 2024 WL 2735005, * 49 (Del. Ch. May 28, 2024)).