The term has come to describe a lawful, legal control of a state or a corporation.
For example, a de jure government is one which has been created in respect of constitutional law and is in all ways legitimate even though a de facto government may be in control.
John Bouvier wrote in his Law Dictionary:
"De jure: rightfully; of right; lawfully; by legal title.
"A government de jure but not de facto is one deemed lawful, which has been supplemented. A government de jure and also de facto is one deemed lawful, which is present or established. A government de facto is one deemed unlawful, but which is present or established. Any established government, be it lawful or not, is a government de facto."
In International Law, the authors wrote:
"De jure/de facto recognition: In effect such a recognition denotes how an entity is recognized rather than a description of the recognition. The essence of the distinction was that an entity recognized as de facto possessed most of the necessary components of sovereignty, whereas a de jure entity possessed complete sovereignty."
In the context of corporations, Justice Linden wrote in Duha:
"... de jure control is just what it is stated to be, control at law.... If majority ownership does not allow for real legal control over a company, the de jure test of control will not have been met."
On appeal of that decision, Justice Iacobucci wrote:
"... de jure control ... the test for such control generally accepted to be whether the controlling party enjoys, by virtue of its shareholdings, the ability to elect the majority of the board of directors.
"However, it must be recognized at the outset that this test is really an attempt to ascertain who is in effective control of the affairs and fortunes of the corporation. That is, although the directors generally have, by operation of the corporate law statute governing the corporation, the formal right to direct the management of the corporation, the majority shareholder enjoys the indirect exercise of this control through his or her ability to elect the board of directors. Thus, it is in reality the majority shareholder, not the directors per se, who is in effective control of the corporation."
REFERENCES:
- Canada v Duha Printers (1996) 3 FC 78; also at 50 DTC 6323 and (1996) 3 CTC 19
- Duhaime, Lloyd, Latin Law Dictionary
- Duhaime, Lloyd, Legal Definition of De Facto
- Duha Printers v Canada (1998) 1 SCR 795; also at 159 DLR 4th 457; 52 DTC 6334; (1998) 3 CTC 303 and 39 BLR 2d 1
- Wallace, R. and Holliday, A., International Law, 1st Edition (London: Sweet & Maxwell, 2006), page 46