VTB Capital: Supreme Court decision - .PDF file.
What are the legal consequences of ‘piercing the corporate veil’ of a company? If it is appropriate to do so, will the controller of the company be made liable on its contracts? The UK Supreme Court has decided in VTB Capital plc v Nutritek International Corp and others  UKSC 5 that contractual liabilities of a corporation cannot be attributed to its controller by means of ‘piercing the corporate veil’. In addition, the case explains the factors that determine the proper forum for cross-border litigation.
VTB is a bank registered as a public company in England that is owned by a large Russian bank. It lent $225m (£149m) to Russagroprom (RAP), incorporated in Russia, under a facility agreement governed by English law. The purpose of the loan was the purchase of six Russian dairy companies from Nutritek International Corp, a BVI company managed from Russia. The ultimate owner and controller of RAP (through another BVI company and a Russian company) was alleged to be a Mr Malofeev, a Russian resident who conducted the negotiations for the loan with VTB.
RAP defaulted. VTB recovered about $40m from the security. VTB then sued the holding companies and Mr Malofeev in England, and obtained permission to serve those defendants out of the jurisdiction. VTB’s claim was, originally, that the defendants had entered into a conspiracy to defraud VTB by falsely representing that RAP was independent of Nutritek, whereas in truth both were controlled by Mr Malofeev…
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