Looking behind the corporate veil

The Supreme Court in VTB Capital v Nutritek has addressed the question of how far it is possible to look behind the separate legal personality of a company to impose liability upon those controlling it — also known as ‘piercing the corporate veil’. In a significant judgment, the court has rejected the suggestion that the corporate veil should be pierced to impose liability on those controlling the company as if they had been a contracting party alongside the ‘puppet’ company.

The Supreme Court reasoned that to impose liability on the controller of a company, where he is not a party to the contract, and where neither he nor any of the contracting parties intend him to be, would be an extension of the jurisdiction to pierce the corporate veil which would be contrary to both authority and principle.

While this decision is useful in limiting the available remedy, the court’s decision to leave open the question of whether there is in any event a discretion to pierce the corporate veil in an appropriate case is unhelpful. A clear statement of the law in this area would have been welcomed…

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