On 6 February 2013, the Supreme Court dismissed the appeal by the claimant bank VTB Capital Plc (“VTB”) on both points. [1], The Court of Appeal dismissed the appeal. Clare Arthurs and Alex Fox reflect on the Supreme Court judgment in Nutritek The Supreme Court clearly declined to extend the circumstances in which the corporate veil may be pierced. The Supreme Court held that this was putting the bar too high: it was unhelpful to approach the matter in terms of a “presumption”; instead a Court should consider all the factors in the round, in accordance with the classic common law test for jurisdiction in The Spiliada [1987] AC 460. The appeal concerned two issues of significance to commercial law: first, the circumstances in which fraud claims involving foreign parties but relating to frauds allegedly perpetrated in England should be heard by the English courts; and second whether a claimant who has entered into a contract with a company as a result of a fraud practised by the company’s owners can “pierce the corporate veil” so as to sue the owners of the company under that contract. But the variety of circumstances is infinite, and the Albaforth principle cannot obviate the need to have regard to all of them in any particular case. The United Kingdom company law regulates corporations formed under the Companies Act 2006. In VTB Capital v Nutritek [[2013] UKSC 5] , the Supreme Court of the United Kingdom revisits in signature erudite fashion a number of extremely relevant conflicts issues. We were referred to a number of cases where courts have either granted relief on the basis of piercing the corporate veil, or where courts have proceeded on the assumption, or concluded, that there is power to do so. Russagroprom defaulted on the loan, and only $40m was recovered. VTB had argued that Malofeev controlled RAP and Nutritek, and that the corporate veil should be lifted so as to expose Malofeev as the 'puppeteer' behind the actions of the companies. VTB Capital plc v Nutritek International Corp 2013 Refers to a "company" being like a "human being" excepted it will act through human agents with the company as "principal". However, in my view, abuse of the corporate structure (whatever that expression means) adds nothing to the debate, at least in this case. 137. It may not always mean the same thing" (and to the same effect, see Palmer's Company Law, para 2.1533). In summary, therefore, the case for Mr Malofeev is that piercing the corporate veil is contrary to high authority, inconsistent with principle, and unnecessary to achieve justice. L Stockin ‘Piercing the corporate veil: reconciling R. v Sale, Prest v Petrodel Resources Ltd and VTB Capital Plc v Nutritek International Corp’ (2014) 35(12) Company Lawyer 363; C Taylor, Company Law (Pearson Education Ltd, Harlow 2009) Footnotes [1897] AC 22 (HL). 129. However, such pejorative expressions are often dangerous, as they risk assisting moral indignation to triumph over legal principle, and, while they may enable the court to arrive at a result which seems fair in the case in question, they can also risk causing confusion and uncertainty in the law. Practitioners may feel this is something of a missed opportunity, but the net result is that other than closing down the Gramsci principle, the law in this area remains unchanged. It was suggested, however, by Mr Howard QC that the case against Mr Malofeev involves him "abusing the corporate structure", and that that is sufficient to justify piercing the corporate veil. Quite a few of them are tantalizingly held out to the reader, without an answer to them being given. However, the majority were clearly swayed by the practical reasons summarised at (i) to (iii) above, which essentially concern the efficient administration of the trial process. It is unnecessary, because the second argument raised on behalf of Mr Malofeev, to which I shall shortly turn, persuades me that VTB cannot succeed on this issue. Thus, the decision in Gilford had nothing to do with the fact that a company was involved, and therefore, as a matter of logic, the decision cannot have been based on piercing the corporate veil – a point made by Toulson J in Yukong Line at 308, and rightly accepted by Arnold J and the Court of Appeal in this case. On VTB's case, if the agency analogy is relevant, the company, as the contracting party, is the quasi-agent, not the quasi-principal. The fact that a company can only act or think through humans does not call that point into question: it just means that the law of agency will always potentially be in play, but, it will, at least normally, be the company which is the principal, not an agent. Recent cases have sought to narrow the exceptions. However, a number of other exceptions exist which are wider in scope. The recent decision of the UK Supreme Court in VTB v Nutritek has attracted a great deal of attention and will be viewed as the leading modern authori We use cookies to enhance your experience on our website.By continuing to use our website, you are agreeing to our use of cookies. The case of VTB Capital Plc v Nutritek International Corp and others will be mentioned for years to come, says Fried Frank partner Justin Michaelson Not many things are certain in litigation, but one prediction I can make with confidence is that we will be citing the case of VTB Capital Plc v Nutritek International […] It is an extension because it would lead to the person controlling the company being held liable as if he had been a co-contracting party with the company concerned to a contract where the company was a party and he was not. It is inappropriate because this is an interlocutory appeal, and it would therefore be wrong (absent special circumstances) to decide an issue of such general importance if it is unnecessary to do so. On by vtb in this connection is, on analysis, of assistance to its case ( RAP ) incorporated! Time that there is a company should be treated as a sham transaction thinking that Russagroprom was already... 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