The New Law of Piercing the Corporate Veil in the UK (original) (raw)

2016, European Company and Financial Law Review

because, in a growing number of cases, attempts were made to circumvent the separate personality and limited liability of companies. 2 However, it is well known that English company lawyers were never really fond of piercing the corporate veil. The Supreme Court even went so far as to call the existence of the doctrine into question altogether in VTB Capital. 3 Soon after VTB Capital, however, Prest apparently confirmed the existence of the doctrine. 4 It also made an effort to deliver the long missing rationale for piercing the veil by spelling out the "evasion principle" as opposed to the "concealment principle". However, this rationale is extremely narrow and leaves only two classical cases (Jones v Lipman 5 and Gilford Motors v Horne 6) as good law. Moreover, Prest curtailed the scope of piercing the veil even further. By introducing a "rule of last resort", it turned it into an exceptional remedy that is hardly ever supposed to apply in practice. Arguably, un,der that rule, it would not even have applied in those two very cases that are supposed to carry the principle. Moreover, the justices of the Supreme Court take very different views on the doctrine of piercing the veil as a remedy. In a subsequent judgement in another Gramsci case, 7 the Court of Appeal went so far as to deny any clear rationale and therefore held that: "Absent a principle, further development of the law will be difficult for the courts because development of common law and equity is incremental and often by analogical reasoning". This raises the question where the law on piercing the veil stands today. Therefore, we will interpret the will of the Justices as the oracles of the law (sub II). After that, we will subject it to critical analysis (sub III). Then, we will conclude (sub VI).