Well, that’s a relief. In the words of the English Court of Appeal, to impose one would be to make ‘a fundamental inroad into the basic principle of law that contracts are the result of a consensual arrangement between, and only between, those intending to be parties to them’: VTB Capital plc v Nutritek International Corp, [2012] EWCA Civ 808.

The argument in favour of making such an inroad was made by VTB Capital, the UK subsidiary of a Russian bank, which alleged that it had been the victim of a conspiracy by two British Virgin Islands companies, a Russian company and a Russian individual in connection with the financing of a corporate take-over by one of the BVI companies. VTB claimed that two of the entities involved were under common control but had been represented as operating at arm’s length, and that the assets of the target company had been overstated.

Even were this a case for piercing the corporate veil (which the court ultimately decided it was not), there are limits to what the veil-piercing exercise will do. To mix metaphors, it will permit the identification of the puppeteer behind the puppet, and permit an equitable remedy against the puppeteer where the puppet’s corporate status has been used for fraudulent purposes. Veil-piercing does not, however, make the puppeteer a party to the puppet’s contracts. Much less does it make third parties liable in contract for a bargain that none of them ever thought it was – or ever intended to be – bound by. VTB did have arguable tort claims in deceit and conspiracy, but failed to establish that England and not Russia was clearly the more appropriate forum to hear the dispute.

[Link available here].