## Facts

- The dispute involved a loan contract between VTB Capital plc and a company controlled by Mr. Konstantin Malofeev.
- VTB Capital alleged that Mr. Malofeev orchestrated a scheme to avoid repayment of the loan by transferring assets from the borrower to related entities.
- VTB argued that the corporate veil should be pierced to hold Mr. Malofeev personally liable for the debt in question.

## Issues

1. Whether the court can disregard the corporate veil to assign personal liability for a company's debts where the controlling individual allegedly misused the corporate structure.
2. Under what circumstances the corporate veil may be ignored in English law.
3. Whether it is sufficient to show a company was a mere 'front' or whether intentional evasion of existing legal duties is necessary.

## Decision

- The Supreme Court held that a court may only pierce the corporate veil in narrowly defined circumstances.
- The “evasion principle” applies only where there is misuse of the corporate structure specifically to evade or frustrate an existing legal obligation or enforceable right.
- It is not enough that the company was a ‘front’ or merely controlled by the individual in question.
- The court clarified that forming a company to avoid future potential liabilities does not meet the necessary threshold.
- On the facts, the court rejected VTB’s arguments and declined to pierce the corporate veil to impose personal liability on Mr. Malofeev.

## Legal Principles

- The principle of separate legal personality, established in Salomon v A Salomon & Co Ltd [1897] AC 22, remains fundamental.
- The "concealment principle" allows courts to identify the real actors behind a company without disregarding corporate personality.
- The "evasion principle", a true exception, permits piercing the corporate veil only to prevent a person from evading existing legal responsibilities by misusing the company structure.
- Simple control or use of companies as ‘fronts’ is insufficient; there must be proof of using the corporate form to avoid, defeat, or frustrate an existing legal duty or right.
- The decision clarifies and narrows the circumstances in which the remedy of piercing the corporate veil may be available in English law.

## Conclusion

The Supreme Court in VTB Capital plc v Nutritek International Corp strictly limited the circumstances under which the corporate veil may be pierced, confirming that only the deliberate misuse of a company to evade existing legal obligations will justify such intervention, thereby reaffirming the importance of the separate legal personality principle in company law.


VTB Capital plc v Nutritek International Corp [2013] UKSC 5