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PIERCING THE CORPORATE VEIL: SEARCHING FOR APPROPRIATE CHOICE OF LAW RULES

Lloyd's Maritime and Commercial Law Quarterly

Piercing the corporate veil: searching for appropriate choice of law rules Chee Ho Tham * The question when an English court will lift the corporate veil is by no means easy to answer, even when the facts are wholly domestic. Obviously, the question will be rendered even more complex if the company against which an application involving veil-lifting is sought is not an English company—the immediate question one faces is, which law should govern this question: the lex incorporationis or some other law? On the analysis undertaken in this paper, the answer is: “It depends.” Starting from the recognition that corporate veil-lifting is not a singular concept, this paper argues that no single choice of law rule can therefore govern. Instead, a more nuanced, but fragmented, approach to characterization of the true issues is proposed. A. INTRODUCTION Litigation over the commercial 1 obligations and liabilities of corporate entities incorporated outside England is commonplace. Just as common is litigation involving companies incorporated in England but where the applicable law is some other national law, as well * Assistant Professor of Law (Singapore Management University). Thanks are owed to Professor Adrian Briggs and Associate Professor Hans Tjio for their patient comments as the arguments in this paper were developed. Any errors are, of course, my own. The following abbreviations are used: Companies Act: Companies Act 1985. As it is projected that the schedule for implementation of the changes introduced by the Companies Act 2006, c 46 will only be made known in or after February 2007, this paper will continue to refer to the Companies Act 1985. In any event, the points made in this paper remain valid even under the Companies Act 2006. Cooke: Lord Cooke of Thorndon, Turning Points of the Common Law (Sweet & Maxwell, London, 1997), ch 1: “A Real Thing: Saloman v. A Saloman & Co Ltd ”. Dicey & Morris : L Collins, (Gen Ed), Dicey, Morris & Collins on the Conflict of Laws , 14th edn (Sweet & Maxwell, London, 2006). Fletcher: I F Fletcher, Insolvency in Private International Law , 2nd edn (OUP, Oxford, 2005). Insolvency Act: Insolvency Act 1986. 1. This paper will leave aside consideration of the distinct question whether, for the purposes of the division of matrimonial assets, there exists a separate and distinct power for the court to make orders directly or indirectly against a company’s assets where the company is wholly owned and controlled by one of the parties to the matrimonial proceedings and where no third parties are affected. That such “veil-lifting” powers exist in the Family Division is doubtful, given the decisions of the Court of Appeal in Crittendon v. Crittendon [1990] 2 FLR 361 and Wicks v. Wicks [1999] Fam 65. However, although the veil was not lifted in Mubarak v. Mubarak [2001] 1 FLR 673, in that case, Bodey J suggests that, as different considerations pertain in the family context (in particular, the Family Court’s distributive powers as between spouses undergoing divorce), the technical adherence to the separate existence of the company prevalent in the commercial context in commercial disputes may not necessarily apply: ibid , 682. 22

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