Corporate Veil: Judicial Discretion, Case Law, and Academic Opinion

This essay critically examines the statement that setting specific rules for lifting the corporate veil is impossible, focusing on the judicial discretion and evolving attitudes within company law. The essay analyzes relevant UK case law, including Caterpillar Financial Services (UK) Limited v Saenz Corp Limited, Salomon v Salomon Co. Ltd, and Hashem v Shayif & Anor, to illustrate the complexities and occasional contradictions in this area. It explores the tests used by the courts, such as the intention of the offender and whether the company was used as a sham. The essay references academic opinion to further evaluate the statement, providing a comprehensive understanding of the corporate veil's application and the challenges of its legal interpretation.

Running head: CORPORATIONS LAW
CORPORATIONS LAW
Name of the Student:
Name of the University:
Author Note:

1CORPORATIONS LAW
Essay:
The corporate veil separates the company for being a legal person from its directors or
shareholders. But, in certain situations the court can use its discretion for piercing the veil. In the
Caterpillar Financial Services (UK) Limited v Saenz Corp Limited, Mr Karavias, Egerton Corp
& Others1 case, the court used its power for lifting the corporate veil.
Court in many cases has to face the question whether the corporate veil belonging to the
company can be lifted such that litigants can recover debts from the members2. Generally the
court followed the doctrine of separate lawful entity of the company as enshrined in the case of
the Salomon v Salomon Co Ltd3. Some relevant tests must be followed prior to the piercing the
corporate veil as laid down in Hashem v Shayif & Anor4 case. Those tests involve the following,
 The control of the company and its ownership are not enough thereby allowing veil to be
lifted,
 The veil cannot be lifted when there does not exist any unconnected 3rd party for justice,
 There has to be impropriety evidence though such impropriety is not enough alone to lift
the veil,
 The offender’s intention must be considered by the court before allowing the piercing of
veil,
 Whether the company is being incorporated with a malafide intention or not, the court
will consider whether the company is used as a sham during the disputed event happened.
1 Caterpillar Financial Services (UK) Limited v Saenz Corp Limited, Mr Karavias, Egerton Corp & Others ([2012]
EWHC 2888 (Comm).
2 McGowan, Jamie. "Veil Piercing in the UK: An Evolution of Doctrinal Approaches." De Lege Ferenda2 (2019):
92.
3 Salomon v Salomon Co Ltd [1897] A.C. 22.
4 Hashem v Shayif & Anor [2008] EWHC 2380 (Fam).

2CORPORATIONS LAW
When the litigants are able to satisfy that the relevant test is being fulfilled, then the court
may allow lifting the corporate veil. However it is at the court’s discretion.

3CORPORATIONS LAW
References:
Caterpillar Financial Services (UK) Limited v Saenz Corp Limited, Mr Karavias, Egerton Corp
& Others ([2012] EWHC 2888 (Comm).
Hashem v Shayif & Anor [2008] EWHC 2380 (Fam).
McGowan, Jamie. "Veil Piercing in the UK: An Evolution of Doctrinal Approaches." De Lege
Ferenda2 (2019): 92.
Salomon v Salomon Co Ltd [1897] A.C. 22.