In VTB v Nutritek the Court of Appeal refused to pierce the corporate veil of the borrower under an English law bank loan agreement in order to say that the directing minds of the borrower had incurred contractual liability under the agreement. The Court reached that conclusion because there had been no objective agreement to the effect that the directing minds were parties to the agreement and because the bank had adequate remedies in tort. In reaching that conclusion, the Court overruled two first instance decisions, one of which was Gramsci v Stepanovs. The consequence was that the bank was unable to found jurisdiction against the directing minds in contract. As to the claims in tort, the Court concluded that, although the most significant elements of the torts alleged occurred in England and thus, all other things being equal, the applicable law would have been English law by virtue of section 11(2)(c) of the Private International Law (Miscellaneous Provisions) Act 1995, nevertheless the centre of gravity of the torts alleged was in Russia and therefore the applicable law was Russian law by virtue of section 12. The Court also commented on the relevance of allegations of fraud in the context of a Worldwide Freezing Order. Permission to appeal to the Supreme Court was refused.
Iain Milligan QC acted for the Fourth Respondent (instructed by SJ Berwin LLP)