Essence of the Case:
A bank sought joint recovery of damages from a foreign corporation and its Russian subsidiary.
The lower courts ruled in favor of the plaintiff, but the Russian Supreme Court overturned those rulings.
Key Findings of the Supreme Court:
1. Civil law is based on the principles of separation of a company’s assets from the assets of its participants, asset independence, and separate legal personality;
2. However, if a corporate structure is used to cause harm, other members of a corporate group may be held liable for the debts of one participant—provided that the actions of the group’s “controlling center” resulted in the inability to meet financial obligations;
3. To depart from the principle of a legal entity’s asset independence and justify recovery of losses caused by one participant of a corporate group at the expense of another, the court must assess, in particular:
#case
A bank sought joint recovery of damages from a foreign corporation and its Russian subsidiary.
The lower courts ruled in favor of the plaintiff, but the Russian Supreme Court overturned those rulings.
Key Findings of the Supreme Court:
1. Civil law is based on the principles of separation of a company’s assets from the assets of its participants, asset independence, and separate legal personality;
2. However, if a corporate structure is used to cause harm, other members of a corporate group may be held liable for the debts of one participant—provided that the actions of the group’s “controlling center” resulted in the inability to meet financial obligations;
3. To depart from the principle of a legal entity’s asset independence and justify recovery of losses caused by one participant of a corporate group at the expense of another, the court must assess, in particular:
- the corporate structure;
- the procedure for entering into transactions;
- the degree of control and management exercised by one group participant over another.
#case