Piercing the Corporate Veil in International Arbitration
University of West London
March 16, 2010
Global Business Law Review, Vol. 1, p. 169, 2011
This article examines the application of the piercing the corporate veil concept in international arbitration. Interpretation of this concept is inconsistent even within one domestic legal system, and it is even less predictable in international arbitration when several legal systems come into play. In addition, domestic courts are likely not to recognize and enforce an arbitration award piercing the corporate veil in the absence of a written arbitration agreement. Piercing the corporate veil may help to give a concrete practical meaning to the purpose of an arbitration agreement or a bilateral investment treaty. However, there are downsides of such piercing because it negates many of the benefits, which the corporate form offers.
Jurisprudence under the International Centre for Settlement of Investment Disputes (“ICSID”) Convention allows one to avoid the enforcement problem. However, the approaches of ICSID tribunals are inconsistent. This article identifies several major conceptual approaches ICSID tribunals took in the past towards piercing the corporate veil. Some tribunals declined jurisdiction in the absence of an explicit arbitration agreement. Other tribunals pierced the corporate veil by looking into the issue of foreign control. ICSID tribunals also pierced the veil on the basis of interpretation of the concept of “investment” in accordance with the intent of parties to the arbitration agreement or purpose of an international treaty.
The practical advice offered by this article is to make written arbitration clauses as inclusive as possible, to avoid dealing with piercing the corporate veil altogether.
Number of Pages in PDF File: 18
Keywords: ICSID, ICC, Piercing the Corporate Veil, Lifting the Veil, Unlimited Corporate Liability
JEL Classification: F21, K33, K40Accepted Paper Series
Date posted: March 23, 2010 ; Last revised: May 12, 2011
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