Adams v Cape Industries plc [1990] 2 WLR 659

Court: Court of Appeal

Facts: This case concerned Cape Industries, an English parent company, being held liable for the tortious actions of its US subsidiaries involved in asbestos production. Plaintiffs sought to enforce a US judgment against Cape Industries in the UK after the subsidiaries were unable to satisfy the judgment.

Issue: Can the corporate veil be pierced to hold a parent company liable for the debts of its subsidiaries based on the argument that the corporate structure was a single economic entity?

Held: Appeal dismissed. The court ruled that the corporate veil could not be pierced merely due to the parent company’s structuring of operations to limit liability. There was no evidence of fraud or illegality.

Key Judicial Statement: Slade LJ emphasized, "The corporate veil cannot be pierced merely because a parent company has structured its operations to limit future liability."

💡 Leveluplaw: The corporate veil will not be pierced without clear evidence of fraud or illegality, reinforcing the principle of respecting corporate separateness.