Muhammad Aqil Kamaluddin

History and Application of Piercing the Corporate Veil Doctrine: A Comparison Study between the United Kingdom and Indonesia

Introduction

History and application of piercing the corporate veil doctrine: a comparison study between the united kingdom and indonesia. Comparative study of Piercing the Corporate Veil (PCV) doctrine in UK and Indonesian law. Discover its history, application, and future challenges for corporate liability.

Abstract

Separate legal entity doctrine is a foundation in corporation law, and courts have generally resisted deviations from it, save in specific instances involving doctrine of piercing of the corporate veil (PCV). PCV doctrine permits a party to circumvent the separate legal personality and hold the company's "controller" liable. This essay will explain the evolution and future of PCV in UK and Indonesian law. Research methods that will be used are normative and comparative law methods. UK cases have developed PCV doctrine, such as the Rossendale case, which the court argues that not every case requires the doctrine. While Indonesia’s law system implicitly regulated the doctrine under Art. 3 (2) Law Number 40 of 2007 and no major cases. For the future of the doctrine, the UK judges maintained a firm commitment to limited liability and separate legal personality, which means the doctrine’s future looks uncertain. While in Indonesia, there is a lack of highlighting and balancing the separate legal entity with piercing the corporate veil.

Review

This paper proposes a timely and relevant comparative study on the Piercing the Corporate Veil (PCV) doctrine, a critical exception to the fundamental principle of separate legal personality. By examining its evolution, application, and future in the United Kingdom and Indonesia, the authors tackle a complex area of company law that profoundly impacts corporate accountability and limited liability. The use of normative and comparative legal methods is appropriate for such an endeavor, promising a detailed analysis of both theoretical underpinnings and practical applications across two distinct legal systems. The abstract effectively introduces the core tension between upholding separate legal entities and intervening in cases of corporate abuse. The abstract highlights key divergences that form a compelling basis for comparison. For the UK, the mention of case law development and the court's cautious approach (e.g., the Rossendale case) correctly frames its jurisprudence, underscoring a strong commitment to limited liability, which makes the "uncertain" future of PCV doctrine understandable. In contrast, Indonesia's implicit statutory regulation under Law Number 40 of 2007 and the noted absence of major case law present a significant analytical challenge and an opportunity. The comparative framework effectively sets up a contrast between a mature, judge-led common law evolution and a nascent, statutorily-based civil law approach. To fully capitalize on its potential, the paper should meticulously detail the specific legal tests and criteria applied in UK courts, especially in the wake of landmark decisions beyond *Rossendale*, such as *Prest v Petrodel Resources Ltd*, which significantly refined the doctrine. For Indonesia, given the lack of major cases, the analysis could benefit from exploring the legislative intent behind Article 3(2) of Law Number 40 of 2007, potential scenarios where the doctrine might be invoked, and a discussion of scholarly interpretations or theoretical applications. A more robust comparative analysis would not only delineate differences but also delve into the underlying policy considerations, socio-economic factors, and legal cultures that have shaped these divergent paths, offering valuable insights into potential future developments or avenues for legal reform in both jurisdictions.

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