In recent years, Russian courts have begun to hold Russian companies jointly and severally liable for the debts of their foreign parent companies. Courts state that Russian and foreign companies belong to the same group of companies with a unified decision-making center.

As a result, Russian creditors are deprived of the opportunity to recover assets from the Russian company within the group, and abroad, they are refused recovery of debts due to sanctions. This situation indicates the bad faith of foreign holdings, which is sufficient grounds for imposing liability on the Russian companies within the group.

The corporate structure of foreign holdings is specifically designed to evade responsibility: the Russian company within the group conducts business in Russia and generates profits, but the majority of obligations to Russian creditors are assumed by the foreign company within the group.

The Supreme Court of the Russian Federation clarified:

• Belonging to the same group of companies ≠ automatic joint and several liability.

   

• Courts are obliged to investigate specific circumstances (degree of control, participation in causing harm, etc.).

• The property segregation of legal entities remains a key principle, but abuse of the corporate structure to the detriment of creditors cannot be tolerated.

Conclusions:

The Supreme Court of the Russian Federation did not prohibit holding Russian subsidiaries jointly and severally liable for the debts of foreign companies within the group. However, the application of “piercing the corporate veil” in each case must be justified by the existence of specific exceptional circumstances.