Adams v Cape Industries Plc [1990]

Adams v Cape Industries Plc [1990]

Adams v Cape Industries Plc [1990] Ch 433 is a notable UK company law case that delves into the concepts of separate legal personality and limited liability of shareholders. It addresses key issues related to piercing the corporate veil and the recognition of foreign court jurisdiction over a company. The case has been subject to subsequent developments, particularly in Lungowe v Vedanta Resources Plc [2019] and Chandler v Cape Plc [2012].

Cape Industries plc, a UK company, was the head of a group engaged in asbestos mining. Its subsidiaries operated in South Africa, shipping asbestos to the US, where a marketing subsidiary supplied it to another company in Texas. Employees of the Texas subsidiary developed asbestosis, leading to legal action in a Texas court. Although Cape contested the jurisdiction, a judgment was entered against it for breach of duty in negligence. The question arose when the tort victims sought to enforce the judgment in the UK courts.

The case involved determining whether Cape Industries plc was present in the US through its subsidiary, NAAC, for the purpose of recognising the Texas court's jurisdiction. To establish presence, the claimants needed to lift the corporate veil and treat Cape and its subsidiaries as one entity. The court had to assess whether the veil could be lifted and if the companies could be treated as a single economic unit.

Scott J held that Cape Industries plc could not be considered present in the US. The Court of Appeal unanimously rejected the allegations that Cape should be treated as part of a single economic unit or that its subsidiaries were a facade. The court emphasised the principle of Salomon v A Salomon & Co Ltd [1896], stating that the corporate veil could not be lifted merely because justice might demand it.

On the issue of presence, the Court of Appeal outlined criteria for a company to be considered present in a foreign jurisdiction. It required a fixed place of business from which the company transacted its own business for more than a minimal time. On these grounds, Cape had no such fixed place of business in the US.

Adams v Cape Industries Plc is significant for setting principles related to piercing the corporate veil and recognising foreign court jurisdiction. Subsequent developments, including Lungowe v Vedanta Resources Plc and Chandler v Cape Plc, have further shaped the understanding of these issues in English law. The case highlights the limitations on lifting the corporate veil and the importance of adhering to legal principles even in complex corporate structures.
Back to blog
UOL Case Bank

UOL Case Bank

Upon joining, you become a valuable UOL student and gain instant access to over 2,100 case summaries. UOL Case Bank is constantly expanding. Speed up your revision with us now.

Subscribe Now

Where are our students from?

Yale University
Council of Europe
Baker Mckenzie 
University of Chicago
Columbia University
New York University
University of Michigan 
INSEAD
University College London (UCL)
London School of Economics (LSE)
King’s College London (KCL)
University of London
University of Manchester
University of Zurich
University of York
Brandeis University
University of Exeter
University of Sheffield
Boston University
University of Washington
University of Leeds
University of Law
Royal Holloway, University of London 
Birkbeck, University of London
SOAS, University of London
University of Kent
University of Hull
Queen’s University Belfast
Toronto Metropolitan University
Hong Kong University of Science and Technology
University of Buckingham

  • Criminal Practice

    Diagrams and Charts

    Our carefully designed diagrams and charts will guide you through complex legal issues.

  • Criminal Law

    Clear and Succinct Definitions

    Key concepts are concisely defined to help you understand legal topics quickly.

  • Property Law

    Statutory Provisions

    Statutory provisions are provided side by side with legal concepts to help you swiftly locate the relevant legislation.

  • Public Law

    Case Summaries

    We have summarised important cases for you so that you don't need to read long and boring cases.

  • Evidence

    Rules and Exceptions

    Rules and exceptions are clearly listed so that you know when a rule applies and when it doesn't.

  • Company Law

    Terminology

    Legal terms and key concepts are explained at the beginning of each chapter to help you learn efficiently.

  • Case Law

    Case law is provided side by side with legal concepts so that you know how legal principles and precedents were established.

  • Law Exam Guide

    Law Essay Guide

    You will learn essential law exam skills and essay writing techniques that are not taught in class.

  • Law Exam Guide

    Problem Question Guide

    We will show you how to answer problem questions step by step to achieve first-class results.

  • Conflict of Laws

    Structured Explanations

    Complex legal concepts are broken down into concise and digestible bullet point explanations.

  • Legal System and Method

    Legal Research

    You will learn legal research techniques with our study guide and become a proficient legal researcher.

  • Jurisprudence and Legal Theory

    Exam-focused

    All essential concepts, principles, and case law are included so that you can answer exam questions quickly.