On appeal from [2014] EWCA Civ 1516

The case considered whether, as a matter of English private international law, equitable proprietary rights can be created in assets situated in a country where the lex situs does not recognise or permit the creation of these rights. The Supreme Court allowed the appeal, holding that at common law, the nature of the interest intended to be created by a trust depends on the law governing the trust and thus that the lex situs may treat a disposition of shares to a third party as overriding any interest of the beneficiary in the shares. Nonetheless, a common law trust can exist in respect of those shares in  a jurisdiction such as Saudi Arabia as one of the aims of the Hague Convention was to provide for the recognition of trusts in jurisdictions which did not themselves know the institution. Whilst the Insolvency Act 1986, s 127 enables companies in winding up to recover assets legally owned by them by treating the disposition as void, this was found not to apply in the current case as the appellant gave value in the form of discharging debt. Thus s 127 applies equally in respect of property held for a company by a third party as it does to property which it holds in its own name.

For judgment, please download: [2017] UKSC 6
For Court’s press summary, please download: Court’s Press Summary
For a non-PDF version of the judgment, please visit: BAILII

To watch the hearing, please visit: Supreme Court Website