Forum Issues

But will the English courts accept jurisdiction? Stephanie Lee, a Travers Smith Dispute Resolution Partner who acted for Hewlett-Packard Enterprise companies in their successful fraud claims in the Autonomy litigation, explains that forum is often a key issue for claimants: "Complex fraud almost always has some form of multi-jurisdictional element and consideration needs to be given to where the defendant is based, where the fraud took place, where relevant evidence resides, and the law governing the claim – these factors often don't align."

Following Brexit, the English courts' determination of the question of jurisdiction has reverted to the two-limb test set out in Spiliada Maritime Corporation v Cansulex Limited [1987] AC 460.  Under Spiliada, an applicant seeking a stay of proceedings commenced in England must show that: another court has jurisdiction to hear the claim, and is a more appropriate forum, and that the applicant will obtain justice in that more appropriate forum.

Some indication of the English courts' likely approach post-Brexit can be drawn from last year's decision in Al Assam & Ors v Tsouvelekakis [2022] EWHC 451 (Ch), when the court dismissed the defendant's application to stay the English claim in favour of the Cypriot courts.  There were several potential jurisdictions where the claim could have been heard: the claimants were domiciled in Cyprus and Dubai; the defendant was resident in England; four of the claims against the defendant fell to be determined pursuant to Cypriot law, and two under Swiss law; and expert evidence would be required from experts who spoke Greek but not English, whilst most of the factual witnesses would give evidence in English. The English court determined that Cyprus was not a more appropriate forum, on grounds which included the fact that a fraud involving acts said to have taken place in multiple jurisdictions made it less likely that any one of them could claim to be a more appropriate forum than England.

2023 and beyond

The English Commercial Court is set to hear a range of high value, complex international fraud claims this year.  In The Federal Republic of Nigeria v Process & Industrial Developments, Nigeria seeks to overturn three arbitration awards in the sum of $6.6 billion, where it claims that the underlying contract was obtained by fraud. Loreley Financing No 30 v Credit Suisse International & Ors sees a special purpose vehicle bring fraudulent misrepresentation and unlawful means conspiracy claims valued at $150m against Credit Suisse.  And in Stichting Vestia v BNP Paribas, the Commercial Court will preside over a €303m fraud dispute relating to Vestia's losses arising from its investment in derivatives – this is the latest in a series of claims brought by Vestia against global banks.

The evidence is that the English courts are ready, willing and able to tackle the most complex of the new generation of multi-jurisdictional fraud claims, and we predict that England will remain the forum of choice for many claimants seeking redress against the increasingly complex landscape of modern fraud.

Group Litigation

At present, the closest the fraud world gets to group litigation is securities litigation. Under 90A and Schedule 10A of the Financial Services and Markets Act 2000 ("FSMA"), shareholders in listed companies are able to bring deceit-based claims in respect of dishonest statements made to the market.

These FSMA claims have been underused to date. However, Mr Justice Hildyard's mammoth (almost 1,700 page) judgment in the Autonomy litigation (widely touted as the biggest fraud trial to hit the English Courts and the first claim brought under section 90A / Schedule 10A FSMA to be considered at full trial) appears to have boosted confidence and paved the way for more FSMA claims (with a number occupying the courts as we speak - and no doubt others waiting in the wings). With the continued growth in third-party litigation funding and after-the-event insurance which has effectively lifted the adverse costs risks off the shoulders of shareholder claimants, mass fraud claims could well be some of the most high-value and high-profile cases of the next decade.

(For further analysis of the Autonomy case and the use of Schedule 10A FSMA, see our briefing: HP/Autonomy v Lynch & Hussain - A FSMA First | Travers Smith)

Cryptocurrency

In another area predicted to be fertile ground for fraud cases, and involving particular challenges for claimants (as to which, see Travers Smith Dispute Resolution Partner John Lee's recent article), the case of AA v Persons Unknown [2019] EWHC 3556 confirmed – by reference to statute and caselaw going back as far as the 1880s - that cryptoassets such as Bitcoin are property, not merely information, meaning that the full range of proprietary remedies is available in relation to the currency.

The full range of interim remedies was displayed in the Bitcoin case of Sally Jane Denisz v (1) Persons Unknown (2) Huobi Global Limited (trading as Huobi) [2022] EWHC 280 (QB) when the English court applied its extensive jurisdiction to grant: (i) an interim injunction preventing the defendants dealing with the claimant's traceable Bitcoin, (ii) a worldwide freezing order, (iii) an order compelling the disclosure of information vital to the identification of another defendant, (iv) reporting restrictions to avoid tipping off the alleged fraudsters, and (v) permission to serve out of the jurisdiction by email. 

The Quincecare Revival

A recent line of cases has seen the so-called Quincecare duty become a hot topic.  First established in 1992, the Quincecare duty refers to the fiduciary duty assumed by a bank in acting as agent for its customer, including an obligation to exercise reasonable skill and care when executing the customer's instructions.  The bank is in breach of that duty if it executes the customer's instructions when it has reasonable grounds for believing that they were dishonestly given or were an attempt to misappropriate funds.

In the 2019 case of Singularis Holdings Ltd (in liquidation) v Daiwa Capital Markets Europe Ltd [2019] UKSC 50, the Supreme Court made the first award of damages for breach of the Quincecare duty, and the duty is now in the spotlight once again in the context of "authorised push payment" frauds – where a person or business is tricked into sending money to a fraudster posing as a legitimate payee – an area which could give rise to many more claims. Later this year, The Supreme Court is expected shortly to hand down its judgment in Philipp v Barclays Bank plc, where the Quincecare duty argument arose in that very context, when a customer was duped into paying £700,000 to accounts in the UAE.

Summary Judgment

One remedy traditionally considered less likely to be available in a fraud case is summary judgment, whereby either claimant or defendant can obtain an early judgment on the basis of the weakness of the other side's case.  The conventional wisdom is that it is difficult to obtain summary judgment in a fraud case, on the basis that full disclosure and witness evidence is required in order for the court properly to scrutinise the facts.  Recently, however, in the multi-jurisdictional banking fraud claim Foglia v Family Officer Ltd [2021] EWHC 650 (Comm), a series of third-party disclosure orders – combined with evidence to show falsification of emails purportedly sent by the defendant – provided sufficient evidence for the claimant to secure summary judgment at an early stage, the court having concluded that the defendant's prospects of success at trial were fanciful.

Similarly, in King v Stiefel [2021] EWHC 1045 (Comm), the defendants succeeded in an application for summary judgment where the claimants had repeatedly reframed their claims (first as fraudulent misrepresentation, then as conspiracy) and made unpleaded and unsubstantiated allegations of dishonesty against the defendants. In the view of Alexa Day, a Travers Smith Dispute Resolution Partner who acted on the successful defence of the fraud and conspiracy claims brought by the Tchenguiz brothers against Kaupthing Bank: "Both of these cases were relatively unusual on their facts – Foglia, for example, involved some very compelling technical evidence - but they may indicate that the English Commercial Court is now beginning to show a willingness to deal more swiftly with unmeritorious claims and defences".

The new generation of fraud claims

But how is English law being used to tackle the newer types of fraud claim, and how are judges using the remedies available to them to address newer forms of fraudulent activity? The last few years have seen several developments in the English law of fraud being applied to cases which are predicted to set new trends in fraud litigation: