FIRE Magazine - Year in Review 2025

ISSUE 23 - DEC 2025

MAGAZINE Fraud • Insolvency • Recovery • Enforcement

Year in Review: The FIRE Verdict on 2025

Thought Leadership for and by the FIRE Community

ThoughtLeaders4 FIRE Magazine • ISSUE 23

INTRODUCTION

“The turn of the calendar is less about time passing, more about opportunity unfolding.”

- anonymous As we draw to the end of another fantastic year in FIRE, we are pleased to publish the final FIRE Magazine for 2025, our ‘Year in Review’ edition. Inside Issue 23, our authors tackle a variety of topics that have been prominent this year, including fraudulent trading, the new anti-slapp regime & remedies for dishonest assistance. This issue also features a Women in FIRE supplement, where we feature a series of 60 Seconds With interviews alongside further insightful content, all curated by just some of our incredible Women in FIRE. We extend our deepest gratitude to all Corporate Partners and contributors whose expertise and commitment have been instrumental in shaping all the issues for 2025. Your valuable insights and knowledge sharing have enriched the pages of the FIRE magazine. We look forward to bringing you more in 2026.

The ThoughtLeaders4 FIRE Team Paul Barford Founder/Managing Director

Chris Leese Founder/Chief Commercial Officer

020 7101 4155 email Paul

020 7101 4151 email Chris

Danushka De Alwis Founder/Chief Operating Officer

Maddi Briggs Strategic Partnership Senior Manager

020 7101 4191 email Danushka

020 3398 8545 email Maddi

Amelia Gittins Senior Strategic Partnership Executive

Ben Sullivan Commercial Director

020 3059 9797 email Amelia

020 3965 4386 email Ben

CONTENTS

| Featured Article |

Fraudulent Trading and Limitation in Dissolved Companies: The Supreme Court’s Judgment in Bilta v Tradition ....................................................

6

Abdulhameed Dhia Jafar V Abraaj Holdings (in Official Liquidation): Attribution of Acts, and Liability, Of Director..............................................

9

EU’s Public Prosecutor Highlights Huge Europe-Wide Tax Fraud........................................ 12 Two UK Men to Be Sentenced in US Over Multi-Million Dollar Wine Fraud............................ 14 The Interpol Silver Notice: The Pilot Project in the Fight Against International Money Laundering................................................. 16 Supreme Court’s Clarification On The Scope of Section 423 of The Insolvency Act 1986 (You Can Run But You Can’t Hide….

Your Assets)........................................................... 19 Navigating The New Anti-Slapp Regime: Key CPR Changes and Legal Implications......... 22

| Women in F IRE Supplement | Rethinking Remedies For Dishonest Assistance: Stevens v Hotel Portfolio II UK Ltd (In Liquidation) [2025] UKSC 28; [2025] 3 W.L.R. 293........................................................... 26 60 Seconds With...Georgina Bayley.................... 30 Cutting To The Chase: Section 39a of the Arbitration Act 1996.............................................. 32

Yelda Ismail Senior Marketing Manager

Melody Mok Conference Portfolio Manager

020 3398 8551 email Yelda

020 3997 8527 email Melody

CONTRIBUTORS Victor Lui - Payne Hicks Beach Thomas Wong - Twenty Essex Niall Hearty - Rahman Ravelli Andrea Puccio - Puccio Penalisti Associati (IFG) Tom Crisp - PCB Byrne Eamon Khorsheed - PCB Byrne Emily Hynes - PCB Byrne Noam Greenberger - Asserson Ramyaa Veerabathran - Serle Court Georgina Bayley - Payne Hicks Beach

Matthew Wescott - PCB Byrne Yana Ahlden - PCB Byrne Moya Clifford - Hill Dickinson Kate Steele - Hill Dickinson Jack Lewis - Hill Dickinson Maria Kennedy - Twenty Essex Daisy Bovingdon - Collas Crill Lynn Yin - Asserson Laetita Amy - ALTER Eurl Antonia Argyrou - Argyrou Legal Teona Phatsatsia - LK Law Sarah Murray - Fox Williams Ishita Mishra - Fox Williams

Cryptocurrency Fraud – Landmark Decision..... 36 60 Seconds With...Maria Kennedy....................... 39 Jersey Insolvency – A Year in Review................. 41 60 Seconds With...Lynn Yin.................................. 46 Real Estate Seizure In France: A Strategic Tool For Creditors................................................. 48 60 Seconds With...Daisy Bovingdon................... 52 The New Era of Civil Litigation In Cyprus........... 54 The Rising Threat of Ai-Generated Fake Evidence In Litigation........................................... 57 Evolution of the Freezing Injunction: Mareva To Modernity............................................. 60 2

ThoughtLeaders4 FIRE Magazine • ISSUE 23

Fraud. Insolvency.

Recovery. Enforcement.

The global Asset Recovery community bringing together key practitioners across contentious insolvency, fraud litigation and international enforcement.

Upcoming Events: Sovereign & States Disputes and Enforcement Summit 2026 5-6 February 2026 | Plaisterers' Hall, London FIRE International Circle 24-25 February 2026 | The K Club, Kildare, Ireland FIRE Starters: Global Summit - Dublin 25-27 February 2026 | Conrad Hotel, Dublin, Ireland FIRE & ICE Circle Europe 10-11 March 2026 | Le Mirador Resort & Spa, Vevey, Switzerland FIRE International: Vilamoura 19-21 May 2026 | EPIC SANA Algarve Hotel, Vilamoura, Portugal FIRE Channel Islands & Isle of Man 17-18 June 2026 | Jersey, Channel Islands Insolvency & Restructuring Circle 20-21 October 2026 | Miami, USA FIRE Middle East 8-10 November 2026 | Dubai, UAE To register for the events and speaking opportunities, contact:

To discuss event partnership opportunities, contact:

Melody Mok

Ben Sullivan

Conference Portfolio Manager

Commercial Director | FIRE

t: +44 (0)20 3997 8527 e: melody@thoughtleaders4.com

t: +44 (0)20 3965 4386 e: ben@thoughtleaders4.com

For more details:

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ThoughtLeaders4 FIRE Magazine • ISSUE 23

WOMEN IN FIRE PRESENTS: ASSET RECOVERY IN ACTION The inaugural Women in FIRE: Asset Recovery in Action conference set a dynamic tone, blending technical depth with candid discussion. We would like to thank our chairs Natalie Todd, Tatiana Flores, Carla Reyes & Antonia Argyrou for taking the lead on such a brilliant event.

Delegates enjoyed rich debate, shared expertise, and networking opportunities, rounded off with a co‑hosted drinks reception by Mishcon de Reya and Michelman Robinson.

A heartfelt thank‑you to all our Event Partners for their support: Mishcon de Reya, Asserson, Michelman Robinson, Selborne Chambers, Monfrini Bitton Klein, A Mindful Lawyer, ACROSS Fraud, Female Counsel, IWIRC, and the Women’s White Collar Defense Association (WWCDA).

The launch marked a powerful start for the Women in FIRE community — and a clear commitment to championing women across asset recovery and beyond.

FIRE MIDDLE EAST 2025 The 5th annual FIRE Middle East was a fantastic gathering of insight, debate, and connection. Panels explored fraud in the region, onshore vs offshore frameworks, directors’ duties, asset tracing, digital assets, arbitration, sanctioned sovereigns, and insolvency reform, with contributions from leading practitioners across the Middle East and beyond.

We extend our thanks to our chairs Walid Azzam, Georgina Munnik, and Sally Kotb FCIArb, our expert speakers, and all delegates for their active participation.

A special thank‑you to our Event Partners: Grant Thornton UK, Essex Court Chambers, Simmons & Simmons, Penningtons Manches Cooper, Global Advocacy and Legal Counsel, Enterprise Chambers, Walkers, Mountford Chambers, Perun Consultants, PwC, MKS Law, PCB Byrne, 4 Stone Buildings, MoloLamken, CMS, Taylor Wessing, Howden, and Rahman Ravelli.

ThoughtLeaders4 FIRE Magazine • ISSUE 23

WOMEN IN FIRE AFTERNOON TEA X FIRE MIDDLE EAST We were delighted to host our annual Women in FIRE Panel Session & Afternoon Tea, hosted by 4 Stone Buildings and A Mindful Lawyer, to kick off FIRE Middle East!

This highly anticipated session brought together women and allies in asset recovery to share insights, exchange experiences, and strengthen professional networks. It was an inspiring afternoon celebrating the achievements and contributions of women across the industry.

Many thanks to our expert panellists, Sheila Shadmand, Olga Bischof and Ruby Modare.

ASSET RECOVERY & ENFORCEMENT CIRCLE In October we were delighted to host the Asset Recovery & Enforcement Circle in Cambridge.

With 40 leading practitioners in asset recovery and enforcement, it was two days of valuable insight, collaboration, and connection - with a memorable highlight: punting down the Cambridge river!

Huge thanks to our brilliant Advisory Board - Natalie Todd & Jon Felce (Cooke, Young & Keidan LLP) and LaureHélène Gaicio-Fievez (BSP) - and to everyone who joined and contributed so insightfully.

We’re proud to create space for real conversations and shared challenges in asset recovery. More to come!

| Featured Article |

ThoughtLeaders4 FIRE Magazine • ISSUE 23

FRAUDULENT TRADING AND LIMITATION IN DISSOLVED COMPANIES: THE SUPREME COURT’S JUDGMENT IN BILTA V TRADITION

Authored by: Victor Lui (Associate) - Payne Hicks Beach Who are the persons that may be held liable for fraudulent trading, and how do limitation rules operate in relation to dissolved companies? In this article, Victor Lui (Associate) examines the significant decision of Bilta (UK) Ltd (in liq) v Tradition Financial Services Ltd1 and its implications for insolvency practitioners.

Civil Liability For Fraudulent Trading s.213 of the Insolvency Act 1986 (“IA”) provides that: “(1) If in the course of the winding up of a company it appears that any business of the company has been carried on with intent to defraud creditors of the company or creditors of any other person, or for any fraudulent purpose, the following has effect.

(2) The court, on the application of the liquidator may declare that any persons who were knowingly parties to the carrying on of the business in the manner above-mentioned are to be liable to make such contributions (if any) to the company’s assets as the court thinks proper.”

The provision allows liquidators (not a creditor or contributory2) to apply for contributions by persons who had transacted with the company in the knowledge that it was carrying on its business for a fraudulent purpose.

Do those “persons who were knowingly parties” need to have been the company’s directors or “insiders” who carried out a managerial or controlling role within the company, or is the statute broad enough to catch “outsiders” who had dealt with that company? That was the question which the Supreme Court had to grapple with in Bilta v Tradition.

The facts concerned a VAT fraud involving spot trading in carbon credits within the EU. In essence, rogue traders would fail to account for VAT due on imported credits, pay the VAT receipts to third parties and then enter into insolvent liquidation. The various claimant companies were among the vehicles used to perpetrate the fraud; they are now in liquidation with HMRC as the principal creditor. The defendant company, Tradition, brokered deals on behalf of the rogue traders and was paid brokerage by volume traded.

1

[2025] 2 WLR 1015, [2025] UKSC 18

2

Albeit there is an equivalent provision for administrators: s.246ZA IA

3

Bilta v Tradition, [9]-[15]

4

Bilta v Tradition, [26], [36], [58]

The liquidators’ primary claim was that Tradition had knowingly participated in the fraudulent trading.

The appeal proceeded on such assumed facts as: (1) Tradition knew the traders were unlikely legitimate trading concerns; (2) Tradition did not perform genuine KYC inquiries of the suppliers; (3) Tradition was aware that the nature of the trading was suspicious and it knew (or did not care whether) such trading was linked to VAT fraud.3 That claim was successful. In the joint judgment by Lord Hodge DPSC and Lord Briggs JSC, the Court held that on its correct statutory interpretation, s.213 IA applies to third parties or outsiders who participate in, facilitate or assist fraudulent transactions by a company when they know its business is (or are wilfully blind to it) being carried on for any fraudulent purpose.4 The Court arrived at this conclusion after having considered the provision’s natural

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ThoughtLeaders4 FIRE Magazine • ISSUE 23

otherwise, every restored company wishing to pursue a claim in fraud would be able to postpone the running of time.15 On the facts, the second claim was timebarred as the claimant companies had failed to discharge that evidential burden.16

meaning, its statutory context, its legislative history, analogous criminal provisions5 and both civil and criminal case law.

The purpose of s.213 IA is to discourage dishonest participation in fraud. The Court of Appeal gave the example where a manufacturer regularly supplies counterfeit products to a retailing company, knowing that the retailer will pass them off as genuine; that manufacturer would be a relevant party even though he exercises no managerial or controlling role in the retailing company.6 s.213 IA is subject to these limitations: (1) the person to incur liability must be party to the carrying on by the company of a fraudulent business, not merely involved in a one-off transaction; (2) a mere failure to advise does not amount to being a relevant party; (3) the person liable must have had an active involvement in the carrying on of that business.7 The Court’s decision widens the scope of recovery under s.213 IA, which is already capable of applying to persons outside the UK.8 Whether a third party is liable will however depend on their degree of involvement and their state of mind at the relevant time. Recent High Court authorities9 have adopted the two-stage test of dishonesty from Ivey v Genting Casinos10 (which applies to dishonest assistance): (1) ascertain (subjectively) the actual state of the individual’s knowledge / belief as to the facts; (2) determine whether their conduct was honest or dishonest by applying (objective) standards of ordinary decent people.

Bilta left open the question whether a creditor, who accepts money from a debtor company (which becomes insolvent) whilst being aware that the funds were procured fraudulently, would count as a relevant party.11 The requisite knowledge threshold may be ripe for argument in a different appeal.

| Featured Article |

Limitation And Dissolved Companies The liquidators had a second claim in Bilta, being that Tradition had dishonestly assisted the claimants’ directors in their breach of fiduciary duties (by perpetrating the VAT fraud) owed to the claimant companies. The two relevant claimant companies had been abandoned by their directors before they were struck off and dissolved; it took years before they were restored and wound up, the liquidators were appointed, and the claims were issued.

To come within the 6-year limitation period for dishonest assistance, the liquidators relied on s.32(1)(a) of the Limitation Act 1980 for postponement in case of fraud.12 They argued (the burden being on them) that, after the claimant companies were deserted by their directors, they could not with reasonable diligence have discovered the fraud until the liquidators were appointed.13 At issue was the effect of the deeming provision in s.1032(1) of the Companies Act 2006 (“CA 2006”), which provides that “The general effect of an order by the court for restoration to the register is that the company is deemed to have continued in existence as if it had not been dissolved or struck off the register.” Does that mean that the companies should be deemed to have had no directors or liquidators for as long as they remained struck off?

The Court held in the negative. The question of what would have happened if the company had not been dissolved is not answered by s.1032(1) CA 2006 itself, but by adducing factual evidence of the counterfactual (not historical) scenario, to be decided on the balance of probabilities.14 The rationale was that

s.1032(3) CA 2006 gives the court discretion to give such directions as seems just for placing the company and other persons in as near a position as possible if the company had not been dissolved. The Court noted, however, that such discretion may only be exercised in exceptional circumstances to override the statutory limitation regime.17 Although the claimant companies had not sought a “limitation direction”,18 in the light of the Court’s conclusion on this issue, it should be expected that difficulties in adducing factual evidence of the counterfactual world would not generally qualify as exceptional circumstances.

Proving the counterfactual will likely be practically challenging and may well require expert evidence. The hypothetical world in Bilta may be along these lines: the claimant companies remained without directors for years, whereas liquidators might have been appointed at an earlier date. Since time does not begin to run until the claimant’s (reasonable) discovery of the fraud, the factual inquiry should centre on the information readily available to the liquidators and the steps that they would have taken to investigate potential recovery after their appointment. Any delay by creditors in claiming against the company or putting it into liquidation should not be relevant. It should also be borne in mind that time starts running upon the essential facts of the fraud (as found proved by the court) being discovered; should subsequent details of the fraud be uncovered without giving rise to a separate cause of action, that does not reset the clock.19 To seek advice on commercial litigation, please contact Lucas Moore or Victor Lui, or alternatively, telephone on 020 7465 4300.

5 s.993 CA 2006 created the offence of fraudulent trading, which applies whether or not the company has been wound up and a person convicted on indictment may be imprisoned for up to 10 years or a fine (or both) 6 Bilta v Tradition, [36] 7 Bilta v Tradition, [25] 8 Bilta (UK) Ltd v Nazir (No 2) [2016] AC 1, [2015] UKSC 23, [213] (Lord Toulson and Lord Hodge JJSC) 9 E.g. Bilta (UK) Ltd v Natwest Markets Plc [2020] EWHC 546 (Ch), [225]-[228] (this point not disturbed on appeal: [2021] EWCA Civ 680, [61], [128]-[134]); Re JD Group Ltd [2022] EWHC 202 (Ch), [33]-[36] (Deputy Judge Agnello QC); London Capital & Finance Plc v Thomson [2024] EWHC 2894 (Ch), [1558] (Miles J) 10 [2018] AC 391, [2017] UKSC 67, [74] (Lord Hughes JSC) 11 Bilta v Tradition, [44] 12 s.21(3) of the Limitation Act 1980 as applied in Williams v Central Bank of Nigeria [2014] 2 WLR 355, [2014] UKSC 10, [116]-[119] (Lord Neuberger PSC) 13 The directors’ knowledge of the fraud not to be attributed to those companies in such circumstances: Bilta v Nazir, [207] 14 Bilta v Tradition, [78]-[81] 15 Bilta v Tradition, [82] 16 Bilta v Tradition, [83], [85] 17 Bilta v Tradition, [75] 18 Bilta v Tradition, [75]-[76] 7 19 Seedo v El Gamal [2023] Ch 473, [2023] EWCA Civ 330, [53], [70]-[74] (Nugee LJ)

ThoughtLeaders4 FIRE Magazine • ISSUE 23

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ThoughtLeaders4 FIRE Magazine • ISSUE 23

ABDULHAMEED DHIA JAFAR V ABRAAJ HOLDINGS (IN OFFICIAL LIQUIDATION): ATTRIBUTION OF ACTS, AND LIABILITY, OF DIRECTOR

Authored by: Thomas Wong (Barrister) – Twenty Essex

Abraaj: The Facts Abraaj was an “impact investment” private equity group based in Dubai, aimed at providing healthcare to the developing world. The Group collapsed in 2018, as examined in the BBC Panorama programme: “Billion Dollar Downfall: The Dealmaker”.

The Cayman claim in Abdulhameed Dhia Jafar v Abraaj Holdings (in official liquidation) [2025] CIGC (FSD) 70 related to loans made by Mr Abdulhameed Jafar (“Mr Jafar”) to Abraaj Investment Management Limited (“AIML”) and (possibly) Abraaj Holdings (“AH”, the 1st Defendant). Both AH and AIML were Cayman companies in insolvent liquidation. Mr Jafar eventually settled its claim against AH,1 carrying on his claim against the other defendants.

1

§§1, 35.

2

§§2 (summarising §50), §§20 – 21.

3

§§24.

4

§§25 – 26.

5

§5.

6

§6.

7

§830.

8

§§1045 – 1047.

The monies advanced by Mr Jafar to AIML and AH were rapidly passed on by them to two private equity funds that were part of the same affiliated group of companies, entities and funds operating under the name Abraaj.2 The two funds were Neoma Private Equity Fund IV LP (“Fund IV”)3 and the Abraaj Growth Markets Health Fund (“AGHF”, a group of three Cayman-domiciled exempted partnerships),4 both exempted LPs (together, “Funds”).

Since AIML and AH could not repay the loans, Mr Jafar claimed against the Funds.5 To do so, Mr Jafar made a deceit claim and an unjust enrichment claim under UAE law.6 In relation to the deceit claim, Mr Jafar sought to attribute liability to the Funds through a Mr Arif Naqvi (“Mr Naqvi”), by saying inter alia that Mr Naqvi was a de facto / shadow director of the Funds’ general partners.7 This is the issue on which this article focuses.

De Facto vs Shadow Directors As a point of law, Mr Justice Segal found that a de facto director did not need to be “held out” as a director (although evidence on the point would be relevant), but only that s/he

“participate in directing the affairs of the company”. 8

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ThoughtLeaders4 FIRE Magazine • ISSUE 23 What was important was the purpose for which it was sought to characterise an individual as a de facto director, eg for the purposes of disqualification proceedings under statute, or seeking to bind a company by acts of de facto directors.9 As for shadow directors, Segal J held that such a designation was statutory, and would only be relevant where the statutory definition of a “shadow director” was part of the claim in question. However, by giving specific directions and instructions, a shadow director may also be a de facto director as he may be found to be exercising decision-making powers of a director.10

This Case: Was Mr Naqvi a De Facto or Shadow Director?

In the present case, Mr Jafar was seeking inter alia to attribute certain alleged misrepresentations made

by Mr Naqvi by virtue of his de facto directorship, to the Funds’ general partners, and thus the Funds.11 Mr Justice Segal was satisfied that Mr Naqvi was a de facto director of the Funds as he undertook functions in relation to the business and affairs of the Funds which could only be discharged by a director,12 which included raising loans.13 The Judge was also satisfied that he had actual14 or implied authority to do so.15 Therefore, Mr Naqvi’s deceit, if any were established, could in principle be attributed to the Funds, either as a de facto director of the general partners of 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26

the Funds, or as a director of AIML. The Judge additionally held that Mr Naqvi was the “directing mind and will” of the Funds,16 although he rejected the contention that Mr Naqvi had ostensible authority, as it was not clear who had represented to Mr Jafar that Mr Naqvi had such authority to act for the Funds and their general partners, not least because the documents which would have demonstrated this were not publicly available.17

In what Capacity was Mr Naqvi Acting when he Made the Representations?

All of the above having been said, Segal J concluded on the facts that Mr Naqvi was only acting on behalf of AIML and AH as a director with authority, but not on behalf of the general partners of the Funds.18 The Judge found that at the time of negotiations when the representations were made for the loans, Mr Naqvi (or, for that matter, Mr Jafar) did not focus on the entities to which the loans were made, nor was the matter of routing the loans through the general partners raised. As a matter of fact, 1/3 of the loans ended up not being paid to the general partners.19 The formal borrower was only AIML (and perhaps AH),20 and therefore formal legal relations and liabilities only needed, and were intended, to be between Mr Jafar and AIML (and AH), and the representations made were only treated as having been made on behalf of AIML (and AH).21 The other Abraaj entities which were to receive the loan monies only needed to engage with AIML and AH.22 Moreover, no oral or written statement had been addressed to Mr Jafar to the effect that Mr Naqvi was acting for and on behalf of the Funds’ general partners. Mr Justice Segal also noted that neither a generalised commercial understanding of what Mr Naqvi was doing, nor the mere fact that commercially the Funds’

general partners would benefit from the loans, warranted ignoring the entities’ separate legal identity. 23 Mr Naqvi was found to be only exercising his powers as a director of AIML, which he did not do

“for the purpose of exercising its powers to borrow on behalf of the general partners”.24 In other words, he did not exercise AIML’s powers to borrow on the general partners’ behalf, or as the Funds’ de facto director or agent.25

Conclusion The Cayman Grand Court’s decision is correct in principle and to be welcome. Mr Justice Segal’s overall approach fairly and robustly assessed the transactions and determined the question of attribution as a matter of law. It also prevented an unprincipled development of the law, where a party would be attributed liability by mere knowledge of another’s misdeeds, dubbed a “thought-crime” by counsel for the GHF parties.26

§§1048 – 1049. §1061.

See §§1053 – 1056. §§1057 – 1058. §1059.

Recited in §1089. §§1057(b) – 1058. §1065. §§1068 – 1073. §§1101 – 1102, 1104. §1102. §1103.

Ibid. §1104. §1105. §1103.

Ibid. §959.

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ThoughtLeaders4 FIRE Magazine • ISSUE 23

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ThoughtLeaders4 FIRE Magazine • ISSUE 23

EU’S PUBLIC PROSECUTOR HIGHLIGHTS HUGE EUROPE-WIDE TAX FRAUD

Authored by: Niall Hearty (Partner) - Rahman Ravelli Niall Hearty of Rahman Ravelli details the statements coming from the European Public Prosecutor’s Office The European Public Prosecutor’s Office (EPPO) has warned that the European Union (EU) is losing €50 billion a year to VAT and customs fraud.

a criminal scheme involving tax evasion, corruption and exploitation of weak enforcement across Member States.

Authorities estimate that the scheme caused losses of around €350 million in customs duties and €450 million in VAT. Such schemes often involve the undervaluing of imports to reduce customs duties. Criminals also use carousel schemes (where VAT is claimed but never paid when it should be) and transport goods through jurisdictions with weak enforcement to avoid detection.

EPPO puts the blame for this on organised criminal networks that operate sophisticated cross-border schemes that have become some of Europe’s most profitable illegal activities.

The warning was made by EPPO following a seizure of more than 2,400 shipping containers at the Greek port of Piraeus, as part of an investigation into

The EU’s VAT in the Digital Age (ViDA) reforms may have some success in tackling these problems. They are set

to come into effect in the coming years.

They involve near real-time digital reporting and e-invoicing, changes to VAT payment rules and a broader single VAT registration system.

In addition, the 2028 EU Customs Reforms package has now been formally approved. Its measures include setting up a single customs authority, digital customs declarations and changes to the EU Import One-Stop Shop system that allows businesses to register with a single tax authority and collect, declare, and pay VAT on the sale of low-value goods to EU customers at the point of sale.

EPPO investigations have shown that abuse of VAT and customs payment systems is carefully planned and uses tactics such as front companies, intermediaries and large numbers of corrupt insiders. The scale of the illegal gains being made has led to violent disputes between the criminal gangs involved.

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ThoughtLeaders4 FIRE Magazine • ISSUE 23

Regulatory investigations, large-scale commercial disputes involving corporate wrongdoing, reputational issues, corporate liability and multi-jurisdictional enforcement. Asset recovery, internal investigations and compliance.

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ThoughtLeaders4 FIRE Magazine • ISSUE 23

TWO UK MEN TO BE SENTENCED IN US OVER MULTI-MILLION DOLLAR WINE FRAUD

Authored by: Niall Hearty (Partner) - Rahman Ravelli Two British men will be sentenced in the US next year after admitting their role in a $99 million wine fraud.

James Wellesley, who is also known as Andrew Fuller, and Stephen Burton have pleaded guilty to their role in a fraudulent scheme that saw victims invest in loans that were meant for wealthy wine collectors. But the wine collectors and the wine they were supposed to own did not exist.

Wellesley, 59, has pleaded guilty to wire fraud conspiracy before District Judge Pamela Chen in Brooklyn. He is in a Brooklyn jail after unsuccessfully fighting extradition from Britain and will be sentenced in February next year.

Under federal guidelines, he could be sentenced to up to 12 and a half years in prison.

He has agreed to forfeit more than $1 million that is held in more than two dozen bank accounts.

Burton, 61, pleaded guilty in July to wire fraud conspiracy and money laundering conspiracy and accepted a $26 million forfeiture order. He is also jailed in Brooklyn but will be sentenced a month before Wellesley.

Posed Prosecutors said the two men posed as executives from the London and Hong Kong-registered company, Bordeaux Cellars. They raised $99.4 million by promising those who invested in their loan scheme that they would receive regular interest payments from high net worth wine collectors.

It is alleged that the two men claimed the loans were backed by an inventory of more than 25,000 bottles of wine.

But Bordeaux Cellars is said to have controlled only 217 bottles. Wellesley and Burton used money gained from their scheme on their personal expenses and paying interest to some investors. The scheme ran from June 2017 until February 2019 and collapsed when interest payments stopped.

While this fraud was based on the idea of top-level wine, it was basically an unsophisticated Ponzi scheme. Those responsible created the fake idea of a profitable enterprise in order to fool potential investors into parting with their money. Wine, like other commodities such as gold, has continued to hold its value and give good returns to investors; leading to it being seen as a relatively safe investment. This, however, can make it an attractive to those looking to make fraudulent gains.

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ThoughtLeaders4 FIRE Magazine • ISSUE 23

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ThoughtLeaders4 FIRE Magazine • ISSUE 23

THE INTERPOL SILVER NOTICE:

THE PILOT PROJECT IN THE FIGHT AGAINST INTERNATIONAL MONEY LAUNDERING Authored by: Andrea Puccio (Founder & Managing Partner) - Puccio Penalisti Associati (IFG) each of which has well-defined objectives.

The best known to the media is certainly the Red Notice, issued whenever it is necessary to arrest wanted persons so that they can be tried or serve a sentence.

The Interpol Alert System

Recently, however, attention has focused on a new category of notice that is set to disrupt the international investigative paradigm: the Silver Notice.

In recent years, there has been a significant increase in crimes committed by individuals operating at an international level. This growing internationalisation of crime makes it increasingly necessary to establish effective and consistent mechanisms for cooperation and intervention at a global level.

In this context, the intergovernmental organisation Interpol, known for its global reach, plays a leading role among the international bodies responsible for providing operational and intelligence support to countries.

As known, Interpol makes use of specific color-code alerts (“Notices”),

The initiative is currently being tested through a pilot program involving 52 countries/territories and, for the first time, is specifically designed not directly on individuals, but rather on assets that may be linked to them and deemed to be of illicit origin.

The operational features of the Silver Notice are outlined in the document

“Legal Framework governing the 2025 silver notice/silver diffusion pilot”1, published on Interpol’s official website.

Silver Notice: Characteristics And Regulatory Framework Starting in 2025, Interpol will have an innovative tool to fight transnational crime: the Silver Notice and its dissemination system.

The Legal Framework clarifies that the Silver Notice/Silver Diffusion, which must be employed in compliance with the fundamental rules governing the Organisation’s operation, can only be activated based on precise and rigorous conditions: • the existence of an ongoing criminal investigation against a natural person; • the allegation of an offense punishable by at least four years’ imprisonment, in accordance with the provisions of the United Nations Convention against Transnational Organised Crime;

1 The Legal Framework governing the 2025 Silver Notice / Silver Diffusion pilot is the official document published by Interpol that governs the experimental phase of the use of Silver Notices, which can be found on Interpol’s website under the operational policies section.

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ThoughtLeaders4 FIRE Magazine • ISSUE 23 • the availability of adequate judicial elements, including a decision confirming that the assets are subject to seizure or confiscation, measures that need not necessarily be predicated upon a conviction.

Furthermore, it is envisaged that Silver Notices/Silver Diffusions shall “establish the link between the criminal activities and the person and/or the asset(s) derived from the offence(s)”2.

This is not an isolated case: cryptocurrencies are emerging as one of the main tools used for money laundering, with increasingly significant estimates.

will facilitate better data collection on the disposal of designated criminal proceeds, including cases where such assets have been converted into crypto assets.

Furthermore, the characteristics of virtual currencies make them perfectly suited for criminal purposes.

Moreover, given the situation, it is reasonable to expect that the use of this innovative tool will primarily benefit local judicial authorities involved in the management of criminal proceedings that form the legal basis for Silver Notices/Silver Diffusions themselves, if not yet concluded.

After all, this is the exact purpose that motivated the introduction of this new tool. As reiterated in the legal framework published by Interpol, a Silver alert/ Silver diffusion may be issued with one of the following grounds: • locating the assets; • identifying the assets more accurately; • acquiring relevant information about the assets; • monitoring the assets discreetly and constantly.

Early Cases: From Italy To India, Towards A New Investigative Paradigm The first Silver Notice was issued

by Italy with the aim of acquiring information on the existence of assets located mainly in Asia and South America.

In the following months, other countries participating in the pilot project, including the United Kingdom and India, followed Italy’s example.

India requested the issuance of two Silver Notices, targeting the assets (of illicit origin) of two high-profile fugitives.

One of the two cases involved an alleged fraudster who created an unregulated cryptocurrency called MTC, allegedly used to obtain financial resources from a significant number of investors, which were then stolen for personal gain.

2

The identification of assets can facilitate the probative reconstruction of the underlying criminal conduct, which will certainly need to be proven in court.

Its decentralised structure allows for peer-to-peer financial transactions without the need for any intermediary.

Also, its “dematerialised currency” nature allows transactions to be carried out from any jurisdiction, with obvious implications in terms of traceability.

Moreover, individuals carrying out such transactions generally benefit from pseudonymity, thus preserving their anonymity.

The waiting period will last until November 2025, when the first pilot phase of this new measure will be completed. It will be the perfect opportunity to concretely evaluate the outcomes and determine the future paths of a tool that could be a key turning point in the fight against transnational crime.

Future Perspective: Towards New Frontiers In The Fight Against International Money Laundering Will Silver Notices/Silver Diffusions genuinely represent a breakthrough in the struggle against international money laundering?

This is the question.

The introduction of this new category of notice holds promises for increasing success in targeting money laundering activities characterised by transnational scope.

With specific regard to cryptocurrencies, it is undisputable that the issuance of the Silver Notice/Silver Diffusion

Article 2, paragraph 2, letter b), Legal Framework governing the 2025 Silver Notice/Silver Diffusion pilot.

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ThoughtLeaders4 FIRE Magazine • ISSUE 23

We are the International Fraud Group The International Fraud Group (“IFG”) is a network of international lawyers who are experts in Asset Recovery and Fraud Investigation.

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We have members spanning over 56 jurisdictions and we cover the globe.

In 1994 a Bank that Mishcon de Reya were working for in the international recovery space expressed a need to access like minded and similarly skilled lawyers across the globe to help them when their and their client’s assets had gone astray. The IFG was born in response to that need.

The ethos of the IFG is based on responsiveness, know how and commerciality.

In the Asset Recovery & Fraud Investigation space there is no time to lose when a problem is discovered. Sometimes injunctions are needed on an immediate basis. IFG’s members know that every second is valuable when chasing crooks and understand that responsiveness is critical.

There is a huge difference between knowledge and know how. It is the practical application of the law to get a result that the client wants which is at the very core of the IFG. Knowing what to do and how to do it is not enough.

What lawyers in this space need to understand is that clients want and are right to insist on a return on their investment. The costs that a client incurs in an Asset Recovery scenario and/or Fraud Investigation represent an investment. IFG Members know that to justify their existence they must produce a return on that investment in terms of funds or assets recovered.

The IFG also has in-depth expertise in the following sectors which are represented by 5 sub-groups namely Crypto Currency, White Collar Crime & Investigations, Arbitration, Shipping and Insolvency.

Contact: Gary Miller Partner, Mishcon de Reya LLP T +44 20 3321 6294 E gary.miller@mishcon.com

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We seize.

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ThoughtLeaders4 FIRE Magazine • ISSUE 23

SUPREME COURT’S CLARIFICATION ON THE SCOPE OF SECTION 423 OF THE INSOLVENCY ACT 1986 (YOU CAN RUN BUT YOU CAN’T HIDE….YOUR ASSETS)

Authored by: Tom Crisp (Barrister), Eamon Khorsheed (Associate) & Emily Hynes (Associate) - PCB Byrne In El-Husseiny v Invest Bank PSC [2025] UKSC 4, the Supreme Court clarified the scope of section 423 of the Insolvency Act 1986, confirming that the provision bites in circumstances where the asset is not beneficially owned by the debtor. The Supreme Court held that a debtor who procures their company to transfer away an asset at an undervalue amounts to a “transaction at an undervalue” for the purpose of section 423(1).

9HP was initially legally and beneficially owned by a Jersey company, Marquee Holdings Limited (Marquee), which was beneficially owned by D1. D1 procured Marquee to transfer ownership of 9HP to his son, Mr Ziad El-Husseiny (D4), for no consideration. This meant that the value of the Marquee shareholding was reduced in value by approximately £4.5 million and the Bank’s ability to enforce its judgment was therefore adversely affected.

Andrew Baker J also held that a debtor does not “enter into a transaction” personally for section 423 purposes when acting solely as a director or other organ of a company. In such cases, it is the company—not the individual debtor—that enters into the transaction (the Capacity Point). Applying this rationale, he found that the transfer of 9HP, owned by Marquee, fell outside section 423 because D1 acted only in his capacity as a company director.

The decision prevents section 423 from being undermined by a stubborn debtor’s use of a company to hold and transfer away assets at their direction, to the prejudice of the debtor’s creditors.

The Bank pleaded under section 423 that D1 procured the transfer of certain assets to Mr Alexander El-Husseiny (D3) and D4 (together, the Appellants) to put them beyond the reach of the Bank or to reduce the value of the companies which owned them.

The Appellants appealed the Judge’s ruling on the Beneficial Interest Point and the Bank appealed against the ruling on the Capacity Point. The Court of Appeal dismissed the appeal on the Beneficial Interest Point and granted the Bank’s appeal on the Capacity Point.

Subsequently, the Appellants appealed the Beneficial Interest Point ruling to the Supreme Court.

Background Invest Bank (the Bank) had the benefit of two Abu Dhabi judgments against Mr Ahmad El-Husseini (D1) for approximately £20 million. The Bank identified valuable assets in the jurisdiction which it looked to enforce against, including a property in London, at 9 Hyde Park Garden Mews (9HP).

The Lower Courts At first instance, Andrew Baker J found that there was no wording in section 423, or in the definition of “transaction” in section 436 of the Insolvency Act, which limited section 423 to a transaction whereby a beneficial interest of the debtor was transferred (the Beneficial Interest Point). Therefore, an arrangement whereby a debtor causes a company they own to transfer assets at an undervalue can still be caught by section 423.

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ThoughtLeaders4 FIRE Magazine • ISSUE 23

The Supreme Court’s Ruling The Supreme Court upheld the Court of Appeal’s judgment on the Beneficial Interest Point. Having explained that in construing section 423 a Court must look at the relevant wording

“in the context in which it appears in the section and in the Act as a whole, bearing in mind the purpose for which it was enacted” the Supreme Court then identified the purpose of the relevant provisions as being to set aside or provide other redress in cases where there have been transactions at an undervalue which have prejudiced creditors. It concluded that on a straightforward reading of section 423(1), the text was sufficiently broad to include an arrangement whereby a debtor procures a company owned by him to transfer away its assets; there is nothing in its wording to limit section 423 to exclude such a transaction.

judgment proof by attempting to hide their assets behind corporate vehicles.

An attempt by a debtor to transfer assets via their companies to third parties with the purpose of frustrating the enforcement of a debt is an arrangement that can fall within the meaning of section 423 and, on the face of it, creditors will be able to unwind such schemes.

The decision is of potentially wider importance to insolvency practitioners as the Supreme Court observed that there was no good reason for a different meaning of “transaction at an undervalue” to apply in relation to sections 238 and 339, as well as section 423, of the Insolvency Act. Those sections address the setting aside of transactions at an undervalue entered into in the period before corporate insolvency and individual bankruptcy.

Thus, insolvency practitioners may well be able to look to set aside transactions under those sections even though the asset transferred is not beneficially owned by the bankrupt or insolvent company.

PCB Byrne acted for Invest Bank, instructing Paul McGrath KC and Marc Delehanty.

The Supreme Court determined that even though an asset directly owned by a debtor has not been transferred away, creditors would be prejudiced by the effect of the transaction because the reduction in value of the company shares would have the effect of depleting or diminishing assets available for creditors.

The Appellants’ contention that a “transaction at an undervalue” could only apply to the transfer of an asset beneficially owned by a debtor was thereby rejected. The Justices concluded that such a narrow reading of the text would ultimately undermine the purpose of section 423.

Implication This judgment provides surer protection to creditors looking to enforce debts against debtors who strive to be

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ThoughtLeaders4 FIRE Magazine • ISSUE 23

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ThoughtLeaders4 FIRE Magazine • ISSUE 23

NAVIGATING THE NEW ANTI-SLAPP REGIME: KEY CPR CHANGES AND LEGAL IMPLICATIONS Authored by: Noam Greenberger (Senior Associate) - Asserson SLAPP1 refers to legal action designed to intimidate, burden and ultimately silence people or organisations who speak out on matters of public interest, rather than to pursue legitimate claims.

It aims to

“ensure that misconduct and improper use of the legal system to suppress legitimate reporting on matters of public interest related to combating economic crime will be prevented.”2

Examples of SLAPP include threatening letters and court proceedings against those responsible for posting online reviews of businesses (including former employees).

Recent amendments to the Civil Procedure Rules 1998 (“CPR”) made pursuant to the Economic Crime and Corporate Transparency Act 2023 (“the Act”) include new provisions relating to SLAPP. These new provisions should have a marked impact on the way English courts handle SLAPP, in order to protect legitimate reporting on matters of public interest concerning economic crime.

Background - the Act The Act forms part of a wider package of UK legislation designed to combat economic crime and enhance corporate transparency.

Employees who alert the authorities or media about corporate misconduct are a prime example of the type of disclosure sought to be protected.

The Act mandates that new civil procedure rules should be introduced to: a. allow for SLAPP claims to be struck out; and b. impose cost consequences for SLAPP claims that are not struck out or dismissed at an early stage.

1

SLAPP stands for Strategic Litigation/Lawsuit Against Public Participation.

2

Explanatory Notes to the Economic Crime and Corporate Transparency Act 2023, paragraph 62.

3

https://www.echr.coe.int/documents/d/echr/convention_eng.

Definition of SLAPP Under section 195 of the Act, a claim is a SLAPP claim if all of the following criteria are met:

1. Freedom of Speech Suppression: • The claimant’s behaviour either has or is intended to restrain the defendant’s right to freedom of expression as set out in Article 10 of the European Convention on Human Rights.3

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ThoughtLeaders4 FIRE Magazine • ISSUE 23

2. Disclosure Related to Economic Crime: • “Economic crime” includes: - a broad range of statutory and common law offences relating to fraud, theft, tax, money laundering, corporate crime, terrorism financing, proceeds of crime and financial sanctions; and - attempts, conspiracies, or assistance to commit such offences.

3. Public Interest Purpose: • The disclosure (or any part of it) is or would be made “for a purpose related to the public interest in combating economic crime”.4

Where a SLAPP claim is struck out, the underlying cause (or causes) of action may remain intact to be pursued by the claimant in separate proceedings.

Defendants applying for SLAPP claims to be struck out should therefore consider applying for consequential orders such as summary judgment in appropriate cases.

It remains to be seen whether a claimant who is found to have intended to cause a defendant harassment, alarm, distress, expense or any other harm or inconvenience beyond that ordinarily encountered in the course of properly conducted litigation in one set of proceedings, will (following a successful strike out application by a defendant) be entitled to pursue the same claim in fresh proceedings which are not tainted by the same behaviour.

4. Claimant’s Harmful Intent:

This point may prove to be moot (or largely so) as the court’s obligation under CPR 36.17(5) is to take into account all the circumstances of the case, which could involve an assessment of whether the defendant acted unreasonably in failing to accept the claimant’s Part 36 offer.

The Bottom Line

The Consequential Amendments To The CPR

The Costs Consequences

Pursuant to the Act, the following amendments to the CPR have been made:

The Costs Consequences have been inserted into CPR 44.2 which deals with the court’s discretion as to costs.

1. SLAPP claims may be struck out before trial (including of the court’s own motion) where the claimant fails to show that it is more likely than not that the claim would succeed at trial.

This is now in CPR 3.4; and

A working definition of “misconduct” can be drawn from CPR 44.11(1)6, which refers to:

2. in respect of SLAPP claims, a court may not order a defendant to pay the claimant’s costs except where misconduct of the defendant in relation to the claim justifies it. This is now in CPR 44.2 (the “Costs Consequences”).

b. unreasonable or improper conduct before or during the proceedings (including in a costs assessment).

4 5 6 7 8

It may however be argued that it would be unjust for a court to order that a claimant to a SLAPP claim be entitled to the consequences under CPR 36.17(4) on the basis of section 194(4) of the Act, which evinces Parliament’s intention for a defendant not to be liable to pay the claimant’s costs “except where misconduct of the defendant in relation to the claim justifies such an order.”

In other words, the defendant’s failure to accept the claimant’s valid Part 36 offer could constitute misconduct, in which case section 194(4) of the Act would be irrelevant.

• Any of the claimant’s behaviour is intended to cause the defendant harassment, alarm, distress, expense or any other harm or inconvenience “beyond that ordinarily encountered in the course of properly conducted litigation.”5

The effect of the Costs Consequences may be that, in the absence of any misconduct, defendants who unsuccessfully apply to strike out a SLAPP claim pursuant to the new CPR 3.4(2)(d) will be shielded from an adverse costs order.

This is on the basis that Part 36 is a “self-contained procedural code”7 which “trumps Part 44.”8

a. failure to comply with a rule, practice direction or court order; or

Notwithstanding a defendant’s misconduct, the court will still be required to assess whether it justifies a departure from the Costs Consequences, and if so, to what extent.

Claimants pursuing remedies which may restrain a defendant’s right to freedom of expression on matters relating to economic crime should ensure that their conduct is proper and proportionate both prior to and during the course of court proceedings to avoid the claim being classified as SLAPP within the meaning of the Act. Defendants should be aware of the court’s unique power to strike out a SLAPP claim, which may afford them an opportunity to seek an early dismissal of the claim without the usual risk of adverse costs consequences.

Parties to potential SLAPP claims should consider the new costs provisions which may apply to court proceedings brought by or against them and their interaction with Part 36 of the CPR.

A SLAPP claimant could likely avoid the Costs Consequences by serving a Part 36 offer, in circumstances where it then obtains a judgment for an equal or greater financial amount than the offer or where the offer is accepted.

Section 195(1)(c) of the Act. Section 195(1)(d) of the Act. Entitled “Court’s powers in relation to misconduct”.

CPR 36.1(1).

Ward LJ in Shovelar v Lane [2011] EWCA Civ 802 [2012] 1 WLR 637 at [52].

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ThoughtLeaders4 FIRE Magazine • ISSUE 23

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Asset Recovery and Enforcement Civil Fraud Commercial and Financial Disputes 24

ThoughtLeaders4 FIRE Magazine • ISSUE 23

Women in FIRE connects women in litigation or whose practice encompasses or touches upon Fraud, Contentious Insolvency, Asset Recovery and International Enforcement.

This initiative brings together female practitioners and allies of all backgrounds and experiences in one room to discuss current challenges and share knowledge. It is all about continuous connection and forging strong networks that elevate women in the industry. Scan the QR code to find out more.

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Women in FIRE presents: Asset Recovery in Action 1-day London-based event | 27 November 2026 To get involved please contact: Danushka De Alwis | Founder/Director

T: +44 (0) 20 3580 5891 | E: danushka@thoughtleaders4.com 25

ThoughtLeaders4 FIRE Magazine WOMEN IN FIRE SUPPLEMENT • ISSUE 23

RETHINKING REMEDIES FOR DISHONEST ASSISTANCE: STEVENS V HOTEL PORTFOLIO II UK LTD (IN LIQUIDATION) [2025] UKSC 28; [2025] 3 W.L.R. 293

Authored by: Ramyaa Veerabathran (Barrister) – Serle Court

Introduction When a company director makes an unauthorised profit in breach of fiduciary duty and a dishonest assistant helps the director to make the secret profit and then to dissipate it, is the dishonest assistant liable to compensate the company for the loss of its proprietary interest in the unauthorised profit?

This was the question before the Supreme Court in Stevens v Hotel Portfolio II UK Ltd (In Liquidation) & Anor [2025] UKSC 28. The majority of the Court answered “yes” for the reasons explained in the powerful judgment of Lord Briggs (with whom Lord Reed, Lord Hamblen and Lord Richards agreed) and Lord Burrows answered “no” in a fascinating dissenting judgment.

Background Hotel Portfolio II UK Ltd (“HP”) sold three hotels to a buyer at fair market value in 2005. Mr Ruhan was a director of HP at the time and owed it various fiduciary duties. Unbeknownst to HP, the buyer was controlled by one Mr Stevens acting as nominee for Mr Ruhan. Mr Ruhan thus hid his interest in the sale from HP and breached the rule that prohibits self-dealing by a fiduciary.

A few years later, the buyer sold the hotels at a tremendous profit, of which approximately £102 million found its way to Mr Ruhan in the form of a dividend, in breach of the ‘no profit’ rule that binds fiduciaries. Mr Ruhan’s involvement in the onward sale was still being dishonestly concealed from HP

The Supreme Court was therefore concerned solely with the extent and basis for Mr Steven’s liability as dishonest assistant to Mr Ruhan’s wrongs. Against this backdrop three issues arose for the Supreme Court’s consideration.

(and did not come to light until it went into liquidation and its liquidators unearthed Mr Ruhan’s scheme, leading to these proceedings).

Mr Stevens then dishonestly assisted Mr Ruhan to dissipate around £95 million of the dividend on unconnected ventures overseas which ultimately turned out to be loss-making. That dissipation was a (distinct) breach of Mr Ruhan’s fiduciary duties as trustee of the secret profit. In return for his assistance with Mr Ruhan’s dishonest scheme, Mr Stevens made a relatively modest profit of £1.5 million for himself, for which he accepted he was liable to account to HP. At trial, Mr Ruhan was also ordered to account to HP for the unauthorised profit that he made but it was common ground that nothing had been recovered from him nor would be recovered via proprietary claims in relation to those profits.

Constructive Trust: Merely Remedial Or “Real”?

It was common ground that Mr Ruhan held the secret profit as constructive trustee for HP as beneficiary.

Lord Briggs teased apart the legal consequences that flowed from this premise, beginning by applying the equitable principle derived in FHR European Ventures LLP v Mankarious [2014] UKSC 45; [2015] AC 250, that a

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ThoughtLeaders4 FIRE Magazine WOMEN IN FIRE SUPPLEMENT • ISSUE 23 profit made by a fiduciary

“as a result of his fiduciary position” is to be treated as having been acquired on behalf of the principal, so that it is beneficially owned by the principal. This meant the secret profit generated was beneficially owned by HP from the moment it was received by Mr Ruhan.

Mr Stevens contended that the constructive trust was merely a remedy for Mr Ruhan’s initial breach of fiduciary duty owed as director with the result that his subsequent breach of the constructive trust (through the dissipation of the secret profit) could not sound in a remedy for compensation, just as a failure to comply with an order to pay damages does not generate a new cause of action.

The majority rejected this argument, emphasising that the constructive trust of the secret profit was an institutional trust under English law and not merely remedial as in some other jurisdictions.

In other words it was a free-standing “real” trust which automatically comes into being as equity’s response to particular facts: not a remedial device created by the court’s order.

Therefore, like any other trust, the constructive trust gave HP a proprietary interest in the trust fund comprised of the secret profit. Its dissipation by the trustee (Mr Ruhan) was a breach of trust which caused the beneficiary (HP) to lose the value of its proprietary interest. Anyone who dishonestly assisted the dissipation was jointly liable with the errant trustee for the loss caused, which is assessed by reference to the value of the proprietary interest which would still belong to the beneficiary but-for the dissipation.

In contrast, the dishonest assistant has a much more limited liability to account for unauthorised profits made in breach of fiduciary duty as they are not required to account for any profit that they themselves did not make: Novoship (UK) Ltd v Mikhaylyuk [2014] EWCA Civ 908; [2015] QB 499 at §77. However, Lord Briggs reasoned, the breach that constituted the making of the unauthorised profit (which gave rise to the constructive trust) is distinct from the subsequent breach of the constructive trust by its dissipation. The boundsof liability for the former do not dictate the bounds of liability for the latter.

On that basis Lord Briggs concluded that the Novoship principle does not

insulate a dishonest assistant from joint liability with the trustee for loss caused by the breach of the constructive trust just because the assets which were dissipated were secret profits generated at an earlier stage of the dishonest scheme with their dishonest assistance.

Such an outcome would accord with neither equitable nor common sense.

In summary, once a constructive trust has come into existence, neither the circumstances of its genesis nor the fact that it was a windfall to the beneficiary are relevant to the issue of whether there is a compensable loss caused by the dissipation of the trust fund.

answered the question at hand, which was whether the fact that the dividend represented the fruit of an earlier breach of trust meant that its dissipation did not constitute loss to HP. The correct answer to that question was that there is no reason to aggregate the two successive breaches in order to assess the loss. To the contrary, that approach would undermine the intended effect of the constructive trust for reasons that had nothing to do with fairness, equity or justice. The correct counterfactual to consider when applying the butfor test laid down in Target Holdings Ltd v Redferns [1996] AC 421 for the assessment of loss for equitable compensation was that Mr Ruhan had not breached the constructive trust and had instead preserved HP’s beneficial interest in it, not that there was no secret profit and therefore no constructive trust and nothing for HP to lose: such an approach was akin to throwing out the baby with the bathwater.

The ‘No Loss’ Argument The trial judge had found that HP received full market value for the hotels in 2005 and that it could not itself have made the profits that Mr Ruhan’s nominee buyer went on to make.

In other words, the covert purchase and subsequent profitable sale of the hotels did not cause HP any loss overall, in a commercial sense.

Mr Stevens argued that HP suffered no loss by the dissipation of the secret profit because HP only became the beneficial owner of the secret profit as a result of Mr Ruhan’s prior breach of fiduciary duty. Viewed through that prism, HP’s gain of the secret profit and its subsequent loss through dissipation were merely different stages of one composite fraudulent scheme, none of which would have occurred but for Mr Ruhan’s breaches of his fiduciary duties (first) as director of HP and (second) as constructive trustee.

The majority rejected the idea that HP had not suffered loss in no uncertain terms. Nothing in the authorities that govern the assessment of loss qualifying for equitable compensation

Could The “Gain” Of The Secret Profit Be Set Off Against The Loss Caused By Dissipation?

Mr Stevens (standing in Mr Ruhan’s shoes by reason of their joint liability) ambitiously argued that, even if the dissipation caused a loss to HP it should be set off against the prior gain represented by its beneficial interest in the secret profit which arose as a result of Mr Ruhan’s related breach of fiduciary duty.

The answer to this issue lay in a proper understanding of the nature and scope of an exception first recognised in Bartlett v Barclays Bank Trust Co Ltd (Nos 1 and 2) [1980] Ch 515.

Lord Briggs reasoned that, properly

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ThoughtLeaders4 FIRE Magazine WOMEN IN FIRE SUPPLEMENT • ISSUE 23 understood, Bartlett turned on its particular facts which made it unjust to apply the usual ‘no set-off’ principle in equity. He then restated the true principle: where gains are made and losses incurred for a trust estate by a series of breaches of trust, the general principle in equity is that one breach may not be set-off against another (i.e. the beneficiary is entitled to any gains but the trustee must bear any losses).

However, the court may recognise an exception where the application of this principle would produce a clearly inequitable result, typically because of a particular connection between the breaches. The test for the exception is whether the application or disapplication of the no set-off principle would better serve the objectives of equity on the facts before the court.

Applying that test to the facts, the majority concluded that the only connecting factors between the relevant transactions were dishonesty and greed such that there was nothing equitable about disallowing a set-off in these circumstances. To the contrary, allowing the set-off would frustrate the purpose of the constructive trust by enabling the dishonest assistant to avoid liability for the beneficiary’s loss.

has suffered loss as a result of a fiduciary’s dissipation of unauthorised profits whilst clarifying the nature of constructive trusts arising out of the breach of fiduciary duties, equitable compensation and the principle of equitable set-off. While Lord Burrows’ dissenting judgment raises interesting questions, the approach of the majority hews close to what might be termed the orthodox analysis in equity and holds an instinctive appeal: as Lord Briggs quipped, if Mr Stevens’ arguments were found to be right such that he would walk scot-free without liability to compensate HP for its loss,

“[a] non-lawyer might well think that something had gone seriously wrong with the law”1!

Conclusion The decision authoritatively confirms that a dishonest assistant may be liable to compensate a claimant who 1

Stevens v Hotel Portfolio II UK Ltd (In Liquidation) & Anor [2025] UKSC 28 at §8 per Lord Briggs JSC.

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ThoughtLeaders4 FIRE Magazine WOMEN IN FIRE SUPPLEMENT • ISSUE 23

60 SECONDS WITH...

GEORGINA BAYLEY PARTNER

PAYNE HICKS BEACH

hat is one work related goal W you would like to achieve in the next five years? o continue helping to grow and T support the dispute resolution offering at PHB, in particular in commercial litigation. We have a great team working on a huge variety of cases with a vast wealth of experience. hat cause are you passionate W about? ducation, particularly in the early E years hat does the perfect weekend W look like? amily, sunshine, walks in the F countryside and good food hat has been the best piece of W advice you have been given in your career?

I think there are actually two pieces of advice that have resonated with me in my career to date which are fairly simple.

Firstly, to always put yourself in the client’s shoes whether that is in terms effective communication, managing expectations, empathy and/or a genuine understanding of a client’s objectives/business.

Secondly, to trust your instincts no matter what level of qualification you are.

hat is the best film of W all time?

I am terrible at sitting down to watch a film – there are so many ‘classics’ I have yet to watch so I am definitely not well placed on this one! hat do you see as the most W rewarding thing about your job? etting a ‘good’ result for a client G is always rewarding particularly when it has been hard fought and challenging/complex. ow do you deal with stress in H your work life? sually on the tennis court!

U Litigation is inherently stressful no matter how good you are at managing your own stress levels.

Being supported by good work colleagues and maintaining a healthy work/life balance are key for me.

hat book do you think W everyone should read, and why?

I love reading but don’t get as much time as I would like to read for leisure now. Books are definitely a personal choice but I would have to say something classic like ‘Little Women’. Being one of three girls meant it was easy to relate to. hat’s your go to relaxing W activities to destress after a long day at work? uddy runs in the countryside, M spending time with family and friends or making chocolate ice cream!

hat is one important skill that W you think everyone should have? he ability to truly listen and give T time to listening – we lead such a fast pace of life, particularly as litigators, and I am just as guilty of wanting to crack on with the next task. However, paying proper attention to verbal and non-verbal and making people feel heard and valued is so important.

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ThoughtLeaders4 FIRE Magazine WOMEN IN FIRE SUPPLEMENT • ISSUE 23

CUTTING TO THE CHASE: SECTION 39A OF THE ARBITRATION ACT 1996

Authored by: Matthew Wescott (Partner) and Yana Ahlden (Associate) – PCB Byrne

Introduction The Arbitration Act 2025 (“the 2025 Act”), which amends the Arbitration Act 1996 (“the 1996 Act”), came into force on 1 August 2025 and the amendments apply to arbitrations commenced on or after that date. Section 7 of the 2025 Act, inserts Section 39A into the 1996 Act, a provision empowering arbitrators in English-seated arbitrations to make an award on a summary basis.

a full hearing of the evidence and arguments. In high-value or complex arbitrations, this did not provide a clear pathway for striking out claims or defences. Moreover, arbitrators were conscious that an award made on a summary basis may be vulnerable to enforcement challenges on the basis of a lack of due process.

The Law Commission therefore recommended the introduction of a statutory power which expressly provided for determination on a summary basis, in the interests of resolving disputes more efficiently and expeditiously, as well as mitigating the risks of enforcement challenges.

Historical Context And The Reasons For Reform Prior to the 2025 Act, the 1996 Act did not contain any section which expressly provided for disposal on a summary basis. Section 34 provided (and still provides) arbitrators with broad procedural discretion, including power over how evidence is presented and how hearings are conducted.

However, it did not explicitly authorise an arbitrator to issue an award without

The Test For Making An Award On A Summary Basis

(1) Unless the parties otherwise agree, the arbitral tribunal may, on an application made by a party to the proceedings (upon notice to the other parties), make an award on a summary basis in relation to a claim, or a particular issue arising in a claim, if the tribunal considers that— (a) a party has no real prospect of succeeding on the claim or issue, or (b) a party has no real prospect of succeeding in the defence of the claim or issue.

(2) For the purposes of subsection (1), an arbitral tribunal makes an award “on a summary basis” in relation to a claim or issue if the tribunal has exercised its power under section 34(1) (to decide all procedural and evidential matters) with a view to expediting the proceedings on the claim or issue.

(3) Before exercising its power under section 34(1) as mentioned in subsection (2), an arbitral tribunal must afford the parties a reasonable opportunity to make representations to the tribunal.” [our emphasis]

Section 39A provides that:

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ThoughtLeaders4 FIRE Magazine WOMEN IN FIRE SUPPLEMENT • ISSUE 23 The words “no real prospect of succeeding” at subsections 39A(1)(a) and (b) are the same as those used as the threshold test in Part 24.3 of the Civil Procedure Rules, which provides the English Courts with the power to give summary judgment.

Summary judgment applications in the English Courts under CPR 24.3 have created a very substantial body of case law on the meaning of the words “no real prospect of succeeding” and it is likely that those authorities will be relevant, if not necessarily binding, when assessing whether the threshold for summary determination has been met.

Importantly, Section 39A departs from the Court rules by omitting the additional “no other compelling reason to proceed” requirement contained in CPR 24.3(b).

This modification lowers the bar for dismissal in arbitration, allowing arbitrators to dismiss unmeritorious matters at an earlier stage, solely on the ground that they lack legal viability.

Institutional Rules The rules of the major arbitral institutions already contain mechanisms for early dismissal prior to the 2025 Act. For example, the LCIA Arbitration Rules 2020 include Article 22.1(viii), permitting the arbitrator to determine that a claim, defence, or counterclaim is “manifestly without merit.” The same test for early dismissal is set by Article 47.1 of the SIAC Rules 2021, Article 43 of the 2024 HKIAC Administered Arbitration Rules and Article 41 of the ICSID Arbitration Rules.

The test under these institutional rules sets a higher threshold than section 39A, which in turn creates a tension between the two regimes. Section 39A is not mandatory, per the opening words of subsection 39A(1):

summary disposal. This is likely to be a question that is tested and finds its way into case law by means of section 68 challenges over the coming years.

Due Process And Enforcement Notwithstanding the introduction of section 39A, arbitrators must still afford parties a “reasonable” opportunity to put their case, and to respond to their opponent’s case (section 33(1)(a) of the 1996 Act) and the courts will set aside an award under section 68 of the 1996 Act if there has been a serious irregularity that has caused substantial injustice to the applicant, including an arbitrator’s failure to comply with their general duties under section 33.

Going forward, parties should review their arbitration clauses with this new landscape in mind. In ad hoc arbitrations or contracts referencing the Arbitration Act without institutional rules, Section 39A will serve as a powerful default mechanism. In institutional settings, parties may want to clarify whether they wish to benefit from the broader test in Section 39A, or remain bound by stricter institutional standards.

Additionally, counsel must carefully consider how and when to invoke the provision. Although summary disposal may be attractive, misuse could backfire, especially if the application is unsuccessful or viewed as premature.

Tribunals will likely impose adverse cost consequences for tactical or frivolous applications. Aggressive use could raise enforceability concerns under the New York Convention, particularly under Article V(1)(b), where a party argues it was denied a proper opportunity to present its case, or V(1)(d), if the summary process is said to diverge from the parties’ agreed procedure.

Moreover, under article V.1(b) of the New York Convention 1958, a party can resist the recognition and enforcement of a foreign award on the grounds that the party was unable to present their case.

Therefore, parties considering whether to make an application under section 39A would be wise to seek advice from counsel in the jurisdiction where they intend to enforce any award in order to ascertain the likely attitude of the local courts to the enforcement of awards obtained under a summary procedure.

“Unless the parties otherwise agree…”.

Arguably the adoption by the parties of these institutional rules “contracts out” of section 39A and the lower threshold for summary determination.

On one view, therefore, despite being heralded as a significant change, section 39A may make no difference at all to arbitrations conducted under the rules of certain arbitral institutions, such as those referred to above, although section 39A may still be relevant in the context of the ICC Arbitration Rules, which make no express provision or

Future Impact and Strategic Considerations In principle, Section 39A enhances the arbitrator’s powers, addressing longstanding concerns about the inefficiency caused by having to hear claims that were lacked merit.

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ThoughtLeaders4 FIRE Magazine WOMEN IN FIRE SUPPLEMENT • ISSUE 23

CRYPTOCURRENCY FRAUD – LANDMARK DECISION

Authored by: Moya Clifford (Legal Director), Kate Steele (Partner) and Jack Lewis (Associate) - Hill Dickinson As part of October’s Cyber Security Awareness month, we look at a landmark case involving cryptocurrency fraud - D’Aloia v Persons Unknown and Ors [2024] EWHC 2342 (Ch).

The case explore key issues around tracing and recovery of digital assets, constructive trusts and the status of the cryptocurrency as property.

Facts Mr D’Aloia, the Claimant, alleged that he was the victim of a sophisticated cryptocurrency scam. This was a complicated and multi-party claim. His claim against the Second Defendant (Binance) settled and his claim against the Fifth Defendant (Aux Cayes

be either the Claimant’s funds or their traceable proceeds (“Identifiable Cryptocurrency”), which the Claimant claimed was held by Bitkub on constructive trust.

Fintech) was struck out. Mr D’Aloia issued a separate application seeking summary judgment against a number of the other Defendants but the current case concerned the issues between Mr D’Aloia and the Sixth Defendant (Bitkub). Mr D’Aloia alleged that a fraud was perpetrated on him by persons unknown in which he was induced to hand over cryptocurrency (specifically Tether’s USDT) valued at around £2.5 million. Mr D’Aloia believed he had made investments through a trading platform with a reputable regulated US brokerage.

In reality, the site was a scam site alleged to have been operated by the First Defendants. After transferring the USDT to wallets controlled by the fraudsters, the funds were moved through a series of blockchain wallets before it was ultimately withdrawn by the Seventh Defendants.

Bitkub was one of the cryptocurrency exchanges with whom the Seventh Defendants held their accounts.

Legal Issues

It was alleged that some of the assets transferred by the Claimant pursuant to the fraud ended up in a Bitkub custodial wallet associated with a Ms. Hlangpan (“82e6 Wallet”).

The case illustrates the difficulties of tracing crypto fraud funds. Mr D’Aloia’s claim against Bitkub was ultimately unsuccessful. It is useful for clarifying the following issues:

Whilst Ms Hlangpan’s wallet contained approximately USDT 400,000, USDT 46,291 was argued to

1. The USDT which formed the subject matter of the Claimant’s claim against Bitkub was classified as neither a chose in action nor a chose in possession, but rather a different form of property which can be the

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ThoughtLeaders4 FIRE Magazine WOMEN IN FIRE SUPPLEMENT • ISSUE 23 subject of tracing and recovery and can constitute trust property in the same way as other property; 2. On the facts, it was possible for Mr D’Aloia’s USDT to be followed through mixed funds to the 82e6 wallet operated by Bitkub. It had not been possible to establish that the USDT in the 82e6 wallet actually belonged to Mr D’Aloia; 3. In terms of principles to be applied to tracing cryptocurrencies, the Court recognised the relevance of the ‘first in, first out’ (FIFO) principle clarifying how stolen assets were converted into currency. However, it cautioned that FIFO should not be the only tracing method used for cryptocurrencies. The Court acknowledged the complexity of modern money laundering techniques, a chronological sequence of events should not necessarily be adhered to, as a matter of law, but USDT was capable of being traced; 4. A constructive trust could potentially be imposed on Bitkub if assets from the fraudulent transaction could be traced to Bitkub and if it was shown that Bitkub received the assets with knowledge of the fraud or in circumstances where retaining them would be unjust. Whilst a trust could be imposed upon third parties who receive trust property and who are not bona fide purchasers for value without notice, Mr D’Aloia failed to demonstrate that Bitkub had received any of his funds, and it appeared that the funds had been paid away, leaving no property against which a proprietary claim could be asserted.

There was insufficient evidence to trace the funds. Moreover, no claim for knowing receipt had been advanced, making it unlikely that a constructive trust could be imposed on Bitkub in this case even if Mr D’Aloia had been able to prove his assets were held by Bitkub;

Comment The case illustrates the challenges that cyber-fraud victims face in attempting to recover stolen funds. It also shows the approach the Court will take in applying traditional principles - Constructive Trusts – to new digital assets.

Due diligence and robust security measures are essential when dealing with cryptocurrency transactions.

Without doubt, cases of fraud as detailed above are likely to increase as scammers become more and more sophisticated. Without clear evidence and analysis in support of the tracing of funds, the routes to recovery are difficult.

5. Whilst not required for the current case, the Court confirmed that the defence of bona fide purchaser for value without notice was recognised in respect to the transfer of cryptoassets.

The recipient of the cryptoassets must not have actual or constructive notice of any prior equitable claim or fraud at the time of acquiring the assets. In the present case had Bitkub actual notice of suspicious activity on the 82e6 wallet, there would have been no defence of bona fide purchaser available to Bitkub

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ThoughtLeaders4 FIRE Magazine WOMEN IN FIRE SUPPLEMENT • ISSUE 23

60 SECONDS WITH...

MARIA KENNEDY BARRISTER

TWENTY ESSEX

hat was your biggest W professional highlight of 2025? his was the first year that I have T volunteered for the Chancery Bar Litigants in Person Scheme (CLIPS).

Given the eclectic range of possible cases, I was lucky to be faced with an issue relating to freezing injunctions and insolvency, both of which are within my core practice areas. After 40 minutes with the client, I was required to go into court.

It was exciting to make submissions on the hoof and very gratifying to get an immediate result, when commercial cases can take years to go to trial. hat was the most challenging W issue you faced in 2025, and how did you tackle it? his year I have done a number of T cases involving loss of cryptocurrency. Cryptocurrency is easily dissipated but can require an expert to undertake a relatively complex tracing exercise before you can apply for an injunction. The key for me has been to issue the application and get before a judge as soon as possible. It is possible (and will likely be necessary in any case) to file updating evidence just before the hearing to take account of any further movements. ooking back, is there anything L you worked on in 2025 in which you felt particularly invested? t the beginning of the year, I A worked on an appeal which centred around whether a person could be held liable under legislation for acts carried out at a time when that person was not subject to that legislation. I felt particularly strongly about this because there seems to me to be an injustice in holding a person liable who could never have anticipated their liability.

hich area of law connected to W FIRE do you think most needs to be developed?

I am very grateful that the Law Commission is finally looking into codifying and simplifying the law on contempt of court. We need greater clarity on the similarities and differences between civil and criminal contempt. It is particularly relevant to fraud practitioners given the prevalence of freezing injunctions and receivership orders in our practice. hat has motivated you in your W work in 2025? ltimately, it is all about getting the U best result possible for your client. I have also enjoyed working with some excellent solicitors and barristers who have taught me a lot about how to drive a case forward and manage people effectively. hich development in FIRE this W year stood out to you the most? or me the most interesting and F relevant Supreme Court judgment this year has been Bilta (UK) Ltd (in liquidation) v Tradition Financial Services Ltd [2025] UKSC 18, both in terms of how it described the liability that third parties (i.e. not the directors or managers of a company) can have for fraudulent trading and in terms of how it dealt with the application of section 32 of the Limitation Act 1980 to companies who have been struck off and then restored to the register during the relevant period.

hat is the best life lesson you W have learned in 2025?

I nvest your time in people.

Sometimes it can be difficult to take your head out of a case for long enough to form relationships but, in my experience, it has always been worth it. I have several mentors and mentees and have found those relationships to be very rewarding. hat are you most looking W forward to professionally in 2026?

I have a four-month trial taking place in the Abu Dhabi Global Market Court from March 2026 for which I will have to go to Abu Dhabi. It will be exciting to experience litigation in a different jurisdiction and cultural environment. o you have any personal or D professional resolutions for 2026?

I would like to use technology more to improve how I work and live. 2026 will be the year when I stop carrying around notebooks.

I f you could sum up 2025 in one word, what would it be and why?

I t has been a year of learning.

Naturally, the law is always changing, and one luxury of this job is that you are encouraged to keep discovering it. Outside of work, speaking in Russian to my 2-yearold has forced me to master the names of the key dinosaurs, Christmas-related mythical creatures, and tree species in our local area. If that doesn’t bolster my professional offering, it’s hard to know what will.

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ThoughtLeaders4 FIRE Magazine WOMEN IN FIRE SUPPLEMENT • ISSUE 23

JERSEY INSOLVENCY – A YEAR IN REVIEW Authored by: Daisy Bovingdon (Senior Associate) - Collas Crill

Overview 2025 has seen innovation in Jersey, which trend promises to continue through into 2026.

The Jersey Courts have provided guidance on when ‘pooling’ of assets might be appropriate where a liquidator makes distributions to creditors; and made the first provisional liquidator appointment.

There is legislative reform on the horizon. We expect to see a tightening on the rules applicable to whether a creditor has standing to bring a windingup application.

In addition, we anticipate the introduction of an administration regime next year, and developments in the law of dégrèvement applicable to the enforcement of security over immovable property in the island. These topics are beyond the scope of this article, however these are important changes to look out for.

others as Joint Liquidators of Petroleum Pipe Group Limited (in liquidation) and others in liquidation [2025] JRC 144 (the Petroleum Pipe Companies) Following the just and equitable winding-up of the Petroleum Pipe Companies (the Companies), the Court has approved the distribution of some US$9.8 million to unsecured creditors achieved by way of subrogated claims as between the Companies.

Companies’ sole secured creditor. The guarantees operated in such a way that the Companies were joint and severally liable to LBG for one another’s obligations owed to LBG. LBG also had the ability to apply one company’s assets towards the discharge of another company’s obligations, which it had done.

Where assets of one company were applied to discharge the debt of another company owed to LBG, this created a subrogated claim by the discharging company against the discharged company.

The JL’s Proposed Model

Jersey Case Reviews And Insight

The Subrogation Issue As A Result Of Bank Guarantees

1. To pool or not? Lessons from The Representation of Stuart Arther Gardner and

The issue arose as a result of a series of corporate guarantees entered into by the Companies with Lloyds Banking Group (LBG). LBG was the

The joint liquidators (the JLs) considered it appropriate to apply the law of subrogation to determine how much cash should be allocated to each company before distributing to the unsecured creditors of each company.

The intention was to ensure that a fair dividend would be received by the unsecured creditors of each of the Companies.

Therefore, the methodology presented to the Court for approval, was to give each company that had discharged another company’s debt the credit for that discharge.

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ThoughtLeaders4 FIRE Magazine WOMEN IN FIRE SUPPLEMENT • ISSUE 23

lead to inequity between unsecured creditors.

The judgment also contains useful guidance:

The Law Of Subrogation In Jersey

• confirming the availability of Article 186A of the Companies Law to a liquidator in the context of a just and equitable winding-up. That article gives a liquidator the express ability to apply to the Court for the determination of a question arising in the context of a creditors’ winding-up.

In the absence of contemporary Jersey authorities dealing with subrogation, the Court traced the Jersey customary law to confirm, to the extent it was ever in doubt, that the law of subrogation exists in Jersey. The Court went on to approve the JL’s application of the ‘Cheltenham Principles’ to the question of subrogation in this case, which are set out in the English case of Cheltenham & Gloucester plc v Appleyard [2004] EWCA Civ 291.

• on the test to be applied to the exercise of the Court’s discretion to approve a liquidator’s decision.

The Court does not exercise its own discretion, rather it verifies that there was no bad faith and that the decision is not one which no reasonable liquidator would take (see Re Golden Sphinx Limited [2023] JRC 106). The following considerations assist the Court in determining whether sanction is appropriate:

The Jersey Court confirmed that the JLs were right to distinguish between secured and unsecured claims and were also entitled to determine a de minimis level after which no further reallocations are necessary, in this case in the sum of US$1,000.

- What is the liquidator’s decision?

- What are its merits and demerits?

- Does the liquidator consider the decision to be in the interests of creditors?

- Is the decision in the best interests of creditors having regard to the liquidator’s view?

- Is the decision taken in bad faith?

- Is the decision one which no reasonable liquidator would take?

The Alternative - Pooling The JLs could have considered pooling the Companies’ assets, which would be to treat all of the Companies’ assets as those of a single company for the purposes of distributions.

However, where the Court has previously exercised its discretion to sanction a decision by liquidators to pool assets in this way, a factor has been that it would have been disproportionate to work out the exact amounts owed to creditors from each company.

Where over US$9 million was at stake, the pooling option was not considered to be appropriate and would

• on The Bankruptcy (Netting, Contractual Subordination and NonPetition Provisions (Jersey) Law 2005, which applied to the corporate guaranties agreed between the Companies and LBG.

2. The RTI case – appointment of provisional liquidator This year saw what seems to be the first application to the Jersey Court for the appointment of a provisional liquidator, in the Representation of OWH SE i.L v RTI Limited [2025]JRC204 (RTI).

The Application Applications are brought under Article 157B of the Companies (Jersey) Law 1991 (as amended) (the Companies Law), and may be granted at any time after an application for a creditors’ winding-up is made under Article 157A. In the case of RTI, the Article 157B application was brought by a creditor, OWH SE i.L (OWH), in that context.

The Legal Principles As in England and Wales, the Jersey legislation imposes no limitations upon, nor does it prescribe, the criteria to be adopted by the court when considering an application for the appointment of a provisional liquidator.

In the absence of Jersey jurisprudence on the subject and given the similarity of the Jersey provisions to section 135 of the Insolvency Act 1986 applicable in England and Wales, the Court sought guidance from English law.

In so doing, the Jersey Court applied the principles clarified by the English Court of Appeal in Revenue and Customs Commissioners v Rochdale Drinks Distributors Limited [2011] EW Civ 1116 (Rochdale), at [75] – [77].

In the case of a creditor’s petition the threshold that the petitioner must cross before inviting the appointment of a provisional liquidator ought to be nothing less than a demonstration that he is likely to obtain a winding-up order on the hearing of the petition.

Whether or not the appointment is to be made is a matter that fits squarely within the Court’s discretion. Specifically, the Court will ask itself whether in the circumstances of the case it is right that a provisional liquidator should be appointed.

The Jersey Court granted the application placing RTI, a member of the ‘Rusal Group’ which is Russia’s second-largest aluminium producer, into provisional liquidation.

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ThoughtLeaders4 FIRE Magazine WOMEN IN FIRE SUPPLEMENT • ISSUE 23

3. Planned legislative intervention in light of HWA 555 Owners LLC v Redox plc SA and Maître Nicolas Thieltgen [2023]JCA085 (HWA 555)

The Decision In RTI In applying these principles, the Jersey Court emphasised that the appointment of a provisional liquidator is a serious step and therefore one that should not be undertaken lightly. In other words, there must be something significant which justifies the appointment of a provisional liquidator.

The Jersey Court made the appointment for two primary reasons: 1. investigations needed to be undertaken as a matter of urgency in relation to the repayment of a loan in the sum of US$166 million, and the paying away of funds remitted, particularly given the speed at which those transactions were made. The Court accepted the submission on behalf of OWH that to wait until matters relating to the creditors’ winding-up application had been resolved, would likely mean that any trail would have ‘gone cold’; and

I last wrote about this case when I co-authored an article in TL4 FIRE’s Issue 15 magazine back in 2023, which addressed the point at which a creditor has standing to bring a winding-up application in Jersey.

In short, HWA 555 held, by majority, that it is not an absolute rule that a creditor with an unliquidated claim is unable to apply to the Jersey Court to wind up a company.

HWA 555 was the first occasion that the Jersey Court of Appeal was called upon to consider the procedure for creditors wishing to apply to the Court to wind up a Jersey company, as introduced by the then relatively new Article 157A of the Companies (Jersey) Law 1991 (Article 157A).

The Court held that the ordinary and natural construction of Article 157A permits a winding-up application to be made by both a creditor with a liquidated claim and by a creditor with a contingent or unliquidated claim against the debtor, as long as the claim can be demonstrated to be of a value exceeding £3,000.

The Proposed Amendments The amendments proposed, if implemented, are likely to have the effect of reversing the HWA 555 decision. What this means, is that in order to have standing to bring a winding-up application, a creditor will likely need to demonstrate that they have a valid claim against the company for a liquidated sum.

Where the value of the debt is unclear the creditors will be forced to simply prove in a winding-up under the Companies Law, by making an estimate of the value of their claim.

If brought into force, this will essentially re-instate what was the widely accepted interpretation of Article 157A, preHWA555.

Any other interpretation of Article 157A would, in Matthew JA’s words,

2. the need for the provisional liquidators to be in place in order to preserve assets.

The Jersey Court made bespoke consequential orders imposing limitations on the powers of the provisional liquidators.

That included preserving the rights of the directors of RTI to pursue the appeal against enforcement of an arbitral award in Jersey; to challenge the appointment of the provisional liquidators; and for the protection of privileged material.

The provisional liquidators went on to obtain recognition in England and Wales, by way of letters of request obtained from the Jersey Court.

‘penalise the unliquidated creditor of an insolvent company who might have to sit out the debtor becoming increasingly mired in debt until a liquidated creditor decides to pull the trigger and make the application’.

The Court cited, by analogy, actions routinely before the Jersey courts for general damages, where liability and quantum are disposed of separately Wolffe JA, dissenting, did highlight that the Jersey courts have consistently continued to restrict the category of creditors able to make the application to those with liquidated claims. In his view, an unquantified award of damages is insufficient.

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ThoughtLeaders4 FIRE Magazine WOMEN IN FIRE SUPPLEMENT • ISSUE 23

60 SECONDS WITH...

LYNN YIN LEGAL DIRECTOR

ASSERSON

hat was your biggest W professional highlight of 2025?

025 has been a huge 2 professional year for me and it’s absolutely flown past. As well as fighting tooth and nail for clients, making new law and achieving some great award listings, my professional highlight of the year was to save a client business in circumstances where conventional legal wisdom advised they had no legal recourse. We were able to have significant positive real world impact, preserving critical employment and infrastructure in a Northern town. hich development in Fraud, W Insolvency, Asset Recovery & Enforcement this year stood out to you the most?

I have to say one of the standout developments for me happened very recently outside of my own jurisdiction, in Singapore.

Singapore, in order to tackle fraud, has introduced compulsory strikes of the cane as punishment for scammers!

Closer to home, the English jurisdiction continues to develop its approach to tackling fraud and I have seen a lot more crossover in my civil practice with criminal matters, necessitating new strategies and different concerns in civil litigation. hat was the most challenging W issue you faced in 2025, and how did you tackle it? oing into mediation with G absolutely no leverage, barely any merits, a very difficult case and an absolute necessity for settlement.

It was an extremely intense and focussed mediation, based

heavily on pure negotiation tactics, psychology and some fast thinking. Highly challenging but we managed to achieve great results! ooking back, which case, deal, L or project gave you the greatest sense of achievement?

I had the unfortunate recent experience of being stuck in arbitration against ChatGPT. It became obvious, very quickly, that the Defendants were wholly reliant on the plausible nonsense produced by ChatGPT and the litigation was an experience in frustration. There was a great deal of personal satisfaction in being able to wholly defeat ChatGPT as a litigation opponent and the extra comfort of knowing human experience and expertise in law cannot be matched by generative AI! hat trend in FIRE are you glad W to see emerge this year?

The improved clarity of enforcing English Judgments abroad brought by the coming into force of the Hague Judgments Convention is very welcome for practitioners dealing with multiple jurisdictions! hich lesson from 2025 do you W think will be most valuable going into 2026?

hat are you most looking W forward to professionally in 2026? rowth of my Chinese practice!

G It’s been extremely interesting to watch changes in Chinese attitudes to litigation over the past decade and I’m excited by the recent increase in litigation queries from large Chinese companies. ny personal or professional A resolutions for 2026? eep my balance. 2026 looks to K be a big growth year for me and my top priority is to be able to maintain my career and ambitions while still spending quality time with my family and being able to remain hands on with my toddler’s pumpkin carvings, costumes and the host of dizzying events for a 4 year old! Keeping up with the latest video game releases and trends would be an added bonus!

I f you could sum up 2025 in one word, what would it be and why? ventful! Rocked by global and E political events, novel and unexpected developments in my cases. It’s a year which demonstrated to me the importance of staying quick on my toes!

he psychology of settlement and T the impact of disdain on a relationship – something I’ve had to delve into this year which will now stay with me forever!

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ThoughtLeaders4 FIRE Magazine WOMEN IN FIRE SUPPLEMENT • ISSUE 23

REAL ESTATE SEIZURE IN FRANCE: A STRATEGIC TOOL FOR CREDITORS Authored by: Laetita Amy (Mediator) - ALTER Eurl

In France, real estate seizure (“saisie immobilière”) remains one of the most powerful enforcement mechanisms available to creditors.

Though often perceived as complex and demanding, it is a decisive legal instrument to secure repayment when the debtor owns valuable real property.

Far from being a relic of traditional enforcement, it has evolved into a modern, judicially supervised process — one that requires precision, patience, and strategic use. As financial institutions, investors, and asset managers continue to face rising default risks in the postcrisis environment, understanding this mechanism has become essential.

Under French law, real estate seizure allows a creditor holding an enforceable title — such as a court judgment, a notarial deed, or an arbitral award granted exequatur — to compel the sale of a debtor’s property. The procedure is strictly regulated by the French Code of Civil Enforcement Procedures and conducted under the supervision of the Judge of Enforcement Matters (JEX).

When the property belongs to a foreign State, jurisdiction lies with the JEX of the Paris Civil High Court, which must first authorise the measure. The process unfolds in three main stages:

authorise an amicable sale (at the debtor’s request) or to order a forced judicial auction. If an amicable sale is allowed, the debtor is granted a couple of months — to sell the property under judicial supervision.

a) Formal demand for payment (“commandement de payer valant saisie”)

c) Auction of the property

The judicial enforcement officer serves a formal demand on the debtor, requiring payment within eight days. If unpaid, the act must be registered with the Land Registry within two months, freezing the property and preventing any transfer. The debtor is then summoned by the pursuing creditor to appear before the court.

b) Orientation hearing before the judge

The Legal Framework and Process

At this stage, the JEX examines the validity of the procedure, rules on any dispute, and decides whether to

The debtor cannot sell below the price set by the judge, and a followup hearing ensures all conditions imposed by the JEX are met.

If no amicable sale occurs — either because the deadline lapses or the JEX refuses the request — the property is sold by public auction. Proceeds are distributed among creditors according to their rank and existing mortgages. The auction itself occurs after a statutory period allowing publicity and property inspection.

On average, it takes around a year and a half to secure a judgment ordering the sale (depending on how the proceedings are being disputed).

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ThoughtLeaders4 FIRE Magazine WOMEN IN FIRE SUPPLEMENT • ISSUE 23 This ruling may itself be appealed.

Creditors often wait for the appellate court to confirm the JEX’s decision before proceeding with the auction, to minimise their potential liability. While an appeal does not automatically suspend enforcement, a stay of execution may be granted by the appellate court. A further appeal before the French Supreme Court (“Cour de cassation”) may also be lodged, but it does not have a suspensive effect. The creditor must then decide whether to await the Supreme Court’s ruling, noting that these proceedings can significantly delay final recovery, amongst other procedural questions.

d) Possibility of a negotiated outcome

local counsel and judicial enforcement specialists.

Despite its formalism, the procedure allows for amicable resolution. At the orientation hearing, the debtor may request authorisation to sell amicably his property — often at a better price — or to negotiate a repayment plan.

Best Practices for Creditors a) Conduct thorough due diligence

Drawbacks and Limitations a) Procedural complexity

Advantages of Real Estate Seizure a) A powerful leverage tool Serving a commandement de payer demonstrates the creditor’s determination.

Publication of the seizure in the Land Registry often triggers settlement or restructuring discussions, as debtors seek to avoid losing their property. The procedure is particularly effective in real estate-backed financings, development loans, and crowdfunding investments, and it also provides a practical test of the debtor’s solvency.

b) Legal certainty and transparency Each step is supervised by the JEX, ensuring procedural fairness and predictability. This oversight reinforces confidence in the system, particularly for foreign investors unfamiliar with French civil law enforcement.

c) Protection of creditor priority Proceeds from the sale are distributed strictly according to legal rank, ensuring equitable treatment among secured creditors. Unlike informal enforcement methods, no hidden arrangements or side payments can alter this hierarchy.

Payment is made under the supervision of the JEX, guaranteeing transparency.

Note that the distribution phase may also give rise to challenges.

Real estate seizure is highly formalistic.

Each procedural act — from service to publication — is subject to strict deadlines, and any irregularity can nullify the entire process. The creditor’s legal precision must be absolute.

Verify ownership, mortgages, and prior encumbrances via a Land Registry extract.

If the debtor is a foreign State, prior JEX authorisation is required to demonstrate that the property is not used for sovereign or non-commercial public purposes.

b) Secure a valid enforceable title Only a judgment, notarial deed, or recognised foreign award can justify a seizure. In cross-border cases, anticipate translation, legalisation, and recognition issues.

c) Engage experienced local professionals

b) Cost and duration Financial

Coordination between a specialised lawyer and judicial enforcement officer is essential to comply with formalities and avoid procedural errors.

Between enforcement officer fees, publicity expenses, lawyers’ fees, and court charges, total costs can be substantial. The process is also timeconsuming, which may conflict with the need for rapid recovery in distresseddebt management.

d) Assess cost versus benefit

c) Lower auction values

e) Use the process as leverage

Judicial auctions often result in belowmarket prices, due to limited buyer participation and the stigma of forced sales. Recovery rates may therefore be reduced, especially for occupied or complex properties.

The psychological impact of a registered seizure can prompt the debtor to negotiate, even when the ultimate goal is settlement.

d) Limited cross-border familiarity Foreign lenders sometimes perceive the French system as opaque or overly procedural, particularly compared to common law enforcement. Effective execution requires coordination with

Weigh expected recovery against total costs. If the property is heavily encumbered or of uncertain value, alternative enforcement methods (bank account or receivable seizure) may be preferable.

f) Monitor deadlines meticulously Missing the two-month registration deadline nullifies the seizure. Maintaining a procedural calendar is indispensable.

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ThoughtLeaders4 FIRE Magazine WOMEN IN FIRE SUPPLEMENT • ISSUE 23

g) Keep alternative options open When the debtor is solvent but temporarily illiquid, structured repayment plans or mediation may yield better outcomes than a forced sale.

In such cases, creditors often combine real estate seizure with other measures, such as bank account or receivable attachments, to create a layered recovery strategy.

Strategic Use Cases Real estate seizure is most effective when: • the debtor owns high-value property with limited encumbrances; • the debt is secured by a mortgage or other real estate guarantees; • prior enforcement actions have failed; or • the creditor seeks maximum leverage.

(Shaded box) It is less appropriate when: • property value is uncertain; • several secured creditors have priority; or • rapid liquidity is required.

pragmatism. Used strategically, it can lead to full recovery or a favourable settlement. Used hastily, it may result in delays, procedural lapses, and unnecessary costs. In today’s tightening credit environment, real estate seizure exemplifies the blend of legal rigor and strategic foresight required in modern asset recovery — and continues to shape the practice of those operating at the intersection of law, finance, and enforcement in France.

Conclusion: Power through Precision Real estate seizure under French law remains a powerful yet exacting tool.

Its success depends not only on the property’s value but also on the creditor’s ability to navigate procedural rules with precision and timing. For financial institutions, lenders, and investors, it should form part of a broader recovery strategy, balancing judicial enforcement with negotiation and commercial

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ThoughtLeaders4 FIRE Magazine WOMEN IN FIRE SUPPLEMENT • ISSUE 23

60 SECONDS WITH...

DAISY BOVINGDON SENIOR ASSOCIATE

COLLAS CRILL

hat would you be doing if you W weren’t in this profession?

I might well still be working as a musician. I originally trained as violinist. After graduating from what is now the Royal Conservatoire of Scotland I spent a number of years teaching and playing music in the Highlands of Scotland.

Had I not been lured back to the big smoke of the city to complete firstly the LLB at the University of Strathclyde and then the Diploma in Legal Practice at the University of Edinburgh, my career focus might well have remained music. hat is one of your greatest W work-related achievements?

I always enjoy, and gain a lot of satisfaction from, a successful mediation. As the old adage goes, if all parties can walk away feeling only a little pain, then they have probably achieved a good settlement.

I had one such positive experience recently, where warring partners came together and achieved a settlement on the day of the mediation. My impression was that not only my client, but all parties, felt that they had been heard. There was certainly the feeling of relief in the room at resolution having been reached, and settlement having been signed on the day.

Many cases require the formality or pressure of the Court process, or truly need third party adjudication. However, the reality is that resolution is better achieved where the parties retain control and mould the decision for themselves.

As you can probably tell, I am very much an advocate of the process. hat personality trait do you most W attribute to your success?

Honesty, integrity, and a commitment to treating others well… and being hard working, which doesn’t sound very interesting, however that bit is about delivering results for the client, on time.

ou’ve been granted a ticket to Y another country of your choice.

Where are you going and why?

To the north of Sweden. Up into the Arctic Circle where the snow falls silently, before the winds howl and the reindeer form a cyclone. I love wild places with few people. I would also like to learn to cross-country ski one day. hat do you see as the most W significant trend in your practice in a year’s time?

2026 should see the introduction of an administration process in Jersey, akin to what has been available in jurisdictions across the Channel in the UK for many years. The absence of this process in Jersey is a bit of an anomaly, and its introduction feels long overdue to many in the profession. It will be interesting to see the take-up, assuming the legislative change is brought into force. ead or alive, which famous person D would you most like to have dinner with, and why?

The American novelist, travel writer, journalist and war correspondent Martha Gellhorn (1908 – 1998). She explored the world and recorded what she witnessed over a career spanning six decades. All long before Lonely Planet – do you remember the fantastic guide books? - let alone the internet.

Martha Gellhorn was bold and impressive, and led a fascinating life.

She was the only woman to land at Normandy On D-Day, June 6, 1944, having stowed away on a hospital ship. She was there when the Allies liberated Dachau. She reported on the Nürnberg trials, and the Vietnam War.

hat’s the most exciting thing you W have done in your career?

I had the privilege of spending two years in the British Virgin Islands, as a member of Collas Crill’s BVI team.

The experience gave me the opportunity to be involved in fascinating, complex cross border litigation. During free time I travelled to remote islands, walked along deserted beaches and trekked across beautiful landscapes. A real career highlight. hat motivates you most about W your work? eally listening to clients and R delivering the right result for each client. Being a strong, supportive colleague to those around me. And always improving my own skills set as a lawyer and professional. hat does the perfect weekend look W like? amily time, incorporating a healthy F blend of social time and quiet time. hat’s the most important quote W you’ve heard that you have adopted to your personal or professional life?

The German playwright Bertolt Brecht said, “You can make a fresh start with your last breath”.

Every day is a new day. For me.

For you. For our clients. For our colleagues. hat is the one thing you could not W live without?

My family and friends.

My only hesitation in meeting Martha for dinner is that she would find me fairly dull company!

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ThoughtLeaders4 FIRE Magazine WOMEN IN FIRE SUPPLEMENT • ISSUE 23

THE NEW ERA OF CIVIL LITIGATION IN CYPRUS

Authored by: Antonia Argyrou (Barrister-at-Law) – Argyrou Legal

Two years after the introduction of the Civil Procedure Rules (CPRs) of 2023, Cyprus continues to experience one of the most significant transformations in its judicial history.

are resolved more efficiently and fairly. More importantly, the reforms are intended not merely to amend procedural rules but to reshape the very mindset of litigation in Cyprus, shifting the focus away from technical procedural battles and toward resolving disputes on their substantive merits, with an emphasis on collaboration, fairness, and timely justice.

These reforms have undoubtedly modernised the administration of justice, aiming to deliver faster, fairer and more efficient outcomes while harmonising domestic procedure with modern international standards.

At the heart of this transformation lies the principle of proportionality, which seeks to ensure that the time, cost, and effort invested in each case are commensurate with its complexity and importance, ultimately fostering a culture in which lawyers act as problemsolvers rather than procedural tacticians and in which the courts operate with greater efficiency, transparency, and public confidence, reinforcing Cyprus’s reputation as an attractive venue for international business and dispute resolution.

From Procedure to Substance The new CPRs have introduced a comprehensive framework designed to streamline litigation through active case management and greater judicial oversight, aiming to reduce unnecessary delays, promote cooperation between parties, and encourage early settlement wherever possible, thereby ensuring that disputes

Key Procedural Innovations The Civil Procedure Rules of 2023 introduce a series of procedural innovations designed to make litigation in Cyprus more efficient, transparent, and outcome-focused. For example: • Active Case Management: Judges now have enhanced powers to set timetables, limit issues in dispute, and direct how evidence is presented.

• Electronic Filing and Communication: The system embraces digital tools to speed up submissions and notifications.

• Pre-trial Conduct: Parties are expected to exchange information earlier, narrowing the issues before reaching court.

• Alternative Dispute Resolution (ADR): The new rules promote mediation and other ADR methods as preferred paths before full trial.

• Streamlined Evidence Procedures: Rules around witness statements and expert reports have been modernized to increase clarity and reduce disputes.

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ThoughtLeaders4 FIRE Magazine WOMEN IN FIRE SUPPLEMENT • ISSUE 23

A Cultural Shift Perhaps more than any single rule, the CPRs aim to change the mindset of litigation in Cyprus. The focus is now on collaboration, fairness, and timely justice — moving away from technical procedural battles and toward resolving disputes on their merits, a shift which encourages lawyers to act as problem-solvers rather than procedural tacticians.

Looking Ahead The adoption of the Civil Procedure Rules of 2023 marks Cyprus’ firm commitment to aligning its judicial system with those of other modern jurisdictions. This reform represents a decisive step toward enhancing public confidence in the Courts and reinforcing Cyprus’ position as an attractive venue for international business and dispute resolution. Although the transition period has presented challenges for practitioners, the long-term benefits greater efficiency, predictability, and transparency - are set to transform litigation in Cyprus for the better.

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ThoughtLeaders4 FIRE Magazine WOMEN IN FIRE SUPPLEMENT • ISSUE 23

THE RISING THREAT OF AI-GENERATED FAKE EVIDENCE IN LITIGATION

Authored by: Teona Phatsatsia (Associate) – LK Law

Introduction

• Fake emails or chat logs

With the continued advancement of the legal practice, one major challenge that we currently face is the development of AI-generated fake evidence in the form of fake emails, deepfakes, and hallucinated case law. In civil cases involving fraud where credibility and documentation become paramount, this can irreversibly undermine the process.

Not only can it affect the outcome of a single case, but also the credibility of the justice system itself.

• Backdated or forged contracts

This article explores how AI-generated evidence can arise in litigation, recent English judgments and regulatory observations, professional and ethical duties, and measures civil fraud practitioners could take to detect and avoid misuse.

• Deepfake audio/video, claiming to show meetings, instructions, or agreements • AI-generated expert reports, copying the tone and style of real ones • Hallucinated legal authorities, cited in submissions or pleadings The higher the quality of deepfakes and AI-generated fake documents, the more difficult they become to spot without proper forensic instruments and training.

1

[2025] EWHC 1383 (Admin)

2

[2025] EWHC 1383 (Admin)

In this case, the claimant cited five authorities, including a Court of Appeal decision which did not exist. When the defendant asked for copies, none could be produced. The legal team regarded it as a minor mistake, but Mr Justice Ritchie called it “appalling professional misbehaviour”, resulting in an order for wasted costs and referral to the SRA and BSB.

Al-Haroun v Qatar National Bank2 In a related matter, 45 citations were submitted of which 18 were fictitious or misquoted. Dame Victoria Sharp, sitting with Mr Justice Johnson, issued a clear warning: “Lawyers must not rely on generative AI as a substitute for verification… Knowingly or recklessly placing false material before the court may amount to contempt or even perverting the course of justice.”

How is AI-Generated Evidence Emerging in Fraud Cases Fraud cases are especially vulnerable to misuse of generative AI tools. Some common examples include:

Ayinde v London Borough of Haringey1

Judicial Response: Ayinde, Al-Haroun, and the 2025 High Court Warnings

These judgments make it clear that verification is lawyer’s responsibility and relying on AI without appropriate oversight can present serious legal and professional risk.

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ThoughtLeaders4 FIRE Magazine WOMEN IN FIRE SUPPLEMENT • ISSUE 23

Professional Duties and Regulatory Expectations Duty Not to Mislead the Court Under Rule 1.4 of the SRA Code of Conduct, solicitors must not mislead the court by act or omission. Failing to verify AI outputs, even if accidental, may constitute a breach.

Acting with Integrity SRA Principle 5 requires solicitors to act with integrity, which includes the duty to verify evidence and challenge suspicious material.

SRA Guidance on AI (2023– 2025) AI tools are powerful, but us, lawyers remain responsible for all outputs. In its 2023 Risk Outlook – AI report, the SRA flagged major risks: hallucinations, bias, errors, and reputational damage.

It cautioned that while there are opportunities in generative tools, lawyers must remain alert to inaccuracy and data security risk.3

Practical Toolkit for Litigators in Fraud Cases Initial Scan • Flag documents that appear late, lack metadata, or use strange formatting • Be wary of language that is too perfect or includes odd phrases • Verify third-party emails

• Misrepresentation

Forensic Verification

• Breach of duty to the court

• Request native files, not just PDFs

• Negligence

• Analyse metadata

In fraud litigation especially, AIgenerated timelines or summaries can easily introduce factual inaccuracies or contradictions. Without rigorous crosschecking, such errors can damage credibility, attract costs orders, or worse.

• For audio/video documents verify digital signatures, voice or visual inconsistencies

Corroboration • Cross-check documents with thirdparty records or backups • Demand originals and use a “notice to prove” if necessary

Litigation Tactics

Wasted Costs, Contempt, and Criminal Liability

• Use cross-examination to test and discredit inconsistencies

Knowingly or recklessly presenting false materials can result in serious consequences, including:

• Seek court directions to exclude unauthenticated documents

• Referral to regulator • Initiation of contempt proceedings • In severe cases referral to the police for a criminal investigation

Even the most diligent lawyers can be misled by tools that hallucinate.

Recent studies found hallucination rates between 17% and 33%, including in retrieval-augmented legal AI tools.6 Imagine relying on AI for drafting a skeleton argument, only to discover that a cited authority does not exist. This might amount to:

In 2025, the SRA authorised Garfield.

Law, the UK’s first AI-driven law firm, but emphasised the need for human oversight and proper safeguards.4

• Strike out and costs sanctions

Risks of Inadvertent Use

• File targeted Request for Disclosure and Request for Further Information

Internal Practices • Implement established procedures for AI use • Record prompts, outputs, and edits from AI

• Admonishment

• Train employees to challenge AIgenerated content before it gets to court

These are the risks emphasised by Dame Sharp in her recent remarks.5

Using AI Safely • Always verify citations and case law from AI sources

Conclusion AI-generated and AI-manufactured evidence is no longer a future concern, it is already influencing court rulings and prompting regulatory action.

For fraud litigators, the implications are immediate. We must: • Approach all digital evidence with forensic-level scepticism • Conduct independent verification of anything AI-assisted • Maintain internal controls over tool usage • Avoid shortcuts that compromise professional duties The Ayinde and Al-Haroun decisions, along with the High Court’s guidance, send a clear message: lawyers remain fully responsible for their work, regardless of AI involvement. Courts expect careful and thorough verification.

In an era where false information can be produced quickly and easily, protecting the integrity of the legal process is core professional obligation.

• Use AI for drafting only, not as a substitute for legal research • Consider voluntary footnote disclosures: e.g. “assisted by AI”

3 https://www.sra.org.uk/sra/research-publications/artificial-intelligence-legal-market/ 4 https://www.sra.org.uk/news/news/press/garfield-ai-authorised/ 5 [2025] EWHC 1383 (Admin) 6 Magesh, V., Surani, F., Dahl, M., Suzgun, M., Manning, C.D. and Ho, D.E. (2025), Hallucination-Free? Assessing the Reliability of Leading AI Legal Research Tools. J Empir Leg Stud, 22: 216-242. https://doi.org/10.1111/jels.12413

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ThoughtLeaders4 FIRE Magazine WOMEN IN FIRE SUPPLEMENT • ISSUE 23

EVOLUTION OF THE FREEZING INJUNCTION: MAREVA TO MODERNITY Authored by: Sarah Murray (Partner) & Ishita Mishra (Associate) - Fox Williams The freezing injunction (also known as a Mareva injunction, named for one of the cases that created it) is a staple in English law. It is easy to forget that it is a relatively new creation - prior to 1975 it did not exist. This meant that Claimants with cast-iron claims could face pyrrhic victories when Defendants took steps to dissipate their assets before judgment.

This article looks at the birth of the freezing injunction, its troubled teenage years, its maturity into the remedy we have today and what might lie ahead.

In 1975 Harold Wilson was Prime Minister, Margaret Thatcher became leader of the Conservative party and Lord Denning was Master of the Rolls.

Two cases came before the Court of Appeal in close succession that summer - Nippon Yusen Kaisha v Karageorgis [1975] 1 WLR 1093 and Mareva Compania Naviera SA v International Bulkcarriers SA [1980] 1 All ER 213.

Both cases concerned Claimant ship owners who had chartered their vessels to the Respondents but not been paid.

Both Defendants had money in bank accounts in England and neither had any clear defence to the claims brought.

The Claimants were concerned that if the court did not act, the Defendants would withdraw the money held in London and they would never be able to recover the sums due.

Lord Denning agreed with the Claimants’ concerns. Whilst acknowledging that such an injunction had never been granted before, in Nippon (1095) he said that

“…the time has come when we should revise our practice.”

In Mareva which followed shortly after, he said that the court had a wide general power to grant injunctions with a sole qualification that the Claimant must have “a legal or equitable right” to protect. For a creditor who has a prima facie entitlement to a debt and is faced with a debtor who might try to dispose of assets, the court had jurisdiction to grant an interlocutory injunction to prevent the debtor from doing so. His view was that if debtors had an issue

with the order or thought it had been wrongly granted, they could apply to discharge the injunction when they became aware of it.

The ability to apply for this new type of order was very popular and led to a deluge of applications by Claimants concerned by dissipation of assets and keen to secure an early tactical advantage against their opponent. The jurisdiction developed rapidly with the courts extending it to: • Respondents outside the jurisdiction where assets were within the jurisdiction; • Assets outside the jurisdiction where the Respondents were within the jurisdiction; • Domestic Respondents where a risk of dissipation could be shown; and • Companies and individuals associated with the Respondent to guard against attempts to frustrate justice by shuffling assets through a complicated corporate web.

The early years were Claimant friendly with the courts adopting Lord Denning’s view that a Respondent who had been unfairly treated need only apply to have the order discharged. However, as time went on and orders were sought in more complex cases, some of the protections for Respondents that 60

ThoughtLeaders4 FIRE Magazine WOMEN IN FIRE SUPPLEMENT • ISSUE 23 we are used to today were introduced – such as the cross undertaking in damages, the ability to use frozen assets for day to day expenditure and the high standard required to discharge the burden of full and frank disclosure resting on the Claimant. However, 50 years on there remains an uneasy tension between the court’s approach of using the inherent flexibility of the jurisdiction to assist Claimants alleging fraud, and the ability of lawyers to properly and fully advise Respondents on the scope of the guardrails around the jurisdiction which are intended to protect their interests.

director and shareholder. Whether this was an intended consequence on the part of the court, or one that simply flows from the interpretation is an interesting debate.

This is further illustrated by the Solodchenko decision [2011] 1 WLR 888 which held that the court can now grant a freezing injunction over trust assets held by a Respondent, even when he is only a nominee or trustee rather than a beneficial owner. Whilst such an order will only be granted where there are grounds for believing that such a trust is a sham, this decision extends the jurisdiction further than was the case under the previous model wording

(for example in Federal Bank of the Middle East v Hadkinson [2000] 1 WLR 1695).

The broad wording contained in the latest Model Form relating to the definition of assets neatly illustrates this point. It provides that a freezing injunction will apply to all the Respondent’s assets, whether they are in the name of the Respondent, are solely or jointly owned, or the Respondent is interested in them legally, beneficially “or otherwise”. They include any asset that the Respondent has the power directly or indirectly to dispose of or deal with.

A Respondent is said to have this power if a third party holds or controls the asset in accordance with his direct or indirect instructions.

In JSC BTA Bank v Ablayazov [2015] UKSC 64 the Supreme Court held that this definition was to be interpreted expansively and included loan facilities that the Respondent could draw down on, even if by doing so he incurred a liability to repay such loans. This instinctively feels like a surprising decision and means that lawyers advising Respondents need to make clear that they should be careful when availing themselves of lines of credit otherwise open to them. Some commentators have suggested that it also opens the door for reconsideration of the principle set out in the Lakatamia Shipping case [2014] EWCA Civ 636 – namely that a freezing injunction does not extend to the assets of a company where the Respondent is the sole

At 50 years old the freezing injunction shows no sign of slowing down or limiting its scope. Most significantly there is a line of case law relating to digital assets where the jurisdiction has been extended to persons unknown and orders served by increasingly novel methods such as NFT drops.

The flexibility of the jurisdiction is what ensures its popularity and success – its constant evolution means it will adapt to novel situations we have not yet even dreamt of (much as Lord Denning might be taken aback to hear about its application to cryptocurrency). Any threat to its existence comes from external sources – Brexit has taken away the ability to enforce interim injunctive relief (including freezing injunctions) within the EU, and the continued success of the jurisdiction depends on lawyers and clients wanting, and being able, to establish that assets and Respondents are subject to the jurisdiction of the English courts. There is no serious doubt that the freezing injunction will one day celebrate its centenary, but whether it will be seen with the same reverence as it has enjoyed for the past 50 years is another question entirely.

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ThoughtLeaders4 FIRE Magazine • ISSUE 23

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