FHR European: the Supreme Court on bribes and constructive trusts
Rory Cochrane reviewed the Supreme Court's decision in European Ventures LLP and others v Cedar Capital Partners LLC FHR [2014] UKSC 45, [2014] 4 All ER 79 for the New Law Journal, edition 17 October 2014.
The judgment finally resolved the much debated question of whether a fiduciary, in this case a purchaser’s agent, holds a bribe or secret commission received in breach of fiduciary obligation, on trust for the beneficiary.
In addition, he looks into the Supreme Court's explanation behind the most controversial aspect of the decision: if the beneficiary has a proprietary claim in respect of a bribe (and, accordingly, to the traceable proceeds), as opposed to a merely personal claim, then that claim will rank ahead of the claims of any unsecured creditors of the defaulting fiduciary.
The outcome is of interest to commercial litigators in general and to fraud and insolvency lawyers in particular. Employment lawyers will also be interested in its application in the context of bribed employees and agents.
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