The Court of Appeal ruled that losing proprietary rights under foreign law could invalidate personal claims against third party recipients of trust assets.

By Daniel Smith and Anna James

On 27 January 2022, the UK Court of Appeal unanimously dismissed an appeal brought by Saad Investments Company Limited (SICL) and its liquidators[1]. The court refused to overturn a lower court’s decision in January 2021 to dismiss SICL’s long-running claim that Saudi National Bank (SNB, formerly, Samba Financial Group) was liable in “knowing receipt” of trust property in September 2009, namely shares in five Saudi Arabian banks. By the time of the judgment the shares had a market value in excess of £320 million.

In dismissing the appeal, the court clarified important issues relating to the relevance of equitable proprietary interests in trust assets, how those interests depend on a careful analysis of the law where the assets are located (in this case, Saudi Arabian law), and how the appellate courts should treat a trial judge’s assessment of expert evidence on foreign law.

The decision is of significant interest to anyone dealing with assets subject to English law trusts, where those assets are located outside the UK, particularly in countries with markedly different legal systems and/or where title is determined by registration.


SICL and its liquidators (Claimants) brought proceedings in the English court against SNB in 2013, alleging that businessman Maan Al-Sanea, had held certain Saudi Arabian shares (Disputed Securities) on trust for SICL under trusts governed by Cayman law, and that Al-Sanea had transferred those shares to SNB in breach of trust. Having first argued that the transfer was void under Section 127 of the Insolvency Act 1986 (a claim the UK Supreme Court struck out in 2017[2]), the Claimants then alleged that SNB was a knowing recipient of trust property, and claimed their value from SNB as a personal remedy.

A debarring order against SNB in April 2020, based on SNB’s refusal to give disclosure on the basis that it would breach Saudi Arabian regulatory law, resulted in striking out parts of SNB’s defence. Consequently, SNB was unable to contest the existence or governing law of the trust, its receipt of the assets, or that it was aware the assets were subject to a trust. However, SNB was permitted to contest that a claim was nevertheless unavailable under English law. The issues at trial were therefore limited to the following:

  1. The English Law Issue: if English law (assumed to be the same as Cayman law for all relevant purposes) is the governing law of the claim, should the claim as pleaded fail?
  2. The Saudi Law Issue: if Saudi Arabian law is the governing law of the transfer of the shares, does it extinguish SICL’s rights in the Disputed Securities even if SNB had knowledge of SICL’s interest?
  3. The Valuation Law Issue: should the value of the Disputed Securities at the date of the transfer and at the date of trial be discounted from the market value to reflect the size of the holdings, i.e., a “block discount”?

The English Law Issue

A trust beneficiary enjoys a number of rights under English law. It can claim against its trustee for breach of trust, including claims for breach of duty, and claims to restore the trust assets. It can also claim against third-party recipients, including proprietary claims to reclaim trust assets in the third party’s hands, and personal claims in “knowing receipt” for the value of the trust property — claims which (importantly) do not depend on the continuing existence of trust assets in the third party’s hands, but on “unconscionability” at the moment of receipt. This last claim was the one Claimants made against SNB.

Notably, a trust beneficiary can also bring a claim in “dishonest assistance”, which does not depend on the third party receiving trust assets at all, but requires proving dishonesty. The Claimants had chosen to bring no such claim against SNB.

The Claimants argued that when dealing with a personal claim in knowing receipt, SICL needed only to show that, as a matter of English law, it had a proprietary interest in the Disputed Securities prior to and at the time of SNB’s receipt. The Claimants accepted that SICL’s proprietary claim to the Disputed Securities could be extinguished by the transfer if the transfer gave SNB good title to the shares under Saudi Arabian law. However, they argued that this issue was irrelevant to the English law personal claim in knowing receipt, which did not depend on a continuing proprietary interest, but only on unconscionability and the English court’s jurisdiction over the recipient.

SNB argued that a personal claim in knowing receipt still required the beneficiary to have a continuing proprietary interest in the shares following the transfer, because the basis of the claim was essentially a custodial liability, not a fault-based liability. As such, if under Saudi Arabian law (the lex situs of the shares and therefore the law governing the effect of the transfer) SNB took the Disputed Securities free of any interest by SICL, then SNB had no liability in knowing receipt, regardless of whether or not SNB had knowledge of the trust at the time of the transfer. Put another way, the English law “unconscionability” test should be resolved by determining whether, under Saudi Arabian law, SNB took good title.

Fancourt J, at first instance, found in SNB’s favour, identifying previous Court of Appeal authority that the claimant must have a “continuing proprietary base”[3], unlike a claim in dishonest assistance[4]. He also identified appellate authority that a transfer cannot be one that gave the transferee good title in priority to the beneficiary’s interest[5]. He concluded that “absent a continuing proprietary interest in the Disputed Securities at the time of registration, the claim in knowing receipt as pleaded will fail”.

The Court of Appeal upheld that decision, relying on the same cases and on the Supreme Court decision that dismissed the Claimants’ prior formulation of their claim[6], which held that in order for liability to arise in a claim for knowing receipt, the claimant must have a “continuing proprietary interest in the relevant property”, and as such, a defendant could not be liable in knowing receipt if they took the relevant property “free of any interest of the claimant”.

The Saudi Law Issue

The Claimants argued that SICL had in any case retained rights under Saudi law that prevented SNB from obtaining good title. They argued that a Saudi Arabian court would characterise the rights by analogy with similar Saudi Arabian concepts and therefore not see the transfer as extinguishing SICL’s rights in the Disputed Shares. In particular, the Claimants’ expert referred to Saudi Arabian concepts, such as a manfa’a, which allow a party to claim compensation from a third-party recipient with knowledge of its interest.

SNB, however, argued that whilst the Saudi Arabian courts might conclude that SICL had certain contractual rights with regard to the Disputed Securities, the courts would not recognise SICL as having any property rights in the Disputed Securities, or any other rights or interests recognised under Saudi Arabian law as enforceable against SNB.

Fancourt J held in SNB’s favour based on the expert evidence he heard at trial. Critical to this decision was a finding that the Saudi Arabian share register at the Securities Depositary Centre at Tadawul (the Saudi stock exchange) was an absolute record of ownership, excluding the possibility of claims based on unregistered interests. Accordingly, SICL’s proprietary base was lost on registration of the transfer to SNB.

The Court of Appeal identified with approval the general approach to the review of a trial judge’s findings of fact: “[a]ppellate courts have been repeatedly warned, by recent cases at the highest level, not to interfere with findings of fact by trial judges, unless compelled to do so[7], and identified similar guidance that a trial judge’s evaluation of expert evidence would be set aside only if the evaluation is one that no reasonable judge could have made[8].

The Court of Appeal recognised, however, that expert evidence of foreign law was a question of fact “of a peculiar kind[9], and the nature of the foreign law issue might mean that the English Court’s expertise “approaches that of any foreign law expert”, for example, “where the foreign law is written in the English language and involves concepts similar to English law and familiar to English judges; or where the foreign Courts would be influenced by the English Courts’ decisions on the issue[10].

However, the Court of Appeal held that the Claimants’ arguments did “not come close to satisfying the criteria for [the Court of Appeal] to interfere with [Fancourt J’s] finding of fact on foreign law”. As such, the Court of Appeal found no grounds to overturn Fancourt J’s findings that SNB obtained a complete ownership interest in the Disputed Securities as a matter of Saudi Arabian law.

The Valuation Law Issue

Once Fancourt J ruled in SNB’s favour on liability, he did not need to decide the Valuation Issue. Fancourt J nevertheless found in favour of SNB on that issue too and held that he would have imposed a block discount, on the basis that a valuation of shares involved an assessment of the value that would have been attributed to the shares based on a hypothetical willing buyer and willing seller at the relevant time. Issues of the size of the shareholding and the likely future volatility of the share price would be factors within that process, which could (and in this case did) justify a reduction from the prevailing market prices.

Having decided in favour of SNB on both the English Law and Saudi Arabian Law issues, the Court of Appeal declined to rule on the Valuation Issue. However, the Court of Appeal indicated that it would not necessarily have endorsed the first instance decision and recognised persuasive arguments on both sides.


The decision in this case is significant in several respects.

First, it clarifies the requirements for bringing a claim in knowing receipt, confirming beyond doubt that a continuing proprietary interest in misappropriated assets is required in order to establish liability for knowing receipt. The decision will be of considerable importance to parties with interest in trusts that contain assets located in jurisdictions (such as Saudi Arabia) that do not recognise the concept of a trust, and assets in any jurisdiction whose ownership is subject to a registration system that can override unregistered interests.

Second, the case is a welcome affirmation of the high threshold for an appellate court to review findings of fact at first instance, even on issues of foreign law — particularly in cases in which a judge’s conclusions are heavily based on assessment of oral testimony.

Third, the issue of a block discount remains open in future cases. Given that the quantum of many claims based on securities may depend on the valuation of those securities, the block discount issue may be the subject of significant future litigation across a wide range of disputes.



[1] Byers v The Saudi National Bank [2022] EWCA Civ. 43.

[2] Akers v Samba Financial Group [2017] AC 424.

[3] Macmillan Inc v. Bishopsgate Investment Trust plc (No 3) [1995] 1 WLR 978.

[4] Dubai Aluminium Co Lt v. Salaam [2003] 2 AC 366.

[5] Lightning v. Lightning Electrical Contractors Ltd (1998) 23 TLI 35, Courtwood Holdings S.A. v Woodley Properties Ltd [2018] EWHC 2163 (Ch).

[6] Akers v. Samba Financial Group [2017] UKSC 6.

[7] FAGE UK Ltd v Chobani UK Ltd [2014] EWCA Civ 5.

[8] Wheeldon Bros Waste Ltd v Millenium Insurance Co Ltd [2018] EWCA Civ 2403, [2019] 4 WLR 56

[9] Parkasho v Singh [1968] P 233.

[10] E.g., King v Brandywine Reinsurance Co (UK) Ltd [2005] EWCA Civ 235.