Mitchell v Sheikh Mohamed Bin Issa Al Jaber [2025] UKSC 43

The Supreme Court (in a joint judgment by Lords Hodge, Briggs, and Sales) has allowed an appeal concerning the appropriate approach to quantifying equitable compensation following the deprivation of an asset which is said since to have lost its value.

In February 2016, Sheikh Mohamed Bin Issa Al Jaber dishonestly procured the transfer of shares in a BVI company (“JJW Inc”) from another BVI company (“the Deprived Company”) to a Guernsey company (“the Recipient Company”). He did so, following the Deprived Company’s liquidation, by pretending that share transfer forms that he had signed purporting to act as the Deprived Company’s director had been signed prior to the liquidation.

Following the transfer of the shares, the entirety of the assets and liabilities of JJW Inc were transferred to a further company (“the Asset and Liability Transfer”). It was common ground at trial that this caused the shares to become worthless. The Court of Appeal, overturning the trial judge’s judgment, considered that this meant that the Deprived Company had suffered no loss from the transfer of the shares, as there was no evidence that the liquidators would have realised those shares before they became worthless; indeed, the Deprived Company continued to own a further shareholding in JJW Inc, which was not realised, and in respect of which no claim was made.

The Supreme Court has allowed an appeal brought by the liquidators of the Deprived Company, requiring the Sheikh and the Recipient to pay equitable compensation of EUR 67 million. It did so on the basis that:

(a) The principle that the court looks back from the date of trial when assessing equitable compensation concerns the information to be taken into account by the court when it makes its evaluation of the value of what has been lost by the trust fund/company. The date of valuation of the property is, however, a distinct issue of principle (at paragraph 94).

(b) A defendant will not be able to pray in aid every supervening event as breaking the chain of causation or as fit for inclusion in a counterfactual “but for” analysis (at paragraph 109). Supervening events will not, in particular, qualify for consideration if the defendant fiduciary had a hand in them, in the absence of a clear and convincing explanation provided by the fiduciary (at paragraph 110).

(c) It was therefore incumbent upon the Sheikh, if he wished to rely upon the Asset and Liability Transfer in diminution of the immediate loss caused to the Deprived Company as a result of the misappropriate of the shares, to prove that he played no part in, and derived no significant benefit from, the transfer. He had not done so (at paragraph 123).

The Supreme Court also refused cross-appeals by the Sheikh on the issues of:

(a) Whether, given the Sheikh had no powers in respect of the Deprived Company’s assets as a result of the Deprived Company’s liquidation, the Sheikh could nonetheless owe fiduciary duties and be liable for their breach. The Supreme Court followed the approach of the Court of Appeal on this issue, deciding that by arrogating to himself the powers of a fiduciary (by causing the transfer of the Deprived Company’s property), the Sheikh could be liable for breach of fiduciary duty in so doing.

(b) Whether the Deprived Company had suffered no loss as it had acquired the shares in JJW Inc subject to an unpaid vendor’s lien. The Supreme Court dismissed this argument for the same reasons as the Court of Appeal: a vendor’s lien was excluded in the circumstances in which the Deprived Company had original acquired the shares.

To read the full judgment, please click here.

James Fennemore acted for the Recipient Company (now acting through its liquidators), instructed by Marc Abrahams of Troutman Pepper Locke.