In Akers and Ors v Samba Financial Group  UKSC 6, a non-tax case, the Supreme Court considered the validity of a Trust arrangement over assets situated in a country that does not recognise trusts.
Under a trust arrangement, the legal and beneficial interest in assets are separated. This includes nominee arrangements.
Saad Investments Co Ltd (SICL) was a Cayman Islands company that went into liquidation on 30 July 2009; Akers are the liquidators. Samba Financial Group (Samba) are a Saudi bank.
Mr Al-Sanea (A), a Saudi Arabian citizen and resident, was the legal/registered owner of shares in five Saudi banks, including Samba. SICL claimed that A agreed to hold these shares on trust for SICL, as a result of six transactions, which were governed by Caymanian law:
- In 2002, A entered into an agreement to transfer beneficial ownership to SICL while retaining legal title “in order to comply with legal requirements in Saudi Arabia”
- In 2003, A agreed to hold “legal ownership of [the relevant] shares as nominee for SICL in order to comply with the legal requirements in Saudi Arabia”
- In 2006, 2007 and 2008 [twice] A made declarations of trust for SICL in respect of relevant shares.
In 2009, A transferred the relevant shares to Samba in settlement of his personal liabilities.
Saudi law does not recognise either the institution of a trust or a division between legal and equitable proprietary interests.
The court held that:
- The trust was valid.
- A could only transfer the legal, not the equitable, interest.
- As Samba gave value to A in exchange, they could only be bound by the trust arrangement if they were aware of it and agreed.
- The transfer was, therefore, a breach of trust.
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