BCCI: clarification of the law on constructive trusteeship

On 14 June the Civil Division of the Court of Appeal handed down a judgment in Bank Of Credit and Commerce International (Overseas) Ltd and International Credit And Investment Company (Overseas) Ltd v Chief Labode Onadimaki Akindele which provided some welcome clarification as to the necessary foundations of a claim in equity against a recipient of money transferred in breach of trust of fiduciary duty. Joanna Gray reviews the decision.

Factual background

The claimants in this action were the liquidators of two Cayman Islands companies, Bank of Credit and Commerce International (Overseas) Ltd (“BCCI Overseas”), which was at the material time a wholly owned subsidiary of Bank of Credit and Commerce International Holdings (Luxembourg) SA (“BCCI Holdings”), and International Credit and Investment Company (Overseas) Ltd (“ICIC”), which was controlled by the BCCI group. The defendant was a prominent Nigerian businessman. In 1985 ICIC obtained US$10 million from the defendant under an artificial loan agreement pursuant to which ICIC had inter alia offered to arrange for investment of the defendant’s funds to the extent of US$10m in the shares of BCCI Holdings on terms and conditions which included: