Landmark judgment in backwards tracing appeal handed down by Privy Council

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The Privy Council has today handed down the hotly anticipated decision in Durant International Corporation and another (Appellants) v The Federal Republic of Brazil and another (Respondents).

Lord Toulson, giving judgment on behalf of the Board (made up of Lords Neuberger, Mance, Carnwath, Toulson & Hodge), stated that although the correctness of the decisions in James Roscoe (Bolton) Ltd v Winder  and In re Goldcorp Exchange Ltd was not questioned, there may be circumstances in which backwards tracing or tracing the value of an asset into an overdrawn account is possible, however, this would be limited to cases in which the claimant could establish a "coordination between the depletion of the trust fund and the acquisition of the asset which is the subject of the tracing claim, looking at the whole transaction, such as to warrant the court attributing the value of the interest acquired to the misuse of the trust fund".

The published judgment can be found on the JCPC website.

Blake Morgan LLP acted as Privy Council agents for the Appellants.