Vale S.A. & Ors v Steinmetz & Ors (Rev 1) [2021] EWCA Civ 1087 (16 July 2021)

Vale S.A. & Ors v Steinmetz & Ors (Rev 1) [2021] EWCA Civ 1087 (16 July 2021)

An arbitration award between contracting parties does not bar a proprietary claim against third party recipients of traceable proceeds, as the award is not binding on non-parties. The creation of a rescission trust upon rescission for fraud is a matter of law and not dependent on the arbitrators' determination. The appellants cannot rely on the arbitration award as a defence to the proprietary claim.

Citation
[2021] EWCA Civ 1087
Parties
Claimant/respondent: Vale S. A.; Claimant/respondent: Vale Holdings BV; Claimant/respondent: Vale International S. A.; Defendant: Benjamin Steinmetz; Defendant: Dag Lars Cramer; Defendant: Marcus Struik; Defendant: Asher Avidan; Defendant: Joseph Tchelet; Defendant: David Clark; Defendant/appellant: Balda Foundation; Defendant/appellant: Nysco Management Corporation
Jurisdiction
England and Wales
Judgment Date
16 July 2021
Procedural Posture
Appeal / Court of Appeal Judgment on Appeal From Summary Judgment Application in High Court
Outcome
Appeal dismissed
Legal Topics
Constructive Trusts, Rescission, Proprietary Claims, Arbitration Award Binding Effect, Fraudulent Misrepresentation
Civil Procedure Equity Arbitration Constructive Trusts Rescission Proprietary Claims Arbitration Award Binding Effect Fraudulent Misrepresentation

Case Brief

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Parties

Vale S. A.

Claimant/respondent

Vale Holdings BV

Claimant/respondent

Vale International S. A.

Claimant/respondent

Benjamin Steinmetz

Defendant

Dag Lars Cramer

Defendant

Marcus Struik

Defendant

Asher Avidan

Defendant

Joseph Tchelet

Defendant

David Clark

Defendant

Balda Foundation

Defendant/appellant

Nysco Management Corporation

Defendant/appellant

Procedural Posture

Appeal / Court of Appeal Judgment on Appeal From Summary Judgment Application in High Court

Legal Issues

  1. 1 Does an arbitration award rescinding a contract for fraud bar a proprietary claim against a third party recipient of traceable proceeds?
  2. 2 Is a proprietary claim dependent on a personal restitutionary claim against the original contracting party?
  3. 3 Is the arbitration award binding on non-parties in subsequent proceedings?

Ratio Decidendi

An arbitration award between contracting parties does not bar a proprietary claim against third party recipients of traceable proceeds, as the award is not binding on non-parties. The creation of a rescission trust upon rescission for fraud is a matter of law and not dependent on the arbitrators' determination. The appellants cannot rely on the arbitration award as a defence to the proprietary claim.

Court Disposition

Appeal dismissed

Orders

  • The LCIA arbitration award does not afford the appellants any defence to the proprietary claim pleaded against them.
  • The proprietary claim may proceed to trial.