In late July, the Supreme Court of England and Wales handed down a succinct judgment on a topic which, while narrow, is of considerable importance in its sphere. FHR European Ventures LLP v Cedar Capital Partners LLC concerned the enforcement rights which are available in the English courts to the principals of fiduciary agents where those agents have made unauthorised profits from secret commissions or bribes. The nature of the rights which arise in this situation is a subject with a considerable history of debate, both in the courts and in academia.
In essence, the issue is whether a bribe or secret commission paid to an agent is the property of that agent's principals, or whether it merely gives rise to a personal action against the agent in the amount of the bribe or secret commission. This is not merely an academic distinction; it is of considerable practical importance for practitioners acting in such a situation. This is because the existence of such property rights in the bribe or secret commission opens up the availability to claimants of powerful tracing and following remedies in English law, including potential rights against third parties to whom the monies have been paid over, and potential rights in assets which have been purchased with the illicitly obtained funds. To read the full article on this case, please click here.