Iranian Offshore Engineering and Construction Company v Dean Investment Holdings SA & Ors

A person who undertakes to act for another in circumstances involving entrusted authority, discretion and vulnerability may owe fiduciary duties even outside settled fiduciary categories. The core obligations are loyalty, the no-conflict rule and the no-profit rule. Dishonest assistance requires a fiduciary obligation, breach, assistance playing more than a minimal role, and dishonesty assessed by the defendant’s actual knowledge or belief and the standards of ordinary decent people. Knowing receipt requires beneficial receipt of traceable assets with knowledge making retention unconscionable. In illegality cases, the court must consider the purpose of the prohibition, other relevant public policies and proportionality. Fraud-related claims were therefore enforceable despite sanctions-related illegality.

IOEC claimed that the defendants had participated in a fraud concerning the proposed purchase of the GSP Fortuna drilling rig. IOEC paid approximately US$87 million to an account controlled by Dean Legal. Dean had agreed to buy the rig for substantially less, and the underlying purchase agreement was later terminated without the money being returned.

The claims included breach of fiduciary duty, dishonest assistance, conspiracy by unlawful means, knowing receipt, fraudulent misrepresentation and contract. The defendants disputed their involvement and argued that sanctions and illegality prevented relief. The central issues were the defendants’ roles, the fiduciary duties owed by IOEC’s managing director and adviser, accessory and receipt liability, and the effect of the sanctions regime.

1. Factual findings and fiduciary duties. The court found that a fraud had occurred in two stages: IOEC was induced to pay US$21 million more than the price at which the rig was being acquired, and further funds were extracted after the underlying purchase agreement had been terminated. IOEC’s managing director and technical adviser each owed fiduciary duties. The adviser’s senior role, entrusted responsibilities and involvement in managing the transaction placed him in a fiduciary relationship. Both defendants breached the no-conflict and no-profit rules.
2. Dishonest assistance. The requirements summarised in FM Capital Partners Ltd v Marino [2018] EWHC 1768 (Comm) were applied. The relevant defendants assisted breaches of fiduciary duty and acted dishonestly. Their liability extended to the loss resulting from the breaches, without attempting to assess the precise causative significance of each instance of assistance. Mr Ansari assisted in the financial administration but dishonesty was not proved against him.
3. Conspiracy. The defendants other than Mr Ansari acted in concert, used unlawful means consisting principally of breaches of fiduciary duty and assistance in those breaches, and intended to injure IOEC. They were jointly and severally liable for the resulting loss. The claim was not established against Mr Ansari.
4. Knowing receipt and misrepresentation. The requirements stated in El Ajou v Dollar Land Holdings plc [1994] 2 All ER 685 and BCCI v Akindele [2001] Ch 437 were applied. Knowing receipt was established against Dean Legal and, to the extent identified, against other recipients. The fraudulent misrepresentation claim failed because the ownership representation was capable of more than one meaning and IOEC did not prove that it was understood in the alleged false sense or intended to be understood that way.
5. Sanctions and illegality. Applying the structured approach in Patel v Mirza [2017] AC 467, the court held that enforcing the fraud-related claims would not undermine the sanctions regime. The claims did not seek enforcement of the sale agreement, the sanctions purpose would not be advanced by denying recovery, and refusal would adversely affect the public policy of preventing and deterring fraud. Denial would also be disproportionate.
6. Disposition. IOEC’s claims succeeded to the extent identified. The defendants other than Mr Ansari were jointly and severally liable for approximately US$87 million, subject to submissions on the precise sum and currency. The contractual claims and fraudulent misrepresentation claim were not pursued to judgment.

First-instance decision in the High Court Commercial Court. No appellate history was stated in the judgment.