Crescent Gas Corporation Limited v National Iranian Oil Company & Anor

A transaction at an undervalue falls within Insolvency Act 1986 section 423 where putting assets beyond a claimant’s reach was a purpose of the transaction. It need not be the sole, dominant or substantial purpose. A trust of land must be manifested and proved by writing signed by a person able to declare the trust. Signature by an ordinary agent does not satisfy section 53(1)(b). The court has a broad remedial jurisdiction under section 425 and may order a transferee to transfer property directly to the creditor where that best restores the pre-transaction position and avoids unnecessary execution costs.

Crescent Gas Corporation Limited, a judgment creditor, sought relief against National Iranian Oil Company and the Retirement, Saving and Welfare Fund of Oil Industry Workers concerning NIOC House in London. NIOC had transferred the property to the Fund for no consideration shortly after enforcement of a substantial arbitral award had been permitted.

The principal issues were whether the Fund beneficially owned the property, whether the transfer was at an undervalue, whether NIOC acted for a purpose specified in section 423(3) of the Insolvency Act 1986, and what relief should follow. An alternative claim concerned a final charging order under the Charging Orders Act 1979.

1. Beneficial ownership. NIOC bought NIOC House in 1975 with money borrowed from the Funds. Under Iranian law, the loan transferred ownership of the money and of the property acquired with it to NIOC, subject to a personal repayment obligation. NIOC was therefore the absolute owner. The property was not within the amanat arrangement, and there was no Iranian-law relationship requiring recognition as a trust.
2. English-law trust. The court accepted that an Iranian entity could declare a trust over land in England, despite Iranian law not distinguishing between legal and beneficial ownership. The question was one of objective intention, assessed in context. The mortgage and certificate of title stated that NIOC was legal owner and the Fund beneficial owner, which objectively manifested an intention to create a trust. However, both documents were signed by agents rather than a director or other person able to declare the trust. Section 53(1)(b) of the Law of Property Act 1925 was therefore not satisfied. The trust could not be enforced against CGC.
3. Section 423 purpose. The August Transfer was for no value and was made when enforcement steps were imminent. The urgency, timing, absence of evidence from relevant decision-makers and failure to disclose contemporaneous reasons supported the inference that NIOC positively intended to put NIOC House beyond CGC’s reach. That purpose was sufficient, even if other purposes also existed.
4. Relief. Under sections 423 and 425 of the Insolvency Act 1986, the Fund was ordered to transfer NIOC House directly to CGC. That order restored the position that would have existed absent the transfer and avoided further execution costs. The charging-order claim was consequently unnecessary.

First-instance decision. The judgment records related arbitral enforcement proceedings, including [2016] EWHC 510 (Comm), [2016] EWHC 1900 (Comm) and [2023] EWCA Civ 1008-type proceedings, but this was not an appeal from those decisions.