Beneathco DMCC v RJ O’Brien Limited

A client-money broker is obliged to comply only with payment instructions falling within the contractual obligation identified from the parties’ express terms and any necessary implied terms. A term requiring payment in any currency selected by the client, or to any nominated third party, will not be implied merely because it would be convenient or commercially desirable.

Where client money is held on trust, the broker’s obligation may be to transfer the particular trust property rather than discharge a separate debt. The Ralli Bros principle can suspend performance where contractual performance necessarily involves unlawful conduct in the territory of performance, including unlawful conduct by a correspondent bank. It does not extend to illegality arising solely from a foreign court order.

Beneathco, a UAE company designated by OFAC as a Specially Designated National, had approximately US$16.5 million held by RJOL, an FCA-regulated UK broker, in a segregated client-money pool.

Beneathco claimed that RJOL was contractually obliged to comply with an instruction to pay the funds in AED to Beneathco’s UAE bank account, later amended to require payment to Future Plus Goods Wholesalers LLC. RJOL denied the alleged obligations, contending that the funds were held on trust and that its obligation was limited to payment in the currency it held, to Beneathco itself. It alternatively relied on the Ralli Bros principle because payment would involve unlawful conduct in the United States.

The central issues were the contractual terms, the legal character of the client money, whether either instruction triggered an obligation to pay, and whether any obligation was suspended by foreign illegality.

1. Claim dismissed. RJOL was under no obligation to comply with either the Original Instruction or the Amended Instruction. No declaration was required because RJOL continued to hold the US$16.5 million on trust for Beneathco.
2. The Professional Client Agreement was not incorporated. It was not supplied when the account was opened, and its later provision during pre-action correspondence did not vary the contract.
3. RJOL held the funds on trust. The segregated account arrangement and the applicable client-money rules created a trust over the pooled client-money account. Pooling did not create uncertainty of subject matter. The judge did not need to decide whether a separate debt also existed, but would have held that no separate debt was owed.
4. The implied terms had to be obvious and necessary to give business efficacy, assessed against the express terms, commercial common sense and facts known when the contract was made. No term required RJOL to convert funds into any currency selected by Beneathco or to pay any person nominated by it.
5. RJOL’s obligation was to pay Beneathco on demand in US dollars, being the currency in which RJOL held the particular trust property. The Original Instruction required payment in AED and therefore did not engage that obligation. The Amended Instruction required payment to Future Plus, not Beneathco, and likewise did not engage it.
6. Alternatively, the Ralli Bros principle applied. If RJOL had been obliged to transfer the particular trust property, payment would probably have required a US correspondent bank, whose conduct in the United States would breach US sanctions law. The principle extends to unlawful conduct by third parties forming part of contractually required performance. RJOL had shown that a licence could not have been obtained in time for the Original Instruction and was highly unlikely to have been obtained for the Amended Instruction.
7. The UK Blocking Regulation did not prevent reliance on the principle. The relevant unlawful activity would occur within the United States, whereas the Blocking Regulation addressed extra-territorial application of foreign legislation. The judge left open the position if RJOL’s own instruction outside the United States were the sole basis for illegality.
8. The principle did not extend to non-performance caused by the August and September 2025 Weinstock court orders. A foreign court order was not equivalent to legislation or regulation governing conduct within the foreign territory.