Director of Public Prosecutions v Zhimin Qian & Anor

Choice of law must be determined issue by issue. Where the Rome Regulations apply, their scope is determined autonomously; describing a claim or remedy as proprietary does not by itself exclude the Regulations. A constructive trust arising from an underlying contractual or non-contractual obligation will not ordinarily generate a separate choice-of-law rule.

For proprietary questions outside the Regulations, the relevant law is determined by the transaction that created or transmitted the asserted rights, not simply by where the asset is later found. Statutory tracing provisions for civil recovery identify recoverable property; they do not create or enlarge a victim’s proprietary rights. The applicable foreign law must be identified before its content is pleaded or proved.

The Director of Public Prosecutions had secured Bitcoin and other assets as proceeds of investment fraud carried out in China by the first defendant, Ms Qian, and others. Thousands of alleged victims, who had invested in China, applied under section 281 of the Proceeds of Crime Act 2002 to establish proprietary interests in the assets. Receivers appointed over the company used in the fraud also asserted claims.

This preliminary hearing proceeded on agreed assumed facts. No evidence of Chinese law had been adduced. The court had to decide whether English or Chinese law governed the issues underlying four proposed bases of claim, including rescission, constructive trusts, statutory tracing and the use of English equitable remedies alongside foreign law. The victims’ substantive rights and entitlement to a section 281 declaration remained for later determination.

1. Applicable-law method. The court applied an issue-by-issue, three-stage conflicts analysis: characterise each issue, identify the relevant choice-of-law rule, then apply its connecting factor. The Rome Regulations require autonomous interpretation. Domestic labels such as “proprietary” or “constructive trust” cannot decide their scope. MacMillan Inc v Bishopsgate Investment Trust plc (No 3) [1996] 1 W.L.R. 387; Nicholls v Mapfre España Cia de Seguros y Reaseguros SA [2025] 1 W.L.R. 660.

2. Claims 1 and 2. Issues arising from the investment contracts, their alleged avoidance or nullity, and the resulting rights fell within Rome I. Any issue treated as non-contractual would lead to the same result under Rome II: the material events, parties, transactions and loss were centred in China. The administrative-matters exclusion did not apply to the applicants’ private-law claims merely because they were made within civil recovery proceedings. Under the alternative common-law analysis, the asserted rights arose from dealings in China; the later location of the Bitcoin in England did not retrospectively change their governing law. Asturion Foundation v Alibrahim [2024] 1 W.L.R. 2947 was distinguished on its facts and issues.

3. Claims 1 and 2 rested on different legal accounts of the same payments: one depended on beneficial ownership passing and later being restored by rescission; the other depended on a trust arising immediately on receipt. The applicants could plead them in the alternative, but could not select the applicable law by choosing whichever pleading was more advantageous. English equitable tracing could identify assets only if the applicants had retained or acquired rights under the governing law; tracing could not recreate rights already lost.

4. Claims 3 and 4. Sections 305 and 306 of the Proceeds of Crime Act 2002 define property that remains recoverable by the enforcement authority. They do not determine what property belongs to a section 281 applicant, and could not be extended by analogy. The Rome Regulations also left no room to add an English constructive-trust remedy to rights governed by foreign law. The court did not decide whether the common-law approach in Kuwait Oil Tanker Co SAK v Al-Bader (No 3) [2000] 2 All E.R. (Comm) 271 could apply in a case outside both Regulations.

5. The absence of evidence about Chinese law did not make English law applicable by default. The choice-of-law question was logically prior to proving the content of the chosen law. Chinese law governed the relevant rights; their content and effect remained for later determination. The court was to hear counsel on the consequential order.