UK Law and Practice Contributed by: Simon Bushell and Gareth Keillor, Seladore Legal
Specific insolvency claims – “wrongful trading” and “transaction at undervalue” Additionally, there are specific claims that arise in an insolvency setting. In particular, English insolvency law provides for a specific claim available to liquidators of “wrongful trading”, which occurs where a company’s director(s) continues to trade in circumstances where they know (or ought to have known) that there is no reasonable prospect of the company avoiding insol - vency proceedings. A director who knowingly fails to exercise due care may become personally liable to the company or its creditors for the losses they cause. Steps may also be taken where a company enters into a “transaction at undervalue”, whereby assets are gifted or sold to third parties at a price that is significantly below their actual value. If the company subsequently becomes insolvent, a court may order the reversal of any such transactions that took place in the two years prior to the insolvency. 1.2 Causes of Action After Receipt of a Bribe Civil Claim A civil law claim may be brought by a person who dis - covers that their agent or employee has been bribed or has received a secret commission. In bringing such a claim, the claimant must show that: • a payment was made to the agent/employee of the briber’s counterparty; • the briber knew that the recipient was the agent/ employee of the counterparty; and • the payment was not properly disclosed to the counterparty. Where that occurs, English law makes an irrebutta - ble presumption that the party making the payment did so to cause the agent/employee to prioritise their interests over those of the counterparty, and that the agent/employee was actually influenced by the bribe. It should be noted that the agent/employee cannot avoid liability by arguing that the payment is governed by (and has no adverse consequences under) foreign law. This is because English courts will not apply a for - eign law where doing so conflicts with the principles of domestic public policy.
In bribery cases, English courts have historically been ready and willing to find that a fiduciary relationship existed by giving the usual rules a wide and loose interpretation – or indeed by disregarding the usual rules that would otherwise suggest that no such rela - tionship existed. Damages and/or Equitable Remedies If a claim of bribery is successful, the claimant can seek damages and/or equitable remedies (such as requiring the defendant(s) to account for, or return, any profits made). The amount recovered will generally be at least the value of the bribe (even if there is no other identifiable loss), which can be, for example, on the basis that English law deems that the agent/employee holds the bribe on a “constructive trust” for the benefit of their principal/employer. This is significant as it pro - vides the principal/employer with a proprietary interest (see 1.5 Proprietary Claims Against Property ) over those funds (and therefore the asset is not available to creditors of the agent) and carries no requirement to prove that the actions of the agent/employee caused damage to the principal/employer. Dishonest Assistance The wronged party may also claim for dishonest assis - tance (see 1.3 Claims Against Parties Who Assist or Facilitate Fraudulent Acts ) against the person who paid the bribe (assuming the party receiving the bribe is a fiduciary) or for procuring a breach of contract (on the basis that an agent/employee will typically breach the terms of any contract if they receive a bribe). In doing so, the wronged party may be able to rescind all transactions between them and the party paying the bribe (or the company they are associated with). Injury by Unlawful Means In some circumstances, it may be possible for a wronged party to bring a claim for conspiracy to injure by unlawful means (see 1.3 Claims Against Parties Who Assist or Facilitate Fraudulent Acts ) against a third-party competitor that it suspects of bribery (ie, in circumstances where Party A suspects that its competitor, Party B, has paid bribes to a potential customer, Party C, such that Party C agrees to do business with Party B and not with Party A). Such claims are difficult to substantiate, as it is insufficient to show that the bribe was merely likely to injure Party
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