LIECHTENSTEIN Law and Practice Contributed by: Matthias Niedermüller, Alexander Milionis and Fabian Rischka, Niedermüller Attorneys-at-Law
to a contract is not entitled to keep an asset received by fraud. The deceived party can assert invalidity of the contract for an unlimited period of time and claim the return of the asset based on Section 877 of the Civil Code within a 30-year limitation period. Acquisition in Good Faith However, a third party not involved in the fraud may become the rightful owner of an asset acquired from the fraudster if it was in good faith concerning the fraudster’s right to dispose of the asset (Section 512 of the Property Act (bona fide acquisition)). In such case, the original owner lost the property right and is not entitled to raise proprietary claims against said person. However, in cases where a third party knew or must have known that the fraudster was not enti- tled to dispose of the asset (bad faith (mala fide)), a reclaim is possible. Mixing of Lawfully and Unlawfully Acquired Funds When funds received via fraud are mixed with funds from legal sources, the acquisition of property is considered to result from the whole combined sum of the funds – not just the fraudu - lent portion. Consequently, the former owner of the fraudulently transferred funds is not entitled to raise propriety claims but is limited to claims for compensation and restitution for unjust enrichment. Protection of Property in Insolvency Proceedings If a debtor falls bankrupt and insolvency pro - ceedings are opened before court in accordance with the Liechtenstein Insolvency Act ( Insolven- zordnung , or IO), generally all assets attributed to the debtor are affected by the proceedings (Section 5(1) of the Insolvency Act).
However, assets attributed to other persons are not affected. As a result, the owner of assets that are factually in possession of the debtor but not in the debtor’s ownership – irrespective of whether lawfully or unlawfully – is entitled to claim segregation of the assets from the assets owned by the debtor ( Aussonderungsrecht ) in the insolvency proceeding. Additionally, persons lawfully claiming a limited right in rem on an asset of the debtor – in particu - lar, rights of pledge – can claim for separate priv - ileged settlement from these assets ( Absonder- ungsrecht ). As a result, such privileged creditors are entitled to receive preferential settlement of their receivables from the realisation proceeds of such assets before other creditors. Gains From Fraudulently Acquired Funds Generally, the profits a fraudster generated from investing fraudulently obtained funds are con - sidered to be property of the proprietor and, thus, of the fraudster. However, if the general requirements for a compensation claim (Section 1293 of the Civil Code) are met, the damaged person can claim compensation for actual dam - ages as well as for lost profits. In addition, claims for restitution of unjust enrichment resulting from unauthorised use of the funds (Section 1041 of the Civil Code) can be asserted. Thus, effective - ly, the victim of a fraudster can also reclaim the profits the fraudster obtained. Confiscation of Profits The rule of Section 20 of the Criminal Code and the skimming-off of the enrichment provides that all profits and benefits obtained from the offence (including fraud) are skimmed off. Confiscation pursuant to this provision also applies to utilisa - tions (proceeds – eg, interest rates, dividends, or rental incomes) and substitution values of the assets declared confiscated (Section 20(2) of the
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