David Mumford KC and James Kinman acted for the National Iranian Oil Company (“NIOC”) before the Court of Appeal, together with Bankim Thanki KC, Laura Newton and Marc Delehanty.

The wide-ranging judgment explores fundamental issues relating to the law of trusts and their interaction with the transaction avoidance provisions of the Insolvency Act 1986; it raises points of general public importance, in respect of which the Court of Appeal has now granted permission to appeal to the Supreme Court.

The Respondent (“CGC”) sought to enforce an arbitral award against valuable London property held in NIOC’s name. Upon seeking to do so, CGC found that NIOC had transferred legal title to the property to a pension fund for retired Iranian oil workers (the “Fund”). CGC sought to set aside the transfer pursuant to s. 423 of the Insolvency Act 1986.

At first instance (at which David and James did not appear) Sir Nigel Teare held that a trust of the property had been declared years earlier by NIOC in favour of the Fund but, because the declarations had been signed by an agent, s. 53(1)(b) prevented both NIOC and the Fund from relying on the trust as an answer to the s. 423 claim. The first instance judgment also found that throughout the almost 50 years since its purchase, the property had been treated by NIOC and the Fund as an asset of the Fund, and that there had been multiple other earlier declarations of trust by NIOC in the Fund’s favour in that period, but as these were (on Sir Nigel Teare’s findings) made before the Fund had obtained legal personality under Iranian law, they could not have created a trust.

On appeal:

1. CGC sought to argue that a person cannot effectively declare a trust which it believes already exists (an issue which arose on the facts of this case given the earlier declarations). The Court agreed with NIOC that an erroneous statement that a trust already exists can bring that trust into existence.
2. The Court agreed with NIOC that s. 53(1)(b) is a rule of evidence, not validity. Failure to comply with s. 53(1)(b) does not mean that a trust of land has not come into existence; but may affect the extent to which it is enforceable or will be recognised by the Court.
3. The Court agreed with CGC and the Judge below that – generally speaking – a document will not satisfy s. 53(1)(b) if it is signed by an agent of the person declaring the trust. In the case of companies, the Court accepted NIOC’s alternative submission that a company could sign such a document by complying with s. 44 of the Companies Act 2006. On the facts as found at first instance, NIOC had not established that it had done so.
4. The Court was split on the question of whether the transfer of land held on trust to its beneficiary was liable to be set aside under s. 423 in the absence of a s. 53(1)(b) document. Zacaroli LJ accepted NIOC’s submissions that, even in the absence of a s. 53(1)(b) document, such a transfer did not involve the transmission of value to the recipient, and that to allow such a transaction to be set aside would be to stretch s. 53(1)(b) beyond its statutory purpose. Dismissing the appeal, Falk LJ and the Chancellor held that, in the absence of a s. 53(1)(b) document, the Court could not have any regard to the trust and that the transfer involved a transmission of value.

Bankim, David, Laura, Marc and James were instructed by Mark Howarth of Eversheds Sutherland.

Read the judgment in full: National Iranian Oil Company v Crescent Gas Corporation Limited [2025] EWCA Civ 1211