UK Supreme Court Rules on Fiduciary Duties of Former Director

London, 24 November 2025, The UK Supreme Court

• Has reinstated a €67 million award to the Krys Global liquidators in Mitchell & another v Sheikh Mohamed Bin Issa Al Jaber & another,
• Confirmed that a director who acts after a company’s liquidation can assume fiduciary duties and be held accountable for misappropriation.
• Clarified that there is no set time from which equitable compensation must be measured, and the burden is on the fiduciary to prove any events reducing that loss
• [supremecourt.uk], [gatehouselaw.co.uk], [clydeco.com], [hsfkramer.com], [southsquare.com]
• https://southsquare.com/wp-content/uploads/2025/11/uksc_2024_0075_0076_judgment_beb05d4339.pdf

KEY FACTS

• MBI International & Partners Inc is a BVI company. It entered liquidation in 2011. In 2016, the company’s director (who had by then been stripped of his powers as a director under BVI law) caused the transfer of valuable assets (“the 891k Shares”) to an associated company.
• The director caused the transfer of the 891k Shares by signing a share transfer form as “director” and backdating the form to a time prior to the liquidation.
• The following year, in 2017, because of events in respect of which the director had given no proper explanation, the 891k Shares became worthless.
• The liquidators brought a claim against the director for breach of fiduciary duty and against the associated company for knowing receipt.
• The liquidators succeeded at trial but lost in the Court of Appeal, which held that the company had suffered no loss from the breach of fiduciary duty.
• On appeal to the Supreme Court, the director argued that he could not owe fiduciary duties because:
• He had no relevant powers under BVI law at the time of the transfer of the 891k Shares; and
• There is a rule that a de facto fiduciary can only owe fiduciary duties where s/he has legal title to, or possession of, property. The Supreme Court unanimously rejected the director’s appeal and upheld the decision of the trial judge and the Court of Appeal that where a person unlawfully purports to assume a fiduciary role and clothes him or herself with a fiduciary power they become liable as though they were a lawfully appointed fiduciary.
• The liquidators appealed against the Court of Appeal’s finding that they were not entitled to equitable compensation because, so the Court of Appeal held:
• There is a rule that equitable compensation is measured as at the date of trial; and
• In this case, the shares were worthless by the date of trial and the company therefore suffered no loss.
• The Supreme Court unanimously allowed the liquidators’ appeal. There is no invariable rule that loss will be calculated as at the date of trial. The date of valuation will be the date that is just and equitable in all the circumstances. Where, as here, a fiduciary misappropriates assets, the principal suffers an immediate loss.
• If the fiduciary wishes to argue that the misappropriated asset would have declined even if s/he had not misappropriated it, then the burden is on the fiduciary to prove that and to prove that the fiduciary was not personally involved in the subsequent act that caused the value of the asset to decline. In this case, the director proved no such thing and, in fact, the evidence that was available suggested that the director was personally involved in the events of 2017 whereby the 891k Shares became worthless.
• The Supreme Court therefore restored the order of the trial judge that the director and the associated company pay c.€67m (plus interest from 2016) in equitable compensation.

CASE BACKGROUND AND SUMMARY

• Company:
• MBI International & Partners Inc, incorporated in the BVI.
• Events:
• In 2009, the BVI company acquired 891,761 shares in JJW Hotels & Resorts Holding Inc for €88.9 million, payable “on demand.”
• In 2011, the company entered liquidation, terminating the director’s statutory powers under BVI law.
• Despite this, Sheikh Al Jaber later signed and backdated share transfer forms, moving the shares to an associated Guernsey company for no consideration. [gatehouselaw.co.uk], [jcpc.uk], [southsquare.com]
• Liquidators’ Claim:
• Breach of fiduciary duty and knowing receipt; sought equitable compensation of €67 million. [clydeco.com]

Supreme Court’s Key Findings

• Fiduciary Duties Apply by Conduct:
• A person who assumes or purports to exercise fiduciary powers—even after formal authority has ceased—can owe fiduciary duties.
• Legal title or possession of property is not required. [hsfkramer.com], [southsquare.com]
• Equitable Compensation Principles:
• No fixed rule that loss is assessed at trial date; valuation must be “just and equitable.”
• Burden on the fiduciary to prove any supervening events reducing loss and provide an innocent explanation. [gatehouselaw.co.uk], [hsfkramer.com]
• Outcome:
• Liquidators’ appeal allowed; compensation reinstated.
• The judgment reinforces that equity imposes robust accountability on those who intermeddle with company assets. [clydeco.com]

Lessons for Jersey and Other IFCs

1. Fiduciary Duties Extend Beyond Formal Status

• Jersey directors and trustees cannot rely solely on statutory cessation of powers (e.g., post-liquidation or resignation) to escape fiduciary obligations.
• Implication:
• Under Companies (Jersey) Law 1991, directors owe duties to act honestly and in good faith (Art. 74). Acting beyond authority or as a “shadow” director can still trigger liability. [viberts.com]

2. Substance Over Form

• Courts will look at conduct, not just legal title. If you act as a fiduciary, you will be treated as one.
• For Trust Companies:
• Jersey’s Trusts Law (1984) already imposes fiduciary duties on trustees and enforcers. This case signals similar scrutiny for corporate fiduciaries in offshore structures. [ogier.com], [mourant.com]

3. Governance and Documentation

• IFC boards must maintain clear authority frameworks and audit trails:
• Ensure directors cease all actions post-liquidation.
• Implement access controls to prevent unauthorized asset transfers.
• Risk:
• Backdated documents or informal instructions can create liability even without formal power.

4. Insolvency and Creditor Interests

• When insolvency looms, fiduciary duties may shift toward creditors. Jersey law is evolving in this area; UK precedents like BTI v Sequana influence local interpretation. [viberts.com]

5. Compliance & Enforcement

• IFC regulators (e.g., JFSC) should:
• Reinforce director training on fiduciary obligations.
• Require governance attestations during liquidation or restructuring.
• Firms should adopt post-appointment monitoring for ex-directors and related parties.

Strategic Takeaways

• For Jersey: Update board governance manuals to reflect risk of “de facto” fiduciary liability.
• For IFCs: Embed fiduciary duty awareness in compliance frameworks; consider exit protocols for directors and trustees.
• For Clients: Avoid informal asset transfers post-liquidation; seek legal clearance before acting.

Sources

• https://www.supremecourt.uk/cases/press-summary/uksc-2024-0075
• https://gatehouselaw.co.uk/mitchell-v-sheikh-mohamed-bin-issa-al-jaber-no-2-2025-uksc-43-supreme-court-clarifies-the-flexibility-of-equitable-compensation/
• https://www.collascrill.com/articles/mitchell-and-another-joint-liquidators-of-mbi-international-partners-inc-in-liquidation-v-sheikh-mohamed-bin-issa-al-jaber-mitchell-and-another-joint-liquidators-of-mbi-international-partners-inc-in-liquidation-v-sheikh-mohamed-bin-issa-al-/
• https://www.clydeco.com/en/insights/2025/11/supreme-court-clarifies-burden-of-proof
• https://www.hsfkramer.com/notes/cf/2025-posts/supreme-court-clarifies-liability-for-equitable-compensation-for-breach-of-fiduciary-duty
• https://southsquare.com/new-supreme-court-judgment-mitchell-v-al-jaber-2025-uksc-43/