With and (then) without: “cum-ex” trading scandal dismissed by English Commercial Court in landmark case for lack of jurisdiction
Mr Justice Baker has handed down judgment in Skatteforvaltningen (the Danish Customs and Tax Administration) v Solo Capital Partners LLP (in special administration) and many others, dismissing the "massive" and "unprecedented" claim at the first opportunity.
As part of the Kingdom of Denmark’s ongoing investigation into the “cum-ex” dividend tax fraud, the Danish Customs and Tax Administration, Skatteforvaltningen (SKAT), had commenced proceedings in the English High Court in connection with a number of tax refund claims that SKAT asserted had been improperly submitted and which it, in turn, had in error approved and paid. The proceedings listed over 100 defendants, sought relief of £1.5 billion and had been listed for a final trial in January 2023 which was expected to last over a year until March 2024.
However, Mr Justice Baker has dismissed the case in its entirety in its first substantive hearing, finding that SKAT’s claim is inadmissible under Dicey Rule 3. The rule states that “English courts have no jurisdiction to entertain an action: (1) for the enforcement, either directly or indirectly of a penal, revenue or other public law of a foreign State; or (2) founded upon an act of state (Dicey, Morris & Collins on the Conflict of Laws, 15th Ed., R5-019)”.
While SKAT had sought to frame its case as advancing private law causes of action, Mr Justice Baker found that the claims were in substance seeking to recover dividend tax which SKAT asserted it was entitled to for the period in question. The court was therefore being asked to enforce the sovereign tax rights of the Kingdom of Denmark. Such matters fell within the scope of Dicey Rule 3 and therefore outside of the English court’s jurisdiction.
The English proceedings were just one of the steps SKAT is pursuing in its investigation into the “cum-ex” fraud, which it claims has defrauded the Kingdom of Denmark of over DKr 12.7 billion. Germany, Italy and France are among the other European counties which are understood to have lost tax revenue stretching into the billions from the fraud.
If you have any queries or require assistance with SKAT-related proceedings please contact Jonathan Addo in the BVI or Nick Hoffman in the Cayman Islands.