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English High Court Unravels National Iranian Oil Company’s Attempt to Shield £100M London Property from Enforcement of Arbitral Award
Monday, May 20, 2024

The English High Court has ordered the National Iranian Oil Company (NIOC) to transfer a high-value London property to Crescent Gas Corporation Limited (CGC) in satisfaction of a US$2.4 billion arbitral award in favour of CGC against NIOC. The Court found that NIOC’s eleventh-hour transfer of the property to its closely linked Iranian pension fund (the Fund) was a ploy to shield it from enforcement action by CGC.

The judgment, which is the most recent development in the ongoing, long-running dispute between CGC and NIOC, is likely to be of interest to practitioners and clients seeking to enforce arbitral awards in England, as well as those establishing or litigating trusts of land in England and Wales

McDermott acted for CGC in the proceedings, as well as the underlying arbitration and award challenge proceedings described below.


In 2009, CGC, a subsidiary of UAE-based Crescent Petroleum, commenced arbitration seated in London against NIOC for breach of a 2001 long-term gas supply agreement. In September 2021, the tribunal rendered a Partial Award on Remedies in favour of CGC in which it ordered NIOC to pay more than US$2.4 billion in damages plus interest.

Having successfully defended two challenges to the award, brought by NIOC under sections 67 and 69 of the Arbitration Act 1996, in August 2022, CGC sought and obtained permission to enforce the award in England. Shortly thereafter, CGC obtained an enforcement order against NIOC’s London property, “NIOC House”, with an estimated value of at least £100 million. However, just six days after the order was granted, and before it became final and effective, NIOC transferred ownership of NIOC House to the Fund, prompting CGC to seek relief under section 423 of the Insolvency Act 1986 and the Charging Orders Act 1979.


Central to NIOC’s and the Fund’s defences was the claim that the transfer formalised the true ownership arrangements. The key issues were the beneficial ownership of NIOC House at the time of the August 2022 transfer, whether the transfer was at an undervalue, and whether the purpose of the transfer was to put the property beyond CGC’s reach.

Sir Nigel Teare, sitting as a Judge of the High Court, found that the true beneficial ownership of NIOC House vested at all material times in NIOC. Because the transfer was made at an undervalue and with the purpose of putting the property beyond CGC’s reach as a judgment creditor before enforcement action could be taken, the Court ordered that the property be transferred to Crescent in partial satisfaction of the award debt pursuant to section 423 of the Insolvency Act.[1]

Trust or No Trust

NIOC and the Fund argued that NIOC held the property either (i) under an “amanat” arrangement under Iranian law, whereby NIOC acted as “amin” managing assets for the Fund, an arrangement that, though not analogous to an English law trust (Iranian law having no such concept) was nevertheless capable of recognition under the Hague Trusts Convention, or (ii) on trust for the Fund under English law. The Court rejected both arguments.

Considering the position under Iranian law, the Court found that NIOC had purchased NIOC House in 1975 using funds it borrowed from the Fund, with the result that NIOC, not the Fund, had been absolute owner of NIOC House since its purchase. NIOC House was, therefore, not within the amanat that existed between NIOC and the Fund, and so there was no Iranian law relationship concerning the property which fell to be recognised as a trust pursuant to the Hague Trusts Convention.

As to English law, the Court accepted that NIOC and the Fund could seek to establish an alternative English law trust case by virtue of Article 14 of the Hague Trusts Convention, which sets out that the Convention shall not prevent the application of rules of law more favourable to the recognition of trusts. The Court also accepted that this would be the case even where there was no concept of a trust (as recognised under English law) in the jurisdiction in which the entity purporting to declare the trust was incorporated and operates (and indeed would have been the case, even if the asset in question were not located in this jurisdiction).

However, the Court ultimately found that NIOC and the Fund could not establish that an express trust existed under English law. The purported declarations of trust were either made before the Fund acquired legal personality in 2019 (and were therefore ineffective) or did not comply with the strict statutory formalities required for the creation of a trust in land under section 53(1)(b) of the Law of Property Act 1925 (LPA).

Noting that the matter did not appear to have been the subject of prior judicial consideration, the Court analysed the language of section 53(1). Significantly, 53(1)(b) of the LPA stands in contrast to sections 53(1)(a) and 53(1)(c), the latter of which permit dealings with (but not declarations of trust in respect of or evidence thereof) property by authorised agents. As the purported declarations that NIOC and the Fund sought to rely on were not signed by NIOC, but rather by various of its agents or representatives, the Court determined that they were neither valid declarations of trust nor did they constitute written evidence of a trust for the purpose of section 53(1)(b).

The Transfer Under Scrutiny: Transaction at an Undervalue

In the light of the failed trust argument, the Court found that NIOC was the true absolute owner of NIOC House at the time of the transfer to the Fund. It followed that, as NIOC had not received any consideration for the transfer, the transfer was at an undervalue. The Court then turned to consider the purpose of the transfer.

The Transfer Under Scrutiny: Unmasking the Real Objectives

The Court found, based on the timing and urgency of the transfer—which occurred mere days after NIOC was served with an order permitting enforcement of the arbitral award—that there was a “cogent case” that the only credible explanation for the transfer was to put the property beyond CGC’s reach, shielding it from enforcement.

Using powers under section 423 of the Insolvency Act 1986, which targets transactions defrauding creditors, Teare J ordered that NIOC House be transferred from the Fund to CGC in partial satisfaction of the award.


The decision is significant for several reasons:

  • Above all, the decision highlights the English court’s readiness to take a robust approach to assisting award creditors, including by using Insolvency Act remedies in order to give effective relief to a creditor of an arbitral award. The decision cements London’s role as a key jurisdiction for resolving high-value disputes and ensuring that parties are held to their bargains.
  • Second, the decision highlights the strict formalities required by English law for establishing trusts over land, even where foreign entities, are involved. In particular, the Court has provided judicial guidance on the requirements established by section 53(1)(b) and the proper signatory to declarations of trusts of land under English law. This will likely be of particular interest to trust law practitioners and family offices alike.
  • The decision is also notable for its close examination of Iranian legal concepts and their interaction with English trust law within the framework of the Hague Trusts Convention.

[1] Section 423 of the Insolvency Act provides for the avoidance of transactions made at an undervalue, empowering the court to restore the position to what it would have been had the transaction not occurred. Section 423 is not a purely insolvency remedy and is available in circumstances where a debtor undertakes a transaction at an undervalue for the purpose of defrauding creditors.

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