Anthony Mark Patterson v Court of Glostrup (Denmark)
[2023] EWHC 1540 (Admin)
Skatteforvaltningen v Solo Capital Partners LLP (in special administration) and others
8 November 2023
[2023] UKSC 40
Supreme Court
A Danish tax agency sued people in England for stealing its money through a tax refund scam. The agency wasn't trying to collect taxes; it was trying to get its stolen money back. The court said that's allowed, even though it involved a foreign tax system.
Key Facts
- •Skatteforvaltningen (Danish Customs and Tax Administration) sued Sanjay Shah and related companies (appellants) in the Commercial Court, London, for fraudulent inducement of tax refunds.
- •The claims totaled approximately £1.44 billion, stemming from 4,590 fraudulent applications for Danish dividend withholding tax refunds.
- •The appellants argued the claims were inadmissible under Dicey, Morris & Collins Rule 20(1), which prohibits enforcing foreign revenue laws.
- •The claims were based on common law causes of action (deceit, conspiracy, etc.) and an alternative case under Danish private law.
- •The High Court dismissed the claims, the Court of Appeal reversed, and the Supreme Court heard the appeal on admissibility.
Legal Principles
English courts have no jurisdiction to entertain an action for the enforcement, either directly or indirectly, of a penal, revenue or other public law of a foreign State.
Dicey, Morris & Collins, The Conflict of Laws, 16th ed (2022), Rule 20(1)
The revenue rule applies only to proceedings with an unsatisfied demand for tax which foreign tax authorities seek directly or indirectly to recover.
Williams & Humbert Ltd v W & H Trade Marks (Jersey) Ltd [1986] AC 368
An action for the enforcement, either directly or indirectly, of a public law of a foreign State is inadmissible.
Dicey, Morris & Collins Rule 20 (Sovereign Authority Rule)
Outcomes
The Supreme Court dismissed the appeal.
The claims were not for the direct or indirect enforcement of foreign tax laws because no tax was due from the appellants. The substance of the claim was to recover payments fraudulently obtained, not to recover tax.
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