Jennifer Fox discusses a long-awaited decision, providing the latest interpretation of the illegality defence
- Old test for illegality: the reliance test.
- Application to other cases: the new tripartite test.
- Clarifying the law in an area of confusion.
In the long-awaited decision in Ahmad Hamad Algosaibi and Brothers Company
(AHAB
) v SAAD Investments Company Limited (In Official Liquidation) (SICL)
(Unreported, 31 May 2018) the Cayman court dismissed AHAB’s claims of fraud against Mr Al Sanea’s Cayman companies. In so doing, the court grappled with numerous complex areas of the law of commercial fraud and the rules for
tracing assets through corporate groups and into sophisticated financial products. This article discusses the court’s findings on the illegality defence and the lessons which can be derived for future Cayman cases in which this defence
might be engaged.
The relevant key factual findings of the court were:
- AHAB and Al Sanea had acted in concert in order to fraudulently obtain billions of dollars in borrowings.
- The loans would not have been made had the banks known the true financial
