English court orders transfer of £100m property in part satisfaction of award debt

6 minute read
21 May 2024

In a long-running dispute arising out of a failure to supply gas, the English Commercial Court recently ordered that a prime London commercial property be transferred to the award creditor in part-satisfaction of a USD 2.6 billion arbitration award. In this article, we explore the case of Crescent Gas Corporation Ltd v National Iranian Oil Company & Anor [2024] EWHC 835 (Comm) and look at how the Insolvency Act was used to support enforcement of the award.


To cut a very long story short, Crescent, a privately owned exploration company, entered into a 25-year gas supply agreement with National Iranian Oil Company (NIOC) in 2001. In 2009, faced with NIOC's failure to supply any gas under the agreement, Crescent commenced arbitration proceedings, seeking compensation for loss of profits. After long-running proceedings, in 2021 Crescent secured a partial arbitration award under which NIOC was ordered to pay Crescent more than USD 2.4 billion in damages, with interest accruing at approximately USD 15 million per month.

NIOC failed to pay sums due under the partial award and so, in 2022, Crescent sought to enforce it (in part) by seeking an interim charging order over NIOC House - prime London commercial real estate in Westminster, with an estimated value of approximately £80 - £100 million.

As at August 2022, when the court gave Crescent permission to enforce the award as a judgment, NIOC House was registered as being in the ownership of NIOC. However, three months later when Crescent came to register the charging order that the court had granted, it found that NIOC House was no longer registered to NIOC, but had been transferred to a pension fund for workers in the Iranian oil industry. There was no monetary consideration for the transfer.

Crescent applied to court to seek an order that ownership of NIOC House be transferred to Crescent under s.423 Insolvency Act 1986, arguing that the transfer of the asset from NIOC to the pension fund was a transaction defrauding creditors.

Transactions defrauding creditors

Where a person enters into a transaction for no valuable consideration, for the purpose of putting assets beyond the reach of someone who has made or may make a claim against that person, s.423 Insolvency Act 1986 empowers the court to make orders to restore the position that existed prior to the transaction, and to protect the interests of any victim of the transaction. Crescent argued that the transfer of NIOC House from NIOC to the fund was effected rapidly in 2022 for the purpose of putting NIOC House out of reach of Crescent's enforcement efforts, and that the appropriate order to regularise the position and protect its interests was to transfer NIOC House to Crescent.

Ownership of NIOC House

In determining Crescent's application, the Commercial Court had to grapple with a number of factual and legal issues, including arguments as to the ownership of NIOC House; both under English trust law and Iranian law concepts of amanat and amin (under which NIOC argued the property had effectively merely been in NIOC's custody, rather than ownership prior to the purported transfer to the fund, and so was not amenable to the order sought by Crescent).

NIOC's Iranian law argument failed. While the court recognised that there was an amanat arrangement between NIOC and the fund, NIOC House was not within that arrangement and a third party, such as Crescent, was not bound by any understanding between NIOC and the fund.

Similarly, under English trust law, the court found that there had been no declaration of trust NIOC was both legal and beneficial owner of NIOC House at the time of the transfer; it had not held it as trustee for the fund.

Purpose of the transfer

The court then had to consider the purpose of the transfer from NIOC to the fund - in particular, whether a purpose of the transfer (not the sole or even dominant purpose) was to put assets beyond the reach of Crescent.

In circumstances where the transfer had been effected with some urgency in the days after NIOC had been served with the order permitting Crescent to enforce the award, the court concluded that the purpose of the transfer had, indeed, been to put assets out of reach of enforcement - not, as NIOC argued, to regularise the ownership position of an asset that had subsisted since 1975.

The court, therefore, had the power pursuant to s.423 Insolvency Act 1986 to make an order to restore the position as it would have been if the transaction had not taken place. In the circumstances of the case, the court determined that the appropriate order to restore the status quo ante, and to protect the position of Crescent, was to transfer NIOC House directly to Crescent - therefore avoiding any further costs that Crescent might otherwise incur in executing against the property.

Insolvency Act as an enforcement tool

This decision demonstrates the potential value of the Insolvency Act as a supporting mechanism for efforts to enforce award and judgment debts, and signals the English court's willingness to support creditors where there is cogent evidence that assets are deliberately being put beyond the reach of enforcement. In the particular context of this case, the asset secured still leaves a substantial unsatisfied liability. Nonetheless, the forced transfer of a prime central London property asset is a headline grabbing signal to recalcitrant debtors.

Should this case raise any points you'd like to discuss further, please contact Tom Price or Jason Freedman.

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