High Court: Recipient bank not unjustly enriched by fraudulent payment

6 min read

In Tecnimont Arabia Limited v National Westminster Bank plc, the High Court considered the extent of a bank's liability to victims of fraud who were not direct customers.1 The High Court found that the bank had not been unjustly enriched as the recipient of a fraudulent payment.


APP Fraud

Authorised push payment ("APP") fraud occurs where the customer of a bank is deceived by a fraudster into instructing their bank to transfer funds from the customer's account to an account controlled by the fraudster. With instances of APP fraud rapidly increasing, the extent of banks' liability for victims' losses has been brought into sharp focus. Victims of APP fraud have typically sought to bring claims against their own banks, leading to judicial consideration of the scope of the so-called "Quincecare" duty of care.2  However, in this case, the claimant instead sought restitution from the recipient bank, National Westminster Bank plc ("NatWest"), thereby attempting to extend the scope of the bank's liability for APP fraud to non-customers.



In October 2018, Tecnimont Arabia Limited ("TAL"), the Saudi based subsidiary of an Italian engineering company, fell victim to APP fraud. The fraudster gained access to the email account of a senior director within the global Tecnimont group and subsequently sent an email from that account instructing TAL to transfer US$5 million to a NatWest bank account in London held in the name of Asecna Limited, an English registered company. TAL, having been deceived by the email, made payment to the fraudster's account. The payment was effected by way of an offshore transfer in US dollars from TAL's Saudi bank, Saudi British Bank SJSC ("SABB"), via Citibank in the US (SABB's correspondent bank) to NatWest in London, using SWIFT messages. 

Before the fraud was uncovered, the fraudster transferred the majority of the funds out of the NatWest account to different accounts in various jurisdictions. The fraudster's outgoing transfer requests triggered NatWest's "know your customer" (KYC) and anti-fraud warnings.  However, having investigated, NatWest ultimately carried out their customer's (the fraudster's) request and made the transfers. Following the discovery of the fraud, TAL brought a claim against NatWest in an attempt to recover the lost funds.


Unjust Enrichment

TAL's claim against NatWest predominantly relied on the principle of unjust enrichment.3 A claim based on unjust enrichment requires consideration of four factors:

(i)    Has the defendant been benefited, in the sense of being enriched?

(ii)    Was the enrichment at the expense of the claimant?

(iii)    Was the enrichment unjust?

(iv)    Are any defences available to the defendant?


The High Court's Decision

The High Court found that NatWest had not been unjustly enriched at the expense of TAL. There was no dispute as to point (i) above; it was accepted that by reason of receipt of the US$5 million into the NatWest account, NatWest had been enriched by the funds received. The main points in issue were factors (ii), (iii) and (iv).

Was the enrichment at the expense of TAL?

Following the Supreme Court's decision in Investment Trust Companies (In Liquidation) v Revenue and Customs Commissioners [2017] UKSC 29, in order to satisfy the "at the expense of" condition, a claimant must show that there has been a "transfer of value" in the sense that the defendant has received a benefit from the claimant and the claimant has suffered a loss or detriment through the provision of that benefit.4  The aim of restitution (the remedy for unjust enrichment) is therefore to correct that defective transfer of value. 

Most commonly, a transfer of value will arise either when (a) the claimant and defendant deal directly with one another, or (b) they deal directly with one another's property. In this case, as the funds were transferred by electronic means via a US correspondent bank, the Court held that there was no direct transfer from SABB to NatWest, and the parties did not deal directly with each other's property. 

It would have been possible for TAL to establish the existence of a transfer of value if the transactions between SABB, Citibank and NatWest could properly be viewed as "a single scheme or transaction on the basis that it would be unrealistic to treat them in any other way".5  His Honour Judge Bird found, however, that this was not possible. It was both "necessary (and realistic)" to treat the transfer as individual transactions, given that the actual mechanism for payment involved the adjustment of interbank balances between two pairs of banks, and consequently there was no single provider of funds.6  HHJ Bird warned that to extend the type of cases where indirect payments can be treated as direct payments to international bank transfers of the kind the Court was considering in this dispute would have "far-reaching and potentially unforeseen consequences". 7

Was the enrichment unjust?

Despite finding against TAL on element (ii) above, the Court went on to consider the other elements to TAL's claim. HHJ Bird was satisfied that the enrichment was unjust, having resulted from a payment made under a mistake of fact induced by the fraud of a third party. TAL employees were "completely taken in by the fraud", and believed at every stage that in authorising the transfer to NatWest's account they were acting on the genuine instruction of a senior director.8

Did NatWest have any defences available to it?

HHJ Bird found that even if he was wrong in his conclusion that TAL had failed to meet the legal test required for unjust enrichment, NatWest had a complete defence to TAL's claims. Relying on the defence of change of position, NatWest contended that it would be unfair to require it to pay restitution, as doing so would put it in a worse position than it would have been in had it never received payment. TAL raised various challenges to NatWest's defence, including to the adequacy of the bank's internal fraud detection systems. However, the Court determined that at no point was NatWest's conduct such that it would be unjust to allow it to rely on the defence of change of position. With the benefit of expert evidence on the anti-fraud systems in place at NatWest (and the bank's response to the transfers made in this case), HHJ Bird concluded that "it [was] plain that the bank had in place adequate and properly designed systems to deal with frauds on and by its customers", and emphasised that such procedures were in line with industry standards.9



As the recent line of English case law has shown, victims of APP fraud are increasingly trying to find ways to hold banks accountable for failing to prevent their financial losses. This decision confirms that banks have limited exposure to potential liability from such claims brought by non-customer third parties.  It also serves as a salient reminder of the importance of having effective internal anti-fraud systems and procedures in place, which conform to current industry standards.


1 [2022] EWHC 1172 (Comm).
2 See, for example, Philipp v Barclays Bank [2022] EWCA Civ 318, our analysis of which is available here
3  TAL brought an additional claim on the basis of knowing receipt; however, this claim was not actively pursued and ultimately failed on the basis that the funds received were not trust property.  
4 [2017] UKSC 29, [43].
5 [2022] EWHC 1172 (Comm), [128].
6 [2022] EWHC 1172 (Comm), [139].
7 [2022] EWHC 1172 (Comm), [147].
8 [2022] EWHC 1172 (Comm), [158].
9 [2022] EWHC 1172 (Comm), [192].


White & Case means the international legal practice comprising White & Case LLP, a New York State registered limited liability partnership, White & Case LLP, a limited liability partnership incorporated under English law and all other affiliated partnerships, companies and entities.

This article is prepared for the general information of interested persons. It is not, and does not attempt to be, comprehensive in nature. Due to the general nature of its content, it should not be regarded as legal advice.

© 2022 White & Case LLP