Reed Smith Client Alerts

The English Commercial Court has dismissed a major case brought by the Kingdom of Denmark against more than 100 defendants to recover approximately £1.5 billion it mistakenly paid based on allegedly fraudulent dividend withholding tax reclaims. The Court ruled that the claim – thought to be one of the largest civil fraud matters ever brought before the English courts – infringed the long-standing common law ‘Revenue Rule’, which holds that English courts will not enforce the revenue laws of a foreign state. Reed Smith acted for two of the defendants to the claim, and was one of just four defendant legal teams who successfully argued the application of the Revenue Rule.

The dismissal serves as a stark reminder of the importance of considered forum selection at the outset of a claim. It also shows the benefits of strong judicial case management and the drawbacks that can arise when pursuing a large number of defendants.


The English Commercial Court has dismissed a major fraud claim brought against more than 100 defendants by the Kingdom of Denmark (acting through its customs and tax administration, Skatteforvaltningen (SKAT)).

SKAT alleged that it had been the victim of a massive fraudulent conspiracy masterminded by Mr Sanjay Shah, the founder and principal of the now defunct FCA-regulated firm Solo Capital Partners LLP.

Prior to its collapse in 2015, Solo handled aspects of so-called ‘cum-ex trading’, a complex strategy involving the trading of shares on or around their dividend date and the subsequent reclaim of dividend withholding tax from the relevant tax authority.

SKAT claimed that between 2012 and 2015, it mistakenly paid approximately £1.5 billion in dividend withholding tax to Solo and related entities, based on thousands of invalid dividend tax reclaim applications. It alleged that the applicants never actually held the shares in question or received any dividends. The leading defendants against whom fraud was alleged denied any wrongdoing, and claimed that the applications were valid.

The scale of SKAT’s claim, both in terms of the number of defendants and different causes of action pleaded, was almost unprecedented before the English courts, with one Commercial Court judge describing it as “mammoth”. Extensive case management was a feature of the proceedings from the outset, with regular procedural hearings attended by some of the 21 separate legal teams and numerous litigants in person involved in the case. Following almost three years of extensive pleadings and disclosure, the Court listed two preliminary trials in 2021 to deal with specific issues, before a year-long main trial, scheduled to begin in early 2023.