BVI Asset Tracing: Looking Forward And Backward

If a wrongdoer spends his ill-gotten gains, is the claimant effectively limited to recovering a maximum sum from a subject bank account? What if the proceeds of the wrongdoer are transferred into an overdrawn bank account?

This was the thorny, but very real question that has recently been answered by the Privy Council in The Federal Republic of Brazil and another (Respondents) -v- Durant International Corporation [2015] UKPC 35. The case, although an appeal from Jersey, concerned BVI companies used to secrete the proceeds of bribes. Moreover, as a Privy Council decision, it has persuasive authority in the BVI.

The central issue in the Appeal was the effect of a bank account, used to hold bribes, being depleted, and then replenished. Given that tracing is a proprietary relief, does the depletion have the effect of removing from the scope of a tracing exercise any further funds? The appeal therefore considered the validity and scope of two principles of tracing: