Privy Council decides appropriation is subject to equitable relief from forfeiture

The remedy of appropriation was introduced into English law by the Financial Collateral Arrangements (No.2) Regulations 2003, implementing the Financial Collateral Directive 2002/47/EC. It was supposed to provide for a speedy and court-free method of enforcement over financial collateral (broadly defined as cash, shares and other financial instruments and credit claims).

After five years of litigation, just how useful the remedy of appropriation really is – at least in respect of shares in a private company – could be questioned following the Privy Council’s decision in Cukurova v Alfa Telecom Turkey Ltd [2013] UKPC 2. It held that there is nothing in the Directive or FCRs precluding the court from granting equitable relief against forfeiture after the appropriation of financial collateral. Although certain unusual factors in this case may limit its practical application, it creates uncertainty over the use of appropriation.

Our briefing discusses this decision further

For more information please contact Paul Sidle or your usual Linklaters contact.

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