Case Analysis: Terna Energy Trading DOO v Revolut Ltd

<center><span class="news-text_italic-underline">Terna Energy Trading DOO v Revolut Ltd [2024] EWHC 1419 (Comm)</span></center>

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Facts

Terna Energy is a Serbian company which sells energy on both domestic and foreign markets. Revolut is a financial services company, authorised by the Financial Conduct Authority as an "electronic money institution" (“<span class="news-text_medium">EMI</span>”).

Terna Energy, induced by an authorised push payment (“<span class="news-text_medium">APP</span>”) fraud, instructed UniCredit Serbia to pay €700,000 to an account with Revolut held by Zdena Fashions Ltd (“<span class="news-text_medium">Zdena</span>”), an English company. Although initially frozen by anti-money laundering software, the credit was released to Zdena’s account and entirely dissipated.  

Issues

Terna Energy’s claim was that Revolut had been unjustly enriched, in that:

1. Revolut was “enriched” by Terna Energy’s payment induced by APP fraud;
2. The enrichment was unjust;
3. The enrichment was “at the expense of” Terna Energy; and
4. Revolut had no defences to the claim.

Revolut applied for reverse summary judgment of Terna Energy’s claim on the grounds it had no real prospect of success. If successful, Revolut’s application would dispose of Terna Energy’s claim without a trial.

Decision

The English High Court refused Revolut’s application.

<span class="news-text_italic-underline">Enrichment</span> – There was a real prospect Revolut was “enriched” by the benefit it gained as a result of the instruction given by Terna Energy to UniCredit Serbia. Revolut held a beneficial interest in the funds and had used and profited from them prior to the dissipation. Revolut had received fees amounting to approximately £3,000. Thus, “enrichment” was a question for trial.

<span class="news-text_italic-underline">At the expense of Terna Energy</span> – The benefit gained by Revolut came as a result of Terna Energy’s instruction to UniCredit Serbia. The instruction caused Terna Energy a loss of the same value. Considering agency principles, Terna Energy put UniCredit Serbia in funds with a direction to pay Revolut, intending no trust of money. Despite the banks and correspondent banks crediting “electronic money” to each other in a series of co-ordinated transactions, there was no doubt Terna Energy had paid Revolut.

<span class="news-text_italic-underline">Unjustness and Defences</span> – The questions of “unjustness” and possible defences could only be determined at trial. The payment mechanism in this case was complex and required full argument.

Comment

In some respects, principles of modern unjust enrichment in English Law are relatively novel. Consequently, there are a number of conflicting English High Court cases in this area, particularly regarding the liability of banks and EMIs in receipt of fraudulently obtained funds. As Revolut has received permission to appeal, we look forward to the Court of Appeal bringing clarity into this area of law.