The Privy Council's decision in Credit Suisse Life (Bermuda) Ltd v Ivanishvili and ors [2025] UKPC 53 removes any lingering doubt that a claimant in deceit need not be consciously aware of a representation to rely on it. In this article, we summarise the decision and consider its relevance and potential effect on claims under s.90A of the Financial Services and Markets Act 2000 ("FSMA").

The background in brief

Mr Bidzina Ivanishvili, a Georgian businessman and former Prime Minister of Georgia, invested over US$750 million as premiums under two life insurance policies issued by Credit Suisse Life (Bermuda) Ltd ("CS Life"). CS Life is a Bermudan insurance company which was a wholly owned subsidiary of Credit Suisse AG (the "Bank"), with whom Mr Ivanishvili had a private banking relationship. Mr Ivanishvili made the investment following advice from his relationship manager at the Bank, Mr Patrice Lescaudron and the premiums were held in segregated accounts.

In 2015, Mr Ivanishvili discovered that Mr Lescaudron had been fraudulently mismanaging the policy assets. Criminal proceedings were brought in Switzerland and he was convicted in 2018. 

Civil proceedings were issued in Bermuda against CS Life in 2017 by Mr Ivanishvili, family members and two companies which were the named policyholders, claiming damages for breach of contract and fiduciary duty. A claim for damages for fraudulent misrepresentation was later added.

Previous decisions and appeal

At first instance, the Chief Justice found CS Life liable for breach of contract and fiduciary duty. He also concluded that the claimants had been induced to enter into the policies by fraudulent misrepresentations. 

CS Life appealed to the Court of Appeal, which dismissed the appeal in relation to the claims for breach of contract and fiduciary duty, but allowed the appeal regarding the fraudulent misrepresentation claim, holding (amongst other things) that the claimants had neither pleaded nor proved that Mr Ivanishvili had any conscious awareness or understanding of the representations made to him.

CS Life appealed to the Privy Council, arguing that the Court of Appeal was wrong to uphold the award of damages for breach of contract and fiduciary duty. The claimants cross-appealed the Court of Appeal's dismissal of the misrepresentation claim, which is our focus for the purpose of this article. 

The fraudulent misrepresentation claim

The representations on which the claim for fraudulent misrepresentation were based were made by Mr Lescaudron (on behalf of CS Life) to Mr Ivanishvili at meetings in Georgia, at which the life insurance policies were proposed. 

The Chief Justice at first instance found that by recommending the life insurance policies Mr Lescaudron impliedly represented that the Bank (including himself) was not fraudulently managing the accounts and did not intend to manage the policy assets fraudulently. Those implied representations were found to be false and induced entry into the policies. In fact, the Chief Justice found that Mr Lescaudron could not have induced the claimants to enter into the policies without making the implied representations. These findings were affirmed by the Court of Appeal and were not challenged. 

The issue for the Privy Council was to determine whether the Court of Appeal was right to hold that the misrepresentation claim failed, (i) because the claimants had not pleaded and proved that Mr Ivanishvili had any conscious awareness or understanding of the representations made to him; and (ii) on a limitation issue.

The claimants did not allege that Mr Ivanishvili consciously appreciated those representations at the time and he did not give evidence that he assumed this to be the case. Instead, they argued that such awareness isn't a legal requirement for deceit. The Privy Council therefore had to determine the following question: is it a legal requirement of a claim in deceit that the claimant was aware of the representation on which the claim is based?

The issue was argued on the basis that the relevant law of Bermuda and England and Wales is the same.

What the Privy Council decided 

The Board had "no hesitation" in rejecting any legal requirement that a claimant in a claim for the tort of deceit was consciously aware of the representation or understood it to have been made. It disapproved an errant line of authorities, starting with Raiffeisen Zentralbank Österreich AG v Royal Bank of Scotland plc [2010] EWHC 1392 (Comm), which suggested otherwise.

The Board set out examples of cases of deceit in which "it is either unrealistic to suppose that the claimant was consciously aware of the representation made by the defendant or plain that the claimant was unaware of it". For example:

The waiter who serves a customer in a restaurant does not stop to think that, by placing an order, the customer is representing that he has the means and intention to pay for the meal before leaving. The waiter just assumes this to be the case. It is an assumption that arises naturally through established social norms and expectations. The same applies to the cab driver who stops to pick up a person who waves her arm to hail the cab or the auctioneer who treats a raised hand as a bid to pay the price asked.

It was noted that, in reality, no separate awareness of a representation being made usually takes place in such situations. 

The Board clarified that reliance or inducement (an essential element of a claim for deceit or other claim for damages for misrepresentation) has two aspects: (1) the representation must have deceived the claimant by causing the claimant to hold a false belief ("reliance in belief"); and (2) the claimant must have acted so as to suffer loss because of holding that false belief ("reliance in action"). Neither requires the claimant to be consciously aware of the representation at the time when he acts on it. 

It would be difficult for a court to determine what conscious thought did or did not occur in the mind of the claimant and would cause practical and evidential difficulties. In the everyday examples given above, the waiter or the taxi driver would equally be victims of deceit if they had had a conscious thought that their customers were impliedly representing that they had the means and intention to pay, or if they did not. If the law made a distinction in this way, there would be a "charter for fraudsters".

Where words are ambiguous and only one meaning would render them false, a claimant may in practice need to show they understood the statement in that false sense. This is a fact-specific evidential point, not a universal rule. 

Another misconception in the case law was that a distinction needs to be drawn between cases where the claimant has relied on a representation and where the claimant has acted on an assumption. However, these are not mutually exclusive. In a case where the claimant has acted on an unconscious assumption, the key question is whether the assumption was one which the claimant would naturally be expected to make in response to the defendant's words or actions, or whether it was an assumption made independently by the claimant. The defendant would not be liable if the claimant acted on an erroneous belief not caused by the defendant. 

Finally, the Privy Council addressed a further misconception that a requirement of awareness of a representation was necessary to preserve the distinction between misrepresentation and non-disclosure (the latter, for the most part, not giving rise to liability). However, this distinction does not depend on the claimant's awareness or understanding of acts done by the defendant, but on the defendant's actions or inactions. 

Despite this, the misrepresentation claim failed on limitation under Georgian law. 

General practical points

The decision that conscious awareness is not a requirement in a claim for deceit is a significant development in the law. This Privy Council decision will be highly persuasive in England and Wales and will likely be followed. 

It may increase the number of deceit claims made and mean that they might have better prospects of success, given the finding that claimants do not have to show that they were consciously aware of the representation or understood it to have been made in order to succeed. Further, it is to be expected that fewer claims would be struck out because the claimant cannot show or has not pleaded conscious reliance.

Defendants' arguments may refocus from "no awareness" to arguments about ambiguity, alternative causation, or assumptions said to be independent of any representation. 

Further, in the judgment, the Privy Council acknowledged the case of Renault UK Ltd v Fleetpro Technical Services Ltd [2007] EWHC 2541 (QB), in which "the judge held that a fraudulent misrepresentation giving rise to liability in deceit can be made to a machine, rather than to an individual, if the machine is set up to process certain information in a particular way in which it would not process information about the material transaction if the correct information were given". It was noted that these types of cases must be "increasingly common". 

Relevance to section 90A FSMA claims

By way of brief summary, section 90A (together with Schedule 10A) FSMA offers a remedy of compensation for shareholders in listed companies who have suffered loss as a result of a misleading statement or dishonest omission within information published by the company relating to the securities, or as a result of a dishonest delay by the company in publishing such information. A claimant must show reliance on the published information. Further, a person discharging managerial responsibilities within the company must have known the statement to be untrue or misleading (or was reckless as to whether it was) or that the omission was a dishonest concealment of a material fact. 

A key case in this area on the question of reliance is Allianz Funds Multi-Strategy Trust v Barclays Plc [2024] EWHC 2710 (Ch), a claim by investors against Barclays Bank. The judge concluded in that case that Parliament intended the court to apply the common law test of inducement or reliance from the tort of deceit in relation to the use of "reliance" in paragraph 3 of Schedule 10A of FSMA. The court went on:

That test requires the Court to determine whether the Claimants were induced to rely on the published information ... and whether that published information caused the Claimants to acquire, hold or dispose of the Bank's shares. I agree with Hildyard J in Autonomy that the Claimants in Category C cannot satisfy this test unless their representatives read and considered that published information or third parties who directed or influenced their investment decisions read and considered that published information.

"Category C" claimants were alleged to have suffered losses as a consequence of movements in the share price of the Bank. Very broadly, it was alleged that these claimants had relied on the relevant published information as a result of their investment processes tracking the share price, which in turn would reflect the contents of published information. This decision therefore seemed to mean that passive investors who tracked the market could not succeed in bringing a claim under s.90A FSMA. 

However, in Various Claimants v Standard Chartered Plc [2025] EWHC 698 (Ch), the court declined to strike out the case of over 200 institutional investors, which included "common reliance claims" which were claims similar to those in Allianz – the claimant or their agent relied on the market to have set the price for the shares, having taken account of the published information that is alleged to have been untrue and misleading. The judge in Standard Chartered noted that this is "clearly a developing area of law ... and certain elements of the test of reliance in the common law are not fully established" and declined to strike out the common reliance claims, noting that it was not bound to follow Allianz and that from a case management perspective, strike out would not dispose of the case or substantially reduce the burden of the trial which was set to proceed in any event. 

This area of the law is therefore in a state of some uncertainty. Given that the Privy Council in Credit Suisse Life v Ivanishvili decided that there is no legal requirement that a claimant in a claim for the tort of deceit was consciously aware of the representation or understood it to have been made, this may be relied upon by institutional investors who track the market to argue against the decision in Allianz and advance section 90A FSMA claims. However, a claimant will need to clearly demonstrate causation between the misleading statement/dishonest omission/delay and their decision-making and will need to address the reasonableness requirement in Schedule 10A. Ultimately, these issues need to be tested before the courts and there is plenty of scope for argument. 

For further information about the content of this article, please contact Leo Meredith.