Trafigura has succeeded establishing that it was the victim of a “fraud on a grand scale” masterminded and implemented by Prateek Gupta. Trafigura is entitled to proprietary relief for sums of about $500 million, together with substantial damages.
Mr Gupta was found to have extracted millions from Trafigura under the pretence that the corporate entities were selling high-quality London Metal Exchange (“LME”) Grade Nickel when in fact they supplied cargoes of low value or worthless materials.
Read the full judgment here: Trafigura Pte Ltd & Anor v Prateek Gupta & Ors [2026] EWHC 159 (Comm)
An ‘unconventional’ defence
Saini J described the defence to the main fraud claim as “somewhat unconventional.”
Rather than deny the existence of the fraud, Mr Gupta’s case was that Trafigura (through senior personnel) itself orchestrated, and actively participated in the fraud. He claimed that Trafigura knew all about the arrangement to substitute the LME Grade Nickel for much cheaper material.
The principal factual issue at trial was whether this complicit arrangement was made or existed.
The arrangement made no commercial sense for Trafigura
Saini J decided that there was no such arrangement between Mr Gupta and senior people at Trafigura. The arrangement made no commercial sense for Trafigura, and it was decided that Mr Gupta’s account of the facts was not credible.
If the arrangement had been true, Trafigura would have taken on enormous risks that were wholly uncommercial by entering into it. For example, it would have involved Trafigura defrauding its own banks, and damaging its reputation irreparably if the arrangement had been discovered.
Looking at Mr Gupta’s account of how the alleged arrangement came into existence, the judge did not consider that it was a likely story. It would have started with a proposition, out of the blue, at the very first meeting of the parties, that they embark on a fraud together. Not just a small lie. But a large fraud involving trading what would appear to be billions of dollars’ worth of Nickel, but which would in fact involve much less valuable (or worthless) material.
This seems an unlikely proposition, given over lunch to a complete stranger.
Implied representations “march hand in hand with common sense”
The first limb to establish in a case of fraudulent misrepresentation is that a representation has been made by the representor to the representee. It can be an express or implied representation.
When negotiating the contracts, the corporate defendants represented that they intended honestly to perform their obligation to supply nickel. Trafigura submitted that implied representations of this nature were inherent in the negotiation of contracts.
Saini J considered SK Shipping Europe Limited v Capital VLCC 3 Corp [2022] 2 All ER (Comm) 784, in which it was said that:
“there are some circumstances where an offer to contract on certain terms carries with it an implied representation as to the party’s honesty in relation to the proposed transaction. It is not difficult to see why this should be so. Such honesty is the necessary substratum for all commercial dealings. It goes without saying.” [51]
The issue was recently considered by the Privy Council in Credit Suisse Life (Bermuda) Ltd v Bidzina Ivanishvili and 6 others (Bermuda) [2025] UKPC 53. That case clarified the law to the extent that a victim of fraud may now rely on a representation, even if it is an implied representation, without needing to demonstrate to the court that he or she gave conscious thought to the representation that was made. See our article on the Ivanishvili decision for more information.
Considering the case law on the point, Saini J commented that “the cases show that the law as to implied representations marches hand in hand with common sense. Commerce plainly involves unstated assumptions of the honesty of one’s counterparty: some things go without saying.”
Comment
The decision brings to a close lengthy years-long litigation, which has involved the application and continuation of a worldwide freezing order. Mr Gupta has fought the litigation at every juncture, but has ultimately been found to have perpetrated the systematic fraud on Trafigura. Trafigura was in no way complicit in the fraud, and personnel at Trafigura were found to be wholly innocent.
