Case studies

In this litigation, our law firm represented a Liechtenstein trustee who had been active for many years and whom the ghosts of the past had caught up with. This trustee was sued in 2011 for an amount in the tens of millions of Swiss Francs. The complaint briefly argued that our client had failed to prevent the U.S. family advisor of the beneficiaries from embezzling disbursements from Liechtenstein Anstalts of which the latter was a board member, instead of forwarding them to his clients. All of the damaged Anstalts were founded in the 1980s.

The business relationship between our client and the US attorney of the beneficiaries, who also had other business relationships, went back to the 1970s. The U.S. attorney who ultimately embezzled a double-digit CHF million amount was active in Liechtenstein in the 1970s, 1980s and 1990s as a highly renowned New York attorney. In 2007, his malversations came to light.

Remarkable and characteristic for this case was the fact that at no time during the 25-year business relationship did the beneficiaries contact our client and his trust company in any way. As it turned out in the later civil proceedings, this passivity had to be seen against the background of tax aspects.

After the discovery of the malversations in 2007, the legal representation of the beneficiaries began in 2008 to press for the removal of our client as director of the concerned Anstalts. To this end, a meeting was held in April 2008 at which the circumstances surrounding the embezzlements by the New York lawyer that had become known by then were all openly discussed and transparently communicated. All persons involved at the time took part in this meeting. Subsequently, our client resigned and the then legal representative of the aggrieved Anstalts was registered as a member of the Board of Directors at the end of July 2008. Attempts were then made to settle the matter by means of a compromise. However, no such settlement was reached, so that a lawsuit was filed against our client in October 2011 for accounting and payment.

The proceedings ultimately lasted almost 11 years; all three court instances had to decide twice, since the first judgement of the first instance was incomplete. In the first instance, the court dismissed the claim after taking only very limited evidence. The dismissal of the claim was based on the fact that the defendants were entitled to rely on the power of attorney of the New York lawyer and therefore all payments from the Anstalts to him had to be regarded as distributions to the beneficiaries and therefore no damage had occurred. The fact that the latter then embezzled the funds was not attributable to the sphere of our client. Moreover, the court of first instance mentioned that the plaintiff’s claims were in any case time-barred but did not give any further reasons for this. The Princely Supreme Court upheld the plaintiff’s appeal and ruled that the requirements for a prima facie power of attorney were not met and that the claims were not time-barred.

It was interesting to note that the court of second instance in his first judgement granted the newly appointed Board of Directors a three-month period, calculated from the date of entry of the new Board of Directors in the Commercial Register, in order to “familiarize” itself. This would have postponed the start of the limitation period by three months, which is why the claims would not be time-barred. Due to the incorrect legal opinion of the court of first instance, the Supreme Court held that the relevant findings of fact were lacking in the matter at hand, which is why it provided its decision with a reservation of res judicata. The Supreme Court did not uphold the appeal lodged by the trustee against this decision and ruled that extensive findings on the issue of the statute of limitations still had to be made.

Sodann wurde das Verfahren vor dem Landgericht fortgesetzt, in dessen Rahmen es zu umfangreichen Beweisaufnahmen kam. The second judgment of the Princely Court granted the claim on the merits. However, only a fraction of the amount was awarded. The Princely Court stated that both the prerequisites for a power of attorney relationship of the U.S. attorney vis-à-vis his clients existed by operation of law, and that the claims were time-barred. The appeal lodged by our client against this decision was upheld by the court of second instance, which ruled that both the prerequisites for the power of representation of the U.S. attorney in the form of a special power of attorney by estoppel existed and that the claims were all time-barred. The Supreme Court rejected an appeal filed by the plaintiff. An appeal to the State Court against this decision was also not upheld.