Court of Appeal confirms that correspondent banking obligations are personal, not proprietary

First City Monument Bank plc v. Zumax Nigeria Limited [2019] EWCA Civ 294

The England and Wales Court of Appeal has handed down a judgment which clarifies the circumstances in which a Quistclose trust, or any trust, may (or may not) arise, in the context of a series of correspondent banking transactions. In short, correspondent banking transactions will not generally give rise to any trust, and the correspondent bank's obligation to effect the onward payment to the beneficiary bank is personal rather than proprietary in nature. The decision will be welcomed by banks, as it clears up some confusion following the decision at first instance.