By Kirstin Ridley and Johannes Birkebaek
LONDON/COPENHAGEN (Reuters) -British hedge fund trader Sanjay Shah has lost a final bid to block Denmark's tax authority from pursuing him and others in London over an alleged 1.44 billion pound ($1.8 bln) 'cum-ex' tax fraud, after senior judges ruled the case could proceed.
The UK Supreme Court on Wednesday unanimously rejected arguments that the case amounted to a foreign state attempting to enforce its domestic tax laws in English courts and breached a well-established principle known as the "revenue rule".
"The substance of (Danish tax authority SKAT's) claim is that the appellants defrauded SKAT to obtain refunds to which they were never entitled and SKAT has brought its claims as a victim of fraud," the judges said.
One lawyer in London said Denmark had shown "dogged persistence" in its case, and that the ruling would "reverberate around the world" amid ongoing litigation over the billions paid out over cum-ex.
"This has to be seen as a significant victory for the Danish tax authorities," said Aziz Rahman, senior partner at law firm Rahman Ravelli. "It will also give reassurance to other countries that are looking to recoup huge amounts of money that they paid out due to cum-ex."
The ruling is a blow to Shah, who has separately been criminally charged by Danish authorities and was arrested in Dubai last year. Shah, who denies wrongdoing, remains in detention pending extradition proceedings.
A spokesperson for Shah and London lawyers for SKAT declined to comment.
So-called 'cum-ex' schemes, which flourished following the 2008 financial crisis, involved trading shares rapidly around a syndicate of banks, investors and hedge funds to exploit the tax systems of countries such as Denmark, Germany and Belgium.
Investigations led by Germany and Denmark have triggered bank raids, arrests and prosecutions. Denmark has charged nine British and U.S. citizens over the schemes, which it says have cost it more than 12.7 billion Danish crowns.
SKAT alleges Shah's Solo Capital Partners and others ran a fraudulent scheme that involved submitting wrongful applications for dividend tax refunds on behalf of investors and companies around the world between 2012 and 2015.
The London ruling, which will allow a year-long civil trial to begin next April, was announced as Denmark kicked off its first criminal cum-ex trial. Guenther Klar, a Briton, is charged with defrauding the Danish government of 320 million crowns ($45 million). Klar denies wrongdoing.
Shah's Danish trial has been postponed until Jan. 8, 2024. However, his lawyer told a London court in August that he continues to fight a decision to extradite him to Denmark.
($1 = 0.8133 pounds)
($1 = 6.9867 Danish crowns)