Private Law Theory

ABSTRACT
This paper argues that the modern law of tracing rests on unstable conceptual foundations. The traditional exchange-product theory was increasingly unable to explain the cases that mattered most, particularly those involving bank transfers, mixed accounts, missing transactions and payments made in the wrong order. Foskett v McKeown appeared to offer a new explanation by replacing the language of rights moving from one asset to another with the language of value. Yet the House of Lords continued to insist that tracing was concerned with the vindication of the claimant’s proprietary rights in the original asset. The result was not clarification but a deeper instability.

That instability became visible in Relfo v Varsani and Federal Republic of Brazil v Durant. In those cases the language of tracing was retained, but the connection between original asset and substitute was loosened to the point where tracing ceased to be a transactional process and became instead an exercise in causation, intention, coordination and attribution. Whatever the merits of the outcomes, the reasoning was increasingly difficult to reconcile with any proprietary account of tracing.

The Supreme Court decision in Byers v Saudi National Bank appears to point in a different direction. By requiring attention to the claimant’s continuing equitable interest, it exposes the difficulty of treating value as something capable of being attributed to a new asset independently of proprietary continuity. It remains uncertain what effect Byers will have on later courts. More fundamentally, it remains uncertain whether any return to a pre-Foskett understanding of tracing is either possible or desirable.

The paper concludes that tracing has never explained the feature which supposedly connects cases involving physical exchanges, bank transfers, mixed accounts, missing transactions, backward transactions and coordinated schemes: that the defendant has in her hands something to which the claimant has a prior and better title. A claimant whose asset has been misappropriated may have claims against a defaulting fiduciary, against a dishonest assistant, or against a recipient personally liable in equity for the value of what was received. What has not been produced is any convincing analysis explaining why such liability should carry with it a proprietary claim in respect of an asset different from the asset in which the claimant originally held rights.

Silver, Jonathan, Tracing the Future (June 15, 2026).