Litigation, Mediation & Arbitration - Recovery
Peters & Peters
United Kingdom: Civil Interim Measures In England
26 January 2010
Article by Keith Oliver *, Senior Partner and Head of the Commercial Litigation, Civil fraud and Asset Tracing Team, Peters & Peters Solicitors.
This chapter gives a practical overview of key civil interim measures and remedies available from the English civil court for securing recoveries for a victim of fraud, corruption or other acquisitive crime. The remedies described are regarded as the lawyers' 'Nuclear Weapons' and are often known as such. Properly applied for and used, freezing property and search orders can put the claimant in the strongest possible position on day one of the proceedings to trace, secure and recover the proceeds of the claim or fraud or corruption upon him, however that crime has been perpetrated. Dishonest defendants or those whose conduct requires it find they are suddenly - and without advance warning - hamstrung financially and may in practical terms be deprived of the oxygen of financial resources to go about their daily lives. With the surprise elements of a pre-emptive strike by way of freezing order and ancillary asset disclosure and tracing orders, the defendant often suffers a mortal wound to his defence from which there is no ultimate recovery to avoid judgment and execution of that judgment worldwide. For the purposes of clarity throughout the chapter C refers to the claimant victim(s) of the fraud or corruption, D refers to the defendant perpetrator(s) and T refers to third party accomplices.'
To secure recovery it is necessary to have sufficient evidence to bring valid claims against D and sufficient assets against which a judgment can be enforced. Victims of fraud and corruption will be minded to (i) preserve assets to satisfy the expected civil judgment against D; (ii) preserve evidence that D might destroy or withhold if he becomes aware that the criminal offence has been discovered; (iii) obtain evidence from third parties that will aid the intended civil claim. Interim measures discussed below help achieve these objectives.
The following three sections consider freezing (Mareva) orders, proprietary injunctions and other key ancillary orders. The fifth section focuses on search (Anton Piller) orders and the sixth examines other relevant considerations namely, illegally obtained evidence and the privilege against self-incrimination
II. Freezing orders
The order takes its name from Mareva Campania Naviera S.A. v International Bulkcarriers S.A.  2 Lloyd's Rep. 509. The Civil Procedure Rules now refer to it as a freezing injunction (CPR 25.1 (1)(f).
It developed as a form of recourse against foreign-based defendants with assets within the UK and consequently the early authorities assumed that the injunction was not available against English-based defendants. In the same vein an early judicial guideline for the grant of the order required claimants to establish a risk of the removal of assets from the jurisdiction.
Section 37(3) of the Supreme Court Act 1981 now provides that the injunction may be granted to prevent defendants from removing from the jurisdiction 'or otherwise dealing with' the assets. Section 37 forms the basis of the jurisdiction for granting freezing injunctions 'in all cases in which it appears to the court to be just and convenient to do so'. The Court of Appeal held in Babanaft International Co. SA. v Bassatne  Ch. 13 that the wording of subsection 3 did not restrict the scope, geographical or otherwise, of 5.37(I). The Civil Procedure Rules currently provide that the injunction may be granted in relation to assets 'whether located within the jurisdiction or not' (CPR 25.1 (I )(f).
2. Purpose and effect
A freezing order prohibits D from unjustifiably dissipating his assets within the jurisdiction so that there are insufficient or no assets left to satisfy a judgment against him. To preserve assets pending enforcement, a freezing order can also be obtained post-judgment. If D has insufficient assets within the jurisdiction to meet the quantum of C's claim, the court can grant a worldwide freezing order.
3. Penal notice
Freezing orders, as well as search orders, are endorsed with a Penal Notice, which warns that disobedience of it may be regarded as contempt of court the penalty for which may be imprisonment, a fine or seizure of assets. Contempt may extend to any third parties who are notified of the order and do anything which helps or permits a breach its terms. However since the English court has no jurisdiction over third parties located abroad, the worldwide order has to be recognised, registered or enforced by the relevant foreign courts to be effective. This process is often described as 'domesticating' the English, order.
The orders usually freeze assets up to a financial limit, calculated according the value of C's claim with likely legal costs and interest taken in to account. D can deal with any 'surplus' assets that exceed the limit of the order as he sees fit. In addition payment of a sum equal to the value of the limit into court or providing security in that sum can discharge the freezing order.
A freezing order bites on the individual not his assets (in personam) and as such it does not grant any proprietary rights over the assets of D. It therefore does not confer on C any advantage in the event of D's insolvency. However, the position is different where proprietary rights are claimed over frozen assets (see Proprietary Injunctions below). A freezing order is an interim measure and therefore the standard form of order permits D to draw on frozen assets to pay a 'reasonable sum' for legal expenses and to pay a pre-set sum (fixed by the court) to meet ordinary living expenses. C is given a measure of control over any increases in expenses in order to prevent D from depleting his assets improperly. For example any increase in expenses has to be agreed with C, or in the absence of agreement, approved by the court.
4. Asset disclosure
The standard freezing order requires D to give details of the value, location and details of assets within the jurisdiction or elsewhere, for a worldwide freezing order. This enables C to identify the whereabouts of the assets and notify third parties of the freezing order. D may refuse to provide some or all of this information if in providing. it, he is likely to incriminate himself. The assertion of self incrimination privilege has been much curtailed in the United Kingdom (UK) by the Fraud Act 2006 - and in practical terms by the fact that reliance on the privilege is generally regarded as in effect an admission of liability. Forcing the fraudster defendant into an assertion of self incrimination privilege can be the first stage in victory for the claimant victim. Where there are concerns about the completeness of D's disclosure on affidavit, C can apply to have D cross examined in relation to those assets. In addition, the court can grant orders requiring third parties (e.g., banks) to assist in identifying and locating assets and other relevant information.
5. Application and requirements
The application to the court for a freezing order, as well as a search order, is almost invariably made without notice to D (ex parte). The first time that D learns about the order should be when he is personally served with it (see below for more detail about Service). This is done so as not to tip off D and T about C's intention to commence proceedings or to take any legal steps to secure assets and/or evidence. The court may decide not to grant a freezing order if D has had notice of C's intentions because' the court is unlikely to make orders which are futile' (Oaktree Financial Services v Higham  EWHC 2098 Ch ).
In order to obtain a freezing order, C needs to show:
A good arguable case; and
A real risk of unjustifiable dissipation of assets; and
That the order is just and convenient in all the circumstances
The court will not automatically conclude that because D is alleged to be dishonest he cannot be trusted not to dissipate his assets. Careful consideration should therefore be given in the evidence to the profile and background of D.
7. Cross-undertaking in damages
The court will require C to give a 'cross-undertaking in damages' which is a promise to comply with any order that it may make if it decides that the freezing order caused loss to D and that D should be compensated for that loss. This may include provision of security to fortify the cross-undertaking in damages.
8. Full and frank disclosure
On a without notice application the court is being asked to grant a hugely intrusive order against D who has not had a chance to be heard. Therefore C and his lawyers must give full and fair disclosure of all the material facts, including what D is likely to argue in his defence, or against C, or any facts likely to be relied upon. If there has not been full and frank disclosure, there is a real risk that the court will set aside the order.
Personal service is usually a precondition to committal for contempt of court for a breach of an order endorsed with a penal notice. However, the court does have an inherent discretion to vary the requirements for personal service (RSC Order 45.7(7)). Where relevant and possible, service should be effected simultaneously on D and the third party asset holders.
III. Proprietary injunctions
If C contends that D is holding C's property (which can include cash) or the traceable proceeds of his property (the 'proprietary assets') then the court can grant a proprietary freezing injunction. Its terms are typically more draconian than a standard (non-proprietary) freezing order and can restrain any dealings with the proprietary assets so that D cannot use them to pay for living or legal expenses.
When applying for a proprietary injunction, C needs to show a good arguable case and that it is just and convenient that the order be granted. He does not need to establish a risk of dissipation, because the nature of C's claim is that D is holding his assets or the proceeds of those assets. As a result the proprietary injunction does give C priority over D's creditors on the asset pool.
IV. Ancillary orders
The English courts have developed a number of orders to assist victims of fraud and corruption in their fight against those who attempt to delay and obfuscate. These include specific disclosure orders, which require disclosure of particular documents to help identify the nature and location of assets or passport orders requiring delivery up of all travel documents and prohibiting D from leaving the jurisdiction. A fraudster1 suddenly deprived of the means of travel internationally is inevitably shocked by the severity of the civil court's powers and it immediately impacts particularly if he is an overseas national who cannot return home or leave the UK during the currency of the asset disclosure process. Third party disclosure (Norwich Pharmacal) orders require third parties who are mixed up in the wrongdoing (whether innocently or not) to disclose information that will assist in the identification of wrongdoers, allow assets to be traced and to establish the validity of proprietary claims against third parties or tracing assets into the hands of third parties. Banks through which stolen funds are believed to have passed are an obvious target for such orders.
In addition third party freezing orders can be obtained against third parties but only where there is good reason for believing that assets ostensibly held by third parties are in reality D's assets. This is known as the Chabra jurisdiction. These orders are particularly useful where D has structured his affairs through sham trusts or other opaque vehicles so as to give the impression that he has no interest in the assets in question.
A critical weapon for the claimants is to be found in section 25 of the Civil Jurisdiction and Judgments Act 1982. Section 25 allows an English court to grant interim relief in aid of proceedings elsewhere. These are commonly invoked where assets are located in England, but D is located outside the jurisdiction, in the place where the substantive proceedings are being conducted. It is not necessary for foreign proceedings to have been commenced as long as they will be commenced. One can obtain relief in England - subject to demonstrating a sufficient geographical nexus - which cannot be obtained in the location of the substantive action.
V. Search orders
1. Purpose and effect
Search orders are directed towards preserving evidence which D would otherwise destroy or suppress if he learnt of C's intention to take legal action against him. The order requires D to permit access to C's solicitors to his 'premises' to search for and seize specified evidence.
The order does not allow forced entry. It imposes an obligation on D to permit entry to his premises. A failure or refusal to grant access will be contempt of court punishable by imprisonment and/or a fine. Search orders are by their nature intrusive and psychologically destroying to the defendants, particularly as standard form orders do not limit the extent of the search and permit the electronic imaging of computers, mobile phones, PDAs and Blackberries to secure information, normally defined by reference to the substantive allegations as the case study that follows this chapter neatly shows.
2. Application and requirements
As with freezing orders, search orders are made without notice. Therefore, C has to provide a cross-undertaking in damages and comply with the full and frank disclosure obligation. The order is also endorsed with a penal notice and contempt may extend to any third parties who are notified of the order and do anything which helps or permits a breach its terms.
The following conditions must be fulfilled in order for the claimant to obtain a search order:
There must be an extremely strong prima facie case
Evidence of very serious potential or actual harm to the claimant's interests
Clear evidence that D possesses the relevant incriminating evidence
That there is a real possibility that D will destroy the material before an interpartes application can be heard
The harm likely to be caused to D and his business affairs as a result of execution of the search order must not be excessive or out of proportion to the legitimate object of the order
In addition, the court must also be satisfied that the order is just and convenient in all the circumstances
The court requires that an independent solicitor is appointed (known as the supervising solicitor) to serve the order on D and also oversee its execution to ensure that it is conducted fairly.
D is permitted to arrange legal representation and also to gather up any documents he believes are legally privileged or which may incriminate him and hand those documents over to the supervising solicitor. If the supervising solicitor determines that the documents may be incriminating or privileged, or is in any doubt as to their status, then he will exclude them from the search and retain them in his safe custody, pending further order of the court.
No one who might gain commercially or personally from what they may see in the course of execution of the search order is permitted to execute the order. This typically means that C is not permitted to attend. C's legal representatives will execute the order.
VI. Other relevant considerations
1. Illegally obtained evidence
Great care should be exercised to ensure that information obtained in the course of the investigation has been obtained lawfully. Examples of illegal sources of information include dishonest pre-text calls, information obtained in breach of data protection laws and hacking. Illegally obtained evidence is admissible before the civil court but the court will decide how much weight to attach to the information and also it will consider whether to exercise its discretion and make the order sought given the provenance of the evidence.
Illegally obtained evidence is disclosable. The general rule is that evidence obtained for intended litigation normally attracts legal professional privilege. This means that the existence of the investigative materials and work product has to be disclosed but the documentation and work product itself is privileged from production and inspection (i.e., D is not allowed to see it).
However, there are exceptions to this rule: in Dubai Aluminium Co Limited v AI Awi and Others (1999] I WLR 1964 the judge held that where criminal and fraudulent conduct was involved for the purposes of acquiring evidence in or for litigation, any documents generated by or reporting on such conduct and which were relevant to the issues in the case were not only disclosable but also were not protected by legal professional privilege and therefore could be inspected by the other party. If evidence is obtained illegally and this is not disclosed to the court, in accordance with the obligation of full and frank disclosure, then if D learns about it, he may attempt to apply to discharge the order that was obtained without notice with the benefit of that evidence on the basis of non-disclosure and also argue that the order should not be renewed at the inter-partes stage.
VII. Privilege against self-incrimination
Freezing, proprietary and search orders contain mandatory provisions requiring the provision of specific information. The orders contain exceptions so that D may refuse to provide information or documents on the grounds that to do so would incriminate him.
The starting point is section 14(1) of the Civil Evidence Act 1968 which provides that the defendant may refuse to answer any question or produce any documents or things if to do so would tend to expose that person to proceedings for an offence or penalty.
However, section 13 of the Fraud Act 2006 has had a dramatic effect on the privilege against self-incrimination. It came into force on 15 January 2007 and, because it is simply an evidential provision, it applies retrospectively. It provides that a person is not to be excused from answering any question put to him in proceedings relating to property or complying with any order made in proceedings relating to property on the ground that doing so may incriminate him or his spouse or civil partner of an offence under this Act or related offence. A statement or admission made by a person in answering such a question, or complying with such an order, is not admissible in evidence against him or his spouse or civil partner in proceedings for an offence under this Act or a related offence.
Under the Act 'proceedings relating to property' means any proceedings for the recovery or administration of any property; the execution of a trust and an account of any property or dealings with property. Property covers any money or other property whether real or personal, including things in action and other intangible property. Related offence means conspiracy to defraud and any other offence involving any form of fraudulent conduct or purpose. In Kensington International Limited v Republic of Congo  I Lloyd's Rep. 161 it was held to include bribery.
The international nature of fraud, corruption and indeed any acquisitive offence involves asset transfers across territorial borders. Careful thought to the choice of jurisdiction and the possible or actual civil, criminal or regulatory processes in those jurisdictions and their effect on the civil recovery strategy are value judgments that must be made with the benefit of the fullest possible information and long term strategic aims in mind. Invariably foreign (local) specialists play an essential role in the international asset tracing and preservation exercise but the team must be cohesive, focused and instantly connected without egocentric national perspectives. Pursuing such criminals is a worldwide exercise where all the relevant jurisdictions have an equally important role to play. Properly managed and directed, the recovery of stolen or corruptly acquired assets through the panoply of civil remedies available can be expeditious, cost effective and devastating for the criminals as the following case studies demonstrate.
1. The Banco Noroeste story - the investigation, tracing and recovery of USD 242 million stolen from the Bank in an elaborate multinational '419' advance fee scam
The use of multinational litigation and, particularly, the combined application of civil and criminal processes working in parallel as part of a litigation pincer movement produced extraordinary successes in the recovery of the millions looted from Banco Noroeste of San Paolo, Brazil in the late 1990s - even though the recovery litigation did not start until several years later.
The head of the international division of Banco Noroeste of Brazil, Nelson Sakaguchi (Mr Sakaguchi), stole USD 190 million from the Bank through falsification of cash balances it held offshore in the Cayman Islands in a fraud of breathtaking audacity. Nigerian 419 fraudsters duped Mr Sakaguchi into believing that they were Nigerian government officials charged with the construction of the new international airport in the Nigerian capital of Abuja. The black hole was discovered in 1998 as part of the due diligence process for the impending sale by the majority shareholders of the Bank of their controlling interest to Banco Santander. By then the proceeds of the fraud - amounting to USD 242.5 million inclusive of interest and costs - had been laundered throughout the world.
The laundry extended to Hong Kong, Switzerland, UK, the United States (US), Singapore and ultimately Nigeria. The funds had been misapplied through SWIFT transfers - from the US to a multiplicity of accounts worldwide for the ultimate benefit of the key fraudsters, primarily Nigerian nationals by name of Emmanuel Odinigwe Nwude (Mr Nwude) and the late Christian Anajemba (Mr Anajemba) and his widow, Amaka, through a currency exchange laundry. The laundering had been managed initially through Hong Kong and subsequently Switzerland by Shamdas and Naresh Asnani (Asnanis), who were importers and exporters of electronic equipment between Hong Kong and Nigeria. It was the Asnanis who dishonestly secured the use of private Swiss bank accounts through which no less than USD 122 million was laundered as part of, purportedly, a black market foreign exchange operation that involved the trading of stolen dollars for Nigerian Niara.
Key to the successful recovery was the inclusive approach adopted by the multinational legal team involving eight jurisdictions with simultaneous proceedings. Aside from civil proceedings in the UK, the US and Hong Kong, simultaneous civil and criminal investigations and proceedings were commenced in Switzerland and subsequently in Nigeria. The criminal investigation in Switzerland secured the freezing of key bank accounts identified through the forensic determination of the fund flows. Simultaneous disclosure proceedings in the UK were directed at various banks through which funds had been channelled - key to the disclosure process (see section IV, first paragraph) are the gagging provisions of the disclosure order mechanism so that the banks innocently caught up in the channelling of misappropriated funds are prevented by Court order from disclosing the fact of disclosure, i.e., of the proprietary information they hold, to the owners of the account(s).
The Swiss legal team acting for the Banco Noroeste claimants (in Switzerland the Parties Civiles) were afforded early access to the information generated as part of the criminal investigation in Geneva. A picture fast emerged of a world wide web of illicit transfers involving the acquisition of valuable real estate in London by the Anajembas and in California by Mr Nwude and members of his immediate family and purported business activities by the Anajembas in Kentucky. Pursuant to a warrant issued by the Juge d'lnstruction in Geneva, Mr Sakaguchi was arrested in New York and transferred to stand trial, following lengthy incarceration, in Geneva. His co-defendants were the Asnanis who were similarly arrested in Miami pursuant to arrest warrants issued in Switzerland. Their lies to Citibank and Lloyds TSB International in Geneva and Zurich regarding the ownership of the funds remitted to the banks were serious breaches of Swiss banking law. They were money launderers. Information they provided both as part of the examination process - undertaken in the presence of the recovery team's lawyers- was applied worldwide. Mr Sakaguchi and Narash Asnani were convicted and spent over two years in a Swiss jail. Their conviction of Swiss money laundering offences demonstrates that overseas nationality is no bar to the full force of domestic law where international fraud is concerned.
In the UK interim and summary judgment against Amaka Anajemba both on her own account and as the widow and key beneficiary of her assassinated husband's estate for, respectively, USD 150 million and USD 290 million was secured as was judgment against one of the smaller players Chief Ezuge Nwandu (Mr Nwandu). It was Mr Nwandu's GBP 100 company, MacDaniels Limited, that effected the laundering of USD 8 million through the East London branch of a UK clearing bank, key transactions in the tracing process which enabled London to act as the spring-board jurisdiction for the worldwide civil litigation. The civil judgments against Amaka Anajemba and subsequently Mr Nwude were transported to Nigeria and California respectively. The US legal team secured judgments against Mr Nwude in California which were similarly spring-boarded to Nigeria. The UK proceedings alone involved 42 defendants and the range of asset tracing weaponry such as search and seizure orders, freezing orders, passport orders, Norwich Pharmacal orders (disclosure orders), interim payment orders, summary judgment, third party debt orders, charging orders and orders for sale. The UK legal team discovered that the late Mr Anajemba had acquired prior to his death extensive residential investment property in North London and extraordinarily had continued despite his death to pay tax on the rental income as part of the continued fiction.
Until the Banco Noroeste case, it had long been thought that recovery of stolen assets by proceedings in Nigeria was a near impossible task. The successes secured by the Banco Noroeste legal team working in conjunction with the EFCC - the Economic and Financial Crimes Commission established by the Nigerian Government to tackle money laundering offences head on - were spectacular. In July 2005, Amaka Anajemba pleaded guilty following a plea bargain arrangement and an agreement with the Banco Noroeste complainants. She received a 30 month sentence, fines of USD 5 million and N I million. In addition, assets worth USD 20.25 million were forwarded to the complainants, this aside from the civil recoveries already made against her and her deceased husband both in London and in Kentucky. In November 2005, Mr Nwude and another conspirator Nzeribe Okoli pleaded guilty receiving respectively five and four year sentences and orders to forfeit assets. The recovery process remains ongoing - over USD 120 million has already been recovered in cash, property and inevitably perhaps the fleet of expensive luxury cars.
Key to the legal operation and the successful recoveries was a number of central factors. The victim claimants' determination to pursue the launderers despite what might have appeared to be insuperable legal odds; the application of the initial recoveries to fund the litigation worldwide so that it was cost effective. The combined use of the civil and criminal jurisdictions - civil in the common law countries such as Hong Kong, UK, the US and Nigeria - and the combined criminal and civil mechanisms in the civil law jurisdiction of Switzerland with the ultimate application of the successful remedies by jail sentences both there and in Nigeria. The flow of monies internationally and the recovery and tracing steps available through the courts shows that there are in the modem world very few places that the fraudster or perhaps corrupt government official banker or ex-politician can ultimately hide.
2. The Brian White story
The Brian White Story - and the claims made against him by the Russian businessman that he conned - raises important issues concerning freezing orders, passport orders and the jurisdiction of the UK Court to issue a civil bench warrant to enforce a freezing order.
Mr Brian White (Mr White) had acted as agent for companies and property interests owned by a leading Russian businessman, Oleg Zakharov (Mr Zakharov), in connection with various investments and financial transactions including a major property development near Sotogrande in southern Spain. Mr Zakharov claimed that Mr White had failed to act honestly in relation to funds transferred to him and into accounts under his control and had dishonestly misappropriated assets and money belonging to him including shares and offshore companies primarily in the Dutch Antilles. Mr Zakharov made proprietary claims for the return of his property and that of his companies together with claims for compensation and damages for breach of fiduciary duty, conversion and breach of contract. The claims ran into several million Euros.
Mr White was elusive and difficult to trace. He was ostensibly located in Gibraltar and southern Spain but operated an accommodation address in Surrey, England, from where he used to direct his post using the confidential postal box system. Following detailed investigative work and an extensive forensic examination of the fund flows between Mr Zakharov's companies and the vehicles controlled or operated by Mr White, Mr Zakharov made application for worldwide freezing order relief including a passport order requiring Mr White to immediately deliver up his passport and other travel documents and a prohibition upon him travelling outside the jurisdiction of the Court.
When confronted with the freezing order requiring him to deliver up his passport and the key documents relating to the subject matter of the proceedings, Mr White refused to cooperate in any way. He claimed that his passport was held by an elderly relative in Scotland and notwithstanding the clearest possible warning that failure to comply would lead to contempt of proceedings his reaction was one of flagrant disregard for the Court order.
He took possession of the case papers and sped off in his vehicle into the Surrey countryside. Fearing that he was about to flee the jurisdiction, Mr Zakharov's lawyers followed Mr White but in the ensuing chase, he managed to lose them. However and simultaneously, Mr Zakharov's lawyers were able to make immediate urgency application to the Judge who made the original freezing and passport order, coordinating that process remotely enabling an application that afternoon to be made for the issue of a bench warrant for Mr White's arrest.
Mr White, within a matter of hours, was arrested at the mansion he occupied with his partner and which had been acquired using funds misappropriated from Mr Zakharov through the mechanism of a Dutch Antilles' entity which was one of the key vehicles of the fraud that Mr White had perpetrated.
Mr White's conduct in the face of the order and his clear disregard for the obligations imposed upon him by the Court led within a matter of months to a bankruptcy order against him and judgment with full recovery by Mr Zakharov of the property and cash assets both in the UK and Spain that Mr White had misappropriated.
The case demonstrates the immediacy of the freezing order regime and how this, allied to the weaponry available to the civil asset tracing legal team, can produce spectacular results for the victim claimant. Mr White - unversed in international litigation of this kind - never imagined the full force of English law would operate so as to compel the delivery up of his passport, the immediate disclosure of his worldwide assets and an order obliging him to co-operate with the tracing and recovery of assets which at that stage it was alleged that he had misappropriated. The without notice (ex parte) effect of the asset tracing civil law weaponry is an extraordinary jurisdiction and one which the victim claimant should employ whenever the evidence justifies it. The assets disgorged by Mr White included, aside from the property cash assets, the valuable executive toys so beloved of fraudsters, in this case the proceeds of a helicopter and a top of the range Aston Martin!
As technology advances daily, the English Courts have shown themselves, time and again, to be adept and creative in assisting the victim claimant to recover the proceeds of fraud and corruption. The last years have seen an explosion of applications made under Section 25 Civil Jurisdiction and Judgment Acts (see section IV, last paragraph) - this enables the Courts on application without notice by the victim to utilise the panoply of weaponry available to the Court to assist a foreigner with jurisdiction in its pursuit of the fraudster or corrupt official. The dictator, the businessman, the ex politician or the 419 crook against whom proceedings have been started or are about to be started in a host domestic state - wherever in the world that may be - can find themselves the subject of International Freezing and Tracing Order relief where proceedings are commenced in England on the basis that there is sufficient nexus with England and Wales to justify it. The nexus can be in terms of the location of property, perhaps a small shareholding in an operating company in which the defendant has a claimed beneficial interest, even if owned offshore but beneficially by him, or by the simple expedient of him being present in England and Wales at a particular time so that service upon him, in personam, can be effected.
The Section 25 jurisdiction is far reaching and often causes amazement to those unaware of its implications - witness for example a defendant with no apparent connection with England who is served with a freezing order requiring the worldwide disclosure of his assets issued by an English Court in ancillary support of proceedings in an European Union country relating to his alleged breach of duty while the director of an international conglomerate. Failure to make worldwide disclosure of his assets to an English Court, even though the subject matter of the fraud or corruption arose in a different jurisdiction, represents a contempt of Court punishable by imprisonment or segregation of assets. This where the subject matter of the alleged fraud or corruption has nothing whatsoever to do with England. The jurisdiction is secured by the expedience of property or in personam jurisdiction.
Technological advance in future years will doubtless enable the Courts to devise orders directed at the recovery of proprietary information held by internet servers providers and mobile phone operators (so that SMS messages can be retrieved aside from e-mail). Aside from the fund flows through the banking systems, developments of this kind enable the claimant lawyer to steal yet another march on the misapplication of laundered funds by the criminal -and this a civil process, though one that co-exists and operates very effectively as we have seen in the Banco Noroeste case with a parallel criminal investigation, prosecution and jail for the wrongdoer.
* Keith Oliver is a Senior Partner at Peters & Peters and heads the firm's specialist Commercial Litigation/Civil Fraud and Asset Tracing Team. He specialises in international and domestic civil and commercial fraud litigation, asset tracing/ recovery, regulatory, insolvency and trust litigation.
** This chapter is not intended to be a substitute for legal advice or a legal opinion. It deals in broad terms only and is intended to merely provide a brief overview and give general information .
1. In this context a fraudster denotes a person who may have committed criminal offences but who for the purposes of this chapter, is the subject of the full panoply of civil measures that are available in the UK and also possibly in other jurisdictions .
First reproduced in 'Tracing Stolen Assets: A Practioner's Handbook',
Reproduced with the kind permission of the Basel Institute on Governance, International Centre for Asset Recovery.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
Specific Questions relating to this article should be addressed directly to the author.
I tego arcana Dei !