Fight against corruption demands global approach

June 16, 2014

This article originally appeared on Solicitors Journal.

The weapon of choice in the battle against fraudsters is section 25 of the Civil Jurisdiction and Judgments Act 1982, say Gavin Foggo and Evie Meleagros.

Section 25 of the Civil Jurisdiction and Judgments Act 1982 empowers the court to grant interim relief in support of court proceedings anywhere in the world.

This discretion can only be exercised if the relief is sought in respect of foreign civil proceedings, and it is not inexpedient for the relief to be granted.

While the courts accept that a cautious approach must be adopted in exercising this discretion (JSC VTB Bank v Pavel Valerjevich Skurikhin and Ors [2012] EWHC 3116), they are going to lengths to find ways of granting freezing orders or disclosure orders sought in fraud cases, or where the judge considers the defendant is seeking to evade enforcement.

Global battle

The recent case of the United States of America v Abachaand Ors [2014] EWHC 993 explains that the global battle against corruption requires cooperation not only between different governments but also between the courts of different national jurisdictions.

Mr Justice Field had no difficulty in granting the continuation of the freezing injunction and a disclosure order against the defendants. The claimant, being the US government, had commenced forfeiture proceedings against assets of the defendants, which allegedly derived from the proceeds of corrupt misappropriations carried out by the former president of Nigeria and others. Some of these assets were held in England.

The defendants argued that the injunction should not be continued because, among other reasons, the US proceedings were criminal not civil and any US judgment would be unenforceable.

Field J held that, while it was right that the claimant had first to prove in the US case that the criminal offences pleaded had been committed, this did not mean the proceedings were criminal. As this case sought the forfeiture of property (and not the imprisonment of an individual) Field J held they were civil proceedings.

He also accepted that the judgment would be unenforceable under common law because the subject matter of the proceedings (forfeiture of property) was situated outside the jurisdiction of the foreign court at the time.

However, the claimant was not seeking to enforce a judgment, it was an application under section 25 to continue an order to ‘hold the ring’ until a judgment in the US case could be lawfully enforced (potentially under the Proceeds of Crime Act 2005).

Connecting link

In JSC VTB Bank and in RBS v FAL Oil Company Ltd and Ors [2012] EWHC 3628, Mrs Justice Gloster granted interim relief even where the assets were outside the jurisdiction.

In both cases, Gloster J was satisfied that there was a real connecting link between the jurisdiction and the subject matter of relief sought to justify granting the orders.

The findings in all three cases were still within the realms of the guidance set down by the Court of Appeal in Motorola Credit Corporation v Uzan [2003]EWCA Civ 752. The focus of the guidance is to ensure that there is no disharmony with the foreign court jurisdiction.

This will not inhibit the exercise of the court’s discretion to grant the relief in cases involving suspected fraudsters.

Key points

  • Consider whether a section 25 application will be useful as soon as foreign proceedings commence, particularly in cases of fraud or cases that involve defendants with assets tied up in various legal entities.
  • Involve tracing agents early. The better your evidence of the assets and actual or potential dissipation, the better the chance of obtaining (and maintaining) the freezing order.
  • Combine a disclosure application with the freezing injunction. Recent cases show the courts are not afraid to grant orders requiring defendants to provide disclosure of information regarding assets, to aid enforcement. But keep the request within the realms of what is necessary.
  • Make sure you have the necessary expert foreign law evidence to satisfy the Motorola criteria: principally that the English order will not interfere with the management of the case in the foreign court and that the English relief will not conflict with orders in other jurisdictions.

Related pages:

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Gavin Foggo
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gfoggo@foxwilliams.com

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Evie Meleagros
Senior Associate
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emeleagros@foxwilliams.com

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