AML: HMRC flexes enforcement muscle to the tune of £7.8 million
The English courts can grant a worldwide freezing order (WFO) to enable victims of fraud to freeze assets located in a multitude of jurisdictions. In Arcadia Petroleum Ltd v Bosworth & Others  EWHC 3700 (Comm) the Court gave permission to enforce such an order in Switzerland and Lebanon, applying the Dadourian guidelines as set out by the Court of Appeal in Dadourian Group International Inc v Simms& Others  EXCA Civ 399.
The Claimant petroleum companies alleged that the Defendants committed widespread fraud and claimed damages in the region of 335 million USD. The Defendants included individuals as well as a Lebanese company. The Defendants’ assets were primarily located in Switzerland and Lebanon, with relatively few in England and Wales. The Defendants had already challenged the jurisdiction of the English court to hear the claims against them when a WFO was granted at a without notice hearing.
A WFO includes a provision that an applicant must seek the permission of the English court before taking steps to enforce the WFO in another jurisdiction. Therefore the Claimant applied for permission and the Defendants argued that an order giving such permission would be premature, oppressive and unnecessary.
It was argued that it was premature to seek permission to enforce the WFO on two grounds. Firstly because of the Defendants’ outstanding challenge to the jurisdiction of the English court, with the first and second Defendants arguing that the Swiss courts should have jurisdiction because they were domiciled in Switzerland. Secondly because an application had been made by the Defendants to set aside the WFO on the grounds of material non-disclosure.
The Defendants argued that the application was oppressive for numerous reasons including: (1) that the Claimant were seeking in rem remedies in Switzerland and Lebanon which offer superior relief to that available under the WFO and (2) the Defendants were dealing with a multiplicity of proceedings.
Finally the Defendants argued that the application was unnecessary as they had already complied with their obligations i.e. they had not taken steps to dispose of their assets since the WFO was granted and had complied with the provision of the WFO requiring them to disclose their assets.
The court granted the application for permission to enforce the WFO in Switzerland and Lebanon. Mr Justice Males held that:
The Defendants were unable to persuade the court that the order would be oppressive as the Claimant only intended to take limited steps to enforce the WFO and simply expressed a desire to put in place equivalent local protection. The Court held that even if the foreign relief is superior this is not an absolute bar to permission being granted. What is important, following the Dadourian guidelines, is the nature of the relief and the extent to which it is superior.
3. In addressing whether the application was unnecessary it was emphasised that in this instance there was indisputable evidence that the Defendants had substantial assets in Switzerland and Lebanon and that there was a real risk of dissipation of those assets. Whilst the Defendants had so far complied with the WFO there was no guarantee they would continue to do so. On balance there was a real benefit to the Claimant in the permission being granted and there was no irremediable prejudice to the Defendants.
The permission was therefore granted. However, it was held that the WFO should include an undertaking from the Claimant that if the outstanding legal challenges before the English court were successful the Claimant would undo any enforcement steps taken and indemnify the Defendants’ legal costs.
Notably the court stressed that any foreign order should not prevent the Defendants having access to funding for legal costs and living expenses as provided for under the WFO. In this way it not only ensured that the relief was not superior but ensured that the steps to be taken were proportionate.
The English court demonstrated that it is prepared to grant permission to enforce a WFO overseas even where there are outstanding applications to set it aside or to challenge the court's jurisdiction.
From a victim’s perspective the extended reach of the English court in relation to WFOs is extremely favourable as it affords protection to those seeking to safeguard assets located in other jurisdictions. WFOs are an extremely useful tool to maximise the chances of recovery where traditional cross-border co-operation in freezing assets proves inefficient. With the built-in protections suggested, a fair outcome can be reached when dealing with allegations of multi-jurisdictional fraud.
Written by Emily Greig, Paralegal, Dispute Resolution
For further information, please contact a member of our dispute resolution team.
Skip to content Home About Us Insights Services Contact Accessibility