In Saleh v Director of the Serious Fraud Office, the Court of Appeal has upheld a Property Freezing Order ("PFO") obtained by the SFO in 2014, and confirmed that a Canadian Court's order which indicated that the property in question had been acquired lawfully did not preclude the SFO from taking action.
Facts
In July 2014 the English Court made a PFO pursuant to the Proceeds of Crime Act 2002 ("POCA") in respect of £4.4m proceeds from the sale of 800,000 shares in Griffiths Energy International Inc ("GEI"), a Canadian oil and gas company. Mrs Ikram Mahamat Saleh, the wife of the former Deputy Chief of Mission for Chad in the USA, had acquired the shares in September 2009 for a total of £454, in what the SFO alleged was part of a series of corrupt transactions involving not only Mrs Saleh, but also others connected with senior diplomatic staff at the Chadian Embassy in Washington DC. The transactions were, the SFO suggested, entered into in order to secure GEI's development rights over two oil blocks in Chad.
The alleged conspiracy was the subject of Canadian criminal proceedings. In January 2013, GEI pleaded guilty to breach of the Canadian Corruption of Foreign Public Officials Act and was fined Can$10.3m. Forfeiture proceedings were commenced in Canada in respect of the shares held by Mrs Saleh, but were later withdrawn by the Chief Federal Prosecutor without explanation. The Order withdrawing the proceedings (the "Canadian Order") included the following recital: "whereas no evidence has been presented…upon which this Honourable Court could conclude in favour of the Applicant…and it therefore appearing that [Mrs Saleh] is innocent of any complicity in any indicatable offence". It also included the words "This Order/Judgment of the Court is to be construed as a judgment in rem" (a judgment in rem being an order that binds the world at large, rather than just the parties involved).
The SFO became involved in the matter following a request for mutual legal assistance from the US Department of Justice. It then acted on its own initiative in issuing proceedings for a Civil Recovery Order against Mrs Saleh, and taking steps to obtain the PFO in England.
Mrs Saleh applied to the High Court for the PFO to be discharged on the basis that the Canadian Order was binding on the SFO, and prevented it from establishing that the proceeds of sale were obtained unlawfully.
Decision
Both the High Court and the Court of Appeal held that the Canadian Order did not bind the SFO. Although it appeared to finally dispose of the Canadian forfeiture proceedings, it was not a judgment on the merits. No evidence had been produced to the Court to enable it to make a decision as to whether or not Canadian forfeiture provisions had been satisfied. Further, the Canadian Court had not been told that the Canadian Order was intended to bar enforcement authorities in other jurisdictions from pursuing proceedings, and there had been no submissions or evidence to suggest that such a consequence was justified. The Court of Appeal concluded that the Canadian Order was "plainly not the product of a decision-making process in which the relevant facts were considered and weighed, in which the relevant principles of law were set out and applied to the facts found, and from which a conclusion was reached". Although the wording of the Canadian Order gave the appearance of a decision on the merits and an order in rem, on a proper analysis it was neither of those things.
Comment
Given its findings in relation to the wording of the Canadian Order, the Court of Appeal was not required to go a step further and consider whether (i) if the Canadian Order did preclude the SFO from pursuing proceedings, it would be inconsistent with the statutory regime established by POCA or (ii) if the Canadian Order had been in rem, the English Court could use its discretion to depart from it in the interests of justice. The answers to those questions would no doubt have been of interest to those involved in international regulatory and/or corruption investigations. What is clear, though, is that English courts will not let decisions in other jurisdictions prevent effective asset recovery in England without very careful examination.
The issues considered by the Court in this case are, as the High Court noted, of considerable importance. If the consequence of an order dealing with the withdrawal of confiscation or forfeiture proceedings in one jurisdiction was that assets became immune from recovery anywhere in the world, there would be wide ramifications for the international investigation and prevention of corruption. In a world where assets can be moved from jurisdiction to jurisdiction very quickly, it is important that private international law (much of which dates from a time before the technology allowing such movement of assets existed) is not interpreted in a way that permits the proceeds of crime to escape recovery.
