Blue Holding (1) Pte Ltd & Anor v United States of America, Court of Appeal - Civil Division, October 09, 2014, [2014] EWCA Civ 1291

Issuing Organization:Civil Division
Actores:Blue Holding (1) Pte Ltd & Anor v United States of America
Resolution Date:October 09, 2014
 
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Neutral Citation Number: [2014] EWCA Civ 1291

Case No: A3/2014/1224

IN THE COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM THE HIGH COURT OF JUSTICE

QUEEN'S BENCH DIVISION

THE HON MR JUSTICE FIELD

2014 FOLIO 209

Royal Courts of Justice

Strand, London, WC2A 2LL

Date: 09/10/2014

Before :

LORD JUSTICE RIMER

LORD JUSTICE BEATSON

and

LADY JUSTICE GLOSTER

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Between :

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Mr Christopher Butcher QC and Mr David Peters (instructed by Byrne and Partners LLP) for the Appellants

Mr Tom Leech QC (instructed by Herbert Smith Freehills LLP) for the Respondent

Hearing dates: Thursday 15th May 2014

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Draft 9 October 2014 11:21 Page 3

Lady Justice Gloster :

Introduction

1. This is an appeal by the fifth and sixth defendants to the action (``the English proceedings''), Blue Holding (1) Pte Limited (``Blue 1'') and Blue Holding (2) Pte Limited (``Blue 2'') (collectively ``the appellants''), against the order of Field J made on 15 April 2014 (``the order'') following his judgment handed down on 8 April 2014 ("the judgment"). By the order Field J continued a freezing injunction ("the freezing injunction") originally granted by Teare J ex parte on 25 February 2014 on the application of the claimant in the English proceedings, the United States of America ("the respondent"), pursuant to section 25 of the Civil Jurisdiction and Judgments Act 1982 ("the 1982 Act"), against certain assets owned by the appellants (``the frozen assets''). Permission to appeal was given by Beatson LJ on 17 April 2014.

2. The appeal raises the question whether it is permissible for an interim freezing injunction to be granted under section 25 in support of foreign proceedings brought, as the Judge put it, ``in the exercise of its sovereign authority'' by a foreign State, which, by those foreign proceedings, seeks to forfeit assets which are in England and Wales, and which are owned by persons who are not subject to the in personam jurisdiction of England and Wales. Field J held that this was permissible as an ``expedient'' way of ``holding the ring'' against the possibility that the relevant United Kingdom enforcement authorities (not the respondent) might in the future bring proceedings under the Proceeds of Crime Act 2002 (External Requests and Orders) Order 2005, (``the 2005 Order'') following a judgment by a United States (``US'') court.

Background

3. The following summary of the background is largely taken from the judgment and the respective skeleton arguments of the parties.

4. The foreign proceedings in aid of which the respondent sought the freezing order was an in rem forfeiture claim brought by it in the US against certain assets held by certain of the defendants to the English proceedings, as well as against certain other property ("the US proceedings"). The respondent alleges that these assets were derived from the proceeds of corrupt misappropriations carried out by the former President of Nigeria, General Abacha, and certain of his relatives and associates, and that such assets are liable to forfeiture under 18 USC § 981 by reason of such assets having been involved in money laundering from the mid-to-late 1990s to at least 2006 within the jurisdiction of the US.

5. The decision to bring the US proceedings was part of the US Kleptocracy Asset Recovery Initiative and was apparently taken at a high level in the US with the approval of the US Assistant Attorney General for the Criminal Division, following a request made on 28 August 2012 by the Federal Republic of Nigeria (``the FRN") pursuant (or, as the appellants contend, purportedly pursuant) to Articles 54 and 55 of the UN Convention against Corruption (``UNCAC'') to the US Department of Justice to order the confiscation of property allegedly corruptly acquired by General Abacha. The US proceedings were accepted (i.e. issued) by the US District Court for the District of Columbia on 18 November 2013.

6. The principal allegation of corruption made in the US proceedings is described as the "Security Votes Fraud", which allegedly involved the theft of more than US$2 billion from the Central Bank of Nigeria under cover of instructions approved by General Abacha, which were issued on the false basis that the money was required for emergency security purposes. It is alleged that the money so obtained was then laundered through the purchase of Nigerian Par Bonds ("NPBs"), US dollar-denominated securities whose interest payments were guaranteed by the US Treasury. This type of security was created as part of the Brady Bond program to help developing countries holding substantial debt to restructure their debt into bonds.

7. The 1st defendant to the English action, Mohammed Sani Abacha ("D1"), is the second son of General Abacha. The 2nd defendant, Abubakar Atiku Bagudu ("D2"), was an associate of General Abacha and, according to the unchallenged evidence on the application before Field J, remains an associate of D1. He continues to be a member of the Nigerian Senate. The respondent alleges that: D1 and D2 misappropriated assets belonging to Nigeria acting on their own behalf and/or on the instructions of General Abacha and transported the stolen assets out of Nigeria; that the proceeds were then illegally laundered in the US, giving rise to the commission of money-laundering offences there; and that D1 and D2 control the assets which are the subject of the forfeiture claims.

8. The 3rd and 4th defendants to the English action ("D3" and "D4") and the appellants are companies owned and/or controlled by D1 and/or D2 and used by them to hold assets, as to which Field J held that there was a good arguable case that they were stolen from the FRN in the manner alleged in the US proceedings. D3 and D4 as corporate entities (together with their assets) are themselves and their assets subject to forfeiture claims in the US proceedings; they are BVI companies that have been struck off the BVI Companies Register for non-payment of statutory fees.

9. D1, D3 and D4 were served with the Claim Form, the freezing injunction granted by Teare J and related documents ("the pertinent documents") in the English proceedings but they did not acknowledge service, did not appear and were not represented at the hearing before Field J. Various unsuccessful attempts had been made to serve the pertinent documents on D2 in Nigeria. There was, however, no doubt that he was well aware of the proceedings before Field J, since the evidence included an affidavit sworn by his brother, Mr Ibrahim Bagudu, which made this abundantly clear.

10. The appellants are companies incorporated under the laws of Singapore, whose shares are owned by the trustees of discretionary trusts for the benefit of D2's family. D2's brother, Mr Ibrahim Bagudu, was, until 25 April 2014, when he was removed from office, a director of both appellant companies and they have been served with the pertinent documents. It was not in dispute before Field J or before this court that there was a good arguable case that proceeds from the Security Votes Fraud could be traced into the assets held by the appellants. Whilst the appellants were not defendants to the US proceedings, assets held in certain of their investment portfolios are subject to the in rem claims made in those proceedings. As a result of disclosure given by the appellants in the English proceedings, it appears: that the 10th defendant to the English proceedings, Waverton Investment Management Ltd ("D10"), holds a portfolio of assets of approximately €7 million for Blue 1 and a portfolio of assets of approximately €23,000,004 for Blue 2; and that the 11th defendant to the English proceedings, James Hambro & Partners LLP ("D11"), holds a portfolio of assets of approximately €12 million for Blue 1 and a portfolio of assets of approximately €65 million for Blue 2.

11. Originally the appellants contested the jurisdiction of the court by appropriately ticking the box on the Acknowledgement of Service forms. They did so on the basis that there was not a good arguable case against them for a freezing injunction to be made. There was no separate basis for any challenge to the jurisdiction of the English courts.

12. For the purposes of the application before Field J, and this appeal, it was not disputed by the appellants that there was a sufficiently arguable case to support the allegations of fraudulent misappropriation and money laundering made by the respondent in the English proceedings and in the US proceedings.

13. However, the evidence sworn on the application by D2's brother, Mr Ibrahim Bagadu, referred to the fact that the allegations of fraudulent misappropriation against General Abacha and his associates had resulted in various and protracted proceedings between the FRN and a number of individuals and companies (including D2 and companies controlled by him) in a number of different jurisdictions, including the United Kingdom, Switzerland, Liechtenstein, Luxembourg and Jersey. These proceedings had been ongoing during the period 1999-2003. They included proceedings brought by the FRN in July 2001 in the Chancery Division, under case number HC01 C03260, against certain defendants including D2 asserting a proprietary claim in respect of monies that were alleged to have been corruptly taken from the Central Bank of Nigeria in the course of the Security Votes Fraud (``the Security Votes Fraud proceedings"). In the course of this action a freezing injunction was granted by Hart J on 25th September 2001 and, pursuant to that order, D2 swore a further affidavit disclosing his assets and explaining his understanding of the flow of funds from the Security Votes transfers to the assets then held by a company called Ridley Group Limited. That freezing injunction defined "Security Votes Monies" as meaning "the monies withdrawn from the Central Bank of Nigeria listed in Annex 1".

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