Commercial Court applies civil remedy to freeze alleged proceeds of crime

Posted on: April 17th, 2014

In the case of United States v Abacha [2014] EWHC 993 (Comm), Mr Justice Field delivered an important judgment in continuing a Freezing Injunction in aid of foreign proceedings. That injunction was granted under s.25 of the Civil Jurisdiction and Judgments Act (“the CJJA”) on behalf of the US, so as to “hold the ring” until a judgment could be obtained in the US against the defendants and enforced in the UK under the Proceeds of Crime Act 2002 (External Requests and Orders) Order 2005 (“the Order”).

The Defendants are alleged to have been involved in a fraud committed in Nigeria during the presidency of General Sani Abacha. Proceedings were brought in the US by the US Government against the Defendants, seeking forfeiture of assets representing the proceeds of crime. Under the Order, the US could seek enforcement of a civil forfeiture order, once obtained in the US, in the UK. However, it was not able to obtain an interim freezing order under that instrument due to expiry of the relevant limitation period. As such the US obtained a Freezing Injunction under the CJJA instead. It was argued by the Defendants that the Freezing Injunction should not be continued as a) the foreign proceedings to which it related were not civil but in fact criminal proceedings, and b) that it would be inexpedient to continue the Order for various reasons.

Dismissing the first point, Field J drew the distinction between criminal proceedings involving the prosecution and sentencing of an individual in a criminal court, and the present foreign proceedings which concerned a claim seeking the vesting of property in the US Government which were the proceeds of crime. Field J considered the latter were properly construed as civil proceedings within the meaning of s.25(1) CJJA. On the second issue Field J stated “it is  unquestionably expedient for this court to render the assistance sought… Corruption, like other types of fraud, is a global problem and it and its consequences are only going to be dealt with effectively if there is co-operation… between the courts of different national jurisdictions.”