views

English fraud law is powerful and popular

STEVEN RICHARDS
ASSOCIATE AT JONES DAY

THE recent case of Binyam Mohammed, in which the former Guantanamo detainee was successful in obtaining the disclosure from the UK government of documents relating to his alleged mistreatment by foreign personnel at a US base in Afghanistan, might not seem to have a lot to do with fraud litigation. But what underpinned this decision was in fact an established legal principle whereby the English courts can require third parties who have become mixed up in another’s wrongdoing to assist the victim through the provision of necessary information. This applies as much to fraud as it does to torture.

This case serves as a reminder of the power of the English courts to assist the victims of international fraud. For example, if the proceeds of a fraud have been channelled through a UK bank account, it may be possible to obtain a disclosure order against that bank compelling it to deliver up documents that reveal the identity of the relevant account holder or the details of the ultimate recipient – information which is often crucial to a successful recovery process.

Another key weapon in the English court’s arsenal is the freezing injunction – an order prohibiting a defendant from disposing assets before a civil trial. In the context of international fraud, the appeal of such orders are twofold. Firstly, freezing injunctions can have worldwide effect so that a defendant will be in breach – and hence liable to be imprisoned here – if assets in any country are dealt with or dissipated. Even for foreign defendants, the threat of arrest on entry into this country may act as a sufficient incentive to compel them to comply with the order’s terms.

Secondly, the fact that there are no assets or even parties located here is not necessarily a bar to the grant of injunctive relief. The courts will need to be satisfied that it is appropriate for them to hear the underlying claim, but there are a wide variety of grounds on which such jurisdiction can be founded. In the recent fraud case relating to the AIM-listed cash shell Langbar International, the fact that the ultimate damage had been incurred in this country constituted one such factor, even though Langbar was a Bermudan entity and none of the relevant perpetrators were resident or domiciled here.

The most draconian tool available to the courts is the grant of a search order. This can compel a defendant to allow his premises to be searched and relevant documents to be seized. While such orders have been available to civil claimants for many years, their scope is continuously being adapted to meet modern requirements, and it is now possible for the courts to compel an individual to permit all data held on his personal computers, email accounts and virtual storage facilities to be accessed and imaged immediately on service. In exceptional circumstances, it is even possible to obtain such an order over foreign premises, but a properly executed search in this jurisdiction alone can uncover evidence as to the existence and scope of frauds on a wider geographical scale. Advances in information technology have made the world a much smaller place. Increasingly, the English court is being used to police it.