Re S-L (Restraint Order: External Confiscation Order) (pet dis)
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE PILL,v,LORD JUSTICE OTTON,LORD JUSTICE EVANS |
| Judgment Date | 05 July 1995 |
| Judgment citation (vLex) | [1995] EWCA Civ J0705-4 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | No QBENF 94/0838/D |
| Date | 05 July 1995 |
[1995] EWCA Civ J0705-4
IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM ORDER OF MR JUSTICE JUDGE
Before: Lord Justice Evans Lord Justice Otton Lord Justice Pill
No QBENF 94/0838/D
MR R G MARSHALL-ANDREWS QC and MR A MITCHELL (Instructed by Denton Hall) appeared on behalf of the Appellant.
MR P GARLICK (Instructed by Crown Prosecution Service) appeared on behalf of the Respondent.
( )
This is an appeal against the refusal of Mr Justice Judge on 18 March 1994 to discharge a restraint order made by Mr Justice Kennedy (as he then was) on 30 July 1990 under the Drugs Trafficking Offences Act 1986 (Designated Countries and Territories) Order 1990 (the 1990 Order). The issue is whether a restraint order can be made when the relevant foreign order is a civil judgment in rem.
The restraint order was obtained on behalf of the United States Government in 1990 on the basis that the property identified, including money in bank accounts in London, was the realisable property of a putative defendant J L in putative criminal proceedings in the United States and that there were reasonable grounds for believing that what is defined in the 1990 Order as an external confiscation order might be made against him in the United States. There are no longer grounds for belief that there will be criminal proceedings. J L has never been arrested and is believed to be in Colombia, a state which does not have an extradition treaty with the United States of America.
Bank accounts were opened in London in the joint names of the parents of J L's then wife, E and H, both citizens of Colombia. After the making of the Order in 1990, H died and his heiress is his daughter, then J L's wife. It is the account holders who seek to set aside the restraint order. They accept, for present purposes, that the United States authorities can demonstrate a prima facie case of drug trafficking by J L and that the funds in the London banks represent the proceeds of drug trafficking which may have originated in the United States.
The 1990 Order was made in exercise of powers conferred by section 26 of the Drugs Trafficking Act 1986 (the 1986 Act). It is not suggested that the scope of the order is beyond the powers conferred. Paragraph 3(2) of the 1990 Order provides that the 1986 Act "shall have effect as set out in Schedule 3 to this Order". Schedule 3 is headed "The Drugs Trafficking Offences Act 1986 as Modified". It is common ground that the Schedule can be read as a Statute and construed accordingly, though subject to the Appellants' submission that it must be read in the context of the 1986 Act. Both parties seek to rely, as aids to construction, upon the terms of a Treaty, which came into force in 1989, between the United States and the United Kingdom and concerned the "investigation of drug trafficking offences and the seizure and forfeiture of proceeds and instrumentalities of drug trafficking".
The United States is a designated country for the purposes of the legislation. Section 1(1) of Schedule 3 provides that "an order made by a court in a designated country for the purpose of recovering payments or other rewards received in connection with drug trafficking or their value is referred to in this Act as an 'external confiscation order'." That definition also appears in the enabling provision, section 26 of the 1986 Act. The order relied upon by the United States government is an order of the United States District Court for the Eastern District of New York made on 24 May 1994. The order had not been made at the time of the hearing before Mr Justice Judge but that is not material for present purposes because section 7 of Schedule 3, to which I will refer, provides that a restraint order can be made when there are reasonable grounds for believing that an external confiscation order may be made in proceedings which have been instituted in a designated country.
The issue turns upon whether the proceedings are such as to entitle the High Court to exercise its power under section 8(1) of Schedule 3 to make a restraint order. The Appellants' submit that because no person is a defendant to the New York proceedings, the powers cannot be exercised.
I have set out section 1(1) of Schedule 3. The remainder of the section provides:-
"(2)In subsection (1) above the reference to an order includes any order, decree, direction or judgment, or any part thereof, however described.
(3)A person against whom an external confiscation order has been made, or a person against whom proceedings may result in an external confiscation order being made have been, or are to be, instituted in a court in a designated country, is referred to in this Act as 'the Defendant'."
Section 7 provides:-
"(1)The powers conferred on the High Court by sections 8(1) and 9(1) of this Act are exercisable where -
(a)proceedings have been instituted against the Defendant in a designated country,
(b)the proceedings have not been concluded, and
(c)either an external confiscation order has been made in the proceedings or it appears to the High Court that there are reasonable grounds for believing that such an order may be made in them.
(2)Those powers are also exercisable where it appears to the High Court that proceedings are to be instituted against the Defendant in a designated country and that there are reasonable grounds for believing that an external confiscation order may be made in them."
Section 8(1) provides that "The High Court may by order (in this Act referred to as a 'restraint order') prohibit any person from dealing with any realisable property subject to such conditions and exceptions as may be specified in the order".
The order does not of course have the effect of disposing of the realisable property. Realisable property is defined in section 5 so as to include the property specified in the order.
The New York action is entitled:
United States of America Plaintiff
vAll funds on deposit in any accounts maintained in the name of H or E and all funds traceable thereto at the National Bank of Greece in London, England, et al.Defendants
The order made in New York provides inter alia that "the Defendant funds and all proceeds traceable thereto are hereby forfeited and condemned to the use and benefit of the United States of America as being proceeds of illegal narcotics trafficking and illegal narcotics money laundering".
An affidavit has been sworn in the proceedings by the Director of The Asset Forfeiture Office of the United States Department of Justice. He states that "Federal laws provide for the forfeiture of property pursuant to a criminal prosecution (in personam) or a civil action (in rem)". Having dealt with the position in crime, he adds:-
"However, there are no Federal statutes that I am aware of that provide for civil in personam forfeiture of property, ie a civil action that would name the owner of the property as the Defendant and seek to confiscate, through a civil proceeding, his or her interest in specific property on the basis that such property represents the proceeds of, or instrumentalities used to commit, a criminal offence".
On behalf of the Appellants, Mr Marshall-Andrews QC submits that in the absence in the New York proceedings of a "Defendant" within the meaning of that term in the 1990 Order, the Court has no power to make a restraint order. The working of section 7(1) is plain; there must be a Defendant. Reading sections 3 and 7 together the Defendant must be a person and proceedings must have been instituted against him. By virtue of section 38(11), proceedings are instituted when an application has been made to a court for an external confiscation order.
Mr Marshall-Andrews relies, in support of that central point, upon the submission that proceedings in rem are, except with respect to ships, alien to English law. Parliament did not intend to confer power to make a restraint order in support of an order which no English court could or would make. Notions of comity do not permit the wording of the order or the concepts of English law to be circumvented. Both the 1988 Vienna Convention against Illicit Traffic in Narcotic Drugs and the Treaty require respect for national laws; Article 5 of the Treaty for example includes the expression "subject to the provisions of national laws".
While accepting that the question whether the external confiscation order in the present case could be registered under section 26A of the 1986 Act...
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