Civil Asset Recovery in Action: Two’s a party; Three’s a crowd!

The Royal Court of Jersey, Channel Islands has considered a case (The Federal Republic of Nigeria v Doraville Properties Corp and The United States of America) under the Civil Asset Recovery (International Co-operation) (Jersey) Law 2007 (‘2007 Law’). The US wanted to join the party, but because of various legal technicalities, was not allowed to do so.

 

Background

General Mohammed Abacha, President of Nigeria from 1993 to 1998, stole millions of dollars of Nigerian public money when in power. Those monies were moved through the US and into a Jersey bank account (Doraville), which at the time of the hearing was worth about $287m.

Nigeria asked for assistance from the US in recovering those funds. In 2014 DOJ, District of Columbia secured a default judgment in rem for forfeiture, including over the Doraville bank account in Jersey. To have effect in Jersey, that default judgment needed to be registered under the 2007 Law by the Attorney-General of Jersey.

The bank account of Doraville was subject to a property restraint order (‘PRO’) under the 2007 Law. Funds were vested in the Viscount – an enforcement officer of the Jersey Court.

 

Meanwhile in Jersey…

Nigeria wanted to obtain judgment against Doraville on the following three claims:

  1. Any interest retained by Doraville in the funds vested in the Viscount should be held upon constructive trust for Nigeria;
  2. If the PRO were set aside, any monies should be transferred to Nigeria;
  3. An account by Doraville of which of the monies were obtained from Nigeria unlawfully, compensation and a charge over Doraville Property as security for the same.

The US had something to say about this. It was concerned that a default judgment between Nigera and Doraville would impact registration of its default judgment under the 2007 Law. So the US applied to intervene in proceedings and asked the Court to stay Nigera v Doraville until the 2007 Law case had terminated.

 

The Arguments

To be joined as a party to Nigeria v Doraville, the US had to show it was necessary for all matters in dispute to be effectually determined. For that it had to show it had a proprietary or pecuniary right that was directly effected. The judgment of the USA was not enforceable at common law in Jersey, first because it related to property outside the territory of the USA and second because it would amount to enforcement of a foreign penal law. This meant the US could claim no proprietary right to the monies in Jersey and could not be joined as a party under the Royal Court Rules.

So the US argued that it should be joined because there was ‘collusion’ in the proceedings between Nigeria and Doraville – Doraville was not contesting judgment on Nigeria’s claim to a constructive trust over the monies. The Court said that was not collusion in the sense of ‘play-acting’ between the parties to defeat proceedings under the 2007 Law, so no ground for joinder.

Finally the US argued that because Nigeria had invoked international mutual assistance from the US, Nigeria should be estopped from contesting registration of the US judgment under the 2007 Law. The Court accepted this was a good argument, but not a ground for joinder in Nigeria v Doraville.

 

The Decision

The USA could not intervene in Nigeria v Doraville. However, the Court found that the USA did have a legitimate interest in ensuring that any judgment in Nigeria v Doraville did not hamstring proceedings under the 2007 Law. Nigeria was therefore allowed to take default judgment on grounds (1) and (2) – the constructive trust over any interest by Doraville in the funds vested in the Viscount, but not to the third element of its claim – giving it an equitable lien or charge over Doraville’s property. The Court said that might give Nigeria an argument that it had a proprietary right, first in time, and so be able to challenge registration of the US default judgment under the 2007 Law.

 

All’s well that ends well

Nigeria conceded the third ground. Proceedings were stayed, with Nigeria undertaking not to enforce its judgment pending termination of the 2007 Law proceedings.

Although the US was not allowed to take centre stage as a party, its stage whispers had the desired effect. Nigeria was not allowed to take judgment on the third element of its claim and Nigeria did make concessions, protecting registration of the US default judgment.

 

By way of an aside

In separate proceedings an application by Doraville to have the PRO discharged failed: the US default judgment amounted to a ‘finding’ under the 2007 Law that the monies were ‘tainted property’.

 

Stephen Baker, Senior Partner
mailto: stephenbaker@bakerandpartners.com

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