Power to freeze assets outside Jersey

In the latest chapter of the long-running Tantular litigation[1] the Royal Court has confirmed that it has the power to freeze foreign assets held through Jersey trust structures.

The point in question was whether the statutory power to order a saisie judiciaire under Article 16(1) of the Proceeds of Crime (Jersey) Law 1999, as modified by the Proceeds of Crime (Enforcement of Confiscation Orders) (Jersey) Regulations 2008 (“the Modified Law”), is limited to property situated in Jersey or, as the Royal Court has held previously[2], could extend to foreign property which is held (directly or indirectly) by a Jersey based individual or entity.

By way of brief background, in 2013 and 2014 the Royal Court granted two saisies over the realisable property of Mr Tantular. These applications were brought at the request of the Indonesian Government, following the convictions in Indonesia of Mr Tantular for fraud and money laundering, to preserve assets pending the enforcement of financial confiscation orders made in Indonesia.

Mr Tantular does not hold property in Jersey. However, he is the settlor and a beneficiary of the Jasmine Investment Trust (“the Trust”), a discretionary trust governed by Jersey law. The only valuable assets of the Trust are the shares in a BVI company (“Jonzelle”) which, in turn, holds a residential property in Singapore (“the Property”).

In two previous judgments[3] the Royal Court held that as a beneficiary of the Trust Mr Tantular was not beneficially entitled to its assets for the purposes of the Modified Law but that several gifts from Mr Tantular to the Trust were caught by the gift provisions in the Modified Law.

In the present application Mr Tantular contended that upon a proper construction of the legislation the saisie was limited to assets in Jersey, and therefore did not extend to the shares in Jonzelle or the Property. This argument was founded upon the well-known rule of construction that legislation should not be given extra-territorial reach unless it contains clear language to that effect. In support of this analysis reliance was placed on Jersey’s international obligations under various conventions which, it was said, made clear that territorial limits should be observed and only obliged Jersey to enforce confiscation orders in respect of property situated in Jersey, as well as King v Director of Serious Fraud Office[4] and King v HM Procureur[5] in which the English and Guernsey Courts respectively declined to extend comparable legislation to assets outside their respective jurisdictions.

The focus of the construction argument was the meaning ascribed to the term “realisable property” in Art 6(4)(b) (which confers the power to grant a saisie over property in the hands of a third party) in light of the definition of that term in Art 2(b)(ii) (which pertains to gifts made by the defendant) and the definition of “property” in Art 1 which, save where the context requires otherwise, covers “all property, whether movable or immovable, or vested or contingent, and whether situated in Jersey or elsewhere”. In order to determine whether the context did admit otherwise, further provisions of the Modified Law were examined, including the realisation and registration provisions at Art 17 and Art 39 respectively.

Mr Tantular therefore contended that the construction adopted in In the matter of the representation of Kaplan[6] was wrong and should now be departed from. The Court did not accept Mr Tantular’s argument. The primary reason for this was that it was clear on the face of the statute that Arts 16(4)(b) and (c) were intended to apply to property situated in Jersey or elsewhere. This was consistent with the unambiguous definition of property in Art 1 and reinforced by the contrary language of Art 16(4)(a), which makes clear that it is limited to property situated in Jersey.

As to the scope of the subject matter jurisdiction the Court referred to the decision of Lord Mance in Masri v Consolidated Contractors International (UK) Ltd (No 4)[7], applied the test as to whether “eyebrows might be raised” at the notion that the legislature had intended the statute to have extraterritorial effect, and held that in this instance they would not. At paragraphs 46 to 53 the Court reviewed a series of ancillary construction arguments raised by Mr Tantular, and rejected each in turn.

In respect of King v Director of Serious Fraud Office the Court held that the Modified Law is different on its face from the English legislation that was under examination there, and that there was no basis for the English construction to be applied. In respect of policy arguments which found favour in the House of Lords, the Court accepted two points advanced on behalf of the Attorney General: that (i) in the context of Jersey structures, considerations of public policy pointed in the opposite direction and it would be contrary to public policy to allow a defendant to access the administrative benefits of a Jersey structure while also establishing serious obstacles to overseas authorities with a legitimate interest in freezing and confiscating assets held therein; and (ii) the Royal Court could only freeze assets outside Jersey in so far as it has a personal jurisdiction over those who control those assets. That meant that only certain assets overseas could be the subject of a saisie and it was hard to see why a court with jurisdiction over the person who controls assets should not freeze them by making orders made against that person[8].

In addressing King v HM Procureur[9], in which the Royal Court of Guernsey applied the decision in King v Director of Serious Fraud Office to legislation which is very similar to Jersey’s, the Court noted that neither of Jersey’s two leading authorities had been cited and that, on analysis, the decision did not provide a sound basis to depart from the decision in Kaplan[10], which it held had been properly decided[11].

Arguments based on treaty obligations and conflict of laws principles were dismissed on similar bases, namely that the Jersey Court was exercising subject matter jurisdiction but only in respect of property controlled by persons over whom it had personal jurisdiction, and that those persons could only be ordered to deal with property outside Jersey in a manner which complied with the law of the jurisdiction in which the property was situated[12]. In both cases reference was made to the English decision in R (on the application of KBR Inc) v Director of the Serious Fraud Office[13]. In so far as Mr Tantular had sought to rely on features of European law, the Court appears to have adopted the submissions of the Attorney General that the E.U. is a separate legal order and provides no aid to the construction of the legislation of a non-member state.

This is an interesting case because, while the substantive position in Jersey has been maintained, the Royal Court considered potentially persuasive case law from England and Guernsey and declined to depart from its decision in Kaplan. Had it done so the power of the saisie as a tool for the recovery of the proceeds of crime would have been significantly reduced. Nothing is settled yet, however, as the question may well receive the attention of the Court of Appeal in due course.

 

Advocate Charles Sorensen of Baker & Partners appeared for the Viscount of Jersey in the above case.

 

[1] In the matter of the Saisies Judiciaires of Robert Tantular [2020] JRC058

[2] In the matter of the representation of Kaplan [2009] JLR 88

[3] Tantular v AG [2014] JRC 128 and Tantular v AG [2014] JRC 243

[4] [2009] 1 WLR 718

[5] 2011-12 GLR 285

[6] [2009] JLR 88

[7] [2010] 1 AC 90

[8] See paragraphs 56 to 57

[9] 2011-12 GLR 285

[10] See paragraphs 58 to 62

[11] See paragraphs 62-66

[12] See paragraphs 67 to 74

[13] [2019] QB 675.

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