Civil asset recovery \u2013 jurisdictional issues<\/u><\/strong><\/p>\n Parallel proceedings<\/em><\/p>\n Is there any restriction on civil proceedings progressing in parallel with, or in advance of, criminal proceedings concerning the same subject matter?<\/strong><\/p>\n No, there is no legal restriction on civil proceedings progressing in parallel with, or in advance of, criminal proceedings on the same subject matter. The courts have discretion to stay civil proceedings where there is a real risk of substantial prejudice that could lead to injustice. However, the courts rarely exercise this discretion. In Shiva Ltd v Boyd <\/em>[2021] EWHC 371 (Admin)<\/a>, the court refused a stay of proceedings and emphasised that there is a high bar for what constitutes a real risk of substantial prejudice. It stressed that there is a \u2018public interest in civil proceedings being determined in a reasonable time\u2019.<\/p>\n Forum<\/em><\/p>\n In which court should proceedings be brought?<\/strong><\/p>\n Except for small value claims, which proceed in the County Court, proceedings should be brought in the Business and Property Courts division of the High Court of England and Wales. Within the Business and Property Courts, claimants have a choice of commencing proceedings in specialist divisions. In practice, most large-scale asset recovery cases are brought in the Commercial Court, which has significant experience in dealing with ancillary orders that are common in fraud and asset recovery, such as freezing and receivership orders.<\/p>\n Limitation <\/em><\/p>\n What are the time limits for starting civil court proceedings?<\/strong><\/p>\n Asset recovery claims span a range of different types of claim, which all have different time limits. Under the Limitation Act 1980<\/a>, the limitation period for tort and contract claims is six years. In fraud claims, the limitation period does not start until the claimant has discovered the fraud or reasonably could have discovered it. Where the claim is based on foreign law, the English courts generally apply the foreign limitation law, although there are some exceptions to this. There is no time limit for starting claims for a fraudulent breach of trust or claims by a beneficiary of a trust to recover trust property. Different limitation periods apply in insolvency claims. Claims for wrongful or fraudulent trading are generally subject to a six-year limitation but claims to set aside transactions and recover property may be subject to a 12-year limitation period under section 8 of the Limitation Act 1980.<\/p>\n Proceedings to enforce English High Court judgments are not subject to any limitation period, although delays may make them more difficult. Proceedings to enforce arbitration awards are generally subject to a six-year limitation period. Enforcement of foreign judgments has different limitation periods, depending on the basis on which the judgment is being enforced.<\/p>\n Jurisdiction<\/em><\/p>\n In what circumstances does the civil court have jurisdiction? How can a defendant challenge jurisdiction?<\/strong><\/p>\n For the English courts to establish jurisdiction, proceedings must be served. If a defendant can be served in England, the English courts automatically have jurisdiction, although defendants can challenge this by arguing that England is not the proper place for the claim to be heard. An English jurisdiction clause also automatically gives jurisdiction to the English courts.<\/p>\n In other circumstances, Part 6 of the Civil Procedure Rules<\/a> contains jurisdictional gateways. The gateways that are most frequently used in asset recovery cases are:<\/p>\n \u00a0<\/p>\n The English courts permit the enforcement of foreign judgments and awards. There are various registration regimes or it is possible to enforce under common law provided the judgment satisfies certain criteria, including that the judgment is final and for a definite sum of money.<\/p>\n The United Kingdom has adopted the United Nations Commission on International Trade Law Model Law in the Cross Border Insolvency Regulations 2006<\/a> and recognition is regularly granted to foreign insolvency proceedings.<\/p>\n A defendant can challenge jurisdiction. To do so, they must file an acknowledgement of service that disputes the jurisdiction of the English courts and specifies why jurisdiction is disputed.<\/p>\n Civil asset recovery \u2013\u00a0procedure<\/u><\/strong><\/p>\n Admissibility of evidence<\/em><\/p>\n What rules apply to the admissibility of evidence in civil proceedings?<\/strong><\/p>\n Evidence that is relevant to the disputed factual issues in the case is generally admissible, although the courts have discretion and there are some exclusions. The key exclusions are:<\/p>\n \u00a0<\/p>\n As a general rule, the English courts admit evidence rather than excluding it, even if it has been unlawfully obtained. In Ras Al Khaimah Investment Authority v Azima<\/em> [2021] EWCA Civ 349<\/a>, the Court of Appeal confirmed that evidence that was allegedly obtained by illegal hacking would not be excluded.<\/p>\n The court has a wide discretion to control evidence under Part 32.1 of the Civil Procedure Rules<\/a>, including the ways in which evidence is presented and the issues it covers. Evidence by video link is allowed, including where the witness is in another jurisdiction, subject to permission of the English court and any rules governing the giving of evidence in the jurisdiction in which the witness is located.<\/p>\n UK criminal convictions are admissible, but foreign criminal convictions are generally inadmissible, subject to certain limited exceptions.<\/p>\n Witnesses<\/em><\/p>\n What powers are available to compel witnesses to give evidence?<\/strong><\/p>\n In civil proceedings, parties usually rely on a written witness statement (namely, parties do not question their own witness in court). A witness is normally only questioned by the opposing side in a process known as cross-examination.<\/p>\n If a witness within the jurisdiction will not provide evidence voluntarily, a witness summons can be served. This obliges the witness to provide documents or give oral evidence, or both. However, serving a summons can be a risky strategy because, without a witness statement, the party serving the summons often has no advance knowledge of the witness\u2019s evidence. If a witness fails to comply with a properly issued summons, the court can fine or imprison the witness, or hold the witness in contempt of court.<\/p>\n If a witness outside the jurisdiction will not provide evidence voluntarily, the party requiring that witness\u2019s evidence can ask the English court to send a letter of request from the English court to the court in the foreign jurisdiction. The letter will ask the foreign court to take and send evidence from the witness. The English court has discretion regarding whether it sends letters of request and the English court will evaluate the evidence received for admissibility before it can be deployed in the English proceedings.<\/p>\n Publicly available information<\/em><\/p>\n What sources of information about assets are publicly available?<\/strong><\/p>\n The key sources of publicly available information include the following:<\/p>\n Cooperation with law enforcement agencies<\/em><\/p>\n Can information and evidence be obtained from law enforcement and regulatory agencies for use in civil proceedings?<\/strong><\/p>\n Evidence can be requested from law enforcement and regulatory agencies for use in civil proceedings. It is generally at the discretion of the relevant law enforcement agency whether to comply with a request. In practice, they rarely comply.<\/p>\n In very rare circumstances, the court can grant an order that compels public authorities to provide information. For example, in Various Claimants v News Group Newspapers & Others<\/em> [2013] EWHC 2119 (Ch)<\/a>, the court ordered the Metropolitan Police in London to disclose information obtained in phone hacking investigations to claimants in civil proceedings.<\/p>\n Third-party disclosure<\/em><\/p>\n How can information be obtained from third parties not suspected of wrongdoing?<\/strong><\/p>\n There are various types of order that allow this.<\/p>\n A type of disclosure order called a Norwich Pharmacal<\/em> order is available against third parties (eg, banks) who may have relevant documents or information, but are unlikely to be defendants to proceedings. These orders can be obtained before a claim is issued. These orders normally prohibit the respondent or respondents from disclosing the existence of the order to anyone else (namely, they usually include a gagging order).<\/p>\n Under Part 31.17 of the Civil Procedure Rules<\/a>, the court can order disclosure against third parties, but only after proceedings have been commenced. An applicant must prove disclosure is necessary to dispose fairly of the claim or to minimise costs, and that the documents requested will support their case or adversely affect the case of the other parties.<\/p>\n Bankers\u2019 trust orders are disclosure orders available against third parties, typically banks. They are orders intended to assist in tracing assets where a party has a proprietary claim. These orders require disclosure of any information that may assist in the tracing process.<\/p>\n Documents can be obtained under section 7 of the Bankers\u2019 Books Evidence Act 1879<\/a>. This permits any party to a legal proceeding to inspect entries in a banker\u2019s book for the purposes of those proceedings. In Wangzhou Meng v HSBC & Others<\/em> [2021] EWHC 342 (QB)<\/a> the court held that this only applies to legal proceedings in England, and that the types of documents that can be inspected are documents with a transactional focus and not, for example, records that are maintained for regulatory compliance.<\/p>\n Civil asset recovery \u2013\u00a0remedies and relief<\/u><\/strong><\/p>\n Non-compliance with court orders<\/em><\/p>\n How do courts punish failure to comply with court orders?<\/strong><\/p>\n The courts normally penalise non-compliance with case management orders by making adverse costs orders.<\/p>\n However, injunctions \u2013 including freezing orders and search orders \u2013 contain a penal notice. This notice warns the recipient of the order or anyone within the jurisdiction with notice of the order that breach of the order may result in the respondent being held in contempt of court. The courts can hold a party that disobeys an order with a penal notice in contempt of court and punish them with fines, asset seizure and imprisonment for up to two years.<\/p>\n Obtaining evidence from other jurisdictions<\/em><\/p>\n How can information be obtained through courts in other jurisdictions to assist in the civil proceedings?<\/strong><\/p>\n The English courts can issue letters of request to courts in other jurisdictions to obtain information to assist in civil proceedings under the Hague Convention on the Taking of Evidence Abroad in Civil or Commercial Matters 1970<\/a> (the Hague Evidence Convention).<\/p>\n Assisting courts in other jurisdictions<\/em><\/p>\n What assistance will the civil court give in connection with civil asset recovery proceedings in other jurisdictions?<\/strong><\/p>\n The English courts will respond to letters of request issued in compliance with the Hague Evidence Convention. Further, the English courts will grant freezing orders in support of foreign proceedings under section 25(1) of the Civil Jurisdiction and Judgments Act 1982<\/a> in appropriate cases.<\/p>\n There are various reciprocal enforcement conventions in force, such as the Hague Convention on Choice of Court Agreements 2005<\/a>, the Administration of Justice Act 1920 and the Foreign Judgments (Reciprocal Enforcement) Act 1933. Orders that fall under these conventions can be enforced through a registration process. Foreign arbitration awards can be enforced under the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958<\/a>.<\/p>\n Causes of action <\/em><\/p>\n What are the main causes of action in civil asset recovery cases, and do they include proprietary claims?<\/strong><\/p>\n The main causes of action in civil recovery cases are the following:<\/p>\n Remedies<\/em><\/p>\n What remedies are available in a civil recovery action?<\/strong><\/p>\n The principal remedies in asset recovery claims are restitution (to restore to the claimant the benefit that a defendant obtained at the claimant\u2019s expense) or an award of damages to compensate the claimant for losses they have suffered.<\/p>\n Where a claim relates to trust property or unjust enrichment, a proprietary remedy may be available to recover the relevant assets (namely, the disputed asset, or its traceable proceeds, are returned to the claimant). In these cases, the court will usually impose a constructive trust over the asset. Equitable tracing claims may also be available to recover specific assets.<\/p>\n Where a claim is against a fiduciary (for example, a trustee or director of a company) acting in breach of duty or trust, the defendant may be ordered to provide an account of profits. This remedy can also apply in some other claims, depending on the circumstances.<\/p>\n Punitive damages are not generally available. However, in cases involving the tort of deceit, punitive damages may, very rarely, be awarded.<\/p>\n Judgment without full trial<\/em><\/p>\n Can a victim obtain a judgment without the need for a full trial?<\/strong><\/p>\n If the defendant does not respond to the claim, a judgment can be ordered in default and without a trial. If the defendant responds to the claim but their defence has no real prospect of success and there is no other compelling reason for the claim to go to trial, summary judgment is available. The bar for succeeding on these applications is high, particularly in fraud cases.<\/p>\n In extreme cases, where a defendant is in contempt of court for disobeying an injunction or repeatedly breaching court orders, the court may bar the defendant from defending the claim unless they cure their contempt. While this still results in a full trial, if the trial is undefended, it may be reduced to proceedings that last just one day.<\/p>\n Post-judgment relief<\/em><\/p>\n What post-judgment relief is available to successful claimants?<\/strong><\/p>\n Freezing orders are available both post-judgment and pre-judgment.<\/p>\n The court can also order a judgment debtor to provide information under oath regarding their assets under Rule 71 of the Civil Procedure Rules<\/a>. If a judgment debtor fails to attend court to provide information, the court can hold them in contempt of court and penalise them with fines, asset seizure or imprisonment, or a combination of these penalties.<\/p>\n The court can also appoint a receiver post-judgment to preserve assets. Finally, insolvency office holders have extensive powers under English law, and claimants and judgment creditors should consider whether an insolvency process would put them in a better position than enforcement. This will usually depend on what other creditors are pursuing the same debtor.<\/p>\n Enforcement<\/em><\/p>\n What methods of enforcement are available?<\/strong><\/p>\n The main methods of enforcement available are:<\/p>\n \u00a0<\/p>\n Personal bankruptcy or liquidation proceedings are an alternative route to enforcement, although they are collective processes (namely, any monies realised by the insolvency officer will be divided between creditors).<\/p>\n Funding and costs<\/em><\/p>\n What funding arrangements are available to parties contemplating or involved in litigation and do the courts have any powers to manage the overall cost of that litigation?<\/strong><\/p>\n Parties are legally permitted to use the following:<\/p>\n \u00a0<\/p>\n In England, the court normally orders the party that loses litigation to pay part (or sometimes all) of the winning party\u2019s legal costs. All the arrangements listed above are legal, but the additional costs (over and above lawyers\u2019 standard costs) that they incur cannot be recovered from a counterparty in litigation. For example, a claimant will still be able to recover their own legal costs (namely, the lawyers\u2019 costs funded by a litigation funder), however, the claimant will not be able to recover the costs of the litigation funding itself.<\/p>\n In small claims, the courts exercise significant control over costs by setting cost budgets. Where the value of a claim is over \u00a310 million, the courts do not usually exercise direct control over costs by setting budgets. However, the court exercises indirect control, for example by taking into account the reasonableness of costs when it makes an order for the losing party to pay the winner\u2019s costs. Usually, the courts only order part of these costs to be paid.<\/p>\n<\/div>\n![\"\"](\"https:\/\/d2dzik4ii1e1u6.cloudfront.net\/images\/lexology\/static\/2111448a-61e9-4049-b169-9ed5c41aa379.png\")
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