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Royal Court confirms power to freeze assets outside Jersey | Feature

In the latest chapter of the long-running Tantular litigation (in the matter of the Saisies Judiciaires of Robert Tantular [2020] JRC058) the Royal Court has confirmed that it has the power to freeze foreign assets held through Jersey trust structures.

The 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 (in the matter of the representation of Kaplan [2009] JLR 88), could extend to foreign property held by a Jersey based individual or entity.

In 2013 and 2014 the Royal Court granted two saisies over the realisable property of Mr Tantular. These orders were obtained at the request of the Indonesian government, following the convictions in Indonesia of Mr Tantular for fraud and money laundering.

Mr Tantular is the settlor and a beneficiary of a discretionary trust governed by Jersey law (the Trust). The only valuable assets of the Trust are the shares in a BVI company (Jonzelle) which holds a residential property in Singapore (the Property). In two previous judgments (Tantular v AG [2014] JRC 128 and Tantular v AG [2014] JRC 243) the Royal Court held that Mr Tantular was not beneficially entitled to the Trust assets for the purposes of the Modified Law but that several gifts from him to the Trust fell within the relevant provisions.

Mr Tantular contended that upon a proper construction the saisie was limited to assets in Jersey, and therefore did not extend to the shares in Jonzelle or the Property. This was based on 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, reliance was placed on Jersey’s international treaty obligations 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 ([2009] 1 WLR 718) and King v HM Procureur (2011-12 GLR 285) in which the English and Guernsey Courts respectively declined to extend comparable legislation to assets outside their respective jurisdictions.

The key argument centred on the meaning of ‘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’.

Mr Tantular argued that the construction adopted in In the matter of the representation of Kaplan ([2009] JLR 88) was wrong. This failed because Arts 16(4)(b) and (c) were held 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 is limited to property situated in Jersey. The court referred to the decision of Lord Mance in Masri v Consolidated Contractors International (UK) Ltd (No 4) ([2010] 1 AC 90), asked itself whether ‘eyebrows might be raised’ at the extraterritorial effect, and held that they would not.

In respect of King v Director of Serious Fraud Office the court held that the Modified Law is different from the English legislation, and that there was no basis for the English construction to be applied. In response to policy arguments which found favour in England, the court accepted two points advanced by the attorney general: (i) that it would be contrary to Jersey public policy to allow a defendant to benefit from a structure while also establishing serious obstacles to overseas authorities with a legitimate interest in the assets held therein; and (ii) the court could only freeze assets outside Jersey in so far as it has a personal jurisdiction over those who control those assets (see paragraphs 56 to 57).

In addressing King v HM Procureur (2011-12 GLR 285), in which the Royal Court of Guernsey applied 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 Kaplan (see paragraphs 58 to 62).

Arguments based on treaty obligations and conflict of laws principles were rejected 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 (see paragraphs 67 to 74). In both cases reliance was placed on R (on the application of KBR Inc) v Director of the Serious Fraud Office ([2019] QB 675).

While the substantive position in Jersey has not changed, this case is notable because the Royal Court considered potentially persuasive case law from England and Guernsey and declined to depart from 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 quite settled, however, as the question may yet receive the attention of the Court of Appeal.

 

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

 

 


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