Government Of United States Of America v Montgomery & Anor

The classification of a foreign enforcement order depends on its purpose, not its form. An order made in civil contempt proceedings may be an external confiscation order if it coercively recovers criminally obtained property or its value, or deprives a person of a pecuniary advantage. The 1991 Order applied even though related proceedings began before the United States became designated, because the domestic restriction on proceedings instituted before commencement was deliberately omitted. Using interest rates to update the value of forfeited property did not prevent the order from qualifying. Restraint-order proceedings under the regime were civil and collateral to criminal proceedings, so an appeal lay to the Court of Appeal.

The United States obtained ex parte restraint orders under the Criminal Justice Act 1988 (Designated Countries and Territories) Order 1991 to assist enforcement of United States criminal forfeiture proceedings concerning shares transferred to Kathleen Montgomery. Latham J set aside the orders, holding that the United States had become a designated country only in December 1996, that the Order had no retrospective effect, and that the November 1995 United States order was an award of interest rather than an external confiscation order. He rejected challenges based on non-disclosure and delay. The appeal concerned the Court of Appeal’s jurisdiction, the temporal application of the Order, and whether the foreign order qualified as an external confiscation order.

1. The appeal was allowed and the restraint orders made by Collins J were restored. The appeal was civil in character. Under section 18(1) of the Supreme Court Act 1981, the relevant question was the character of the restraint proceedings, not the criminal nature of the underlying foreign proceedings. Following Re ‘O’ [1991] 2 QB 520, the statutory regime for restraint and charging orders was civil and collateral to the criminal confiscation regime. The contempt orders were coercive, not punitive. Re Londono [1996] QB 272 supported that conclusion.
2. The United States became a designated country on 1 August 1994. The relevant orders against Mrs Montgomery were made in 1995. The omission of section 102(4) of the Criminal Justice Act 1988 from the modifying provisions of the 1991 Order was deliberate. The Order therefore applied to proceedings instituted before designation. The amended wording of section 102(5) also contemplated property or pecuniary advantages received before or after commencement. The ultra vires argument based on Article 7 of the Convention on Human Rights and Welch ECHR 1/1994/448 failed because the foreign confiscation liability already existed when the offences were committed.
3. The November 1995 order was an external confiscation order. Its purpose, rather than its description as interest or civil contempt, was decisive. The notional interest calculation updated the value of the forfeited shares and fell within section 71(1)(a) and section 74(6) of the 1991 Order. Alternatively, retaining valuable shares, dividends and their increased value constituted a pecuniary advantage within section 71(1)(b). The court did not need to decide the separate gift argument. The findings on non-disclosure and delay disclosed no basis for discharging the orders. The appeal was allowed with costs and leave to appeal to the House of Lords was refused.

1. Court of Appeal (Civil Division): Appeal allowed, the restraint orders restored, and costs awarded. Leave to appeal to the House of Lords was refused.
2. High Court of Justice, Queen’s Bench Division: On 20 February 1998, Latham J set aside the ex parte restraint orders, holding that the 1991 Order did not apply temporally and that the foreign order was not an external confiscation order. He rejected the non-disclosure and delay challenges.