Government of The United States of America v. Montgomery and Another

The House of Lords held that restraint orders made by the High Court under section 77 of the Criminal Justice Act 1988 in aid of foreign confiscation orders are civil in nature and therefore appealable to the Court of Appeal under the general jurisdiction given by section 16 of the Supreme Court Act 1981. The court held that the Criminal Justice Act 1988 (Designated Countries and Territories) Order (the DCO) could, within the powers conferred by section 96, be applied so as to permit enforcement in England of external confiscation orders even though the underlying foreign proceedings or original domestic forfeiture order predated the application of the DCO to the United States. Finally, the Lords held that an interest element added by the foreign court formed part of an "external confiscation order" because it represented the value or pecuniary advantage obtained by retention of the property and was therefore enforceable under the DCO.

Background and parties:

• The United States government sought enforcement in England of confiscation and forfeiture orders made by a United States Federal District Court against Larry Barnette and, consequentially, orders against Mrs Montgomery (formerly Mrs Barnette) and her husband Mr Montgomery to restrain and preserve assets. The English High Court made restraint orders under section 77 of the Criminal Justice Act 1988; those orders were discharged on application by the Montgomerys and subsequently reinstated by the Court of Appeal. The United States government appealed to the House of Lords.

Procedural history:

• Restraint orders made by Collins J (5 September 1997).
• Latham J discharged the restraint orders (20 February 1998) on grounds including alleged retrospectivity and that the US orders were not "external confiscation orders" under the DCO.
• Court of Appeal ([1999] 1 All ER 84) overruled Latham J and reinstated the restraint orders.
• Appeal to the House of Lords ([2001] UKHL 3) — dismissed.

Nature of the claim and relief sought:

• The United States sought English restraint orders to prevent dissipation of assets and to preserve rights to enforce US confiscation orders (including a revised forfeiture order of 15 November 1995) by using the powers of Part VI of the Criminal Justice Act 1988 as applied to external confiscation orders by the DCO.

Issues framed by the House of Lords:

1. Whether orders under section 77 were made "in a criminal cause or matter" for the purpose of section 18(1)(a) of the Supreme Court Act 1981 and thus not appealable to the Court of Appeal.
2. Whether the DCO could be applied to enforce foreign confiscation orders made before the DCO was applied to the United States (retrospectivity/vires of the DCO as made under section 96 of the 1988 Act).
3. Whether the interest element added by the US court formed part of an "external confiscation order" enforceable under the DCO.

Court’s reasoning and conclusions:

• On jurisdiction the Lords concluded that the powers exercised under Part VI (including restraint orders under section 77) are conferred on the High Court as civil jurisdiction, often mirroring ordinary civil remedies (for example, freezing orders) and dealing with proprietary disputes and third party rights; accordingly such orders are not "judgments in a criminal cause or matter" for the purpose of section 18(1)(a) and are appealable to the Court of Appeal. The House followed and relied upon authorities including In re O (Restraint Order: Disclosure of Assets) [1991] 2 QB 521 and Amand v Home Secretary [1943] AC 147 while recognising limits of some earlier tests.
• On retrospectivity and the DCO, the Lords rejected the argument that the DCO could not be applied to orders made before it was applied to the United States. They held that section 96(1)(a) authorised Orders in Council to apply Part VI (subject to modifications) to external confiscation orders and proceedings, and that omission of the equivalent of section 102(4) in the DCO was within the order-making power; enforcement in England of rights conferred by a foreign order made earlier did not amount to an impermissible retrospective penalty.
• On the interest element the court held the additional sum represented the value to the defendants of retaining the property and thus constituted a recoverable pecuniary advantage under the definitions in Part VI as applied by the DCO; consequently the interest component was part of an external confiscation order for enforcement purposes.

Conclusion: the House dismissed the appellants' appeal and the restraint orders were held to have been properly reinstated.

Appeal dismissed. The House held that restraint orders under section 77 of the Criminal Justice Act 1988 are civil in nature and therefore appealable to the Court of Appeal; that the DCO made under section 96 could validly apply Part VI to external confiscation orders even where the foreign proceedings or original forfeiture order predated the DCO's application to the United States; and that interest awarded by the foreign court formed part of an external confiscation order as it represented a pecuniary advantage recoverable under the Act.

High Court (Collins J) restraint orders made 5 September 1997; Latham J discharged restraint orders 20 February 1998; Court of Appeal (Stuart-Smith, Aldous and Swinton Thomas LJJ) reversed Latham J ([1999] 1 All ER 84); appeal to the House of Lords dismissed ([2001] UKHL 3).