The Serious Fraud Office v Saleh

A foreign order returning property after forfeiture proceedings are withdrawn is not necessarily a judgment on the merits, nor necessarily binding in rem against the world. The English court must analyse the order’s substance and purpose. A declaration of lawful ownership may operate in personam or facilitate transfer of title without determining the property’s status for all jurisdictions. Where the foreign proceedings did not adjudicate the forfeiture claim, the order does not prevent a claim under Proceeds of Crime Act 2002 in respect of property or proceeds located in England. For a property freezing order, the claimant need only establish a good arguable case that the property is recoverable property. Ownership by a third party does not itself defeat recovery where there is evidence of a causal connection between the property and unlawful conduct.

The Serious Fraud Office sought continuation of a property freezing order made under Part 5 of the Proceeds of Crime Act 2002 over £4.4 million representing the sale proceeds of shares acquired by Mrs Saleh in 2009. The shares had previously been seized in Canadian forfeiture proceedings arising from corruption by the issuing company. The Canadian prosecution withdrew its forfeiture application before any substantive hearing, and the Canadian court ordered the shares returned, describing them as neither crime-related proceeds nor offence-related property and as lawfully acquired property.

Mrs Saleh applied to discharge the English order, relying on issue estoppel, dual criminality and alleged material non-disclosure. The central issue was whether the Canadian order prevented the SFO from showing that the shares and their proceeds were recoverable property under English law.

1. The application was dismissed. The SFO had established, without relying on the challenged diplomatic evidence, a good arguable case that the shares were recoverable property. The evidence supported an inference that the opportunity to acquire them formed part of corrupt incentives offered by the issuing company to Chadian diplomatic officials or their spouses and nominees. The lawful ownership of the shares did not defeat the claim.
2. Under the conflict-of-laws principles recognised in Castrique v Imrie (1870) LR 4 HL 414, a foreign judgment final and conclusive on the merits may be conclusive as to the matter adjudicated, including where it operates in rem. But the foreign court’s description of an order as in rem is not determinative. Following Pattni v Ali [2006] UKPC 51, a judgment may operate partly in rem and partly in personam, and its effect depends on analysis of its substance.
3. The Canadian order was not a judgment on the merits. The forfeiture claim had been withdrawn, no evidence had been presented on the substantive claim, and the judge had not considered the relevant legal arguments or statutory provisions. The order was made to discharge an interim management order, return the shares and facilitate their exchange and sale. In substance it was unopposed and not materially different from a consent order.
4. The declaration that the shares were neither crime-related proceeds nor offence-related property was incidental to the return of the shares. It did not determine their status for the purposes of English POCA. Those Canadian statutory expressions were terms of art, and the English question was whether there was a causal connection between the shares and unlawful conduct sufficient to satisfy the statutory definition of recoverable property.
5. The dual-criminality requirement in section 241 of POCA was satisfied on the evidence. If the conduct had occurred in England in 2009, it would have constituted common-law bribery and an offence under section 1 of the Prevention of Corruption Act 1906. The possible application of money-laundering provisions did not need to be determined.
6. The non-disclosure challenge failed. The SFO disclosed what it knew, and the alleged omissions did not materially undermine the original decision. Applying Jennings v Crown Prosecution Service [2006] 1 WLR 182, discharge is an exceptional remedy even where material non-disclosure is established, particularly where the order is otherwise justified in the public interest.