Saleh v Director of the Serious Fraud Office

A foreign judgment is conclusive only where it is final and conclusive on the merits. The court must have established or accepted facts, identified and applied the governing law, and reached a conclusion. A foreign court’s description of an order as a judgment in rem is not decisive. The order must arise from proceedings with jurisdiction and a function to determine rights or property status against the world. An order made after withdrawal of forfeiture proceedings, without evidence, submissions or an adjudicative process, cannot acquire that effect merely through its wording. Even an order having in rem effect may be confined to title and need not determine whether property is crime-related or recoverable in another jurisdiction.

Mrs Saleh challenged a Property Freezing Order made under Part 5 of the Proceeds of Crime Act 2002 over proceeds from the sale of shares. She relied on an Alberta Queen’s Bench order made after Canadian forfeiture proceedings against her had been withdrawn. The Canadian Order described itself as a judgment in rem and declared that the shares were not crime-related proceeds or offence-related property.

Andrews J held that the Canadian Order did not preclude the Serious Fraud Office from asserting that the funds were recoverable property: [2015] EWHC 2119 (QB). The central issue on appeal was whether the Canadian Order was final and conclusive on the merits and had in rem effect binding the respondent.

The Court of Appeal, in the judgment of Lord Justice Simon with which Sir Martin Moore-Bick and Sir Stephen Tomlinson agreed, dismissed the appeal.

1. Applicable principles. A foreign judgment that is final and conclusive on the merits is conclusive as to the matter adjudicated. The principle applies to judgments both in personam and in rem: Castrique v Imrie (1870) LR 4 HL 414. A decision is on the merits where it establishes facts as proved or undisputed, states the relevant legal principles, applies them to the facts and reaches a conclusion, as explained in The Sennar (No.2) [1985] 1 WLR 490.
2. A foreign court’s characterisation of an order as in rem is not conclusive for private international law purposes. The proceedings must be within a jurisdiction whose function is to determine rights or the status or disposition of property against the world. Findings incidental to an in personam determination do not bind the world at large. The practical question was whether the order would prevent a person with a better right to the shares from asserting it, consistently with Pattni v Ali [2006] UKPC 51; [2007] 2 AC 85.
3. The Canadian Order did not satisfy those requirements. The recital linking Mrs Saleh’s apparent innocence to the absence of evidence did not establish facts or amount to an adjudication. The reference to section 490.5(4) of the Criminal Code of Canada was inapposite, and the operative paragraph declaring the shares neither crime-related proceeds nor offence-related property had not been explained, considered or ruled upon by the Canadian judge. There had been no evidence, legal submissions or decision-making process capable of supporting an order binding enforcement authorities in other jurisdictions. The Crown had approved the form but had not consented to the order.
4. In any event, even if the order had in rem effect, its scope was limited to title to the shares and did not determine their status as recoverable property under another legal system. The court therefore did not need to decide the respondent’s further arguments concerning inconsistency with the statutory regime or a residual discretion to avoid injustice.

• Court of Appeal (Civil Division): Appeal dismissed in [2017] EWCA Civ 18.
• Queen’s Bench Division: Andrews J held that the Canadian Order did not preclude the respondent from contending that the funds were recoverable property under Part 5 of the Proceeds of Crime Act 2002: [2015] EWHC 2119 (QB).