PetroSaudi Oil Services (Venezuela) Limited v National Crime Agency

Exclusions from a Prohibition Order are discretionary and must be justified by evidence. The court must consider whether it is just to permit restrained funds to be used, while applying the specific statutory safeguards for legal expenses. Available assets belonging to others, including a beneficial owner willing and able to fund the relevant expenses, may be taken into account without piercing the corporate veil. Costs must be reasonable in nature and amount, and should ordinarily be assessed by a costs judge where appropriate. Exclusions should be capped, supported by sufficiently particularised evidence, and released only against genuine invoices for expenses actually due.

The applicant sought exclusions from a Prohibition Order made over approximately £240 million held in a fund. The application covered legal expenses in several jurisdictions, operational expenses and a contingency allowance. The applicant also sought payment of the fund through the Court Funds Office to a receiver appointed under the Proceeds of Crime Act 2002 (External Requests and Orders) Order 2005.

The court had previously granted the Prohibition Order and declined exclusions because the evidence was inadequate. On the renewed application, the central issues were whether other assets were available, whether the claimed expenses were reasonable and justifiable, and what conditions should govern any exclusions.

1. The court varied the order governing the receiver and directed that the Court Funds Office pay the fund to the receiver, who would hold it as an officer of the High Court and remain subject to the court’s directions.

2. The power to grant exclusions under Article 141G is discretionary. It must be exercised according to principle. The applicant must establish that it is just to permit the restrained funds to be used. If other available assets exist, regardless of ownership, the restrained assets should not be used. If the evidence leaves doubt but gives specific substantial grounds for suspicion of undisclosed assets, the doubt may be resolved against the applicant; absent such grounds, the applicant need not positively prove that no other assets exist. The court applied the guidance in Serious Organised Crime Agency v Azam [2013] EWCA Civ 970.

3. Assets of a person who owns and controls the applicant may be relevant without piercing the corporate veil. It was reasonable in principle to expect the applicant’s 100% beneficial owner to fund the applicant and its group before recourse to the fund, but the evidence did not establish that he had assets available for that purpose.

4. Legal expenses connected with the Prohibition Order had to be limited to expenses reasonably incurred or reasonably to be incurred, subject to a specified cap and the statutory conditions. The court should normally refer assessment of reasonable legal costs to a costs judge under paragraph 7H.6 of the Practice Direction – Civil Recovery Proceedings. The applicant’s failure to provide adequate detail justified substantially reducing the sums claimed.

5. The court refused exclusions unsupported by adequate evidence, disproportionate to the value or significance of the relevant proceedings, or relating to group operational expenses rather than the applicant’s reasonable requirements. It allowed capped exclusions of £75,000 for Prohibition Order costs, £50,000 for other UK legal costs, £20,000 for Clyde & Co, £200,000 for French arbitration costs, US$1 million for US legal costs, £1 million for Malaysian legal costs and £50,000 for Saudi Arabian legal costs.

6. Payments were limited to genuine and immediately due expenses supported by sufficiently informative invoices. Copies had to be provided to the NCA at least 14 days before payment, and no assumption was made that further exclusions would be granted.

The judgment records that the Court of Appeal refused permission to appeal against the earlier Prohibition Order judgment. The present decision concerned the renewed exclusions application and the Accountant General’s application to vary the receiver arrangements.