National Crime Agency v Petrosaudi Oil Services (Venezuela) Limited

Under the Proceeds of Crime Act 2002 (External Requests and Orders) Order 2005, a prohibition order may be made where the statutory requirements are met, even though the relevant property is held in the Court Funds Office. Risk of dissipation is not a formal statutory condition, although it is ordinarily relevant to the court’s discretion. The court must assess whether property may be needed to satisfy a possible external order against the relatively low threshold of reasonable grounds to believe. A receiver may be appointed to preserve and administer the property under the court’s control. Exclusions for legal or business expenses require full disclosure and evidence establishing both the availability of other assets and the reasonableness of the sums sought.

The National Crime Agency applied for a prohibition order over approximately £240 million held in the Court Funds Office. The application followed a request for mutual legal assistance from the United States concerning civil forfeiture proceedings in California, where the funds were alleged to represent proceeds of the 1MDB fraud.

The respondent contended that the funds were not relevant property, were outside the request, and faced no real risk of dissipation because they were held in court. It also alleged abuse of process and sought continued access to funds for legal and business expenses. The issues were whether a prohibition order should be made, whether the funds should be transferred to a receiver, and whether exclusions should be permitted.

1. Prohibition order. The statutory requirements were satisfied. The Fund was relevant property under section 447(7) of the Proceeds of Crime Act 2002. The statutory test required reasonable grounds to believe that it might be needed to satisfy an external order which had been or might be made. The threshold was relatively low and did not require proof that the property was criminal property.
2. The United States judge’s reasoned ruling, made after an inter partes hearing, provided reasonable grounds for believing that the Fund might be required to satisfy a future forfeiture order. The Fund also fell within the request because the request covered portions which might be released by the High Court. The court therefore had jurisdiction under articles 141A to 141D of the Proceeds of Crime Act 2002 (External Requests and Orders) Order 2005.
3. Risk of dissipation was not a statutory condition of a prohibition order, although it was ordinarily relevant to the exercise of discretion. In this case there was a real risk because the respondent retained freedom to seek access to the Fund, to challenge the effect of the United States warrant, and potentially to encumber the Fund. The application was not an abuse of process. The earlier decision not to pursue a Malaysian request did not amount to an acceptance that the Fund was not criminal property.
4. Receiver. The court appointed a receiver under article 141I. The receiver was to hold the Fund as agent for the Court Funds Office, subject to the court’s orders and directions, rather than as the respondent’s agent. This preserved the court’s control and permitted more flexible administration of the substantial fund.
5. Exclusions. No exclusions were allowed at that stage. The respondent had not provided sufficient evidence of its other available assets or of the reasonableness and present necessity of the substantial legal and business expenses claimed. Future applications could be made under article 141G, supported by fuller evidence, and questions concerning reasonable legal costs should ordinarily be referred to a costs judge.

The prohibition order and appointment of a receiver were made. The Fund remained under the control of the High Court. No present exclusions were granted.

Not an appeal. The application was determined at first instance in the Administrative Court.