The Unexplained Wealth Order’s little brother – Account Freezing and Forfeiture Orders14 Feb, 2019 - General | by Grosvenor Law
In the third blog of the series looking at the powers granted to the authorities within the Criminal Finances Act 2017, Andrew Gilmore and Sophie Adams review the lesser publicised Account Freezing and Forfeiture Orders (‘AFFOs’)
While the Unexplained Wealth Order (‘UWO’) has entered English law with much fanfare and publicity, the Criminal Finances Act 2017 also introduced other, less well-known provisions into the Proceeds of Crime Act 2002. These provisions also give prosecutors the power to freeze the contents of bank and building society accounts and, in due course, hold those monies as forfeit. Welcome to the AFFO!
AFFOs compared to UWOs
An AFFO is split into two parts –
(1) An Account Freezing Order: a court order which relates to a specific bank or building society account that prohibits account holders or signatories of an account from making withdrawals or payments from that account for a period of up to two years. During that period, the money held in that account could, upon application by the Crown, be held as forfeit.
This type of order will be made if a Magistrates’ Court is satisfied that the enforcement officer making the application has “reasonable grounds” for suspecting that money held in that account (“whether all or part of the balance”) is, more likely than not, either “recoverable property” or is intended by any person for use in “unlawful conduct”.
(2) An Account Forfeiture Order: at any stage during the length of the Account Freezing Order, the enforcement officer can apply for a forfeiture order, the second part of an AFFO. The application for this order is also heard at the Magistrates’ Court and, if successful, any monies in the frozen account are held to be forfeit as the proceeds of crime.
An AFFO can be made if suspicion arises in relation to amounts of £1,000 – a significantly lower threshold than the £50,000 required to obtain a UWO or the £10,000 threshold needed to obtain a Property Freezing Order.
Further, where UWOs need to be made in the High Court, an AFFO application is heard at the Magistrates’ Court: a much quicker, simpler and more cost-effective venue for the Crown; and all without the disclosure requirements or costs risks incumbent within the UWO procedure.
The judicial scrutiny afforded to an AFFO application from a District Judge in a busy Magistrates’ Court could be argued to be somewhat less than that given by a High Court Judge when hearing a UWO application.
The speed and ease in which AFFOs may be obtained is clearly designed to complement the Suspicious Activity Reporting disclosure regime that the National Crime Agency uses, but these advantages will also prove a very attractive and hassle-free alternative for prosecutors looking to other Asset Recovery Powers.
It seems that the UWO’s little brother has more bite than was first thought.
What should you do if you find your account has been frozen as a result of an Account Freezing Order or if an Account Forfeiture Notice / Account Forfeiture Order has been made?
AFFOs, and forfeiture itself, are draconian tools now at the fingertips of enforcement agencies. Any action in response should be taken swiftly, including instructing solicitors to advise you properly, to avoid the worst-case scenario.
If any of your accounts end up frozen by an Account Freezing Order, or indeed, if you are in any way affected by an AFFO, you may wish to make an application in the Magistrates’ Court to have the Account Freezing Order set aside or varied. If this is successful, you may have grounds to apply for compensation for any loss suffered by you as a result of an AFFO.
If you are already at the stage where a forfeiture notice has been made that affects you, objections can be raised to the enforcement officer on your behalf whether you are a recipient of the notice or not; alternatively, it may be advisable to make representations at Court. If a forfeiture order has been made and you are affected by that order, there may be scope to appeal the decision.
Grosvenor Law has a specialist team on hand to deal with any aspect of asset recovery.
Andrew Gilmore is Head of Grosvenor Justice, specialising in money laundering, fraud, asset recovery and all aspects of criminal law.
Sophie Adams is an associate in Grosvenor Law’s commercial litigation team, where she often advises on complex cases in which allegations of fraud and corruption have been made.
When you bring a claim and win – options for enforcing a High Court judgment in England and Wales07 Feb, 2019 - General | by Grosvenor Law
In the first of a two-part series on enforcement of judgments, Ben Wolfe sets out the process in England and Wales.
Obtaining judgment in your favour is often not the end of civil litigation. The losing party will not always comply with the court’s judgment or order and not everyone realises that the court will not automatically seek to enforce it. To avoid being left out of pocket at the conclusion of proceedings, litigants should always consider at the outset how they may be able to enforce judgment against a defendant who is unwilling to pay.
Do your homework
When commencing litigation, a claimant’s objective is usually to recover sums lost. The key to successful enforcement is identifying and ascertaining the value of the defendant’s assets at the outset. For example, it is not unusual for fraudsters to live a lifestyle that suggests that they are cash rich when the reality is that they are living beyond their means, spending other people’s money or not paying their bills. An individual’s wealth may be tied up in trust structures. Even large companies do not always hold significant assets in their own names, instead, they may be owned by holding companies which are often outside the jurisdiction.
When dealing with an individual, you should consider:
– does the defendant own their own home?
– are they a shareholder in a private company?
– what debts may they have?
If the defendant is a private company, you will want to know:
– is the business a UK business or is it incorporated abroad;
– is the company solvent and are recent accounts publicly available?
– who are the shareholders and directors and where do they live?
You have your judgment – now what?
In English law, in addition to commencing a process in which the threat of bankruptcy or insolvency is raised unless payment is made, a claimant who has obtained a money judgment against a defendant who is resident or incorporated within the jurisdiction has broadly five options. It should be noted that these can only be obtained after making an application to court.
These options consist of:
1) a writ of control;
2) a third-party debt order;
3) a charging order;
4) an attachment of earnings order; or
5) the appointment of a receiver.
Writ of control
After obtaining judgment, the successful party may instruct an authorised enforcement agent to enter the judgment debtor’s premises, seize goods (including vehicles, art and jewellery) up to the value of the judgment sum and sell them in order to satisfy the debt in whole or in part. This method of enforcement is useful and effective, particularly where the sum in question is relatively modest or where the debtor is known to have valuable moveable assets.
Third-party debt order
Such orders require third parties (i.e. someone other than the judgment debtor) to pay the creditor either some, or all, of the debt owed by the judgment debtor. For example, an order may be sought against the debtor’s bank requiring it to transfer sums held in the debtor’s bank account. If the debtor itself is owed money by a third party i.e. in satisfaction of a commercial contract between the debtor and that third party, then such an order would enable the judgment creditor to step in and receive the money before it is paid to the judgment debtor. This method of enforcement is particularly effective where you have a debtor who has the cash to pay but simply refuses.
This allows judgment creditors to secure their debt against the debtor’s land or securities. Ultimately, the creditor may obtain an order for sale of the debtor’s property in satisfaction of the judgment debt. This method of enforcement is an extremely useful tool because real property is usually an individual or company’s most valuable asset, which they are often unwilling to sell voluntarily.
Attachment of earnings
This is an order that the debtor’s employer transfers to the judgment creditor an amount from their regular salary until the judgment is satisfied. This method of enforcement is only available from the County Court so may not be appropriate for all cases.
Appoint a receiver
Appointing a receiver is an option where the judgment debtor’s affairs are particularly complex. However, professional receivers need to be paid for their work and their appointment will take some level of control away from the creditor.
The methods of enforcement outlined above can be used on their own or together in order to satisfy all or part of a judgment debt where the judgment debtor is in England and Wales. Often the threat of the successful party applying for one or more of these enforcement methods can be as effective as the enforcement itself. However, successful parties in litigation need to be aware that judgment is not always the end of the story. Faced with a judgment debtor who is unwilling to pay, the successful party needs to maintain their resolve, ensure they have funds available to apply for enforcement, and only relent when as much as possible of the judgment debt has been satisfied. The key is to know which method or methods are likely to yield results in different circumstances.
Ben Wolfe is a managing associate specialising in commercial litigation, often involving high profile clients and with a foreign element.
Aggressive negotiation or blackmail?31 Jan, 2019 - General | by Grosvenor Law
Negotiations can be hard fought, with each party using whatever advantage is at their disposal to obtain the most favourable outcome they can. Such tough negotiation is all well and good as long as the actions of the parties, and the manner in which any “leverage” is used, does not stray over the line into blackmail.
Blackmail is a criminal offence. If you think that you have been subjected to blackmail in the course of negotiations, you should immediately seek advice from your solicitor.
What constitutes “blackmail”?
In very brief terms, for there to be blackmail there must be:
– An unwarranted demand;
– Such demand was made with “menaces”; and
– The demand is made with a view to gain for the person making it or an intent to cause loss to another.
A demand with menaces will be unwarranted unless the person making it does so in the belief that:
– he has reasonable grounds for making the demand; and
– the use of the menaces is a proper means of reinforcing the demand.
It will be a question of fact in any particular case whether the demands are made with a view to gain or an intention to cause loss. Indeed, the purpose of most negotiations is to improve one’s position at the expense of another. As such, it will generally be the manner in which the demands are made that result in an allegation of blackmail.
To be an offence under English law, one of the constituent elements of the blackmail must have taken place in England and Wales.
A real menace
This blog post will focus primarily on “menaces” as it is this aspect that generally causes the most distress and, when made, is often the point at which a person realises that, rather than simply being on the other side of tough negotiator, they may actually be a victim of blackmail.
“Menaces” are serious or significant threats (express or implied) and include threats of violence or other detrimental or unpleasant consequences. The threats a) should be such as to affect the mind of a reasonable person; or b) did, in fact, affect the mind of the victim and the accused knew his actions were likely to have such an effect.
Clearly, if in the course of negotiations, your counter party threatens violence towards you or a loved one you should immediately seek legal advice; however, often the threats are not so clear. Other acts which may constitute “menaces” include threats to:
1) publish pornographic images of someone on the internet;
2) make public allegations of improper or otherwise bad conduct;
3) report someone to the relevant authorities (for example the police, HMRC or the Home Office) for criminal or other wrongdoing; and/or
4) publish allegations about a company with the intent to lower its share value.
The threats do not have to be express or overt. Phrases such as those set out below can give rise to blackmail:
1) “I am not making a threat, merely a promise…”;
2) “you never know who might find out those explicit photographs you sent…”; and/or
3) “wouldn’t it be a shame if the tax / customs / immigration authorities found out about X…”
If you are in any doubt as to whether you are at the other end of a blackmail attempt or simply on the other side of an aggressive negotiator, you should seek legal advice.
Michelle Quinn is Counsel and a senior associate at Grosvenor Law. She regularly advises in complex commercial matters, including in fraud, conspiracy, insolvency and breach of privacy disputes.
Serious Fraud Office prosecutions – trials of fraud24 Jan, 2019 - General | by Grosvenor Law
Andrew Gilmore reviews the Serious Fraud Office’s Tesco and Barclays prosecutions and looks ahead over what might be a difficult year for the organisation.
In early December 2018, the high-profile trial of two former senior Tesco executives over the company’s £250m accounting scandal collapsed after both men were acquitted.
Chris Bush and John Scouler’s protracted journey through the courts came to an end when the trial Judge, Sir John Royce, dismissed the SFO’s case and concluded that “in certain crucial areas, the prosecution’s case was so weak that it should not be left for a jury’s consideration”.
This story began between February and September 2014 when Tesco executives Carl Rogberg, Chris Bush and John Scouler were all investigated after Tesco was found to have inflated its profits. The supermarket made a public announcement on 22 September 2014 admitting to overstated profits of £250 million; Tesco’s share price fell by nearly 12 per cent as a result of the scandal. A whistle-blower within Tesco claimed payments to the company’s suppliers were being manipulated to make the supermarket’s finances appear healthier than they actually were, following a decline in its fortunes.
The SFO investigated and pursued a trial against Bush and Scouler in 2017. This case was abandoned by the prosecution before the jury had a chance to deliberate. The SFO tried again, and a second trial took place during the autumn of 2018.
It was during this second trial that the Judge, Sir John Royce, stopped the proceedings when he found that there was ”no case to answer”. Legally speaking, this meant that it was clear to him that the prosecution evidence, taken at its highest, was such that no jury, properly directed, could convict the defendants.
In the aftermath of the trial, much criticism was levelled at the SFO for not properly understanding its own case and evidence. Indeed, many legal commentators suggested that the matter should never have reached the trial stage. To compound matters, on 23 January 2019 the trial of the last of the Tesco Defendants, Carl Rogberg, also ended in failure for the SFO when he was acquitted after a second trial.
What does this mean for the SFO?
This case has been an embarrassment for the SFO, coming straight after its calamitous (and much publicised) attempts of other prosecutions. These include a series of acquittals for defendants in the LIBOR cluster of trials in 2016, and the dropping of conspiracy to defraud charges in June 2017 against Barclays PLC and four individuals in respect of the bank’s 2008 rescue package with Qatari funding.
All eyes are now on Southwark Crown Court for the outcome of another trial involving Barclays’ senior management. The trial is expected to last until at least March 2019. It will see four individuals – the former chief executive John Varley, ex-investment banking chief Roger Jenkins, former Barclays Wealth boss Thomas Kalaris and ex-European financial institutions head Richard Boath – face charges over conspiracy to commit fraud in relation to the bank’s capital raising in 2008.
Going after big game
Much will rest on the outcome of this trial for the SFO. While its newly appointed director, Lisa Osofsky, is publicly predicting a bright future for fraud prosecutions under her leadership, the SFO remains mired in accusations of “big scalp hunting” – pushing potentially weaker cases in a drive to prosecute high-profile figures and companies, while ignoring less glamorous frauds. Indeed, the SFO is encouraged to take this approach, being able to request substantial extra funds from government for high-profile investigations (known as ‘Blockbuster Funding’). This is concerning, coming at a time when public resources into the criminal justice system and the police have been stripped back to unprecedented levels.
Should the Barclays trial result in failure, how long could it be before the government loses patience and seeks to merge the SFO with other, arguably more successful directorates, such as the National Crime Agency?
Andrew Gilmore is Head of Grosvenor Justice, specialising in money laundering, fraud, asset recovery and all aspects of criminal law.
Divorce Day – approaching your divorce with dignity18 Jan, 2019 - General | by Grosvenor Law
January is one of the busiest months for divorce. Whether it’s the pressure of spending time over the seasonal holidays together, the desire for a new start in a new year or simply the feeling that the time has come, embarking on divorce is a mammoth life decision, no matter what the reason or when in the year the decision is made.
Official records show that 42 per cent of all marriages end in divorce; in 2017 there were just over 102,000 divorces in the UK. Tracey Rodford, Grosvenor Law’s matrimonial expert, joined The Women’s Radio to discuss how to approach the path to divorce to achieve the conclusion to a marriage.
Tracey shared her thoughts with the programme’s host and below are her top tips on how to navigate the early stages of a divorce, whether you are embarking on your journey in January or any other time of the year.
As with any major life decision, there can be no perfect time for such a momentous move. However, it is always worth considering the impact of timing for you and those closest to you, such as children, and how the timing of divorce might affect their lives. There’s no getting away from it – divorce is a stressful time, so trying to avoid clashes with other major life events, such as exams, is always worth bearing in mind.
Throughout the course of divorce proceedings, you’ll find yourself having to share some of the most intimate details of your life with your lawyer. Being able to feel that you can speak freely, as well as having trust in their professional competence, makes for a more positive relationship. You may find it helpful to speak to a few different lawyers before you appoint somebody; make the time to find somebody who you feel will work best with you, not simply for you.
Divorce brings with it the inevitable separation of finances and possessions. To minimise time and cost, it’s best to understand your financial position before you visit your legal representative. Take the time to research the matrimonial assets, be ready with figures, and understand what is where. Supplying this information at the outset will allow you to receive focused advice earlier, rather than spending time incurring the cost of inconclusive meetings and then being asked to return to cover the same ground (but this time with paperwork that could have been gathered previously).
Don’t allow emotion to blur judgement
Divorce is never an easy time. However, once the decision is made, approaching the divorce as calmly as possible will help you to reach a conclusion more smoothly and often in a shorter timeframe. There will understandably be moments of upset throughout the process, but remaining as objective as possible, letting go of the past and focusing on the future will help you to move forward and begin the next chapter of your life.
Tracey Rodford, managing associate, advises on all areas of matrimonial and family law.
Grosvenor Law’s commercial team expands with appointment of Sophie Adams17 Jan, 2019 - General | by Grosvenor Law
Sophie Adams has joined Grosvenor Law as an Associate. Sophie joins our growing commercial litigation team where her experience of working on fraud and corruption cases, and high-value breach of contract disputes, will support clients as they seek to achieve solutions to their disputes. Sophie joins the team from specialist commercial practice William Grace where she regularly advised FinTech and investment business. She has worked on behalf of defendants in the notable cases of Libyan Investment Authority v Societe Generale and Ors and Republic of Djibouti & Ors v Boreh & Ors.
Commenting on her appointment, Nicola McKinney, Partner shared, “Sophie is a strong talent and a welcome new colleague for our team. Her experience and skills offer a great match for our clients and we are looking forward to the contribution she will make as our practice continues to grow.”
Worldwide Freezing Orders – Partner Nicola McKinney featured in Law36016 Jan, 2019 - General | by Grosvenor Law
Worldwide Freezing Orders (WFOs) are currently the subject of much international attention highlighted by the recent case of FSDEA v Dos Santos, where a breach of disclosure meant the order was discharged. These orders may seem appealing as they are extremely effective – if a defendant fails to comply with a WFO they may be found in contempt of court, which can attract a prison sentence.
However, the risks to law firms and their clients are huge when seeking such an order without careful consideration. While a WFO will prevent an individual from disposing of their assets, the flip side is that any breaches in disclosure obligations from the entity seeking the order will be embarrassing, costly and likely to result in the order being lifted.
Grosvenor Law acted for the successful second respondent in FSDEA, helping to ensure the order was discharged by showing that the applicant had not disclosed crucial documents and information during the hearing. The judge found eight counts of “non-disclosure and an unfair presentation” which undermined the applicant’s case for the WFO, and so the freezing order was immediately discharged.
In response to the case, in an exclusive feature published by Law360, Grosvenor Law Partner Nicola McKinney examines WFOs and explain their risks and benefits. She reviews the obligations upon the applicant, considers the penalties for breaching the duty of disclosure, and outlines the duties for legal advisors in these cases.
Minority shareholder litigation: breaking up can be hard to do16 Jan, 2019 - General | by Grosvenor Law
Signing on the dotted line of the shareholders’ agreement and being part of the “next big thing” is all well and good, but what happens if things go wrong? A frequent occurrence is that, shortly after signing the shareholders’ agreement, the co-shareholders use their majority influence to push the business in a direction that you were not expecting. This, in turn, may harm the value of your shareholding in the company. When this happens (sadly, on a regular basis) minority shareholders (who may not share the same wealth and influence as the majority) find themselves in an unenviable position of having parted with considerable sums of money, or other assets, only to be left with difficult and uncompromising business partners.
Facing the opposition
Minority shareholders hold fewer than 50 per cent of the shares in a company, and corresponding voting rights. As the name suggests, minority shareholders do not have any special rights, unless enshrined in the company’s articles, meaning that their ability to make or even influence decisions in a company may be limited; this is particularly likely to arise where there is a single majority shareholder, or a block of shareholders acting together against the minority. In the face of strong majority shareholder opposition, a minority shareholder does have options, including the following:
1) Do nothing.
2) Sell your shares.
3) Make a nuisance of yourself at an AGM.
4) Petition for relief of the grounds that the conduct is unfairly prejudicing you under section 994 of the Companies Act 2006 (“CA 2006”).
5) Petition to have the company wound up under section 122(1)(g) of the Insolvency Act 1986 on the basis that it is just and equitable that the company is wound up.
6) Ask the Department of Business, Innovation & Skills to investigate the company.
Unfair prejudice claims
A claim under section 994 CA 2006 (an unfair prejudice claim) is one of the more common ways for a minority shareholder to protect their interests in the company in which they have a shareholding. This type of claim is made by petition and the petitioner must seek an order on the grounds that:
– The company’s affairs are being, or have been, conducted in a manner that is unfairly prejudicial to the interests of its members or of some part of its members; or
– Any actual or proposed act or omission of the company (including an act or omission on its behalf) is, or would be, prejudicial.
What counts as unfair prejudice?
What constitutes ‘unfair prejudice’ is likely to be highly fact specific; case law indicates that the courts have accepted that unfairly prejudicial conduct includes:
– Depriving a company of materials to enable it to continue in business and a refusal to buy minority shares at a negotiated price (Scottish Co-operative Wholesale Society Ltd v Meyer  3 All ER 66); or
– The majority shareholder assuming powers that he does not have and exercising those powers against shareholders who have major beneficial interests in the company but limited voting power (Re (HR) Harmer Ltd [3 All ER 689  1 WLR 62).
Putting it right
The remedies under section 996 CA 2006 which the court can grant, if it finds unfair prejudice, include:
– Preventing the company doing something the majority wished it to, or making the company do something the majority did not wish it to; or
– Ordering the company or the majority shareholders to buy out the minority.
While it can be time consuming and stressful to bring an unfair prejudice petition, it may nevertheless be worthwhile exploring whether there is scope to challenge the majority in this way, and to consider how you, as the minority shareholder, will ask the court to intervene to remedy the unfairness. It is difficult to break up or regain control, however, it is not necessarily impossible.
Ganesh Nanwani is a managing associate at Grosvenor Law, and regularly works on company and partnership disputes, including advising on minority shareholder rights and in relation to employee restrictive covenant breaches and misuse of confidential information.
The dangers of using third party references – a warning to businesses10 Jan, 2019 - General | by Grosvenor Law
In October 2010 Hassan Barakat, a gentleman with an appetite for high stakes gambling, opened a £800,000 cheque cashing facility with the Playboy Club casino in London (the “Club”). The Club required a credit reference from the player’s bank for twice the amount of credit facility requested (i.e. for £1.6m). To protect clients’ privacy, it was the Club’s practice to obtain the reference via an intermediary company called Burlington Street Services Ltd (“Burlington”). Upon the written request of Burlington, Mr Barakat’s bankers, Banca Nazionale del Lavor (“BNL”) provided written confirmation that Mr Barakat had an account with them and was trustworthy up to £1.6m in any one week.
Rolling the dice
Relying on that reference the Club granted the cheque cashing facility to Mr Barakat and shortly thereafter increased it from £800,000 to £1.25m. Mr Barakat subsequently drew two cheques on BNL for a total of £1.25m in return for gambling chips of the same amount. Both cheques were then returned unpaid. The Club later discovered that BNL did not in fact hold an account for Mr Barakat and there was no basis for the reference.
In the recent case of Banca Nazionale del Lavoro SPA v Playboy Club London Ltd and others  All ER (D) 148, the Supreme Court examined whether BNL owed a duty of care to the Club, and found that a bank could not be liable for a credit reference in circumstances where it was not aware that its reference would be communicated to or relied upon by any third party.
This is a well-trodden (albeit complex) area of law, but this case serves as a useful reminder of the limits to professional advisors’ liability to undisclosed principals and the importance of ensuring that the contractual framework is appropriate to the situation and context in which that advice is sought. There are highly fact sensitive considerations, including what the advisor’s knowledge of the transaction was and the purpose for which the advice is being given. Is there a special relationship between the parties which is ‘akin to contract’? In this case there was not, and BNL did not owe the Club a duty of care.
Hedging your bets
There is sometimes a tension between protecting client confidentiality, particularly in the banking context, while at the same time ensuring contractual arrangements afford adequate protection to undisclosed principals. The courts are reluctant to expand a representor’s liability for negligent misstatement where that would result in liability to the world at large or to a wholly indeterminate group. Clients looking to strike a balance between these two competing aims should give consideration to the principles considered in this case.
Gregory Pooler is a managing associate at Grosvenor Law.
Sports stars, politicians and billionaires – diplomatic immunity in the English courts07 Jan, 2019 - General | by Grosvenor Law
Recent high-profile news stories about the bankruptcy proceedings against Boris Becker and the killing of journalist Jamal Khashoggi in the Saudi consulate in Istanbul have brought the status of diplomatic immunity into focus. Bar a highly unlikely political intervention by the Saudi state, the perpetrators of Khashoggi’s murder will almost certainly never see the inside of a Turkish court room. However, for both claimants and defendants in English legal proceedings, the status and effect of an individual’s diplomatic immunity can have wide-ranging implications for the litigation in such proceedings.
International approach to diplomatic immunity
Under the 1961 Vienna Convention, foreign diplomats are generally afforded immunity from prosecution in their host country in both criminal and civil proceedings. Diplomatic immunity may also extend to the diplomat’s family members.
There have been a number of cases in English law in which the compatibility of immunity with Article 6 of the European Convention for the Protection of Human Rights and Fundamental Freedoms (right to a fair trial) has been considered. As is often the case, the law seeks to balance competing rights and protections.
A regular counter to defendants who rely on their diplomatic status to secure immunity from prosecution is for the other party to claim that the diplomatic position is not genuine. Claimants will argue that a diplomatic position is merely a device to prevent the successful prosecution of legal proceedings. The party seeking to challenge diplomatic immunity may question whether the role taken up by the individual asserting the immunity is just a “sham”, merely intended for the avoidance of prosecution.
English courts’ approach to immunity as a defence
In ongoing bankruptcy proceedings, Boris Becker claims diplomatic immunity resulting from his appointment by the Central African Republic as a Sports and Culture Attaché. However, the media, and presumably Mr Becker’s creditors, have questioned the circumstances of this diplomatic appointment, on the basis that it is a device to enable him to resist bankruptcy.
It may seem uncontroversial to suggest that the English court could apply a test to determine whether Mr Becker’s diplomatic status is or is not designed to resist proceedings. However, where the diplomatic status of an individual is confirmed by a foreign state, the English courts have shown a reluctance to seek to go behind such an assertion.
In two recent cases on diplomatic immunity, Al Attiya v Al Thani  and Estrada v Juffali , the English courts have confirmed a reluctance to question a foreign state’s assertion that an individual is a member of their diplomatic staff and entitled to the protections that confers. There are a range of policy reasons for adopting such an approach, including the state’s own fears that the process or circumstances of the appointment of its own diplomats may be similarly questioned by foreign states.
Subject to certain exceptions, international law provides that a diplomatic agent who is a national of, or permanently resident in a host state shall enjoy only immunity from jurisdiction in respect of official acts performed in the exercise of his functions. This approach has been confirmed by the English courts, which have found that where an individual is “permanently resident” in the UK and a claim against them does not arise in respect of official acts performed in the exercise of their diplomatic functions, then that person is not entitled to immunity. This is an important reservation, and for an individual seeking to assert diplomatic immunity, care will need to be taken not to establish residence.
The bottom line
The domestic and international rules and regulations in respect of diplomatic and state immunity are a complex area that is tested by the English courts relatively infrequently, and usually by parties who have a high public profile. Therefore, when such cases are litigated in London, it is of particular interest to both the legal profession and the general public.
Ben Wolfe is a managing associate specialising in commercial litigation, often involving high profile clients and with a foreign element.