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Jersey Unreported Judgments |
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You are here: BAILII >> Databases >> Jersey Unreported Judgments >> Federal Republic of Nigeria v Doraville Properties Corporation [2017] JRC 019 (23 January 2017) URL: http://www.bailii.org/je/cases/UR/2017/2017_019.html Cite as: [2017] JRC 19, [2017] JRC 019 |
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Fraud - application to intervene by USA in the proceedings between the parties.
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Before : |
J. A. Clyde-Smith, Esq., Commissioner, sitting alone |
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Between |
The Federal Republic of Nigeria |
Plaintiff |
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And |
Doraville Properties Corporation |
Defendant |
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And |
The United States of America |
Proposed Intervener |
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Advocate J. M. Dann for the Plaintiff.
Advocate M. T. Jowitt for the Proposed Intervener.
judgment
the COMMISSIONER:
1. The United States of America ("USA") applies to intervene in the proceedings brought by the Federal Republic of Nigeria ("Nigeria") against Doraville Properties Corporation ("Doraville").
2. The background is set out in detail in the Court's judgment of 22nd July, 2016, Doraville Properties Corp-v-AG [2016] JRC 128, but by way of brief overview:-
(i) Doraville is alleged to be the recipient of funds stolen from Nigeria, and laundered through the USA, by General Sani Abacha, his family and associates during his military regime which came to an end on his death on 8th June, 1998.
(ii) On 25th February, 2014, and on the application of the Attorney General, the Court imposed a property restraint order over the recoverable property of General Abacha's son, Mohammed Sani Abacha, and specifically over the bank account of Doraville at Deutsche Bank International in Jersey, and this pursuant to Article 6(3) of the Civil Asset Recovery (International Co-operation)(Jersey) Law 2007 ("the 2007 Law"), the effect of which was to vest the funds within the bank account in the Viscount (Article 7(1) of the 2007 Law) who has taken possession of those funds.
(iii) On the 6th August, 2014, and at the request of Nigeria, the USA obtained a default judgment in rem in the United States District Court for the District of Columbia against inter alia the bank account of Doraville.
(iv) The Attorney General has yet to apply to register the US default judgment in Jersey under Article 9 of the 2007 Law, but when and if he does so, it is the intention of Nigeria to oppose it.
(v) Doraville applied to discharge the property restraint order, which application was dismissed for the reasons set out in the Court's judgment of 22nd July, 2016. That judgment is under appeal.
(vi) These proceedings were commenced by Nigeria by way of Order of Justice dated 11th May, 2016, which recites that Mohammed Abacha and one of his father's associates, Abubakar Atiqu Bagudu, the beneficial owners of Doraville, entered into an agreement with Nigeria entitled the "Repatriation Agreement" dated 14th July, 2014, by which it was agreed that the funds held in the bank account of Doraville (and other assets) would be transferred to Nigeria. In the Order of Justice, Nigeria seeks:-
(a) a declaration that the monies held in the bank account were held by Doraville as constructive trustee for Nigeria;
(b) an order that any monies in the bank account be transferred to Nigeria forthwith; and
(c) further or alternatively, an account as to which of the monies held by Doraville had been obtained from Nigeria unlawfully or otherwise in breach of trust, together with equitable compensation as to the sums so obtained.
(vii) Doraville gave notice that it did not intend to defend the proceedings brought by Nigeria, so that judgment would be obtained in default. The USA has applied to intervene to prevent such a judgment being obtained, as it is concerned that any such judgment would prejudice the ability of the Attorney General to register the USA default judgment on behalf of the USA under the 2007 Law.
3. The application by the USA to intervene in the proceedings brought by Nigeria first came before the Court on 30th September, 2016. During that hearing, the following emerged;-
(i) The Order of Justice made no reference at all to the property restraint order obtained by the Attorney General under the 2007 Law and the fact that there were no monies now in the bank account of Doraville over which any judgment could be obtained.
(ii) Nigeria's intention was to obtain judgment over Doraville's reversionary or contingent interest in the funds now held by the Viscount should the application by the Attorney General to register the US default judgment fail and the funds be returned to Doraville.
4. The matter was adjourned to see whether parties could agree the basis upon which the Order of Justice might be amended and judgment granted in favour of Nigeria in a manner which did not prejudice the proceedings under the 2007 Law. I had indicated that I was minded, subject always to counsel's further input, to order Nigeria to amend its Order of Justice along the following lines:-
(i) To recite the proceedings under the 2007 Law, the property restraint order and the vesting of all of the monies in Doraville's bank account in the Viscount;
(ii) To seek a declaration over Doraville's reversionary interest in the monies held by the Viscount, however that should be best articulated; and
(iii) To limit any order sought to that reversionary interest.
5. Nigeria offered an undertaking not to enforce any judgment it obtained against Doraville until the proceedings under the 2007 Law had terminated, which I had indicated I would be minded to accept.
6. Nigeria has now proposed amendments to its Order of Justice (for which leave has not yet been granted) and in which it does now recite the proceedings under the 2007 Law and the vesting of the funds in the Viscount. It is proposed to amend the relief sought in this manner:-
"AND THE PLAINTIFF CLAIMS:
A declaration that any monies
held in accounts at Deutsche Bank International Limited in Jersey in the name
of Doraville interest
retained by Doraville in the Doraville Property, whether reversionary or
contingent or otherwise in nature is held upon constructive trust for Nigeria.
are held by Doraville as Constructive trustee for Nigeria or alternatively
that Nigeria is beneficially entitled to such monies;
An order that, in the event that the property Restraint Order is discharged, set aside or otherwise ceases to have effect any monies held in accounts at Deutsche Bank International limited in Jersey in the name of Doraville shall be transferred to Nigeria forthwith;
Further or alternatively, an account as to which of the monies held by Doraville have been obtained from Nigeria unlawfully or otherwise in breach of trust, together with equitable compensation as to the sums found to have been found to have been obtained unlawfully or in breach of trust, together with an equitable lien or charge over the Doraville Property as security for the same."
7. It can be seen that the proposed amendment to prayer (3) goes beyond a simple declaration of a constructive trust over Doraville's reversionary or contingent interest in the funds held by the Viscount.
8. The parties were unable to reach agreement and the matter came back before me on 23rd November, 2016. The USA's position was that I should stay these proceedings until the proceedings under the 2007 Law had terminated, but if not, the proposed amendments to the Order of Justice should be strictly limited to those which I had indicated. If any wider amendments were permitted, the USA would wish to persist with its application to be convened.
9. By its summons, the USA seeks to be joined as a party to these proceedings and an order that "the proceedings be stayed sine die until further order of the Court, the proceedings be dismissed or that the proceedings be adjourned to an alternative date to be fixed".
10. The application is brought under Rule 6/36 of the Royal Court Rules which is in the following terms:-
11. Advocate Jowitt for the USA submitted that its application to be joined as a party came within both of the two bases set out in Rule 36, namely that the presence of the USA before the Court was necessary to ensure that all matters in dispute may be effectually and completely determined and adjudicated upon, or that it is a person between whom and any party to the proceedings there may exist a question or issue arising out of or relating to or connected with any relief or remedy claimed and that it would be just and convenient to determine between the USA, Nigeria and Doraville.
12. He argued that the application came within Rule 6/36 for three reasons:-
(i) The order sought by Nigeria in relation to the assets in Doraville's bank account in Jersey would, if made, be incompatible with the USA's title to the assets. That title was recognised by the US in rem default judgment.
(ii) There was a good arguable case that these proceedings would be classified as "collusive or friendly proceedings" by reason of the fact that there appears to be no genuine dispute between Nigeria and Doraville. Instead, there is material to suggest that the proceedings have been brought to obtain a default judgment which could then be used to defeat any order that might be made in the proceedings under the 2007 Law. The USA needed to be joined so that the Court could decide whether the proceedings were in fact "collusive or friendly proceedings" in which no such default judgment should be entered.
(iii) The USA commenced proceedings before the United States District Court for the District of Columbia at the request of Nigeria and in these circumstances the USA should be permitted to be joined as a party to argue that Nigeria is estopped by convention or by acquiescence from bringing inconsistent proceedings in relation to the assets of Doraville, at least until the proceedings under the 2007 Law had terminated.
13. Advocate Dann, for Nigeria, submitted that none of the three grounds advanced by the USA would justify it being permitted to intervene in these proceedings. Nigeria should be allowed to proceed to judgment with any issues that may arise between the USA and Nigeria being dealt with at the appropriate time in the 2007 proceedings.
14. Advocate Jowitt concedes that the US default judgment cannot be enforced in Jersey at common law, either because it is an in rem judgment in relation to property outside the territorial jurisdiction of the United States Court or because it is a penal judgment. The USA sought unsuccessfully to enforce the very same default judgment at common law in England in the case of USA v Abacha and others [2015] 1 WLR 1917. Quoting from the judgment of Gloster LJ at paragraphs 71, 73 and 78:-
15. It is well settled that as a matter of private international law, our courts will look to the principles of English law for guidance, and in particular to Dicey, and it follows therefore that the US default judgment is unenforceable at common law in this jurisdiction.
16. As the judgment of the Supreme Court of the United Kingdom in SOCA v Perry (Numbers 1 and 2) [2013] 1 AC makes clear, states have, by agreement, departed from these well-established principles of international law. Those changes in the context of civil asset recovery proceedings are reflected in this jurisdiction in the 2007 Law. However, as Advocate Dann pointed out, even if the US default judgment is registered under the 2007 Law that would simply trigger further powers in the Court to make orders under Article 10, which would not confer upon the USA a proprietary interest in the monies vested in the Viscount. There is nothing in the 2007 Law providing that registration of an external civil asset recovery order causes it to have the same force and effect as a judgment of the Jersey Court, in contrast to the position under Article 4(2) of the Judgments (Reciprocal Enforcement)(Jersey) Law 1960.
17. If the US default judgment is registered, then the monies vested in the Viscount may be paid into the civil asset recovery fund established under Article 11 of the 2007 Law and under the terms of the asset sharing agreement between Jersey and the USA may be shared between the USA and Jersey. As Advocate Dann said, that is very far removed from giving the USA any right which could be described as proprietary - its position, he said, more resembles that of a contingent creditor.
18. The jurisdiction to join parties to proceedings in Jersey (both under the Royal Court Rules 2004, as amended and under the inherent jurisdiction) was considered by the Court of Appeal in Mourant and Company (Trustees) Limited and Five Others v Broere [2003] JLR 509. The Court of Appeal relied on the reasoning of the Royal Court in In re Esteem Settlement v [2000] JLR 165 which applied a decision of the English courts under the materially identical Order 15 rule 6 (see page 170) and decided that (pages 171 to 172): "[the applicant to intervene in that case] is not a mere creditor. [It] asserts a proprietary interest in those moneys which has been found by the English court to be well founded. In our judgment GT does have an interest directly relates to the subject matter of this application". On that ground (and on another ground) it granted the application.
19. The 1999 edition of the English Whitebook interprets the equivalent to Rule 6/36(b)(i) as having the following effect:
20. Gurtner v Circuit [1968] 1 QB 587 concerned an application by the Motor Insurers' Bureau ('MIB') to intervene in proceedings which would otherwise have resulted in a default judgment. The MIB would have been bound to satisfy that judgment. The Court of Appeal acceded to the application. Lord Denning said (page 595 D): "...when two parties are in dispute in an action at law, and the determination of that dispute will directly affect a third person in his legal rights or in his pocket, in that he will be bound to foot the bill, then the court in its discretion may allow him to be added as a party on such terms as it thinks fit."
21. The US default judgment being unenforceable in this jurisdiction under common law, the USA has no legal rights here which will be affected by any judgment obtained by Nigeria against Doraville in respect of the latter's reversionary or contingent interest in the monies held by the Viscount.
22. The 'proprietary right' ground for intervening in proceedings was considered in Dollfus Mieg et Compagnie SA v Bank of England [1951] 1 Ch 33. That case decided that the ground was wide enough to apply to a situation where the intervener could not enforce its interest in the property in the proceedings in question but wanted to prevent a judgment inconsistent with its interest being entered by the court. The facts were as follows. The Bank of England held gold bars which had been stolen by the Germans from a French bank. The bars had been recovered in Germany and a tripartite commission consisting of the governments of the United States, France and the United Kingdom was set up to take possession of the bars and dispose of them to claimants who had made a valid claim to the commission. The commission had deposited the bars with the Bank of England pending the resolution of the claims. The plaintiff sought to short circuit this claims process by suing the Bank of England claiming that it (the plaintiff) owned the bars that had been held by the French bank. The governments of France and the US sought to intervene in the proceedings, not to assert a proprietary claim, but to have the writ and the proceedings set aside. They wanted to argue that: (a) they had possession or control of the gold bars, and (b) by reason of the doctrine of State immunity they as foreign sovereign states could not be sued.
23. The Court began by considering the passage from the then current version of the Whitebook which appears to have been in materially similar terms to paragraph 15/16/11 of the 1999 edition set out above (see pages 39 to 40 of the judgment). The judgment then contains the following passages:
24. In the present case, the monies in which the USA claims an interest (unenforceable at common law), are not held by Doraville, the defendant in these proceedings, but by the Viscount, who is not a party. In any event, the governments concerned in Dollfus were allowed to intervene, because they would become, for all practical purposes, the owners of the gold bars held by the defendant, the Bank of England, which gave them a right akin to a proprietary right. Allowing the USA to intervene in these proceedings will place it in no such position, as it has no rights enforceable at common law. Its interest in this jurisdiction is confined to the Attorney General's application to have its default judgment registered under the 2007 Law.
25. Advocate Jowitt submitted that there was a good arguable case that these proceedings were collusive, sufficient to justify it being joined as a party to fully argue the same.
26. He reminded me that it is not necessary at this stage for the USA to establish its right to relief in the proceedings themselves. The question is whether there is a good arguable case: see generally Allergen Inc v Sauflon Phamaceuticals Ltd [2001] All ER (D) 106.
27. The hurdle is a high one. Spencer, Bower and Handley, Res Judicata, 4th edition defines collusive proceedings as follows:-
28. The cases generally cited in this context are old ones. In Brandon v Becher [1835] 6 ER 1517, Lord Brougham said the following:-
29. In Girdlestone v The Brighton Aquarium Company [1874] Ex D 107, reference is made to it being necessary to find something wrong in the mind of the parties, to a trick or connivance planned by both parties to the transaction which is alleged to be tainted by it and for the need to be something in it which in the view of the law is deceitful.
30. The USA's application is supported by an affidavit sworn by Elizabeth A Aloi, of the United States Department of Justice, dated 12th July, 2016, which provides no evidence whatsoever of collusion between Nigeria and Doraville, other than the fact that Advocate Nicolle, for Doraville, gave notice to the Court in the unsuccessful discharge proceedings that Doraville did not intend to defend these proceedings. Indeed to defend these proceedings would be inconsistent with its obligations under the Repatriation Agreement.
31. Advocate Jowitt relies entirely on drawing an inference that the purpose of these proceedings is somehow to defeat any application the Attorney General may bring to register the US default judgment under the 2007 Law.
32. That is to ignore the fact that Doraville is beneficially owned by the perpetrators of the fraud against Nigeria (or at least the recipients of part of the proceeds of that fraud), and although Nigeria has an agreement with them for the repatriation of these funds, agreements can be breached and Nigeria must be entitled to secure its proprietary rights in these funds as against Doraville through an appropriate court order. It is of note that nowhere in the Repatriation Agreement do Mohammed Abacha, Abubakar Atiqu Bagudu or Doraville acknowledge that Nigeria has a proprietary interest in the monies held in Doraville's bank account. I have seen nothing to persuade me that there is a good arguable case that these proceedings are collusive.
33. Advocate Jowitt referred to the history of dealings between the USA and Nigeria which can be summarised as follows:-
(i) Prior to August 2012, Nigeria had provided evidence in support of the USA investigation.
(ii) The Attorney General of the Plaintiff sent a mutual legal assistance request to the USA, dated 28th August, 2012. That request acknowledged that the USA had jurisdiction over the confiscation of the proceeds of General Abacha's corruption and asked the USA to obtain an order confiscating that property.
(iii) The mutual legal assistance request was expressed to be made under the United Nations Convention Against Corruption. It is the USA's submission that this request expressly engaged the international scheme for the confiscation of the proceeds and instrumentalities of crime. The 2007 Law proceedings are part of that international scheme.
(iv) The plaintiff then assisted the intervener to serve the USA proceedings in Nigeria. This service included the verified complaint in the USA proceedings that set out the facts, the law and the relief sought by the USA.
(v) The Attorney General of the plaintiff also assisted the USA to defeat a challenge to the USA proceedings by someone purporting to represent the plaintiff and purporting to make a claim to the assets on behalf of the plaintiff.
(vi) The plaintiff, having notice of the US proceedings, did not choose to contest them.
(vii) The plaintiff has known, at all relevant times, that the assets the subject of the relevant part of the USA proceedings are situated in Jersey. Nigeria had ample time to bring the present proceedings before the USA began its action.
34. It follows from the above, he said, that Nigeria, by its appropriate officer, asserted to the USA that as far as Nigeria was concerned, the appropriate method of dealing with the assets of Doraville was by way of US forfeiture proceedings and the enforcement of the resulting judgment using the mutual legal assistance procedures that had been established. That created a common assumption between Nigeria and the USA that the assets of Doraville would be dealt with by this method and it would be unfair or unjust to allow Nigeria to depart from that assumption. Nigeria was therefore estopped by convention or acquiescence from bringing these proceedings against Nigeria, at least until the proceedings under the 2007 Law had terminated.
35. Advocate Dann did not detract from that factual summary of the dealings between Nigeria and the USA, but questioned how cooperating with one potential method of recovery in respect of various assets amounts to a representation that that is the only appropriate or permissible method of recovery of any of those assets. The conclusion, he said, simply did not follow from the premise. The victim of a fraud will frequently have various alternative means of trying to recover his money. There is no reason why attempting recovery by one route should preclude the use of any other routes.
36. In particular, the USA contends that by invoking mutual legal assistance under the UN Convention Against Corruption, Nigeria "expressly engaged the international scheme" of which the 2007 Law forms a part, but he argued that the UN Convention Against Corruption refers to numerous methods of tackling corruption by criminal and civil means, with no suggest that they are mutually exclusive. The section of the Convention dealing with asset recovery includes art. 53 ("Measures for direct recovery of property") which provides:
"Each Party shall, in accordance with its domestic law:
Take such measures as may be necessary to permit another State Party to initiate civil action in its courts to establish title to or ownership of property acquired through the commission of an offence established in accordance with this Convention;
Take such measures as may be necessary to permit its courts to order those who have committed offences established in accordance with this Convention to pay compensation or damages to another State Party that has been harmed by such offences; and
Take such measures as may be necessary to permit its courts or competent authorities, when having to decide on confiscation, to recognize another State Party's claim as a legitimate owner of property acquired through the commission of an offence established in accordance with this Convention."
37. Thus, he said, the Convention expressly contemplates action of the kind now being taken by Nigeria. There is no evidence, he said, for a common assumption that trying to enforce the US default judgment was the only, or the most appropriate, way to deal with the assets of Doraville, or that any such assumption was communicated between the parties in a sufficiently specific and certain way to give rise to estoppel by convention or acquiescence.
38. In any event, he submitted, Nigeria's request to the USA for mutual legal assistance was on the basis that the USA would "give priority consideration to returning the confiscated property to [Nigeria] as requesting state party and also as a victim of the crimes (article 57(3)(c) of the Convention)". (USA v Abacha at paragraph 21). If (which Nigeria denied) there was ever a common assumption about the use of a particular procedure, the return of the property to Nigeria formed part of any such common assumption. More recently, as Gloster LJ recounts at paragraph 76 of USA v Abacha, the USA's intentions as to the ultimate fate of the money have become "not transparent, to say the least", undermining any such common assumption.
39. In this context I should record here that Advocate Jowitt made the following statement on behalf of the USA at the commencement of the hearing:-
"We understand that there remains concern on the part of those advising Nigeria about the terms of any asset sharing agreement that would follow successful completion of the 2007 Law proceedings. We understand there has been some discussion suggesting that Jersey and the USA would share the assets equally. We can say on behalf of both that this is wrong. Both Jersey and the USA share the aim of ensuring that these assets go to benefit the people of Nigeria."
40. It seems to me that the USA has a good arguable case in estoppel, should Nigeria seek to resist the registration of the US default judgment in the proceedings under the 2007 Law, but that is the forum in which such an argument should be deployed. I accept Advocate Dann's submission that there is nothing in the evidence I have seen to suggest that Nigeria is precluded from trying to secure its position over Doraville's reversionary or contingent interest in the funds held by the Viscount, should the 2007 proceedings fail.
41. As Advocate Jowitt submitted to me, the Court has a wide inherent power to stay these proceedings until the proceedings under the 2007 Law have been terminated, but that would be unjust as it would deprive Nigeria of its ability to secure its position vis-à-vis Doraville, forcing it to rely on the terms of a written agreement entered into, it is fair to say, with parties who have been heavily implicated in a large scale fraud. Should the monies held by the Viscount revert for any reason back to Doraville, then Nigeria has a legitimate interest in securing those monies in its favour.
42. The USA has no locus to intervene in proceedings between Nigeria, as the victim of the fraud, and Doraville, as the recipient of the proceeds of that fraud, on the basis of a US default judgment which would not be recognised under our common law, save to the extent that these proceedings may impact upon its interests under the 2007 proceedings.
43. Its presence in these proceedings is not necessary to ensure that any matter or dispute between Nigeria and Doraville in relation to the latter's reversionary or contingent interest in the monies held by the Viscount are effectively and completely determined and there is no question or issue arising out of the relief sought by Nigeria against Doraville, save to the extent set out below, which it would be just and convenient to determine as between the USA and the other parties to these proceedings.
44. Where the USA does have a legitimate interest, in my judgment, is in ensuring that the Court does not grant Nigeria a judgment in default, which may hamstring the Court in the proceedings under the 2007 Law. A default judgment under prayer (1) would not do so because that is expressly limited to Doraville's reversionary or contingent interest in the monies held by the Viscount, but I share Advocate Jowitt's concern that a default judgment under the amended prayer (3) might do so. It might enable Nigeria to argue that it has a prior existing proprietary claim to the monies which trumps that of the USA and to challenge the registration of the US default judgment on that basis, but armed with an earlier default judgment of this Court to that effect. If that argument is to be run, then it should be run in the proceedings under the 2007 Law without the Court being hamstrung by an earlier decision of the Court on the point. Advocate Dann did indicate to me that if Nigeria was unable to obtain judgment on the basis of all three prayers (as amended) then it was prepared to concede prayer (3).
45. I therefore conclude:-
(i) That leave should be granted to Nigeria to amend its Order of Justice other than in respect of prayer (3). The parties identified a point which they agreed needed clarifying under prayer (2) which I would ask Advocate Dann to draft.
(ii) That Nigeria should be permitted to take judgment under amended prayers (1) and (2). I will need to sit with Jurats for that purpose.
(iii) That these proceedings and the application to intervene should otherwise be stayed pending determination of the proceedings under the 2007 Law.
(iv) That Nigeria and the USA shall have liberty to apply under notice to the other of them.
46. I accept Nigeria's undertaking not to enforce any judgment so obtained until the proceedings under the 2007 Law have terminated.
