External Requests For Restraint Orders: King v. Director Of The Serious Fraud Office [2009] Ukhl 17

Introduction

The appeal in King v. Director of the Serious Fraud Office [2009] UKHL 17, concerned the scope of the Proceeds of Crime Act 2002 (External Requests and Orders) Order 2005 (SI 2005/3181) ('the Statutory Instrument'), which enables the Crown Court to make a restraint order at the request of a foreign state. The essential issue was whether Part 2 of the Statutory Instrument (articles 6-55) gives the Crown Court the power to make a restraint order prohibiting a person from dealing with property situated outside England and Wales. The Serious Fraud Office contended that the Crown Court does have such a power, whereas Mr. King, the Respondent, contended it does not. The House of Lords decided that the Statutory Instrument provided a scheme to make restraint orders in response to a request from a foreign state only in respect of property in England and Wales. The decision brings clarity to a somewhat technical area of the law and is significant because it highlights the differences between restraint orders in criminal proceedings on the one hand and civil freezing orders on the other.

The Background to the Appeal

On 31st May 2006, in the Crown Court sitting at Southwark, His Honour Judge Wadsworth Q.C. made a restraint order against Mr. King (and a number of corporate entities) under article 8(1) of the Statutory Instrument and an accompanying disclosure order under article 8(4). The restraint order prohibited Mr. King from dealing with any of his property whether or not it was "in or outside England and Wales." The restraint order was made on the application of the Serious Fraud Office, ex parte and without notice, following a letter of request from the National Prosecuting Authority of the Republic of South Africa ('the NPA'). Restraint orders against Mr. King (and the corporate entities) were also made in Guernsey (on 9th June 2006) and Scotland (on 29th June 2006). A subsequent application to discharge the restraint order was dismissed on the basis that, provided that "relevant property" in England and Wales was identified in the letter of request, the Statutory Instrument conferred on the Crown Court the power to restrain any property wherever situated and that accordingly the Crown Court had jurisdiction to make a restraint order with extraterritorial effect. Mr. King appealed to the Court of Appeal (Gage L.J., Simon J. and His Honour Judge Paget Q.C.) and his appeal was allowed. The Court of Appeal concluded that the Crown Court's powers under the Statutory Instrument was confined to property in England and Wales, saying that this was consistent with the fact that the assistance the Crown Court provides by granting a restraint order is ancillary to overseas investigations and proceedings, and that, unlike in proceedings arising from a domestic investigation, the Crown Court is not the primary forum of the litigation. The question of law of general public importance certified by the Court of Appeal was in the following terms:

"Does the Crown Court have the power under the Proceeds of Crime Act 2002 (External Requests and Orders) Order 2005 to make a restraint order in respect of property located outside England and Wales?"

The Statutory Instrument

Prior to 1st January 2006 (when the Statutory Instrument came into force) foreign requests for assistance in matters relating to confiscation and restraint were dealt with under different statutory regimes, depending on whether the request related to drug trafficking or other acquisitive crime (the Drug Trafficking Act 1994 (Designated Countries and Territories) Order 1996 (SI 1996/2880) and the Criminal Justice Act 1988 (Designated Countries and Territories) Order 1991 (SI 1991/2873)). (It had never been authoritatively decided whether these earlier schemes enabled the Crown Court to make worldwide restraint orders but it would appear that they did not.) The Statutory Instrument simplified the law by providing a single scheme for the enforcement of foreign confiscation orders and the provision of assistance in obtaining restraint orders. As in the case of domestic proceedings, under the earlier statutory regimes, applications for restraint orders and the enforcement of overseas restraint orders were made to the High Court. Under the Statutory Instrument, as in the case of domestic proceedings, applications are made to the Crown Court.

The...