Perry and ors v. Serious Organised Crime Agency [2012] UKSC 351

The Supreme Court has confirmed that the Proceeds of Crime Act 2002 (POCA) confers no power (a) to impose property freezing orders or civil recovery orders over property outside the UK, or (b) to compel persons outside the UK to disclose information in relation to civil recovery of criminal property.

Background facts

The appellants were P, who was convicted of fraud in Israel, members of his family, and an Isle of Man company. None was resident in the UK, but some held property in the UK.

The UK Serious Organised Crime Agency (SOCA) obtained a disclosure order under POCA Part 8 from the High Court requiring the appellants to disclose their worldwide assets and a property freezing order under Part 5 against the appellants and others with worldwide effect. These orders were made in support of prospective applications under Part 5 to seek civil recovery orders in relation to property obtained by P’s unlawful conduct.

Property Freezing Order

The lower courts granted the property freezing order despite a presumption arising from English law against statutory provisions permitting orders applying to persons situated outside the UK. The courts considered that the presumption could be rebutted based on the clear definition of “property” in POCA as being “all property wherever situated2 (emphasis added).

Lord Phillips, President of the Supreme Court and delivering the majority judgment on the property freezing order, disagreed. Lord Phillips confirmed that POCA should be read in light of the 1990 Strasbourg Convention On Laundering, Search, Seizure and Confiscation of the Proceeds from Crime, which recognised that courts in one state could make orders in relation to property situated in another state. However, undue weight was placed on the definition of property, and POCA did not confer extraterritorial jurisdiction in the manner sought by SOCA.

Lord Phillips considered that POCA Parts 2, 3, and 4 contained a scheme which conferred powers to grant “confiscation” Orders against a defendant who had had been convicted of an offence, in relation to property obtained or situated anywhere in the world3. Parts 2, 3, and 4 also contained powers, where a confiscation Order had been made, to request assistance from foreign states in which the property was situated4. Lord Philips considered these powers gave proper effect to the Convention.

However, the freezing order in this case was sought under POCA Part 5, which conferred powers to grant civil recovery orders in respect of criminal property, whether or not the person holding the property had committed an offence. There was no equivalent power in Part 5 to request assistance from other states in respect of property situated outside the UK.

Lord Phillips considered that Parliament intended civil recovery orders to apply only to property in the UK:

“I can see no compelling reason why Parliament should have wished to confer on SOCA a right to seek a civil recovery order in respect of the proceeds of crime that was not committed within the United Kingdom where those proceeds are not within the United Kingdom”.

Lord Phillips considered that each country should give assistance only in relation to property located within its jurisdiction, to avoid “confusing, and possibly conflicting, overlap of international requests for assistance” involving “significant and unnecessary multiplication of effort and expense”.

Lord Phillips considered that the worldwide definition of property nevertheless had relevance to Part 5, because civil recovery orders could be made against criminal property in the UK where it derived from property outside the UK.

Disclosure Order

SOCA also sought a disclosure order under POCA Part 85, which applies both to Parts 2, 3, 4, and 5. The disclosure order created a positive obligation on the appellants to provide certain information in relation to their assets, with non-compliance potentially being an offence punishable by fine or imprisonment6.

Lord Phillips, delivering the unanimous judgment on the disclosure order considered that directing such an order against persons outside the jurisdiction “would be a particularly startling breach of international law” and held that “for that reason alone” it could only be directed at persons within the jurisdiction.

Comment

These decisions are to be welcomed, not only in relation to freezing and disclosure orders but also because they provide clarity on the principles behind complex criminal legislation with potentially worldwide application. POCA confers significant and wide-ranging powers on the UK courts, which law enforcement agencies may ask them to exercise often without notice to the persons affected. This case confirms that not all such powers have international reach. If entities and individuals become subject to orders made under such powers, they should consider carefully not only what the orders require them to do, but also whether it is lawful that the order was granted at all.