An extract from The Asset Tracing and Recovery Review, 8th Edition
Seizure and evidencei Securing assets and proceedsCriminal remedies
At the investigation stage and also during the trial, the courts may decide to seize an asset for the purpose of preserving evidence or as security for the victim's claim for recovery of assets or damages. The rule applies to assets, chattels and property controlled by the suspect of a crime and even – although to a lesser extent – assets in the possession of a non-suspect.
A decision to seize will be made by court order, and the order may be sought by the police as well as the victim. In some cases, however, the police may bypass the courts and make a summary decision to seize if the purpose would otherwise be lost.
The seizure order will be lifted or terminate, depending on its terms and the outcome of the investigations and any subsequent criminal prosecution. The court's decision-making powers are subject to certain restrictions – for one thing, no decision can be made by the court during the criminal proceedings as to who owns the seized assets.Civil remediesAttachment orders
Generally, enforcement of a claim can be sought in accordance with Section 478 of the Danish Administration of Justice Act. Court judgments, out-of-court settlements, arbitral awards, debt instruments and mortgages and pledges may serve as the basis for enforcement.
However, a victim of fraud will usually have no basis for enforcement, and if the victim must wait for a court to decide on the matter, there is a risk that the offender will have disposed of his or her profits and assets.
Certain interim remedies are available to accommodate this risk. A victim of fraud can seek an attachment order against assets belonging to the offender. When an attachment order is issued, the owner loses control of the asset affected by the attachment order.
An attachment order does not grant security over an asset. Instead, the purpose of the order is to ensure that the owner does not dispose of assets so creditors can levy execution. Any creditor can, however, levy execution on an asset and not just the person seeking the order.
An attachment order may be issued if the following cumulative criteria are met:
- there is no basis for enforcement of the victim's claim under Section 478 of the Danish Administration of Justice Act;
- the prospect of the victim obtaining coverage for his or her claim will materially deteriorate in the absence of an attachment order against the defendant's assets. The victim bears the burden of proof. The criteria will usually be met if the victim can prove that the defendant's transactions are unusual; and
- the defendant cannot prove that the victim's claim most likely does not exist. Usually, the party alleging to have a claim bears the burden of proving its existence. Under this rule, however, the defendant must prove that the claim (most likely) does not exist to prevent the attachment order being granted.
An application for an attachment order must be filed in writing to the relevant enforcement court, and must include the necessary information about the circumstances supporting the claim. The enforcement court may request the person seeking the attachment order to provide security for damages in respect of the defendant if the order turns out to be unjustified.
The enforcement court can also decide to physically remove the assets affected by the order from the defendant to make sure that the defendant is not able to dispose of them.
Having obtained an attachment order, the victim must then file a civil suit against the defendant within seven days of the attachment hearing. The court must confirm that the claim on which the order was granted is justified, and confirm the attachment order (this is known as a confirmatory action).Dispossession of assets prior to bankruptcy order
When a bankruptcy order is issued, the debtor loses control of the assets. Before issuing a bankruptcy order, however, the probate court may decide at the request of a creditor to dispossess the debtor of his or her assets if there is a risk that the debtor may dispose of the assets to the detriment of the creditors.ii Obtaining evidence
The rules on obtaining evidence are found in the Danish Administration of Justice Act. The common ways of obtaining evidence are through examination of parties, disclosure and expert evidence.
Any person summoned by a party to a current civil case will be under an obligation to appear and give evidence before the relevant court. The person summoned may request to be excused either in part (on certain subjects) or in full – for example, if giving evidence would expose the person or any of his or her connected persons to the penalty of the law, or would be detrimental to his or her, or their, safety or welfare.
A victim of fraud can seek a disclosure order with respect to documents in the defendant's or a third party's possession. If so, the victim must specify which documents are requested, which facts the victim seeks to prove with the documents and why the documents are relevant to those facts. The victim must also provide the reasons why the documents are (thought to be) in the other party's possession.
If the defendant does not comply with the order, the court may conclude in its ruling on the substance that the evidence assumed to be contained in the requested documents prejudices the defendant's case. While the court cannot force the disclosure of any documents in the defendant's possession, it does have certain measures to compel a third party to comply with the order of disclosure.
Expert evidence is mostly used to explain any complicated factual circumstances of a case. The rules governing expert evidence are found in Part 19 of the Danish Administration of Justice Act.
A party may request the court's permission for the taking of evidence even before the issue of proceedings. The purpose of taking evidence before a trial is to enable a party to obtain evidence for the purpose of the trial, and it is thus a precondition to the taking of evidence that the claim in question is capable of serving as the basis of a trial.
In the case of bankruptcy proceedings, the debtor is required to provide the trustee of the bankruptcy estate with all information that is necessary for the administration of the estate. The trustee may summon the debtor or others to give evidence before the probate court. In this case, too, the debtor and others may request to be excused. With the assistance of the enforcement court, if relevant, the trustee of a bankruptcy estate may seek to recover any documents as well as assets that may be assumed to belong to the bankruptcy estate.