This chapter originally featured in The Asset Tracing and Recovery Review – 3rd Edition.
I OVERVIEW
As a major offshore financial centre, the Island of Jersey has, unfortunately, all too often been one of the jurisdictions of choice for those seeking to hide assets that have been fraudulently obtained from others and to launder their ill-gotten gains. Encouragingly the Island's regulatory, legislative and judicial bodies have in recent years adopted a robust approach to nancial crime and to ensuring that, through the civil court process, victims of fraud are properly compensated for the wrong done to them.
Jersey has enacted legislation to specifically combat money-laundering offences relating to drug traficking and terrorist activity, in addition to its 'all crimes' money laundering legislation (see the Drug Tra cking (Jersey) Law 1988; the Terrorism (Jersey) Law 2002; and the Proceeds of Crime (Jersey) Law 1999, respectively). Furthermore, legislation such as the Investigation of Fraud (Jersey) Law 1991 (the 1991 Law), confers upon o cers, such as the Attorney General, far-reaching investigative powers. Under the 1991 Law, the Attorney General is permitted to seize documents that are believed to be relevant to an investigation and to interview any individual, including third parties, believed to possibly have information relevant to an investigation. Individuals who are interviewed pursuant to the 1991 Law may not refuse to answer questions put to them.
Such legislation is, of course, only as strong as the will to enforce it. Jersey has become well known for pursuing to their logical conclusion investigations that bear fruit. Over the past decade numerous civil and criminal asset recovery actions have come before the Royal Court, including Brazil v. Durant,2 Attorney General v. Michel,3 Attorney General v. Bhojwani4 and In Re the Representation of Lloyds TSB O shore Trust Company Limited.5
Asset recovery cases by their nature, at times, raise di cult legal concepts. Cases such as Lloyds v. Fragoso and Brazil v. Durant have shown that the courts of Jersey are prepared to depart from outmoded or overly formalistic approaches to such concepts and be innovative in order to ensure justice between the parties. In Brazil v. Durant, which is discussed at length below, the key concept dealt with was tracing.
II LEGAL RIGHTS AND REMEDIES
As outlined above, Jersey law recognises a number of rights and remedies that may be employed by the victims of nancial crime to recover their misappropriated assets.
i Civil and criminal remedies
Civil causes of action and remedies
Jersey law provides civil remedies at all possible stages of a fraud claim. Interlocutory injunctions (including freezing and Anton Piller orders) are available with very short notice to the court. e Jersey Royal Court also has a long-established practice of granting injunctive relief to assist proceedings in other jurisdictions. As regards substantive remedies available in Jersey, Jersey law recognises the concept of a constructive trust as established in Re Esteem. The Royal Court in Re Esteem6 also held that a bene ciary of a constructive trust has an equitable proprietary interest in the assets that are subject to that trust. The Royal Court further held that in Jersey, as in English law, when property is obtained by fraud and contrary to a duciary duty, equity will impose a constructive trust over that property for the bene t of the victim of the fraud, meaning that they have an equitable proprietary interest in that property.
Jersey also recognises concepts of accessory liability. An equitable claim can be made against a third party if they have dishonestly assisted or knowingly received property, both causes of action establishing a constructive trust for the benefit of the victim of the fraud to claim directly against the third party who has received or assisted with the transmission of the funds.7
Jersey law also allows a claim in restitution based on 'unjust enrichment'. is does not require an element of fault on the part of the recipient. It means that where property in respect of which a person has an equitable proprietary interest is received by an innocent volunteer, the bene ciary has a personal claim in restitution against the recipient even where the recipient is not guilty of any fault in their receipt or handling of the property. is is, however, only a personal claim and no proprietary interest by way of constructive trust is established between the bene ciary and the innocent recipient. Thus, if the monies have been paid away by the innocent recipient they cannot be claimed from that recipient directly. A defence of change of position is therefore available.
There is a mature and extensive civil conscation regime in aid of international civil recovery actions over assets that are the subject of a foreign civil judgment determining them to be the proceeds of unlawful conduct. is allows a foreign government to apply to the Attorney General of Jersey to make applications to the Royal Court to freeze and eventually conscate the assets in question.
The Jersey Royal Court has consistently recognised its responsibility to assist in the prevention, detection and remedying of fraud. Hence, in actions involving civil remedies for fraud, it has gone further than English law currently permits, and is likely to be one of the most progressive jurisdictions for pursuing civil fraud claims, particularly in light of the recent stance taken by the Royal Court in respect of evidential issues such as tracing and 'reverse tracing' (see Brazil v. Durant), and its advanced restitutionary jurisdiction.
- Stephen Baker is a senior partner at Baker & Partners.
- Federal Republic of Brazil and Anor v. Durant International Corporation and Anor [2012] JRC211.
- [2011] JRC 093.
- [2010] JRC 116 (Lloyds v. Fragoso).
- [2013] JRC 211.
- [2002] JLR 53.
- See UCC v. Bender 2006 JLR 242.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
