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Expert Strategies for Effective Asset Tracing and Recovery

Author: Nicola Sharp  3 October 2012
2 min read

A RULING from the Supreme Court looks set to seriously restrict the UK government's attempts to freeze and recover assets located abroad that they believe to be the proceeds of crime.

In Perry and others V Serious Organised Crime Agency (SOCA), the court's ruling in favour of the appellants means severe limitations on SOCA's ability to recover assets located abroad and restricts its powers in relation to people outside of the UK. The ruling, released on July 25, makes it clear that:

• No civil recovery order (CRO) or property freezing order (PFO) made under Part 5 of the Proceeds of Crime Act POCA) can be made regarding assets outside of SOCA's jurisdiction – meaning outside of the UK.

• A disclosure order (DO) made under POCA cannot be made against a person outside of the UK's jurisdiction.

• If property sought by SOCA is outside of its jurisdiction it must be pursued via criminal proceedings that lead to a conviction and then a confi scation order under Section 74 of POCA. Or by asking the authorities in the country where the assets are located to pursue them through their legal system.

• If the property is within the UK's jurisdiction it does not matter where the respondents are – the litigation must be brought in the UK. The ruling in relation to Perry followed his conviction in Israel in 2007 for pension fraud; leading to him being imprisoned for ten years and fined £3M.

In 2009, SOCA successfully sought a worldwide PFO against the assets that Perry, his relatives and associates – none of whom lived in the UK – had amassed around the world. Prior to this, SOCA obtained a DO against Perry and his daughters. Perry challenged the PFO on the grounds that the property was abroad and beyond SOCA's jurisdiction. The DO was challenged on the grounds that it was addressed to people who were not in the UK.

After unsuccessful appeals at lower courts, the Supreme Court found in favour of the appeals against the PFO and the DO. It ruled that a PFO obtained by SOCA is not entitled to freeze assets abroad, as Part 5 is in respect of property within the UK – not outside it – and makes no provision for SOCA to secure assets abroad.

The Supreme Court rejected SOCA's argument that Part 5's geographical reach was limitless because it makes no reference to territorial limits regarding CRO's or PFO's. The court stated that there were no such references because Part 5 was only ever meant to apply to the UK.

Lord Reed stated that there was “a presumption that Parliament does not intend to legislate in respect of property outside the UK and in particular that legislation is not intended to authorise the seizure or confi scation of property situated outside the UK.''

The Court added that a DO did not authorise the sending of notices to people outside of the UK.

The ruling will have significant implications for current and previous cases of Civil Recovery and SOCA is undertaking urgent reviews.

Nicola Sharp C 09983

Nicola Sharp


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Nicola is known for her fraud, civil recovery, arbitration and business crime expertise, her experience of leading the largest financial disputes and multinational investigations and her skills in devising preventative measures and conducting internal investigations for corporates.

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