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Catch me if you can: Worldwide freezing order against ‘persons unknown’

[2017] EWHC 3599 (Comm) – CMOC v Persons Unknown

In an ongoing commercial dispute the English Commercial Court has broken new ground in the fight against large-scale sophisticated international fraud. The case surrounds a commodities business which was the victim of a cyber-attack payment fraud resulting from the compromise of its email system. Funds stolen from the business were then transferred through or to several overseas banks.

The claim arose out of alleged frauds committed by person(s) yet unknown who infiltrated the email account of one of the senior managers of the claimant company. The fraudster(s) were then able to send payment instructions purporting to come from a ‘Mr Chen’ to the administration of the company, but which did not in fact come from him. As a result a number of very large payments were sent out from the company’s bank account, at Bank of China in London, to various other banks around the world. The sums stolen were in the region of £6.3 million in total.

His Honour Justice Waksman QC sitting in the Commercial Court granted a first of its kind worldwide freezing order (WFO) against the assets of ‘persons unknown’ who perpetrated the online fraud but who had not yet been identified. His Lordship held that the Court had jurisdiction in general against persons unknown provided that the description used is sufficiently certain so as to identify both those who are included and those who are not.

The Court reasoned that there is a good arguable case for extending the jurisdiction to make orders against persons unknown to the case of freezing injunctions, arguing that such relief can often be a springboard to further ancillary relief against third parties, in this case the banks used in commission of the fraud, which would not otherwise be available unless there was a primary freezing injunction in place. To this end, the Court also made several ancillary orders supporting with the WFO which includes disclosure orders against major financial institutions in several jurisdictions, who are believed to have been used by the fraudsters in their scheme, which will assist in tracing and recovering of the stolen funds.

The Court also granted blanket permission for worldwide enforcement of the WFO and for service of documents by alternative-modern-means including email, by the popular social media forum, Facebook, as well as a web based data room.

As commercial frauds become more expansive and fraudsters adapt to the technological age, such robust and innovative remedies are a welcome arsenal in the toolkit when pursuing international commercial fraudsters.

At Harneys we would seek to employ creative techniques when litigating commercial fraud. This precedent is persuasive authority before the BVI Commercial Court and we can expect to rely on it in the future. This approach will also serve the future of asset tracing well as fraudsters deploy the use of crypto currency as a means of structuring.

 

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