E-briefing: Singapore Court of Appeal declines to adopt English position that risk of dissipation is a requirement to restrain assets upon request from foreign authorities

Why is this important? This removes a hurdle for foreign authorities to seek assistance from Singapore to seize Singapore-based assets that may be subject to a foreign confiscation order.

Key points you should note:

• A foreign country can request assistance from Singapore under the Mutual Assistance in Criminal Matters Act (“MACMA”).
• Such assistance includes a court order to restrain Singapore-based assets that may be subject to a foreign confiscation order.
• There is no need to show that there is a risk of dissipation of those assets.

The background

This e-briefing addresses the Court of Appeal’s decision in Steep Rise Ltd v Attorney-General [2020] SGCA 20. The full text of decision may be accessed here.

The appellant Steep Rise Ltd (“Steep Rise”) is a company incorporated in the British Virgin Islands and is beneficially owned by one Mr Touil, a French citizen. Mr Touil was allegedly involved in a series of Value Added Tax (“VAT”) fraud and money-laundering schemes in France.

The French authorities’ investigations into the VAT fraud revealed suspicious transfers into bank accounts in Singapore, including a Bank of Singapore Account (“BOS Account”) owned by Steep Rise.

The French authorities sent official letters of request to the AG in 2014 and 2015 for assistance in freezing those accounts. In August 2017, the AG filed an ex parte application to the High Court to restrain dealings with the funds in the BOS Account. The application was made under section 29 of the MACMA which enables the court to restrain property in Singapore that may be the subject of foreign confiscation orders.

The Judge allowed the application and made the restraint order. Steep Rise later applied to set aside the restraint order on the basis that:

• There was no risk of dissipation of the funds in the BOS Account as they were already subject to a seizure order under the Criminal Procedure Code.
• The AG had not made full and frank disclosure, including the fact that the French authorities also sought the restraint order to satisfy a potential fine rather than solely to support a confiscation order. MACMA does not permit restraint orders to be made in order to satisfy a potential fine.

The application to set aside reached the Court of Appeal, where it was dismissed.

Risk of dissipation is not a factor for MACMA restraint order

Steep Rise contended that, in order to obtain a restraint order under MACMA, the AG must show that the assets sought to be restrained are at risk of dissipation.

The Court of Appeal held that there was no basis for imposing this requirement. It was not stated in MACMA, nor is there any indication that Parliament intended such a requirement when drafting the legislation. There was also no evidence that the United Nations Working Group for the Convention against Transnational Organized Crime (2000), which provided the impetus for MACMA, had envisaged this requirement.

The English Court of Appeal in In re Stanford International Bank Ltd and another [2011] Ch 33, held that the State had to show a risk of dissipation to obtain a restraint order under the English equivalent of MACMA. The English court reached this conclusion by applying earlier case law where a risk of dissipation had to be shown to obtain a domestic restraint order, but did not explain why this should also apply to an application for restraint order made at the request of a foreign country.

The Singapore Court of Appeal declined to follow the English court’s decision, noting that the legislative landscape is different in Singapore, where there is no requirement to show a risk of dissipation in order to obtain a domestic restraint order.

Extent of AG’s duty of full and frank disclosure under MACMA

The Singapore court also clarified the extent of the AG’s duty of full and frank disclosure when making such an ex parte application under MACMA. In general, a party’s duty of full and frank disclosure in any ex parte proceedings extends to disclosure of: (i) material facts known to him, even if they may be prejudicial to his case, and (ii) facts he would have discovered after making reasonable inquiries.

However, the information on which the AG makes an application for a restraint order is given to him by a foreign authority. The Court of Appeal held that AG does not have a duty to investigate further into this information, as the underlying investigations are within the purview of the foreign authority and are to be carried out under its law.

However, if the AG becomes aware of any facts that might cast doubt on the application, whether before or subsequent to the hearing of the application, he should disclose that information in line with his continuing duty of full and frank disclosure.

The AG has a duty to make the application to the court where a request from the foreign country satisfies all requirements of the MACMA. Failure to do so would cause Singapore to be in breach of its international obligations to that foreign country.

For further information contact:

Suressh S.

Partner, Eversheds Harry Elias

suressh@eversheds-harryelias.com

+65 6361 9883

Farrah Isaac

Senior Associate, Eversheds Harry Elias

farrahisaac@eversheds-harryelias.com

+65 6361 9898