Posted In: Webinars & seminars

Posted By: Singularity Legal

Tags: law, assets, recovery, strategies


Asset Recovery: Onshore and Offshore Strategies Webinar

Expert Talk Quarterly Training Series

On 11 January 2024, Singularity organised the third webinar in the Expert Talk quarterly training series – “Navigating Complex Disputes”. The session was titled “Asset Recovery: Onshore and Offshore Strategies”. The purpose of the webinar was to understand the intricacies and nuances of enforcement and asset recovery in various jurisdictions in order to streamline the process and eliminate duplication of time and effort.

Mr. Prateek Bagaria (Partner, Singularity Legal) moderated the session. Six leading experts from all over the globe representing key jurisdictions shared their insights and experiences into developing an effective global enforcement strategy. The panel comprised:

  • Mr. Rupert Reed KC: Barrister, Serle Court (UK and DIFC)
  • Ms. Stefanie Pfisterer: Partner, Homburger (Switzerland)
  • Mr. Bradley Henry: Partner, Akerman LLP (USA)
  • Mr. Wouter de Clerck: Partner, Legaltree (Netherlands)
  • Mr. Nicholas Poon: Director, Breakpoint LLC (Singapore)
  • Mr. John O’Driscoll: Partner, Harneys (British Virgin Islands and Cayman Islands)

Mr. Bagaria initiated the discussion with his thoughts on how actual enforcement and recovery of funds continues to be one of the biggest hurdles in transnational dispute resolution. He remarked that be it banks with outstanding debt, or judgment/award holders with unpaid decisions, the road to asset recovery can often appear long, cumbersome and never-ending. The focus of the webinar thus, was on analysing legal tools available in various jurisdictions for recovery, and unpacking challenges that come up in cross-border enforcement.

1. Conduit jurisdiction and international treaties

Mr. Bagaria began the discussion by inviting Mr. Reed to express his views on the usefulness of conduit jurisdiction as a tool in cross-border recovery. Mr. Reed explained how the DIFC evolved as a conduit jurisdiction since 2014, when parties brought foreign judgments and arbitral awards through common law enforcement in the DIFC into other onshore courts in the UAE. This resulted in some controversy leading to the formation of the Joint Judicial Committee (“JJC”) which decided on issues of conflict between the DIFC and Dubai courts. Mr. Reed also hinted at rumours that the conduit jurisdiction may be dismantled by legislation. However, he concluded that as things stand, it is very much alive and the DIFC continues to be a “port of entry” for judgments and awards into Dubai. Mr. Reed also spoke of the availability of powerful tools in the DIFC such as worldwide freezing orders (“WFOs”). He mentioned anticipatory freezing orders in support of foreign proceedings, which are potentially now been closed down by the Sandra Holdings decision of the DIFC Court of Appeal. (Read our alert on this decision here.)

Mr. Reed then went on to discuss the effectiveness of the conduit approach especially in light of treaties like the Riyadh Convention and Gulf Cooperation Council Convention, which allow for the conversion of awards into judgments amongst contracting states. Mr. Bagaria agreed, emphasising the practicality and success of the conduit approach, particularly in challenging jurisdictions like Libya, Iraq and Syria. He noted the strategic use of the DIFC conduit to extend enforcement beyond traditional jurisdictions like the UK, Netherlands, USA, and France. Mr. Bagaria highlighted the growing recognition of DIFC judgments and their use in South Asia citing the reciprocity between India and the UAE.

Switching focus to offshore jurisdictions, Mr. Bagaria engaged Mr. O’Driscoll on the enforcement of foreign orders in the Cayman and BVI. Mr. O’Driscoll explained that the process for recognising and enforcing foreign money judgments and arbitral awards is pretty straightforward. He outlined the legal systems in Cayman and BVI which is based on common law and equity, and discussed the local statutes and orders governing civil procedure rules. He delved into enforcement mechanisms describing the user-friendly and efficient court systems in both jurisdictions. He emphasised the pro-enforcement approach of the courts.

2. Alternative routes

Mr. Bagaria remarked that the long-winded enforcement proceedings can be shortened through alternative routes, especially in offshore jurisdictions like the Cayman Islands and the BVI. He sought the views of Mr. O’Driscoll on using liquidation as a ‘shortcut’. Mr. O’Driscoll commented that liquidation proves to be more effective in such jurisdictions, as the liquidator will have the authority to cascade through the corporate structure of parent company and several offshore shell companies. He also opined that the liquidator has a very strong toolkit to go after the bad actors and chase them down, not only in the Cayman Islands and the BVI, but also elsewhere. However, he warned that liquidation is a serious measure and suggested that a statutory demand and out of court settlement should be attempted before pushing the company into liquidation.

For a different perspective on such shortcuts, Mr. Bagaria turned to Mr. Henry for the benefits of proceedings under Chapter 11 of the US Bankruptcy Code which permits reorganisation of debtors. Mr. Henry emphasised the global reach of such proceedings and the ability to preserve the value of assets. He interestingly pointed out that if there are multiple actions heading around the globe, Chapter 11 could be used coordinate them.

Mr. Bagaria pointed out that racketeering laws in the US had also been recently used for the enforcement of awards and judgments. Mr. Henry then delved into the use of the Racketeer Influenced and Corrupt Organisations Act (“RICO”) in enforcing awards. He commented on the strategic use of RICO, specifically in cases where debtors actively attempt to evade payment through unlawful activities. They observed that the requirement to allege underlying activities violating the statute makes the RICO a powerful tool in situations involving reluctant debtors.

3. Transnational estoppel

Mr. Bagaria began discussing the challenges that lawyers face in enforcing judgments or awards across different jurisdictions, one being the repetition of legal arguments and the duplication of efforts. the concept of transnational estoppel and its challenges in. Mr. Poon led the discussion, speaking about recent developments in Singapore, including the Singapore Court of Appeal’s recent affirmation of the principles of transnational issue estoppel in Deutsche Telekom v. India. Mr. Poon explained the new emerging principle called ‘primacy principle’ and discussed its intermediate problems. He discussed key facets or aspects of the transnational estoppel doctrine, elaborating on how sometimes a foreign judgement may not give rise to a transnational assurance as far as the Singapore courts are concerned. He also expressed his personal reservation on the condition of ‘public policy’ as a ground to refuse recognition of the policy of transnational estoppel in Singapore.

Mr. Bagaria then steered the conversation towards the Yukos saga – a complex and lengthy case pending before various courts. Subsequent to the nationalisation of Yukos in 2007, the former shareholders of the company commenced a number of arbitral proceedings against a Russian State-owned company (which acquired the assets of Yukos). Mr. de Clerck gave an overview of the current status of the Yukos proceedings, discussing the efforts of Yukos’ shareholders to enforce arbitral awards against Russian entities. He observed that the forthcoming findings of the English Court of Appeal could be expected to have finality on the Dutch court’s decision on the issue regarding the jurisdiction of arbitral tribunal. He also talked about the ‘ping pong effect’ i.e., the manner in which English and Dutch proceedings are affecting each other’s decisions.

4. Preservation of assets and discovery

Mr. Bagaria addressed the issue of preservation of assets and discovery. He commented on the use of freezing orders from courts like England or BVI and raised the question of whether such orders could be obtained in foreign proceedings. Mr. Poon explained an intriguing provision under Singapore law effective April 2022, that allowed the Singapore court to grant interim relief, including freezing orders, even without substantive proceedings being initiated in Singapore. He provided an example of how this provision could be applied in a global context to support foreign proceedings. Mr. Poon also emphasized that the Singapore court now has the authority to grant interim relief in support of foreign proceedings, making it more accessible and streamlined for practitioners and businesses.

Mr. Bagaria then shifted the discussion towards offshore jurisdictions, such as BVI and Cayman, and sought insights into unique reliefs, such as the Chabra relief. Mr. O’Driscoll explored the realm of injunctive reliefs in support of foreign proceedings in BVI and Cayman, including freezing injunctions, Norwich Pharmacal relief, prohibitive, proprietary, and anti-suit injunctions. He highlighted a unique protective measure called a ‘stop order’ or ‘stop notice’, useful for preventing the transfer of beneficial interests in shares. To seek views on position in the civil law jurisdictions, Mr. Bagaria then turned to Mr. de Clerck enquiring about his views into the Dutch precautionary attachment regime. Mr. de Clerck discussed the importance of two Dutch jurisdictions tools of precautionary attachments and injunctive reliefs in a money judgment. He also interesting explained that the assets can be attached discreetly and quickly often within two days in urgent cases. He further commented on how the turnaround time for international orders can be shortened considerably by promptly demonstrating the merits of a claim when seeking precautionary attachment. Subsequently, Mr. Henry contributed to this discussion by providing his views on the position in the US. He asserted that Section 1782 of Title 28, a powerful discovery tool in the US used in cross-border disputes. He observed that despite this limitation, people are finding creative ways to set up cases to take advantage of Section 1782 which allows obtaining documents and information from persons even if they are overseas.

5. Provisional arbitral awards

Mr. Bagaria spoke of unique experience at Singularity where a provisional award from an English-seated arbitration was simultaneously being enforced in jurisdictions such as Singapore, the DIFC, the Cayman Islands and Switzerland. Mr. O’Driscoll spoke about the publicly available order of the Grand Court of the Cayman Islands in this case, highlighting the significance of the court’s supportive attitude towards foreign arbitral awards. He also opined that this decision is strategically significant for creditors as it provided them with another route to potentially get early relief rather than having to wait for a final order to come through. Mr. Reed noted on how from the DIFC’s perspective, the relevant decision of the DIFC Court makes a crucial analysis of Article 24 (interim measures in domestic seated arbitrations) and Article 42 (enforcement of arbitral awards) of the DIFC Arbitration Law to find that interim measures ordered in an foreign-seated arbitral provisional award are enforceable as a New York Convention award.

Ms. Pfisterer was involved in this very case in its Swiss leg. Shedding light on civil law enforcement in jurisdictions like Switzerland, she commented on how attachment proceedings would precede the recognition of the award. Ms. Pfisterer also discussed the various ways for obtaining freezing orders in Switzerland, such as freezing and seizure of specific assets and freezing all assets post declaration of bankruptcy. She observed that the Swiss courts normally consider decisions of interim measures or interim awards as purely procedural orders, sufficient for obtaining attachment over specific assets; it remains to be seen whether a Swiss court would equate a provisional award to final awards for matters of mutual recognition and enforcement. Mr. Bagaria concluded this segment by stating that provisional awards are slowly coming in the mainstream, also stating that Article 17 of UNCITRAL Model Law has been amended to bring in exactly this sentiment.

6. Sovereign immunity and sanctioned assets

Mr. Bagaria introduced the interesting topic of sovereign immunity, focusing on sanctioned assets and the challenges they pose in enforcement proceedings. Mr. Bagaria first addressed Mr. de Clerck, enquiring about how Dutch courts handle claims against sanctioned assets and the weight sanctions hold. Mr. de Clerck discussed a recent Dutch decision involving a claim by a sanctioned Russian entity, seeking recovery of its funds. Though the Dutch court held the validity of the claim before it, the existing EU sanctions prevented the availability of the assets for enforcement even if the sanctioned entity were to win the dispute.

Mr. Bagaria then turned to Mr. Reed to discuss the Middle East’s stance on US or EU sanctions on Russia and the presence of Russian wealth in Dubai. Mr. Reed explained that the DIFC Courts do not face issues with recognising sanctions. However, he pointed out potential challenges for DIFC funds affiliated with or having relationships with firms subject to sanctions. He also emphasized on the caution needed in such situations. of Form

Mr. Bagaria invited Ms. Pfisterer to discuss Switzerland’s unique nexus requirement for enforcing against sovereigns. Ms. Pfisterer commented that a recent Federal Supreme Court decision maintained the necessity of a sufficient link to Swiss territory even in the case of ICSID awards for enforcing them against sovereigns. She opined that the nexus requirement is not likely to change in the near future and highlighted that Switzerland is better suited for enforcing private awards and judgments rather than sovereign ones.

The session concluded with Mr. Bagaria thanking the participants and hoping for their participation in the next session, to be announced soon.

Read about our previous sessions in the Navigating Complex Disputes Series: