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In asset recovery, not all jurisdictions are created equal

October 23, 2019
Michael Redman

One of the main challenges Burford faces when conducting complex asset recovery cases is their multi-jurisdictional nature. A commercial mining dispute originating in Kazakhstan might lead to a UK arbitral award against a company registered in the British Virgin Islands whose beneficial owner is a Russian citizen living in Miami. Enforcing the award, in turn, could hinge on our ability to freeze bank accounts in Switzerland and a flat in Paris. Navigating the legal and practical hurdles inherent to these types of cases is rarely straightforward.

The multi-jurisdictional element of asset recovery also presents unique opportunities. Asset recovery is a process underpinned by the acquisition and analysis of information about a judgment debtor. Whether it is identifying assets, evidencing links between them and the debtor, or developing strategic pressure points to bring someone to the table—information is critical. Generating information by means of traditional investigation (as undertaken by myriad corporate intelligence firms) is insufficient alone. We focus here on how to augment this approach with discovery, specifically how legal remedies available in one jurisdiction can be used to obtain information for enforcement purposes elsewhere.

Not all jurisdictions are created equal when it comes to discovery. The factors which account for this include, among others, varying legal systems, privacy and secrecy laws, as well as the extent to which information is generated routinely (e.g., in the banking sector) and disclosed to third parties. An awareness of the relative strengths and weaknesses of different jurisdictions in terms of the remedies available to a judgment creditor is therefore essential to our work. It allows us to identify and use discovery opportunities which might otherwise be missed by focusing too narrowly on any single jurisdiction. The distinction between common law and civil law jurisdictions is a key consideration.

Common law systems (e.g., England) begin with the concept of an adversarial system, which defines the roles of the judge and the parties’ advocates.[1] The judge’s role is to decide between competing presentations of evidence and law whereas the advocates’ role is to develop and make those presentations. The judge is not responsible for getting at “the truth”, and simply chooses between two competing versions of facts presented to him. The right to wide-ranging pretrial and post-judgment discovery follows from this principle. Thus, in both England and the US there is significant scope for a judgment creditor to seek disclosure from third parties for enforcement purposes.

Civil law systems (most of the non-English speaking world) are different, with the judge assuming responsibility for deciding a case according to the truth of the matter. The judge decides both fact and law, while the advocates’ function is to assist the judge in fulfillment of his judicial responsibility. It is therefore not up to the parties to elicit relevant evidence but rather up to the judge. Accordingly, at least in principle, discovery is unavailable to parties in civil law jurisdictions. In practice, there are mechanisms available in civil law systems which fulfill the same function—obtaining information—as discovery in common law jurisdictions. For example, a judgment creditor might seek to align his interests with the state authorities, which often have broad powers in criminal matters to obtain evidence.

Traditional investigation and cumbersome legal routes (e.g., MLATs) cannot be relied upon in complex multi-jurisdictional asset recovery cases against sophisticated fraudsters and other recalcitrant debtors. Just as they constantly seek novel ways to conceal their wealth, so too must we remain abreast of the evolving mechanisms to obtain information about how they are doing so.

[1] See Geoffrey C. Hazard, Discovery and the Role of the Judge in Civil Law Jurisdictions, 73 Notre Dame L Rev 1017, 1019 (1998).