Rob Evans V. European Bank Notes

Rob Evans v. European Bank

Facts

This case concerns funds of which United States credit card holders had been defrauded, some US$7.5 million of which had found their way to a deposit account in the name of Benford Limited ("Benford") with European Bank Limited, the Respondent. Both Benford and the Respondent are incorporated in Vanuatu, where the deposit was made.

In proceedings in the Equity Division of this Court, the Appellant sought as, inter alia, receiver of Benford, to recover these funds. The Respondent filed a cross claim against Citibank Limited ("Citibank"), an Australian corporation, with which it had placed the funds on interest-bearing deposit.

By late 1998, a number of consumers had complained to the Federal Trade Commission ("FTC") that their accounts had been debited, by the Taves companies, for a service they had neither sought nor obtained. The fraud was detected. On 5 January 1999, the FTC filed in the United States District Court for the Central District of California, Western Division ("the Californian Court") a "Complaint for Permanent Injunction and other Equitable Relief" (subsequently amended on 19 January), seeking preliminary and permanent injunctive relief, rescission of contracts, restitution, disgorgement and other equitable relief against Mr and Mrs Taves and the Taves companies.

This issue arises because of the provisions of the United States Federal Trade Commission Act (15 USC §§41-58) ("FTC Act"). The credit card fraud perpetrated in the United States violated the provisions of this Act. Orders of a Californian court appointing the Appellant receiver of the persons and companies involved in the fraud, including Benford, were made on the application of the Federal Trade Commission.

Seizure Order: On or about 20 November 2000, a seizure warrant was served on Citibank NA by the FBI seeking seizure of the deposit with interest (US$8,110,073). On 29 November 2000, after verifying with Citibank Ltd that these funds could be traced to the original deposit by the Respondent in October 1999, Citibank NA paid the amount of the deposit plus interest to the US Marshal's Service. These funds have not been returned to Citibank NA or Citibank Limited. This seizure is central to the dispute between the Respondent and Citibank which is the subject of a separate judgment delivered simultaneously herewith. Proceedings in California to determine the distribution of the seized fund have been stayed pending resolution of the present proceedings.

Holding

“Governmental interest” test – “powers peculiar to the government”

The exclusionary rule under consideration in the present proceedings has long been held to apply to laws of a foreign state classified as either revenue or penal laws and, in more recent times, has extended to a further, but indeterminate, category of "foreign public laws". However, as the joint judgment in the High Court in the Spycatcher case noted: "The expression `public laws' has no accepted meaning in our law." (at 42.6). The High Court expressed a preference for characterising the relevant laws in terms of "governmental interests", which it identified in terms of: "claims enforcing the interests of a foreign sovereign which arise from the exercise of certain powers peculiar to government" (at 42.8 and see at 44.5). The test that the Court applied in the circumstances of the case before it involved a classification of the relevant proceeding as an assertion of a "governmental interest" (at 47.1).

The concept of "governmental interest", understood in terms of "powers peculiar to government", encompasses both of the previous well-established categories, i.e. revenue laws and penal laws, and also identifies the particular kind of "other public law" which may also fall within the exclusionary rule.

Difference between “public interests” and “governmental interests”

The various formulations - "governmental interests" or "governmental claims" or "the exercise of powers peculiar to government" or "an assertion of sovereign authority" or "an assertion of the authority of government" - each identifies a specific and limited range of statutory provision which falls within the exclusionary rule. The identification of a public interest protected by legislation does not constitute...

Buy the full version of these notes or essay plans and more in our Conflict of Laws BCL Notes.