Recovery of Cross-Border Debts

Firms and people who fail to pay their bills are a significant nuisance for any business, but when the debtor is abroad, there may be a temptation to give up. Although recovery of debts from those who live overseas requires determination, English judges are relentless and have a panoply of powers that reach across national borders. One case that proves the point involved a company's pursuit of a Swiss resident who was said to have fraudulently posed as a finance professional, which led to a worldwide freezing order over his assets and an application to have him imprisoned for contempt of court for failing to comply with court orders.

The company claimed to have paid the man large sums of money on the strength of his promise that he would obtain for it various corporate financial guarantee bonds and a credit facility. None of those had materialised and the company claimed that it had been duped by the man, who had held himself out as a qualified banker.

The claims were not contested, so the company obtained default judgments against the man in London for £1.6 million and €400,000. He was also ordered to pay legal costs of £276,000 and the company obtained domestic and worldwide freezing orders against him. A freezing order prevents access to the assets identified, which remain frozen until a judgment is met.

In refusing the man's application to set aside those orders, the High Court noted that he had taken steps clearly intended to cover his tracks in Switzerland and to conceal any assets he may have had there. He had closed his Swiss bank accounts and disappeared from his last known address without disclosing a new one.

Despite having no bank account and no declared income, he had managed to pay for improvements to one of his properties in England and had found sufficient funds to spend over £1 million on the litigation. It was at least arguable that he had breached the international freezing order and the Court refused to set aside the company's application to have him committed to prison for contempt.