#5081 - Robb Evans V. European Bank - Conflict of Laws BCL

Robb 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. 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.

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.

The question here was whether enforcement of the Californian order was barred by the exclusion of foreign laws regarding penal, revenue and other public matters or laws that enforce governmental interests.

Question

The issue before this Court is whether, as a matter of substance, the receiver is seeking to enforce, outside the territory of the United States, the governmental interests of that nation in the sense of the exercise of powers peculiar to government.

Holding

The Exclusionary Rule

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". 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." 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.

Over the years parliaments have created regulatory regimes which build on common law principles, perhaps by laying down rules of greater precision or by providing easier mechanisms of enforcement. In view of the costs of private litigation, of particular significance in the sphere of consumer protection, where the amount any one individual has lost may not justify litigation, publicly funded enforcement mechanisms are often established. Such forms of regulation serve a public interest. They do not, however, generally concern a governmental interest. Proceedings do not involve a governmental claim unless, of course, they seek a penal remedy.

Once it is accepted that not every matter capable of a classification as a "public law" gives rise to the exclusionary rule, it becomes necessary to analyse the substance of the interests sought to be protected and to determine whether these constitute a "governmental claim" or "governmental interest", in the sense of the "exercise of a power peculiar to government".

Application to Facts

The combined effect of the fact that what is involved in these proceedings is only a proportion of the total funds defrauded, the overwhelming probability that there will be leakages...