#6867 - Abou Rahmah V. Abacha - Restitution of Unjust Enrichment BCL

Abou Rahmah v. Abacha

Facts

The claimants in these proceedings, the appellants, are Mr Adnan Shaaban Abou-Rahmah, a lawyer practising in Kuwait, and a client of his, Khalid Al-Fulaij & Sons General Trading & Contracting Co, a Kuwaiti trading company. In May 2001 Mr Abou-Rahmah was contacted by Mr Oumar Bello (the second defendant) on behalf of Mr Al-Haji Abacha (the first defendant) seeking Mr Abou-Rahmah's assistance in investing about $65m, the capital of a family trust, in an Arab country. Mr Abou- Rahman met Mr Abacha, Mr Bello, and a third man, Mr Aboubakar Maiga (the third defendant), to discuss the matter further. In a series of meetings, the claimants agreed to identify suitable investments and to manage those investments on behalf of the trust. In return the claimants were offered 40% of the trust capital and 15% of its income. A formal agreement was entered into on 14 August 2001.

The three fraudsters claimed that the trust money was in Benin and that bureaucratic conditions involving various payments had to be satisfied before it could be transferred out of that country. Over a period of time the claimants were asked to contribute to those payments. Between August 2001 and March 2002 the claimants paid a total of some US$1,375,000 to this end. This appeal concerns two of those payments, a sum of $400,000 paid on 9 January 2002 and a further sum of $225,000 paid on 5 February 2002, in relation to what was said to be VAT payable on the alleged trust money.

These two payments were paid, on the fraudsters' instructions, into the account of a Nigerian bank, City Express Bank, the fourth defendant (the “bank”), held at HSBC in London, for onward transfer to a client of that bank, described as Trust International. The bank transferred equivalent sums of money in naira to its client's account held at its branch in Apapa, Nigeria. The actual name of the client was Trusty (not Trust) International. Its principals, who used the names of Yusuf Ibrahim and Nasir Saminu, were accomplices in the fraud.

Holding

Arden LJ (Majority)

As I have explained, the judge found that the bank's suspicions of the impropriety of the bank's customers did not relate to the two transactions in question, and therefore they did not disentitle the bank from relying on a defence of change of position. He also found that the failure to make further inquiries did not amount to commercially unacceptable conduct and therefore bad faith.

No waiver of enquiry – the bank had done all that it was required to do

I agree with Rix LJ that the judge's reasoning was somewhat narrow and that the question whether, in all the circumstances, the bank acted in good faith cannot be answered simply by looking at the circumstances of the particular transactions without reference to any of the surrounding circumstances. But there must be circumstances which would indicate that the instructions should not be complied with. The circumstance of the opening of the account was a suspicion that the bank's new customer might from time to time be engaged in money-laundering. That put the bank on its guard and it had to make further inquiries to remove that doubt if its suspicion persisted in an individual transaction. But the two payments with which we are concerned did not constitute money-laundering and the bank had no particular suspicions about them. I accept that it can be argued that, if the bank had never opened the account, the payments would never have been made, but this indirect form of causation is in my judgment not justified in circumstances where the bank discharged its obligations under the money-laundering decree.

To treat the defence of change of position as unavailable in this situation is, as I see it, an insufficiently nuanced approach. Of course, once the bank had formed a suspicion about its customer, it had to be aware of that suspicion in all its dealings with the customer. But the bank had done all that it had to do to remove that suspicion by complying with the requirements of Nigerian law on money-laundering and by being satisfied that it had no other residual doubts about the two payments. The imposition of liability in this case would serve to motivate banks not to act for customers in areas of business which gave rise to a general suspicion of money-laundering even where there was no information or suspicion that the customer was so involved. It seems to me that that is a road down which the court should not go, at any rate without fuller submissions than we have had. It would be different if, as in the Niru Battery case [2004] QB...