Petrosaudi Oil Services (Venezuela) Limited v Clyde & Co LLP  EWHC 444 (Ch)
The long arm of US jurisdiction is a recurring theme in transnational civil litigation relating to criminal allegations. A paradigm example is the recent High Court decision in the dispute between Petrosaudi Oil Services (Venezuela) Limited ("POS") and Clyde & Co LLP ("Clyde").
The decision concerned the treatment of US$325million held by Clyde in an escrow account (the "Funds"). The Funds were to be awarded to POS following an arbitral decision in its favour but, prior to payment, were frozen by orders in Malaysia and the US. These orders followed allegations that the Funds arose from embezzlement as part of the 1MDB scandal, in which it is alleged that billions of dollars were stolen from a Malaysian state fund, leading to the arrest of Malaysia's former prime minister, Najib Razak and others. POS then brought a claim before the English Court seeking to release some of the Funds to pay its debts and legal expenses.
The English Court was faced with a dilemma. On the one hand, POS presented credible evidence that the continued freezing of the Funds would imperil its solvency. On the other, Clyde argued that if it were forced to disburse the Funds (or even part of them) then it faced a real risk of prosecution in the US. To complicate matters, the US authorities had not taken steps to 'domesticate' a US warrant issued against the Funds to make it enforceable in England. The Court nonetheless refused to make the order sought by POS in light of the risk it would pose to Clyde. The approach of Mr Justice Miles in resolving the tension posed by the competing considerations is illustrative of the English Court's pragmatism towards the commercial realities faced by parties in such disputes, and also serves to clarify the English Court's approach when considering the implications of foreign criminal proceedings for matters that come before it.