In CMOC Sales & Marketing Limited v Persons Unknown & 30 Others  EWHC 2230 (Comm), the High Court confirmed that it has jurisdiction to grant a worldwide freezing injunction against “persons unknown”.
This is the first reported judgment regarding this relief which refers to the Court having granted an interim worldwide freezing order against “persons unknown” in October 2017. It is the first time that relief against “persons unknown” has been made in the context of a worldwide freezing order. Orders against “persons unknown” are typically seen in trespass or libel cases, but this is the first reported in the context of financial fraud.
The claimant company CMOC purchased and sold niobium, a soft metal that is predominantly found in Brazil. The claimant’s monthly spend amounted to USD 15m. In order to pay invoices, the claimant’s employees would put the invoice on headed paper and email it to the CMOC’s director. CMOC’s director would then email the claimant’s bank to request that invoices be paid. The claimant’s director’s email was hacked, and fake payment instructions were sent to CMOC’s bank account. The bank processed these payments, believing them to be genuine instructions and authorised payments amounting to USD 6.9m and EUR 1.27m.
The identities of the fraudster account holders were unknown and not traceable. However, CMOC sought to restrain the bank accounts to which the monies had been transferred.
In October 2017, the High Court granted a freezing injunction against “persons unknown” (and certain other known parties), requiring 35 international and overseas banks in at least 19 jurisdictions to freeze accounts holding the allegedly stolen funds, and to reveal the identity of the alleged fraudsters and the details of any further transfers made.
The latest judgment ordered the repayment of the stolen money and awarded damages of approximately GBP 7m along with indemnity costs.
The High Court confirmed that the jurisdiction to grant a freezing injunction against “persons unknown” was “clearly established”. There was a strong reason to grant freezing injunctions against “persons unknown” in international fraud cases, which could be a springboard for granting ancillary relief regarding third parties. The development of the law in this area was required given the rise in electronic methods of doing business, the anonymity that this provided, and the need to try and keep up with fraudsters involved with cybercrime.
In the future, claimants may be encouraged to seek an interim freezing order against “persons unknown” so as to freeze bank accounts, before then going on to seek relief (under Norwich Pharmacal or Bankers Trust principles) for the banks to reveal the identity of the account holders.
The case is also of interest as it involved the service of documents via an encrypted online data room, and by Facebook and WhatsApp.