CMOC applied for a worldwide freezing order having fallen victim to an alleged fraud.  The email account of one of its senior managers was hacked and payment instructions were sent for several large transfers to banks around the world from its account at the Bank of China in London, amounting to around £6.3 million.

The unusual feature in CMOC's case was that CMOC could not identify named individuals in its application for permission to serve out of the jurisdiction. The Judge noted that while an injunction, due to its prescriptive nature, needed to be sufficiently certain and precise, in this situation it was possible to identify the class of persons who would be subject to the injunction and those who would not, by reference to the transfers made to particular bank accounts.

The English courts in 2003 confirmed that they have jurisdiction in general against persons unknown (Bloomsbury v. News Group Newspapers restraining the publication of extracts from Harry Potter and the Order of the Phoenix). However, this decision extends the principle to freezing orders. The court considered that there was no good reason not to: to do so would achieve two key objectives of fraud litigation, namely to freeze the relevant account before the monies were dissipated and to obtain vital information from the banks involved.

The threshold for service out of the jurisdiction was fulfilled, because, in respect of the tort gateway for permission to serve out of the jurisdiction, the loss to CMOC was suffered in this jurisdiction given the transfer of funds from its bank account here. In any event the court considered that gateway for restitutionary claims could also apply here. Also, if an arguable case was shown against one defendant another defendant could be served as a necessary and proper party.

On the facts before the court England & Wales was the most appropriate forum as it was from here that the monies had been taken.

Applying the principles from Bankers Trust v Shapira the court also made an order for the disclosure of information. These orders compel a bank to disclose information usually protected by confidentiality. The court will therefore approach any application critically and will require strong evidence of fraud and urgency to make an order.

This decision shows that, provided the right level of certainty and protection can be incorporated into the terms of an injunction, the court will be ready to exercise its freezing injunction jurisdiction in favour of a claimant in a fraud claim. CMOC had very clear evidence of fraud and its requests were sufficiently focussed not to appear oppressive.

Given the rise in email system breaches and hacks, the decision may give some comfort to fraud victims that they should not be left with no way to trace and preserve funds.

CMOC v Persons Unknown [2017] EWHC 3599 (Comm)

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Rachel Cook

Rachel Cook

Managing Associate, Dispute Resolution
United Kingdom

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