Zambia, Attorney General of Zambia for and On Behalf of v Meer Care & Desai (a firm) & Ors

On 15^th August 2005 I heard an application on the part of the Third, Sixth, Seventh, Ninth and Eleventh Defendants issued on 6^th April 2005 for a stay of the present proceedings brought against them by the Attorney General of Zambia.

I indicated that I would dismiss the application and give reasons for the dismissal.

In this judgment I set out the reasons for the dismissal of the application on the part of the above named Defendants.

At the same time I directed that a CMC should take place with a view to setting a timetable for the hearing of this action and (if necessary) part of the action in Zambia as appears in this judgment. That hearing is scheduled to take place (with other Defendants who did not appear on this application) on 10^th October 2005.

Initially the application was to set aside service and challenge the jurisdiction of the court but they were abandoned at the hearing before me. By the time of the hearing the application was made on the basis of 3 grounds as set out in the skeleton argument of Mr Umezuruike who with Mr Atunwa appeared for the Defendant Applicants. Those grounds are :-

The proceedings in the present form are in breach of Article 6 of ECHR

Forum non conveniens

Prejudice to the Applicant Defendants ability to defend criminal proceedings in Zambia

By these proceedings the Claimants seeks to recover substantial sums of Zambian Government money which were allegedly fraudulently misappropriated between 1996 and 2002 during the presidency of the Third Defendant Dr Frederick Jacob Titus Chiluba.

It is alleged by the Attorney General for Zambia (“the AG”) that the misappropriation of the monies and the laundering of the same was undertaken pursuant to 3 conspiracies between various Defendants (identified in the comprehensive proceeding Particulars of Claim as the Zantrop Conspiracy, the Mofed Conspiracy and the BK Facility Conspiracy).

The modus operandi of each of the conspiracies was alleged to be the same namely the use of false contracts or contractual provisions as a façade to create an impression of legitimacy for payments made using misappropriated government monies. The monies it is alleged were then laundered (in the whole or in part) through bank accounts in London operated by the First and Second Defendants who are firms of solicitors in London.

On 24^th November 2004 I granted the Claimant a worldwide freezing order in the amount of £13,500,000 together with consequential directions against the Third to Sixth, Ninth, Tenth and Thirteenth Defendants. Service of that order was effected on the Defendants between 27^th November and 15^th December 2004.

By an order dated 12^th January 2005 the Freezing order was extended until trial or order and on 24^th February 2005 I made a further Freezing order against the Sixteenth to Eighteenth Defendants in the sum of $25,000,000 and in the sum of $30,000,000 against the Seventeenth Defendant. These Defendants took part in a separate trial involving them alone after the hearing of the present application before me. That trial continued for 7 days when the action was settled on agreed terms.

More detail of the substantive conspiracies are to be found in the first witness statement of Janet Legrand on behalf of the Claimant dated 26^th July 2005 (paragraph 13-66).

The Third, Sixth, Ninth and Tenth Defendants purportedly complied with the terms of the Freezing order (i.e. statement of affidavits of means) on 31^st May 2005. The affidavits served were unsworn but jurats were provided on 6^th June 2005. The Claimant does not accept those affidavits are truthful but for the purposes of the present application (in the absence of any other evidence to contradict them) I assume that the assets identified are the only present assets available for the Defendants in this action.

Grounds (a) and (b) substantially overlap. The essential argument on the part of the Defendants is that the proceedings should be stayed as against them and fresh proceedings commenced in Zambia because that would be fairer for them in the conduct of their defence. During the course of his submissions I raised with Mr Umezuruike how that would impact on the proceedings against the English Defendants. This would be unsatisfactory as I pointed out. The allegations are that the Zambian Defendants were the main creators of the conspiracies and the English solicitors were the facilitators of that conspiracy. If the proceedings as against the Zambian Defendants were to be stayed it is difficult to see how that could be fair to the English Defendants or the Claimant. It would be impossible so far as I can see for the action in England to fairly proceed absent the evidence of those vital players.

Conversely if the Claimant was required to commence proceedings in Zambia (self evidently absent the English Defendants) he would not obtain a judgment if successful that bound the English Defendants. Nor would he be precluded from re litigating the matters in England as against them even though he had lost against the primary conspirators in Zambia.

Faced with this Mr Umezuruike submitted this was the creation of the Claimant. When I sought clarification of this he said it was based on the fact that the Claimants instituted the present action within this jurisdiction but kept a set of Defendants unable to be present in England to give instructions to their lawyers or to be present in England to give oral evidence or to be present in England when other witnesses gave evidence to give effective instructions as to how they were to be cross examined. This he submitted arose out of the criminal proceedings and the fact that the Defendants were bailed in Zambia upon terms that their passports should be surrendered. Mr Umezuruike also raised the concern that the Claimants might use the present proceedings in this jurisdiction in effect as a stalking horse to extract out of the Defendants defences which they might not have to reveal at an early stage in the criminal proceedings or even force them to give evidence in these proceedings which they could then use in the subsequent criminal proceedings.

There is a short way to deal with this as I indicated in argument. It is to ring fence the English proceedings. Thus the proceedings take place in private, an order is made that none of the evidence adduced by the Defendants can be used against them in criminal proceedings nor any of the documents disclosed by them in these proceedings be used in the criminal proceedings unless they agree or the court otherwise orders. The result would be therefore that there could be no possible abuse of the criminal proceedings and the Defendants rights to silence and the way in which they conducted their criminal defences. Faced with that Mr Umezuruike relied on the second basis namely that the English proceedings did not give the Defendants a fair trial. This was based on a number of factors. First and foremost was the fact that the bail conditions prevented the Applicant Defendants from taking part effectively in the English proceedings. Mr Umezuruike said that the Claimants had four options. The first was to run parallel civil proceedings in England and Zambia. I do not see that is a sensible option. The second option that was said to be available was to discontinue the civil claim here as against the Applicant Defendants and proceed against the other English Defendants. That too does not seem sensible to me for the reasons I have already given. The third option would be to drop the English proceedings and proceed against the main protagonists by bringing proceedings in Zambia and discontinuing the proceedings against all other parties. That too seems to me to be unrealistic. Further there would be a significantly large cost consequence. The fourth possibility was to stay the proceedings against the English Defendants. I pointed out to Mr Umezuruike that (other than the First Defendant) they were not present in court and I did not see how the present application was so formulated. Further even if it was possible I could not see any legitimate basis for staying the proceedings against them without them being heard. Mr Umezuruike submitted that it was a matter for the Claimant but the reality is that the Claimant has carefully chosen the English court for the main action. Mr Blair QC submits (and I accept this submission) that the action in reality is London focused and not in Zambia. There are a number of reasons for this:-

The characteristic of the alleged fraudulent conspiracy involves paying of government monies into English bank accounts and their disbursement for the personal use of the Defendants concerned.

The bank accounts in question were English bank accounts.

Each of the Defendants was involved in giving instructions in respect of the remittance of monies to or from the English bank accounts and/ or receiving substantial amounts of monies allegedly from the English bank accounts.

Therefore although the monies originated from Zambia and although part of the money ultimately was returned to Zambia nevertheless the conspiracy centred allegedly in London.

A substantial part of the money allegedly stolen was not returned to Zambia but was remitted to other accounts in England, Europe and the USA distributed as cash or used to discharge liabilities in England.

In addition the Claimants clearly identified the First and Second Defendants as the key witnesses who are resident in England and the fact that the substantial amount of documentary evidence is held by those Defendants and by banks to which the monies were allegedly channelled.

Finally the Claimants submit that satellite issues relating to disposal of the money can be effectively disposed of within this jurisdiction as opposed to Zambia. The example given was the proceedings against the Sixteenth to Eighteenth Defendants (the Jarban proceedings) which were dealt with after the hearing and prove demonstrably the Claimant’s point on this issue.

In addition in this context of course the proceedings were commenced as long ago as November 2004. Significant steps and substantial costs have been incurred and before the Defendants issued their application. To require the recommencement of proceedings and to stay the English proceedings in whole or in part would cause considerable wastage of cost and time and would be unfair to the Claimants and the other Defendants. As I said earlier in this judgment I indicated that I would be in a position to set a timetable for this action to be heard commencing in the middle of next year. If these proceedings are stayed there is no realistic possibility of any other form of civil proceedings being in place by that time.

Even if it were, it is unsatisfactory in my view for there to be parallel proceedings involving the same issues if that can be avoided in a way which is fair to all the parties taking into account their respective positions. The Claimant has chosen the English base for his primary proceedings for the reasons that I have set out above. It is not realistic to expect the First and Second Defendants to be willing to have the proceedings against them stayed or discontinued on the basis that they could be revived at some later stage depending on the result of proceedings yet to be commenced in Zambia. Equally it is unrealistic to expect the First and Second Defendants to be willing to participate in fresh proceedings brought against them in Zambia when they are already the subject matter of extensive proceedings within this jurisdiction.

The risk inherent in two trials, namely that the same issues might be determined differently in two cases is to be avoided as it is clearly a “potential disaster from a legal point of view” (see Brandon LJ in Aratra Potato Co Ltd vThe Egyptian Navigation Co [1981] 2 Lloyds Reports 119 at 128.

This was reinforced by the observations of Lord Bingham in Donohue v The Armco Inc [2002] 1 Lloyds Reports 45 at paragraphs 33/34. As he pointed out, the complexity of the current case involving international transactions make it plain that the interests of justice are best served by the submission the whole dispute to a single tribunal which is best fitted to make a reliable comprehensive judgment on all the matters in issue. As he observed, a procedure which permitted the possibility of different conclusions by different tribunals, perhaps made on different evidence would in his view run directly counter to the interests of justice. Equally Lord Scott at paragraph 75 said:-

The point arises as the Claimants submits powerfully in the instant case. I can see no advantage whatsoever in splitting the civil proceedings between England and Zambia but only considerable disadvantages delay inconvenience and wasted costs. The courts in England are well equipped to deal with a dispute of this nature bearing in mind the proximity of the substantive parts of the actions alleged against the Defendants as summarised above. I would not be so convinced that the Zambian court would be in such a strong position. I have no doubt that that stance weighed heavily with the Attorney General of Zambia when he decided not to commence proceedings in his own court.

It follows in my view that the case is overwhelmingly in favour of the Claimant in continuing all the disputes in this court as between all of the Defendants.

I have already dealt with the criminal aspects. I am quite satisfied that a regime can be put in place which will protect the Defendants’ position in the criminal proceedings. I do not regard a suggestion that Mr Umezuruike made (page 12 of the transcript) that the Attorney General would give undertakings and not comply with them (in respect of material obtained in the criminal proceedings) as being credible. The Attorney General through his counsel Mr William Blair QC indicated that he was willing to submit to restrictions on the use of documents and evidence and indeed the judgment in the trial along the lines that I have envisaged.

The other objections of the Defendants are costs of proceedings in England as opposed to Zambia and the inability on the part of the Defendants to attend trial.

When the application first became before me in May of this year I suggested that the trial difficulties could be addressed by part of the evidence being heard either by video link or even by evidence heard in Zambia. In the light of that indication the Task Force on Corruption has sought and obtained the consent of the Government of the Republic of Zambia for the English court sitting in Zambia for the purpose of hearing the evidence of the Applicant Defendants and any other witnesses in Zambia (see first witness statement of Janet Legrand paragraph 109). This is in line with the recent solution adopted by Lindsay J in Peer International Corporation v Termidor Music Publishers Ltd [2005] EWHC 1048 (Ch). I would envisage that it is likely that the trial judge in England would (like Lindsay J) be the examiner. As a matter of practical sense this is the best result because in my view it means that the credibility of all witnesses is assessed by one person. This is something which is from a practical point of view should be considered at the CMC. The other Defendants may well be involved in a number of potential ways. They may choose to hear the evidence by video link only in Zambia and not go to Zambia or they may go to Zambia. As regards the proceedings in England there is in reality no difficulty in the Zambian Defendants seeing daily transcripts or even seeing a video link of the evidence. Matters that arise can be dealt with on the giving of instructions overnight. That is not the best way but it does seem to me to provide a way whereby the Defendants can have a fair opportunity of defending the case in England and presenting a fair case as is their right by giving live evidence before a tribunal. It is not the best solution in the sense in an ideal world it would be best if the parties were in the court during the trial. However that cannot be achieved without causing great prejudice to all the other parties as outlined above. With the right approach I envisage the Defendants will have little difficulty of a practical nature in presenting their case.

The final matter the Defendants raised was the question of costs. This falls into two categories. First there is the cost of employing English lawyers as opposed to Zambian lawyers.

It is self evident that the cost of retaining English lawyers is likely to be far more than the cost of retaining Zambian lawyers. However the Defendants are already retaining Zambian lawyers in respect of the criminal proceedings brought against them. There may be some differences in relation to the criminal offences as opposed to the civil allegations. Undoubtedly that will involve the Defendants obtaining the assistance of English lawyers to advise and if necessary represent them on those issues. Nevertheless there is no reason why a substantial amount of the preparatory work for the English trial cannot be prepared by lawyers in Zambia who are already doing the same task, involving the same material in that country. Input can be provided by English lawyers on an “as required” basis. I do not see there is any necessity for extensive costs to be involved as regards English lawyers in advance of the trial.

When it comes to the trial the possibility cannot be excluded that the Defendants can obtain representation by their Zambian lawyers becoming authorised to appear in these courts. Equally they will be able to obtain assistance from English lawyers at that time.

I do not see any great difficulty if this matter is approached in a positive way by the Defendants. It is to be noted that in their appearances so far the Defendants have been able to obtain representation within this jurisdiction. In any event once again it would not be appropriate to accede to the Defendants applications and the impact that would have on the disputes on the other parties because of these perceived as opposed to real difficulties.

Second it is said that the Defendants do not have assets to fund the litigation. In paragraph 118 of Ms Legrand’s witness statement it was suggested that Mr Kabwe had assets in excess of $2,000,000. Paragraph 21 of Mr Keazor’s fourth witness statement dated 10^th August 2005 pointed out that those assets are subject to restriction by order of the Zambian authorities and by virtue of the Freezing order.

It is by no means clear the extent to which the assets are frozen. My orders permitted the use of funds provided the source was identified. Equally it appears to be the case that the Zambian authorities have placed restrictions against some but not all of the Defendants properties in Zambia. The Claimant believes of course that the Defendants have assets hidden away abroad. However that cannot in my view (absent evidence as opposed to assertion) be used as a basis for restricting the Defendants in having access to funds which have been identified and which are not the subject matter of proprietary or tracing claims. Provisions have been made in the Freezing orders for them to have recourse to assets to defend themselves provided the source is identified. In that context it emerged during the course of the hearing that the Defendants had broken that order when they funded their present English lawyers to make the present application.

During the course of the hearing I indicated that if the Defendants could establish with credible testimony that they would be unable to defend themselves because of restrictions imposed by the Zambian government on properties in Zambia then I would need some persuading from the Attorney General that I should not stay the proceedings unless that restriction was lifted to enable the Defendants properly to defend themselves. At present these matters appear to me to be premature. I do not have before me any credible evidence which shows that there are any realistic financial restrictions on the Defendants ability to present their defences. On that basis therefore I reject the Defendants application. However I make it clear that if circumstances change both as to the conduct of the trial and the ability in practical and financial terms of the Defendants to present a fair defence it is open then to them to seek to make a fresh application based on fresh evidence. I am not saying that I will accede to that application nor am I saying that I will dismiss it as that will depend on the evidence of all parties and the consideration of all parties in the light of the circumstances that appertain at the time of any such fresh application.

For the present purposes however I do not find for the reasons set out in this judgment the present applications should be dismissed. The parties have agreed an order for costs in advance of the determination namely that the costs in the case except as against the First Defendant where there will be no order to costs. The form of the order will need careful consideration and I will direct that that should be considered at the time of the CMC on 10^th October 2005.