First Curacao International Bank NV loses UK High Court action to prevent claim in fraud proceeding

LONDON - The High Court has dismissed a jurisdiction challenge to claims brought against a Caribbean bank in London after finding that allegations over Curaçao International Bank's role in a £415 million tax fraud were closely tied to England.  


Judge Clive Freeman concluded that England and Wales' High Court was "clearly" the "appropriate or proper place to bring a claim," in a judgment published this week. First Curaçao International Bank NV had complained during a hearing in April about the dangers of irreconcilable judgments with the Joint Court in Curaçao.   


Creditors for Transworld Payment Solutions U.K. Ltd. argued that seven of the eight issues it has identified in the case point to England and Wales as the most appropriate forum. They are pursuing the bank through the insolvency courts claiming that the lender helped defraud tax collectors of £415 million ($475 million) VAT on technology and computer goods imported into the U.K. between 2004 and 2006.  


"In my judgment, the essence of the dispute is the fraud itself, and the fraud has its closest connection with England and Wales," the judgment reads. "The alleged fraud and the common law, equitable and statutory causes of action arising out of the same have their closest connection with England and Wales."   


The allegations relate to carousel fraud — a scheme used to falsely claim VAT payouts and seek refunds from the government — against HM Revenue and Customs, the U.K.'s tax authority, Judge Freeman said.  


This was done by Transworld, which was largely based in London through its staff based largely in London, the judgment states. The key meetings were in London, including meetings attended by John Deuss, a Dutch entrepreneur who led the Curaçao bank, and it is largely English companies that are alleged to have participated in the fraud, the judgment states.   


The fact that the bank accounts at Curaçao facilitated the alleged fraud was not enough to persuade Judge Freeman.   


"The closer overall connection was England and Wales where breaches of trust/fiduciary duty took place, where the fraud was acted upon and where the damage occurred," the judgment reads. "It was ultimately a fraud on HMRC in the jurisdiction of the EWHC with consequent damage to largely English companies."  


The fraud was achieved by trading large quantities of equipment without paying the resultant VAT liabilities or retaining the means of doing so, leaving companies heavily insolvent on account of their VAT liabilities.  


Deuss is accused in separate litigation of being the "shadow director" of Transworld. Deuss has also lodged an application seeking a stay on claims against him in England while the proceedings against the bank are resolved in Curaçao.   


Judge Freeman found there was no basis for a stay. "In the contrary, the balance of factors is in favor of the EWHC proceedings continuing," the judgment reads.   


Judge Freeman said there were uncertainties about what the proceedings in Curaçao could actually determine and decide. He said there were uncertainties about whether the court would resolve the dispute between the parties.   


Transworld allegedly provided marketing services to the bank, introducing and recruiting companies that are alleged to have participated in the fraud.  


Transworld's creditors rescued the company from insolvency in 2014 to pursue claims against it. That litigation led to settlements waiving litigation in the future against the Caribbean bank and its directors.  


Transworld Payment Solutions U.K. Ltd. (in liquidation) and Stephen Hunt are represented by Christopher R. Parker KC, Caley Wright and Charles King of Maitland Chambers, instructed by Gowling WLG (UK) LLP.  


First Curaçao International Bank NV is instructed by Andrew Scott KC and Barnaby Lowe of Blackstone Chambers, instructed by Jones Day.  


John Deuss is represented by Tom Smith KC and Paul Fradley of South Square, instructed by Quinn Emanuel Urquhart & Sullivan UK LLP.  


The case is Transworld Payment Solutions U.K. Ltd. (in liquidation) and another v. First Curaçao International Bank NV and another, case number BL-2020-001543, in the High Court of Justice of England and Wales. 

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