Summary

The facts

These proceedings concern in excess of $300 million held in an Escrow Account under the control of the First Defendant ("Clyde & Co") as escrow agent. The Escrow Account was created pursuant to an UNCITRAL arbitration between PDVSA and POS in Paris.

At various stages during the arbitration proceedings between 2017 and 2020, the arbitral tribunal made orders permitting payments to POS from the Escrow Account of amounts needed by POS to meet its operating costs and legal expenses. Clyde & Co communicated with the NCA in relation to such payments and made a number of authorised disclosures to the NCA under Part 7 of POCA in relation to them.

I set out the relevant statutory background under POCA in my earlier judgment. For present purposes it suffices to say that Part 7 of POCA creates a number of offences of money laundering together with criminal penalties in sections 327 to 334. Part 7 then also creates, in sections 335 to 339ZG, a regime under which it is a defence to the principal money laundering offences (a so-called "DAML") if a person makes an "authorised disclosure" within the meaning of section 338 prior to the commission of an act which might otherwise amount to a money laundering offence, and then receives "appropriate consent" as defined in section 335. The NCA is one of the bodies to which authorised disclosures can be made and which can give appropriate consent.

Appropriate consent can be actual or deemed. Actual consent requires no further elaboration. Deemed consent can arise in the following ways (i) if no reply to an authorised disclosure is received by the disclosing party within seven days, or (ii) if consent is expressly refused within the notice period, a 31 day moratorium period commences on the date on which the disclosing party receives notice of refusal, and if the disclosing party does not receive notification within that 31 day moratorium period, consent is deemed to have been given.

Most recently, prior to the events with which this application was directly concerned, Clyde & Co made two disclosures to the NCA on 6 April 2020 seeking a DAML. The first disclosure concerned the regular payments of operating costs and legal expenses to POS pursuant to the tribunal's procedural order number 68, and the second concerned the potential transfer of the bulk of the monies in the Escrow Account in the event that POS was successful in the arbitration. The disclosures followed immediately after officers of the NCA had informed Clyde & Co on 3 April 2020 of their view that if the firm were to proceed with transferring monies held in the Escrow Account "it could render itself liable to a criminal investigation."

On 17 April 2020, the NCA granted consent to Clyde & Co to make payment of the costs and expenses pursuant to procedural order number 68, but refused consent to the second transaction involving transfer of other monies from the Escrow Account. The NCA also made an application to extend the moratorium period which had started to run in relation to the second disclosure. That was due to be heard at Southwark Crown Court on 9 June 2020, but after receipt of POS's evidence and argument in opposition, the NCA withdrew its application the day before the hearing.

On 16 July 2020, the day before the tribunal issued its Final Award, the public prosecutor in Malaysia obtained an order from the High Court of Kuala Lumpur in Malaysia purporting to freeze all of the monies in the Escrow Account on the basis that the monies were connected in some way to an alleged fraud involving a Malaysian state entity, 1MDB.

The arbitral tribunal issued its Final Award the following day, 17 July 2020, directing Clyde & Co to pay all of the monies in the Escrow Account to POS. At some point around this time, Clyde & Co made a further authorised disclosure to the NCA under Part 7 POCA seeking the NCA's consent to the firm making payment of the monies from the Escrow Account in accordance with the Final Award.

On 22 July 2020 PDVSA brought proceedings in the Cour d'Appel de Paris to annul the Final Award, indicating that it would contend that the monies in the Escrow Account were connected with contracts involving money laundering, bribery and corruption. That allegation had not been raised by PDVSA as an issue for decision in the arbitration and is strenuously disputed by POS, which contends that the monies in the Escrow Account are the product of its legitimate business activity.

Rather than make an application to the French courts to stay the Final Award, on 4 August 2020, PDVSA sought, without notice, and obtained, an injunction from Zacaroli J preventing any payment being made by Clyde & Co to POS from the Escrow Account. That UK Injunction did, however, permit the continued payment of up to $455,487 per month from the Escrow Account for POS's operating costs, as had been the case during the arbitration.

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OGEL:

• PDVSA Servicios SA v Clyde & Co LLP & Anor [2020] EWHC 3430 (Ch) (15 December 2020)
• PDVSA Servicios SA v Clyde & Co LLP & Anor [2020] EWHC 3297 (Ch) (02 December 2020)
• PDVSA Servicios SA v Clyde & Co LLP 2020 EWHC 2819 Ch - 23 October 2020
• PDVSA Servicios SA v Clyde & Co LLP 2020 EWHC 2322 Ch - Approved Judgment by Mr Justice Snowden - 26 August 2020
• PDVSA Servicios SA v Clyde & Co LLP 2020 EWHC 2202 Ch - Approved Judgment by Mr Justice Zacaroli - 04 August 2020

TDM:

• PDVSA Servicios SA v Clyde & Co LLP & Anor [2020] EWHC 3430 (Ch) (15 December 2020)
• PDVSA Servicios SA v Clyde & Co LLP & Anor [2020] EWHC 3297 (Ch) (02 December 2020)
• PDVSA Servicios SA v Clyde & Co LLP 2020 EWHC 2819 Ch - 23 October 2020
• PDVSA Servicios SA v Clyde & Co LLP 2020 EWHC 2322 Ch - Approved Judgment by Mr Justice Snowden - 26 August 2020
• PDVSA Servicios SA v Clyde & Co LLP 2020 EWHC 2202 Ch - Approved Judgment by Mr Justice Zacaroli - 04 August 2020