Re Sherman

• Jurisdiction: Cayman Islands
• Judge: (Harre, C.J.)
• Judgment Date: 01 January 1996
• Court: Grand Court (Cayman Islands)
• Date: 01 January 1996

Grand Court

(Harre, C.J.)

IN THE MATTER OF SHERMAN and FOUR OTHERS

Ms. L. Agard, Crown Counsel, for the applicant.

Cases cited:

(1) -Chief Const. (Kent) v. V., [1983] Q.B. 34; [1982] 3 All E.R. 36, distinguished.

(2) -D.P.P. v. Doot, [1973] A.C. 807; [1973] 1 All E.R. 940; (1973), 57 Cr. App. R. 600, considered.

Legislation construed:

Mutual Legal Assistance (United States of America) Law (Law 16 of 1986), s.6(1): The relevant terms of this section are set out at page 35, lines 1–4.

Schedule, art. 1: The relevant terms of this article are set out at page 35, lines 12–30.

Schedule, art. 5: The relevant terms of this article are set out at page 35, line 32 – page 36, line 4.

Schedule, art. 16: The relevant terms of this article are set out at page 36, lines 6–17.

Mutual Legal Assistance-method of assistance-limitations of Cayman law-by Mutual Legal Assistance Treaty, art. 16, para. 2 execution of request for assistance in support of foreign penal law to be in accordance with Cayman law-no injunction to freeze bank accounts if no Cayman proceedings in place for forfeiture or restitution of funds and no clear power to order forfeiture under Cayman law

On the direction of the Cayman Mutual Legal Assistance Authority, the Crown applied for an injunction restraining named US citizens from dealing with funds in their Cayman bank accounts.

The Authority had given the direction under s.6(1) of the Mutual Legal Assistance (United States of America) Law, 1986 in response to a request from the US Justice Department for details of two Cayman bank accounts. The Department had also sought future co-operation in the seizure of the funds in the accounts in the event of the arrest of the named individuals.

The Crown submitted that an injunction should be granted to facilitate assistance as specified in art. 1, para. 2 of the Mutual Legal Assistance Treaty, in particular item (g) relating to ‘immobilizing criminally obtained assets’ even though the court might not have the power to order the forfeiture of the funds under Cayman law (a submission supported by a certificate from the Attorney General) and notwithstanding art. 5, para. 3 of the Treaty which required requests to be executed in accordance with the laws of the requested party.

The court also considered the effect of art. 16, para. 2(a) of the Treaty which required the parties to assist each other in proceedings relating to, inter alia, the forfeiture of the proceeds of criminal offences to the extent permitted by their respective laws.

Held, dismissing the application:

(1) The court could not exercise its discretion to grant an injunction under s.6(1) to immobilize criminally obtained assets in accordance with art. 1, para. 2(g) of the Treaty, if such assistance was not permitted by Cayman law. In this case (a) no proceedings within the meaning of art. 16, para. 2 for forfeiture or restitution of the funds had been commenced which would require the prior freezing of the accounts, nor were any envisaged at the present time and (b) in any case no such injunction was required to execute the request simply for the production of bank records (page 36, lines 28–36).

(2) Had there been reasonable grounds, such as a right and interest in the enforcement of Cayman criminal law, upon which the Crown could apply for an injunction to restrain a suspected criminal from drawing on his account and the bank from honouring his cheques, it might have been open to the court to exercise its discretion in favour of the applicant. However, in circumstances in which it was not clear that the court had power to order the forfeiture of the funds in question, and the application had been made in aid of the penal law of a foreign state, no injunction would be granted (page 38, lines 14–30).

HARRE, C.J.: The Cayman Mutual Legal Assistance Authority
received a request dated December 13th, 1995 for assistance from the US
30	Department of Justice. It sought the production of certain bank records. In
a letter accompanying the request, the following passage appeared:
‘This request seeks the production of bank records only.
However, in accordance with Cayman law, we would like to
coordinate with you and the Royal Cayman Islands Police
35	Department, the seizure of the Cayman bank accounts at a date set
following the arrest of the defendants.’
On February 7th, 1996 the Cayman Authority issued a certificate
described as being pursuant to s.6 of and the Schedule to the Mutual
Legal Assistance (United States of America) Law, 1986 and arts. 1 and 5
40	of the Mutual Legal Assistance Treaty. It required the

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