TNAG-2697-FCO40-3903-Hong-Kong-drugs-1993 — Page 58

CONFIDENTIAL

XCC(93)85

than "in personam" (against a person or company). The challenge was made on a technical interpretation of the legislation. Despite the wide definition of "external confiscation order" in section 3(1) of Schedule 3 to the 1991 Order, the High Court held a restraint order could only be made in Hong Kong where there was a "defendant", meaning a person recognised at law i.e. a natural person or a company, in the foreign proceedings. This had the effect that restraint orders could not be obtained in Hong Kong in aid of "in rem" proceedings in the foreign jurisdiction. The Attorney General appealed against the decision and the Court of Appeal held on 30 January 1992 that the warrant of arrest issued in the United States proceedings was an external confiscation order within the meaning of the legislation. However, the Court did not consider the question of the definition of "defendant".

8

The Attorney General's Chambers agrees with the decision of the Court of Appeal that the High Court's decision was contrary to the intention of the legislation, and is anomalous since the wording of section 7(1) of Schedule 3 to the 1991 Order does not impose such a requirement where an external confiscation order has already been made in the foreign proceedings.

9

We propose to clarify the definition of “defendant" and remove some uncertainties in section 7(1). As most drug assets are presently restrained pursuant to "in rem" proceedings overseas it is desirable that we remove any ambiguities that might frustrate the Administration's efforts to deprive major drug traffickers of their profits.

THE AMENDMENT ORDER

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The principal changes to be effected by the Amendment Order to the 1991 Order are -

(a)

(b)

to apply the Ordinance whether the foreign proceedings concerned are brought against a person or property, and whether the proceedings are criminal or civil in nature;

to define "defendant" to mean "a person (however described in the proceedings in the designated country) against whom, or in relation to whose property, an external confiscation order has been, or may be, made”;

Executive Council