One of the most far-reaching changes the United Nations Convention Against Corruption made to international law was the requirement that states cooperate to return assets stolen through corruption to the country where the crime was committed. No international convention had ever before required a state where the proceeds or the instruments of the crime were found to return them to the state where the offense was committed.
The overarching principle is straightforward, but translating it into exacting, legally binding language is anything but. The drafters had to account for cases where the state requesting return and the requested state have quite different laws on transferring ownership rights by judicial decree and on the effect a decree in one state has on proceedings in another. The result is series of lengthy, complex provisions laced with a thicket of paragraphs, subparagraphs, and cross-references that may warm some lawyers’ hearts but in which many reader can easily become lost.
I mapped the provisions for a forthcoming asset return conference. As the map isn’t (at least yet!) on Google maps, a copy is below. Two experienced UNCAC guides kindly read and corrected an earlier version (thank you Queensland University Senior Lecturer Radha Ivory and Mat Tromme of the Bingham Centre for the Rule of Law). Readers spotting any further mis-directions or errors are asked to flag them. UNCAC provides two methods for the return of stolen assets. Under article 53, the state seeking return is responsible for proving it is entitled to them. Under article 57, responsibility is shared with the state where the assets are located, “the holding state.”
Article 53(a) requires state parties to open their courts to all other state parties, granting them “standing,” or the right, to file a civil action leading to the confiscation and repatriation of property acquired through corruption offenses. Alternatively, article 53(b) directs each state party to establish procedures permitting its courts “to order those who have committed offences [established pursuant to the convention] . . . to pay compensation or damage” to a state party injured by the offense. Where there are conflicting claims to stolen assets, article 53(c) mandates that in any judicial proceeding to confiscate them, the party where the proceeding is being conducted must recognize any ownership claim asserted by another Convention party.
States seeking the direct return of assets pursuant to article 53 thus have two options, one requiring them to initiate a judicial proceeding and one allowing them to appear in a proceeding initiated by another. Article 53 is separate from and independent of any confiscation action in the holding state. It can be invoked before any asset confiscation proceeding in the holding state has begun; while it is underway, or after a final confiscation order has been entered.
Repatriation under article 57 provides for mandatory repatriation when certain prerequisites have been met. When they are not, it provides alternatives. Which one depends on the state of legal proceedings in the requesting and requested state and whether innocent third parties have rights to the assets.
Repatriation under article 57 is obligatory when three conditions are met i) a final order confiscating the assets has issued in the requesting state’s courts; ii) that order has been accorded legal effect by the holding state’s courts; and iii) the requesting state’s claim to the assets is clear. The latter provision obtains in three instances, those where:
- the confiscated assets are the result of the embezzlement of public funds or the laundering of such funds (article 57(3)(a)); or
- the requesting state “reasonably establishes its prior ownership” of the confiscated assets (article 57(3)(b)); or
- the law of the holding state “recognizes damage” to the requesting state “as a basis for returning the confiscated property” (article 57(3)(b)). This provision, the UNCAC legislative guide explains, covers cases such as bribery of the requesting state’s employee, where the requesting state has been damaged but does not have legal title to the bribe proceeds.
In all such cases, the Convention mandates that the holding state “shall . . . return the confiscated property” to the requesting state. States enjoy some flexibility in the application of these provisions. A holding state may waive the requirement that a final judgment of confiscation have issued in the requesting state.
UNCAC’s legislative guide explains how article 57 operates in cases where these conditions are not present. Examples include where i) the requesting state “may not be able to establish prior ownership” of the assets, ii) others have also been “damaged by” the corruption offences, iii) the holding state did not or could not waive the final judgement requirement, or iv) the assets were confiscated pursuant to an order initiated by the holding state or by a settlement. In such cases, article 57(3)(c) directs the holding state to “give priority consideration” to returning confiscated property to the requesting state, prior legitimate owners, and to compensating corruption victims.
Article 57(5) is relevant in these cases and in all others that fall outside paragraphs 57(3)(a) and 57(3)(b). It provides that holding and requesting states, “where appropriate,” are to conclude “agreements or mutually acceptable arrangements on a case-by-case basis for the final disposal” of the assets confiscated.
In practice, most returns have been pursuant to an article 57(5) agreement. The experience with those agreements will be a major focus of the upcoming asset recovery conference.