LONDON - First Curaçao International Bank NV bank told a London court on Thursday that proceedings in Curaçao over its liability to creditors of a defunct payment company caught up in VAT fraud should be heard before a case brought against the lender in England.
Counsel for First Curaçao International Bank NV said the High Court should not allow a "new frontier" of claims to be brought against the lender in England. That could result in "irreconcilable" judgments with the Joint Court in Curaçao, which has already claimed jurisdiction.
The lender is asking the court in Curaçao, in the Lesser Antilles, to grant it an anti-suit injunction preventing creditors for Transworld Payment Solutions U.K. Ltd. from pursuing claims that it aided a £415 million ($515 million) value-added tax fraud. First Curaçao says it owes the claimants nothing.
Transworld's creditors are pursuing the company in the insolvency courts, alleging that it helped defraud tax collectors of VAT on technology and computer goods imported into the U.K. between 2004 and 2006.
The bank is alleged to have been a haven for carousel fraud — a scheme used to falsely claim VAT payouts and seek refunds from the government.
"The Curaçao Court may find that we didn't dishonestly participate in fraud, the English court may find the contrary," First Curaçao's counsel said at the hearing. The bank insisted that it is not "engaging in an abuse of forum shopping" and that it is an "entirely legitimate response" to seek to resolve the dispute where the bank is regulated and based.
The lender is accused of dishonest assistance through providing bank accounts and services that were used for fraud. It says its banking arrangements with companies were entered into under terms and conditions governed by Curaçao.
The bank told the court on Thursday that it has no connection to England, is regulated by the Central Bank of Curaçao and is being wound down. First Curaçao has been in the control of the central bank since its banking licenses was withdrawn in 2006 and the lender was placed into special measures, the company says.
The Caribbean bank was led by Dutch entrepreneur John Deuss. He 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.
Transworld allegedly provided marketing services to the bank, introducing and recruiting companies that are alleged to have participated in the fraud.
Stephen Hunt, a liquidator acting for creditors, has alleged that First Curaçao "conducted its account-opening business in an aggressive and proactive way through Transworld." The bank was "active in opening accounts in a sector that it knew or ought to have concluded was mainly fraudulent and was likely to lead to losses to victims," he added.
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. Limited (in liquidation) and Stephen Hunt are represented by Christopher R. Parker QC of Maitland Chambers, instructed by Gowling WLG (UK) LLP.
First Curaçao International Bank N.V is instructed by Jones Day. Full counsel information was not immediately available.
John Deuss is represented by Tom Smith QC 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 N.V and another, BL-2020-001543 in the High Court of Justice of England and Wales.
By Joanne Faulkner (Law360.com)