The Confiscation of the Proceeds of Drug Trafficking (Designated Countries and Territories) (Scotland) Order 1991

• (2) Where a person has been adjudged bankrupt, the powers conferred on the Court of Session by sections 8, 11 to 13, 16 and 24 of this Act or on an administrator appointed under subsection (1) of the said section 13 shall not be exercised in relation to–

• (a) property for the time being comprised in the bankrupt’s estate for the purposes of the said Part IX,

• (b) property in respect of which his trustee in bankruptcy may (without leave of the court) serve a notice under section 307 or 308 of the Insolvency Act 1986 (after-acquired property and tools, clothes etc. exceeding value of reasonable replacement), and

• (c) property which is to be applied for the benefit of creditors of the bankrupt by virtue of a condition imposed under section 280(2)(c) of the Insolvency Act 1986.

• (3) Nothing in the Insolvency Act 1986 shall be taken as restricting, or enabling the restriction of, the exercise of the powers so conferred.

• (4) Where, in the case of a debtor, an interim receiver stands appointed under section 286 of the Insolvency Act 1986 and any property of the debtor is subject to a restraint order the powers conferred on the receiver by virtue of that Act do not apply to property for the time being subject to the restraint order.

• (5) Where a person is adjudged bankrupt and has directly or indirectly made an implicative gift–

• (a) no order shall, at any time when property of the person to whom the gift was made is subject to a restraint order, be made under section 339 or 423 of the Insolvency Act 1986 (avoidance of certain transactions) in respect of the making of the gift, and

• (b) any order made under either of those sections after the discharge of the restraint order shall take into account any realisation under this Act of property held by the person to whom the gift was made.

• (6) In any case in which a petition in bankruptcy was presented, or a receiving order or an adjudication in bankruptcy was made, before 29th December 1986 (the date on which the Insolvency Act 1986 came into force), subsection (2) above shall have effect as if–

• (a) for the reference to the bankrupt’s estate for the purposes of Part IX of the Insolvency Act 1986 there were substituted a reference to the property of the bankrupt for the purposes of the Bankruptcy Act 1914[^f00025];

• (b) for the reference to section 280(2)(c) of the Act of 1986 there were substituted a reference to section 26(2) of that Act; and

• (c) subsection (2)(b) were omitted.

Winding up company holding realisable property

35

• (1) Where realisable property is held by a company and an order for the winding up of the company has been made or a resolution has been passed by the company for the voluntary winding up, the functions of the liquidator (or any provisional liquidator) shall not be exercisable in relation to–

• (a) property for the time being subject to a restraint order made before the relevant time, and

• (b) any proceeds of property realised by virtue of section 13(1) of this Act for the time being in the hands of an administrator appointed under that section.

• (2) Where, in the case of a company, such an order has been made or such a resolution has been passed, the powers conferred on the Court of Session by sections 8, 11 to 13, 16 and 24 of this Act or on an administrator appointed under subsection (1) of the said section 13 shall not be exercised in relation to any realisable property held by the company in relation to which the functions of the liquidator are exercisable–

• (a) so as to inhibit the liquidator from exercising those functions for the purpose of distributing any property held by the company to the company’s creditors, or

• (b) so as to prevent the payment out of any property of expenses (including the remuneration of the liquidator or any provisional liquidator) properly incurred in the winding up in respect of the property.

• (3) Nothing in the Insolvency Act 1986 shall be taken as restricting, or enabling the restriction of, the exercise of the powers so conferred.

• (4) For the purposes of the application of Parts IV and V of the Insolvency Act 1986 (winding up of registered companies and winding up of unregistered companies) to a company which the Court of Session has jurisdiction to wind up, a person is not a creditor in so far as any sum due to him by the company is due in respect of an external confiscation order.

• (5) In this section–

• “company” means any company which may be wound up under the Insolvency Act 1986; and

• “the relevant time” means– where no order for the winding up of the company has been made, the time of the passing of the resolution for voluntary winding up, where such an order has been made and, before the presentation of the petition for the winding up of the company by the court, such a resolution had been passed by the company, the time of the passing of the resolution, and in any other case where such an order has been made, the time of the making of the order.

• (6) In any case in which a winding up of a company commenced, or is treated as having commenced, before the date on which the Insolvency Act 1986 came into force, subsections (2) to (5) above have effect with the substitution for references to that Act of references to the Companies Act 1985[^f00026].

Property subject to floating charge

36

• (1) Where any property held subject to a floating charge by a company is realisable property and a receiver has been appointed by, or on the application of, the holder of the charge, the powers of the receiver in relation to the property so held shall not be exercisable in relation to –

• (a) so much of it as is for the time being subject to a restraint order made before the appointment of the receiver, and

• (b) any proceeds of property realised by virtue of section 13(1) of this Act for the time being in the hands of an administrator appointed under that section.

• (2) Where, in the case of a company, such an appointment has been made, the powers conferred on the Court of Session by sections 8, 11 to 13, 16 and 24 of this Act or on an administrator appointed under subsection (1) of the said section 13 shall not be exercised in relation to any realisable property held by the company in relation to which the powers of the receiver are exercisable–

• (a) so as to inhibit the receiver from exercising his powers for the purpose of distributing any property held by the company to the company’s creditors, or

• (b) so as to prevent the payment out of any property of expenses (including the remuneration of the receiver) properly incurred in the exercise of the receiver’s powers in respect of the property.

• (3) Nothing in the Insolvency Act 1986, shall be taken as restricting, or enabling the restriction of, the exercise of the powers so conferred.

• (4) In this section–

• “company” has the same meaning as in section 35 of this Act; and

• “floating charge” includes a floating charge within the meaning given by section 462 of the Companies Act 1985[^f00027] (power of incorporated company to create floating charge).

• (5) In any case in which a receiver was appointed as is mentioned in subsection (1) above before the date on which the Insolvency Act 1986 came into force, subsections (2) to (4) above have effect with the substitution for references to that Act of references to the Companies Act 1985.

Insolvency practitioners dealing with property subject to restraint order

37

• (1) Without prejudice to the generality of any enactment contained in the Insolvency Act 1986 or in the 1985 Act, where –

• (a) any person acting as an insolvency practitioner seizes or di` sposes of any property in relation to which his functions are, because that property is for the time being subject to a restraint order, not exercisable; and

• (b) at the time of the seizure or disposal he believes, and has reasonable grounds for believing, that he is entitled (whether in pursuance of a court order or otherwise) to seize or dispose of that property,

he shall not be liable to any person in respect of any loss or damage resulting from the seizure or disposal except in so far as the loss or damage is caused by the insolvency practitioner’s negligence; and the insolvency practitioner shall have a lien on the property, or the proceeds of its sale, for such of his expenses as were incurred in connection with the liquidation, sequestration or other proceedings in relation to which the seizure or disposal purported to take place and for so much of his remuneration as may reasonably be assigned for his actings in connection with those proceedings.

• (2) Any person who, acting as an insolvency practitioner, incurs expenses–

• (a) in respect of such property as is mentioned in paragraph (a) of subsection (1) above and in so doing does not know and has no reasonable grounds to believe that the property is for the time being subject to a restraint order; or

• (b) other than in respect of such property as is so mentioned, being expenses which, but for the effect of a restraint order, might have been met by taking possession of and realising the property,

shall be entitled (whether or not he has seized or disposed of that property so as to have a lien under that subsection) to payment of those expenses under section 16(1) of this Act.

• (3) In the foregoing provisions of this section, the expression “acting as an insolvency practitioner” shall be construed in accordance with section 388 (interpretation) of the said Act of 1986 except that for the purposes of such construction the reference in subsection (2)(a) of that section to a permanent or interim trustee in a sequestration shall be taken to include a reference to a trustee in a sequestration and subsection (5) of that section (which provides that nothing in the section is to apply to anything done by the official receiver) shall be disregarded; and the expression shall also comprehend the official receiver acting as receiver or manager of the property.

Minor amendments in relation to drug trafficking

45

• (1) Section 28 of the Bankruptcy Act 1914 (effect of order of discharge) shall have effect as if amounts payable under external confiscation orders were debts excepted under subsection (1)(a) of that section.

• (2) Section 281(4) of the Insolvency Act 1986 (discharge of bankrupt not to release him from liabilities in respect of fines, etc) shall have effect as if the reference to a fine included a reference to an external confiscation order.

• (3) In the 1985 Act–

• (a) in section 5(4) (interpretation)–

• (i) after the words “future debts” there shall be inserted the words “or amounts payable under an external confiscation order”; and

• (ii) at the end there shall be added the words “; and in the foregoing provisions of this subsection “external confiscation order” has the meaning assigned by section 1(1) of the Criminal Justice (Scotland) Act 1987”;

• (b) in section 7(1) (constitution of apparent insolvency)–

• (i) in paragraph (b), at the beginning there shall be inserted the words “not being a person whose property is for the time being affected by a restraint order or subject to an external confiscation order,”;

• (ii) in paragraph (c), after the words “became due” there shall be inserted the words “or that but for his property being affected by a restraint order or subject to an external confiscation order, he would be able to do so”; and

• (iii) at the end there shall be added the words “In paragraph (d) above “liquid debt” does not include a sum payable under an external confiscation order”, and in the foregoing provisions of this subsection–

• “external confiscation order” has the meaning assigned by section 1(1) of the Criminal Justice (Scotland) Act 1987; and

• “restraint order” has the meaning assigned by section 9 of the said Act of 1987; and

• (c) section 55(2) (discharge of debtor not to release him from liabilities in respect of fines etc.) shall have effect as if the reference to a fine included a reference to an external confiscation order.

Service and notice for purposes of Part I

46

Subject to the provisions of this Part of this Act, provision may be made by rules of court as to the giving of notice required for the purposes of this Part of this Act or the effecting of service so required; and different provision may be so made for different cases or classes of case and for different circumstances or classes of circumstance.

Interpretation of Part I

47

• (1) In this Part of this Act (except where the context otherwise requires)–

• “administrator” shall be construed in accordance with section 13 of this Act;

• “associate” shall be construed in accordance with section 74 of the 1985 Act;

• “drug trafficking” has the meaning assigned by section 1(6) of this Act;

• “external confiscation order” has the meaning assigned by section 1(1) of this Act;

• “implicative gift” shall be construed in accordance with section 6 of this Act;

• “realisable property” shall be construed in accordance with section 5 of this Act;

• “restraint order” has the meaning assigned by section 9 of this Act; and

• “the 1975 Act” means the Criminal Procedure (Scotland) Act 1975; and

• “the 1985 Act” means the Bankruptcy (Scotland) Act 1985.

• (2) This Part of this Act shall (except where the context otherwise requires) be construed as one with the 1975 Act.

• (3) This Part of this Act applies to property whether it is situated in Scotland or elsewhere.

• (4) References in this Part of this Act–

• (b) to anything received in connection with drug trafficking include a reference to anything received both in that connection and in some other connection; and whether received before or after the commencement of the Confiscation of the Proceeds of Drug Trafficking (Designated Countries and Territories) (Scotland) Order 1991 and whether received in connection with drug trafficking carried on by the recipient or some other person; and

• (c) to property held by a person include a reference to property vested in the interim or permanent trustee in his sequestration or in his trustee in bankruptcy or liquidator.

• (5) For the purposes of this Part of this Act—

• (a) proceedings are instituted in a designated country when–

• (i) under the law of the designated country concerned one of the steps specified in relation to that country in column 2 of the Appendix hereto has been taken there in respect of alleged drug trafficking by a person which may result in an external confiscation order being made; or

• (ii) an application has been made to court in a designated country for an external confiscation order,

and where the application of this paragraph of this subsection would result in there being more than one time for the institution of proceedings, they shall be taken to have been instituted at the earliest of those times; and

• (b) proceedings are concluded as regards an offence–

• (i) when (disregarding any power of a court to grant leave to appeal out of time) there is no further possibility of an external confiscation order being made in the proceedings; or

• (ii) on the satisfaction of an external confiscation order made in the proceedings (whether by the recovery of all property liable to be recovered, or the payment of any amount due, or otherwise).

Signed

G. I. de Deney — Clerk of the Privy Council

Explanatory note

(This note is not part of the Order)

This Order provides that, subject to certain modifications, Part I of the Criminal Justice (Scotland) Act 1987 applies to an order made by a court in a designated country or territory for the purpose of recovering payments or other rewards received in connection with drug trafficking or their value (an external confiscation order), and to proceedings which have been or are to be instituted in a designated country or territory and may result in such an order being made there. It also provides, in Article 8, that the value of any property recovered in a designated country or territory in response to a request by the government of the United Kingdom for assistance in the enforcement of a confiscation order abroad is to be treated as reducing the amount payable in Scotland under a confiscation order made by the High Court.

Article 3 of the Order designates the countries and territories listed in Schedule 1 for the purposes of enforcement of confiscation orders abroad and of external confiscation orders in Scotland, and applies the provisions of Part I of the Criminal Justice (Scotland) Act 1987 with modifications, to confiscation orders of courts in those countries and territories and proceedings which may lead to such an order being made. The modifications to Part I of the Act are set out in Schedule 2 to the Order, and Schedule 3 sets out in full Part I of the Act as so modified.

Footnotes

[^f00001]: 1987 c. 41; section 30 was substituted by the Law Reform (Miscellaneous Provisions) (Scotland) Act 1990 (c. 40), section 63.

[^f00002]: Section 30 was substituted by and section 30A was inserted by the Law Reform (Miscellaneous Provisions) (Scotland) Act 1990 (c. 40), section 63.

[^f00003]: 1971 c. 38.

[^f00004]: 1990 c. 5.

[^f00005]: Section 5(3)(b) was amended by the Prevention of Terrorism (Temporary Provisions) Act 1989 (c. 4), section 25(1) and Schedule 8, paragraph 9.

[^f00006]: 1975 c. 21.

[^f00007]: 1987 c. 22.

[^f00008]: Subsection (3) was amended by the Criminal Justice Act 1988 (c. 33), Schedule 5, paragraph 21.

[^f00009]: Section 34(6) was amended by the Criminal Justice Act 1988 (c. 33), Schedule 5, paragraph 22.

[^f00010]: 1986 c. 45.

[^f00011]: 1914 c. 59.

[^f00012]: 1971 c. 38.

[^f00013]: 1990 c. 5.

[^f00014]: 1975 c. 21; section 436 was substituted by the Criminal Justice (Scotland) Act 1980 (c. 62), Schedule 7, paragraph 71.

[^f00015]: 1973 c. 62; section 43 was amended by the Criminal Justice Act 1988 (c. 33), section 69.

[^f00016]: 1989 c. 4.

[^f00017]: 1975 c. 21.

[^f00018]: 1868 c. 101.

[^f00019]: 1889 c. 39.

[^f00020]: 1987 c. 22.

[^f00021]: 1933 c. 41.

[^f00022]: 1985 c. 66.

[^f00023]: 1913 c. 20.

[^f00024]: 1986 c. 45.

[^f00025]: 1914 c. 59.

[^f00026]: 1985 c. 6.

[^f00027]: 1985 c. 6; subsection (2) is substituted by the Companies Act 1989 (c. 40), Schedule 18, paragraph 8. Subsection (5) was amended by section 439(1) of Schedule 13 to the Insolvency Act 1986 (c. 45).