IN BANKRUPTCY
RE: GLENN MAUD
Rolls Building, London, EN4A 1NL |
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B e f o r e :
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GLENN MAUD |
Applicant |
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- and - |
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THE LIBYAN INVESTMENT AUTHORITY |
Respondent |
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Jonathan Swift QC and Adam Al-Attar (instructed by Hogan Lovells International LLP) for the Respondent
Hearing date: 11 May 2015
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Crown Copyright ©
Mrs Justice Rose DBE:
(a) The debtor appears to have a counterclaim, set-off or cross demand which equals or exceeds the amount of the debt or debts specified in the statutory demand; or
(b) The debt is disputed on grounds which appear to the court to be substantial; or
(c) It appears that the creditor holds some security in respect of the debt claimed by the demand, or
(d) The court is satisfied on other grounds, that the demand ought to be set aside.
The Libyan sanctions regime
i) required for basic living expenses, medical expenses, legal services etc provided that such a determination was notified to the UN Sanctions Committee and that the Committee did not object;
ii) required for 'extraordinary expenses' provided that the UN Sanctions Committee approved;
iii) needed to satisfy a lien or judgment or arbitral lien entered against the targeted entity before the date the sanctions came into force, provided the judgment or award was not for the benefit of a targeted entity and that the UN Sanctions Committee had been notified.
i) They defined the entities subject to the prohibition by cross-reference to Annexes II and III of Regulation 204/2011 so as to avoid having to amend the instrument each time those Annexes were amended: see preamble and reg 2(1). They also provided in reg 2(3) that any expression used both in the Domestic Regulations and in Regulation 204/2011 has the meaning it bears in Regulation 204/2011.
ii) Reg 3 dealt with the freezing of assets by providing that a person ('P') must not deal with funds and economic resources owned or controlled by a targeted entity if he knows or has reasonable grounds to suspect that he is dealing with such funds or economic resources. To 'deal with' funds is defined as meaning (i) to use, alter, move, allow access to or transfer; or (ii) to deal with the funds in any other way that would result in any change of volume, amount, location, ownership, possession, character or destination; or (iii) to make any other change that would enable use: see reg 3(2).
iii) The 'making available' prohibition in article 5(2) of Regulation 204/2011 is split into four regulations in the Domestic Regulations: reg 4 prohibits making funds available to targeted entities; reg 5 deals with making funds available for the benefit of targeted entities; reg 6 deals with making economic resources available to targeted entities and reg 7 deals with making economic resources available for the benefit of targeted entities.
iv) Reg 9 sets up a licensing regime whereby none of the prohibitions applies to anything done under the authority of a licence granted by HM Treasury. Such a licence must specify the acts that are authorised by it and may be granted generally or granted to a category of persons or to a particular person; may be granted subject to conditions; and may be of indefinite duration or subject to an expiry date.
v) Reg 10 provides that it is a criminal offence to contravene any of the prohibitions imposed or to participate intentionally in activities knowing that the object or effect of them is (whether directly or indirectly) to circumvent any of the prohibitions or to enable or facilitate the contravention of any prohibition. A person guilty of an offence under reg 10 is liable on conviction on indictment, to imprisonment for up to two years or to a fine or to both and on summary conviction, to imprisonment for up to three months or to a fine not exceeding the statutory maximum or to both: see reg 14. Prosecution for an offence requires the consent of the Attorney General: see reg 16.
The relaxation of sanctions following the fall of the Qadhafi regime
"Article 5
1. All funds and economic resources belonging to, owned, held or controlled by the natural or legal persons, entities and bodies listed in Annexes II and III shall be frozen.
2. No funds or economic resources shall be made available, directly or indirectly, to or for the benefit of the natural or legal persons, entities or bodies listed in Annexes II and III.
3. The participation, knowingly and intentionally, in activities the object or effect of which is, directly or indirectly, to circumvent the measures referred to in paragraphs 1 and 2 shall be prohibited.
4. All funds and economic resources belonging to, owned, held or controlled on 16 September 2011 by:
(a) Central Bank of Libya;
(b) Libyan Arab Foreign Bank (a.k.a. Libyan Foreign Bank);
(c) Libyan Investment Authority; and
(d) Libyan Africa Investment Portfolio,
and located outside Libya on that date shall remain frozen.
…
Article 9
1. Article 5(2) shall not apply to the addition to frozen accounts of:
(a) interest or other earnings on those accounts; or
(b) payments due under contracts, agreements or obligations that were concluded or arose before the date on which the natural or legal person, entity or body referred to in Article 5 has been designated by the Sanctions Committee, the Security Council or by the Council,
(c) payments due under judicial, administrative or arbitral lien or judgment, as referred to in Article 8(1);
(d) payments due under judicial, administrative or arbitral decisions rendered in the Union, or enforceable in the Member State concerned, as referred to in Article 8(2),
provided that any such interest, other earnings and payments are frozen in accordance with Article 5(1).
2. Article 5(2) shall not prevent financial or credit institutions in the Union from crediting frozen accounts where they receive funds transferred to the account of a listed natural or legal person, entity or body, provided that any additions to such accounts will also be frozen. The financial or credit institution shall inform the relevant competent authority about any such transaction without delay.
….
Article 12
1. No claims in connection with any contract or transaction the performance of which has been affected, directly or indirectly, in whole or in part, by the measures imposed under this Regulation, including claims for indemnity or any other claim of that type, such as a claim for compensation or a claim under a guarantee, in particular a claim for extension or payment of a bond, guarantee or indemnity, particularly a financial guarantee or financial indemnity, of whatever form, shall be satisfied, if they are made by:
(a) designated persons, entities or bodies listed in Annex II or III;
(b) any other Libyan person, entity or body, including the Libyan government;
(c) any person, entity or body acting through or on behalf of one of the persons, entities or bodies referred to in points (a) or (b).
2. In any proceedings for the enforcement of a claim, the onus of proving that satisfying the claim is not prohibited by paragraph 1 shall be on the person seeking the enforcement of that claim.
3. This Article is without prejudice to the right of the persons, entities and bodies referred to in paragraph 1 to judicial review of the legality of the non-performance of contractual obligations in accordance with this Regulation."
Permission to extend time for applying to set aside
"The question arising on this appeal concerns the exercise by the court of its power to set aside a statutory demand "on other grounds" within sub-paragraph (d). In my view, the right approach to paragraph (4) of rule 6.5 is this. Under the Act, a statutory demand which is not complied with founds the consequence that the debtor is regarded as being unable to pay the debt in question or, if the debt is not immediately payable, as having no reasonable prospect of being able to pay the debt when it becomes due. That consequence, in turn, founds the ability of the creditor to present a bankruptcy petition because, under section 268(1), in the absence of an unsatisfied return to execution or other process, a debtor's inability to pay the debt in question is established if, but only if, the appropriate statutory demand has been served and not complied with.
When therefore the rules provide, as does rule 6.5(4)(d), for the court to have a residual discretion to set aside a statutory demand, the circumstances which normally will be required before a court can be satisfied that the demand "ought" to be set aside, are circumstances which would make it unjust for the statutory demand to give rise to those consequences in the particular case. The court's intervention is called for to prevent that injustice.
This approach to sub-paragraph (d) is in line with the particular grounds specified in sub-paragraphs (a) to (c) of rule 6.5(4). Normally it would be unjust that an individual should be regarded as unable to pay a debt if the debt is disputed on substantial grounds: sub-paragraph (b). Likewise, if the debtor has a counterclaim, set-off or cross demand which equals or exceeds the amount of the debt: sub-paragraph (a). Again, if the creditor is fully secured: sub-paragraph (c)."
This passage was cited with approval by Ward LJ in John Remblance v Octagon Assets Limited [2009] EWCA Civ 581 where he described it as encapsulating the general approach which will require a statutory demand to be set aside when the interests of justice require it.
The application of the sanctions regime to the guarantee
Discussion
Application for a licence
(1) UNITED NATIONS SECURITY COUNCIL RESOLUTIONS
Resolution 1970 (2011)
Adopted by the Security Council on 26 February 2011
Asset freeze
17. Decides that all Member States shall freeze without delay all funds, other financial assets and economic resources which are on their territories, which are owned or controlled, directly or indirectly, by the individuals or entities listed in Annex II of this resolution or designated by the Committee established pursuant to paragraph 24 below, or by individuals or entities acting on their behalf or at their direction, or by entities owned or controlled by them, and decides further that all Member States shall ensure that any funds, financial assets or economic resources are prevented from being made available by their nationals or by any individuals or entities within their territories, to or for the benefit of the individuals or entities listed in Annex II of this resolution or individuals designated by the Committee;
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19. Decides that the measures imposed by paragraph 17 above do not apply to funds, other financial assets or economic resources that have been determined by relevant Member States:
(a) To be necessary for basic expenses, including payment for foodstuffs, rent or mortgage, medicines and medical treatment, taxes, insurance premiums, and public utility charges or exclusively for payment of reasonable professional fees and reimbursement of incurred expenses associated with the provision of legal services in accordance with national laws, or fees or service charges, in accordance with national laws, for routine holding or maintenance of frozen funds, other financial assets and economic resources, after notification by the relevant State to the Committee of the intention to authorize, where appropriate, access to such funds, other financial assets or economic resources and in the absence of a negative decision by the Committee within five working days of such notification;
(b) To be necessary for extraordinary expenses, provided that such determination has been notified by the relevant State or Member States to the Committee and has been approved by the Committee; or
(c) To be the subject of a judicial, administrative or arbitral lien or judgment, in which case the funds, other financial assets and economic resources may be used to satisfy that lien or judgment provided that the lien or judgment was entered into prior to the date of the present resolution, is not for the benefit of a person or entity designated pursuant to paragraph 17 above, and has been notified by the relevant State or Member States to the Committee;
20. Decides that Member States may permit the addition to the accounts frozen pursuant to the provisions of paragraph 17 above of interests or other earnings due on those accounts or payments due under contracts, agreements or obligations that arose prior to the date on which those accounts became subject to the provisions of this resolution, provided that any such interest, other earnings and payments continue to be subject to these provisions and are frozen;
21. Decides that the measures in paragraph 17 above shall not prevent a designated person or entity from making payment due under a contract entered into prior to the listing of such a person or entity, provided that the relevant States have determined that the payment is not directly or indirectly received by a person or entity designated pursuant to paragraph 17 above, and after notification by the relevant States to the Committee of the intention to make or receive such payments or to authorize, where appropriate, the unfreezing of funds, other financial assets or economic resources for this purpose, 10 working days prior to such authorization.
Resolution 1973 (2011)
Adopted by the Security Council on 17 March 2011
Asset freeze
19. Decides that the asset freeze imposed by paragraph 17, 19, 20 and 21 of resolution 1970 (2011) shall apply to all funds, other financial assets and economic resources which are on their territories, which are owned or controlled, directly or indirectly, by the Libyan authorities, as designated by the Committee, or by individuals or entities acting on their behalf or at their direction, or by entities owned or controlled by them, as designated by the Committee, and decides further that all States shall ensure that any funds, financial assets or economic resources are prevented from being made available by their nationals or by any individuals or entities within their territories, to or for the benefit of the Libyan authorities, as designated by the Committee, or individuals or entities acting on their behalf or at their direction, or entities owned or controlled by them, as designated by the Committee, and directs the Committee to designate such Libyan authorities, individuals or entities within 30 days of the date of the adoption of this resolution and as appropriate thereafter;
20. Affirms its determination to ensure that assets frozen pursuant to paragraph 17 of resolution 1970 (2011) shall, at a later stage, as soon as possible be made available to and for the benefit of the people of the Libyan Arab Jamahiriya;
…
Designation criteria
22. Decides that the individuals listed in Annex I shall be subject to the travel restrictions imposed in paragraphs 15 and 16 of resolution 1970 (2011), and decides further that the individuals and entities listed in Annex II shall be subject to the asset freeze imposed in paragraphs 17, 19, 20 and 21 of resolution 1970 (2011);
Resolution 2009 (2011)
Adopted by the Security Council on 16 September 2011
15. Decides to modify the measures imposed in paragraphs 17, 19, 20 and 21 of resolution 1970 (2011) and paragraph 19 of resolution 1973 (2011) with respect to the Central Bank of Libya, the Libyan Arab Foreign Bank (LAFB), the Libyan Investment Authority (LIA), and the Libyan Africa Investment Portfolio (LAIP) as follows:
(a) funds, other financial assets and economic resources outside of Libya of the entities mentioned in this paragraph above that are frozen as of the date of this resolution pursuant to measures imposed in paragraph 17 of resolution 1970 (2011) or paragraph 19 of resolution 1973 (2011) shall remain frozen by States unless subject to an exemption as set out in paragraphs 19, 20 or 21 of that resolution or paragraph 16 below;
(b) except as provided in (a), the Central Bank of Libya, the LAFB, the LIA, and the LAIP shall otherwise no longer be subject to the measures imposed in paragraphs 17 of resolution 1970 (2011), including that States are no longer required to ensure that any funds, financial assets or economic resources are prevented from being made available by their nationals or by any individuals or entities within their territories, to or for the benefit of these entities;
16. Decides that in addition to the provisions of paragraph 19 of resolution 1970 (2011), the measures imposed by paragraph 17 of that resolution, as modified by paragraph 15 above and paragraph 19 of resolution 1973 (2011), do not apply to funds, other financial assets or economic resources of the Central Bank of Libya, the LAFB, the LIA and the LAIP provided that:
(a) a Member State has provided notice to the Committee of its intent to authorize access to funds, other financial assets, or economic resources, for one or more of the following purposes and in the absence of a negative decision by the Committee within five working days of such a notification:
(i) humanitarian needs;
(ii) fuel, electricity and water for strictly civilian uses;
(iii) resuming Libyan production and sale of hydrocarbons;
(iv) establishing, operating, or strengthening institutions of civilian government and civilian public infrastructure; or
(v) facilitating the resumption of banking sector operations, including to support or facilitate international trade with Libya;
(b) a Member State has notified the Committee that those funds, other financial assets or economic resources shall not be made available to or for the benefit of the individuals subject to the measures imposed in paragraph 17 of resolution 1970 (2011) or paragraph 19 of resolution 1973 (2011);
(c) the Member State has consulted in advance with the Libyan authorities about the use of such funds, other financial assets, or economic resources; and
(d) the Member State has shared with the Libyan authorities the notification submitted pursuant to this paragraph and the Libyan authorities have not objected within five working days to the release of such funds, other financial assets, or economic resources.
(2) EU LEGISLATION
COUNCIL REGULATION (EU) No 204/2011 of 2 March 2011 concerning restrictive measures in view of the situation in Libya
(1) In accordance with UN Council Security Resolution 1970 (2011) of 26 February 2011, Decision 2011/137/CFSP provides for an arms embargo, a ban on internal repression equipment, as well as restrictions on the admission and the freezing of funds and economic resources of certain persons and entities involved in serious human rights abuses against persons in Libya, including by being involved in attacks, in violation of international law, on civilian populations and facilities. Those natural or legal persons and entities are listed in the Annexes to the Decision.
(2) Some of those measures fall within the scope of the Treaty on the Functioning of the European Union and regulatory action at the level of the Union is therefore necessary in order to implement them, in particular with a view to ensuring their uniform application by economic operators in all Member States.
For the purposes of this Regulation, the following definitions shall apply:
(a) 'funds' means financial assets and benefits of every kind, including but not limited to:
(i) cash, cheques, claims on money, drafts, money orders and other payment instruments;
(ii) deposits with financial institutions or other entities, balances on accounts, debts and debt obligations;
(iii) publicly- and privately-traded securities and debt instruments, including stocks and shares, certificates representing securities, bonds, notes, warrants, debentures and derivatives contracts;
(iv) interest, dividends or other income on or value accruing from or generated by assets;
(v) credit, right of set-off, guarantees, performance bonds or other financial commitments;
(vi) letters of credit, bills of lading, bills of sale;
(vii) documents evidencing an interest in funds or financial resources;
(b) 'freezing of funds' means preventing any move, transfer, alteration, use of, access to, or dealing with funds in any way that would result in any change in their volume, amount, location, ownership, possession, character, destination or other change that would enable the funds to be used, including portfolio management;
(c) 'economic resources' means assets of every kind, whether tangible or intangible, movable or immovable, which are not funds but may be used to obtain funds, goods or services;
(d) 'freezing of economic resources' means preventing their use to obtain funds, goods or services in any way, including, but not limited to, by selling, hiring or mortgaging them;
1. All funds and economic resources belonging to, owned, held or controlled by the natural or legal persons, entities and bodies listed in Annexes II and III shall be frozen.
2. No funds or economic resources shall be made available, directly or indirectly, to or for the benefit of the natural or legal persons, entities or bodies listed in Annexes II and III.
3. The participation, knowingly and intentionally, in activities the object or effect of which is, directly or indirectly, to circumvent the measures referred to in paragraphs 1 and 2 shall be prohibited.
1. All funds and economic resources belonging to, owned, held or controlled by the natural or legal persons, entities and bodies listed in Annexes II and III shall be frozen.
2. No funds or economic resources shall be made available, directly or indirectly, to or for the benefit of the natural or legal persons, entities or bodies listed in Annexes II and III.
3. The participation, knowingly and intentionally, in activities the object or effect of which is, directly or indirectly, to circumvent the measures referred to in paragraphs 1 and 2 shall be prohibited.
4. All funds and economic resources belonging to, owned, held or controlled on 16 September 2011 by:
(a) Central Bank of Libya;
(b) Libyan Arab Foreign Bank (a. k. a. Libyan Foreign Bank);
(c) Libyan Investment Authority; and
(d) Libyan Africa Investment Portfolio,
and located outside Libya on that date shall remain frozen.
1. By way of derogation from Article 5, the competent authorities in the Member States, as identified on the websites listed in Annex IV, may authorise the release of certain frozen funds or economic resources, or the making available of certain funds or economic resources, under such conditions as they deem appropriate, after having determined that the funds or economic resources are:
(a) necessary to satisfy the basic needs of persons listed in Annex II or III or referred to in Article 5(4), and their dependent family members, including payments for foodstuffs, rent or mortgage, medicines and medical treatment, taxes, insurance premiums, and public utility charges;
(b) intended exclusively for the payment of reasonable professional fees or the reimbursement of incurred expenses associated with the provision of legal services;
(c) intended exclusively for the payment of fees or service charges for routine holding or maintenance of frozen funds or economic resources;
provided that, where the authorisation concerns a person, entity or body listed in Annex II or referred to in Article 5(4), the Member State concerned has notified the Sanctions Committee of that determination and its intention to grant an authorisation, and the Sanctions Committee has not objected to that course of action within five working days of notification.
2. By way of derogation from Article 5, the competent authorities of the Member States, as indicated on the websites listed in Annex IV, may authorise the release of certain frozen funds or economic resources, or the making available of certain frozen funds or economic resources, after having determined that the frozen funds or economic resources are necessary for extraordinary expenses provided that the following conditions are met:
(a) where the authorisation concerns a person, entity or body listed in Annex II or referred to in Article 5(4), the Sanctions Committee has been notified of that determination by the Member State concerned and the determination has been approved by that Committee; and
(b) where the authorisation concerns a person, entity or body listed in Annex III, the competent authority has notified the grounds on which it considers that a specific authorisation should be granted to the other competent authorities of the Member States and to the Commission at least two weeks before the authorisation.
1. By way of derogation from Article 5, with regard to persons, entities or bodies listed in Annex II, the competent authorities in the Member States, as listed in Annex IV, may authorise the release of certain frozen funds or economic resources, if the following conditions are met:
(a) the funds or economic resources in question are the subject of a judicial, administrative or arbitral lien established prior to the date on which the person, entity or body referred to in Article 5 was included in Annex II, or was referred to in Article 5(4), or of a judicial, administrative or arbitral judgment rendered prior to that date;
(b) the funds or economic resources in question will be used exclusively to satisfy claims secured by such a lien or recognised as valid in such a judgment, within the limits set by applicable laws and regulations governing the rights of persons having such claims;
(c) the lien or judgment is not for the benefit of a person, entity or body listed in Annex II or III, or referred to in Article 5(4);
(d) recognising the lien or judgment is not contrary to public policy in the Member State concerned; and
(e) the Sanctions Committee has been notified by the Member State of the lien or judgment.
2. By way of derogation from Article 5, with regard to persons, entities or bodies listed in Annex III, the competent authorities in the Member States, as listed in Annex IV, may authorise the release of certain frozen funds or economic resources, if the following conditions are met:
(a) the funds or economic resources in question are the subject of an arbitral decision rendered prior to the date on which the natural or legal person, entity or body referred to in Article 5 was included in Annex III, or of a judicial or administrative decision rendered in the Union, or a judicial decision enforceable in the Member State concerned, prior to or after that date;
(b) the funds or economic resources in question will be used exclusively to satisfy claims secured by such a decision or recognised as valid in such a decision, within the limits set by applicable laws and regulations governing the rights of persons having such claims;
(c) the decision is not for the benefit of a natural or legal person, entity or body listed in Annex II or III, or referred to in Article 5(4); and
(d) recognising the decision is not contrary to public policy in the Member State concerned.
3. The relevant Member State shall inform the other Member States and the Commission of any authorisation granted under this Article.
1. By way of derogation from Article 5(4), the competent authorities of the Member States, as indicated on the websites listed in Annex IV, may authorise the release of certain frozen funds or economic resources, provided that:
(a) the funds or economic resources shall be used for one or more of the following purposes:
(i) humanitarian needs;
(ii) fuel, electricity and water for strictly civilian uses;
(iii) resuming Libyan production and sale of hydrocarbons;
(iv) establishing, operating, or strengthening institutions of civilian government and civilian public infrastructure; or
(v) facilitating the resumption of banking sector operations, including to support or facilitate international trade with Libya;
(b) the Member State concerned has notified to the Sanctions Committee its intention to authorise access to funds or economic resources, and the Sanctions Committee has not objected within 5 working days of such a notification;
(c) the Member State concerned has notified the Sanctions Committee that those funds or economic resources shall not be made available to or for the benefit of any person, entity or body listed in Annex II or III;
(d) the Member State concerned has consulted in advance with the Libyan authorities about the use of such funds or economic resources; and
(e) the Member State concerned has shared with the Libyan authorities the notifications submitted pursuant to points (b) and (c) of this paragraph and the Libyan authorities have not objected within 5 working days to the release of such funds or economic resources.
2. By way of derogation from Article 5(4) and provided that a payment is due under a contract or agreement that was concluded by, or an obligation that arose for, the person, entity or body concerned, before the date on which that person, entity or body had been designated by the UN Security Council or the Sanctions Committee, the competent authorities of the Member States, as indicated on the websites listed in Annex IV, may authorise, under such conditions as they deem appropriate, the release of certain frozen funds or economic resources, if the following conditions are met:
(a) the competent authority concerned has determined that the payment is neither in breach of Article 5(2) nor is it to or for the benefit of persons, entities or bodies referred to in Article 5(4);
(b) the Sanctions Committee has been notified by the relevant Member State of the intention to grant an authorisation 10 working days in advance.
1. Article 5(2) shall not apply to the addition to frozen accounts of:
(a) interest or other earnings on those accounts; or
(b) payments due under contracts, agreements or obligations that were concluded or arose before the date on which the natural or legal person, entity or body referred to in Article 5 has been designated by the Sanctions Committee, the Security Council or by the Council,
(c) payments due under judicial, administrative or arbitral lien or judgment, as referred to in Article 8(1);
(d) payments due under judicial, administrative or arbitral decisions rendered in the Union, or enforceable in the Member State concerned, as referred to in Article 8(2),provided that any such interest, other earnings and payments are frozen in accordance with Article 5(1).
2. Article 5(2) shall not prevent financial or credit institutions in the Union from crediting frozen accounts where they receive funds transferred to the account of a listed natural or legal person, entity or body, provided that any additions to such accounts will also be frozen. The financial or credit institution shall inform the relevant competent authority about any such transaction without delay.
1. No claims in connection with any contract or transaction the performance of which has been affected, directly or indirectly, in whole or in part, by the measures imposed under this Regulation, including claims for indemnity or any other claim of that type, such as a claim for compensation or a claim under a guarantee, in particular a claim for extension or payment of a bond, guarantee or indemnity, particularly a financial guarantee or financial indemnity, of whatever form, shall be satisfied, if they are made by:
(a) designated persons, entities or bodies listed in Annex II or III;
(b) any other Libyan person, entity or body, including the Libyan government;
(c) any person, entity or body acting through or on behalf of one of the persons, entities or bodies referred to in points (a) or (b).
2. In any proceedings for the enforcement of a claim, the onus of proving that satisfying the claim is not prohibited by paragraph 1 shall be on the person seeking the enforcement of that claim.
3. This Article is without prejudice to the right of the persons, entities and bodies referred to in paragraph 1 to judicial review of the legality of the non-performance of contractual obligations in accordance with this Regulation.
1. Member States shall lay down the rules on penalties applicable to infringements of the provisions of this Regulation and shall take all measures necessary to ensure that they are implemented. The penalties provided for must be effective, proportionate and dissuasive.
2. Member States shall notify the Commission of those rules without delay after the entry into force of this Regulation and shall notify it of any subsequent amendment.
Freezing of funds and economic resources (in its original form)
3.—(1) A person ("P") must not deal with funds or economic resources belonging to, or owned, held or controlled by, a designated person if P knows, or has reasonable cause to suspect, that P is dealing with such funds or economic resources.
(2) In paragraph (1) "deal with" means—
(a) in relation to funds—
(i) use, alter, move, allow access to or transfer;
(ii) deal with the funds in any other way that would result in any change of volume, amount, location, ownership, possession, character or destination; or
(iii) make any other change that would enable use, including portfolio management; and
(b) in relation to economic resources, exchange, or use in exchange, for funds, goods or services.
(3) Paragraph (1) is subject to regulation 9.
Freezing of funds and economic resources (as amended by SI 2011/2390)
3.—(1) A person ("P") must not deal with funds or economic resources belonging to, or owned, held or controlled by, a designated person if P knows, or has reasonable cause to suspect, that P is dealing with such funds or economic resources.
(1A) The prohibition in paragraph (1) also applies to funds or economic resources which—
(a) on 16th September 2011 belonged to, or were owned, held or controlled by—
(i) Central Bank of Libya;
(ii) Libyan Arab Foreign Bank (also known as Libyan Foreign Bank);
(iii) Libyan Investment Authority; or
(iv) Libyan Africa Investment Portfolio;
(b) were located outside Libya on that date; and
(c) were subject to the prohibition in paragraph (1) immediately before the coming into force of Council Regulation (EU) No. 965/2011 of 28 September 2011;
(2) In paragraph (1) "deal with" means—
(a) in relation to funds—
(i) use, alter, move, allow access to or transfer;
(ii) deal with the funds in any other way that would result in any change of volume, amount, location, ownership, possession, character or destination; or
(iii) make any other change that would enable use, including portfolio management; and
(b) in relation to economic resources, exchange, or use in exchange, for funds, goods or services.
(3) Paragraphs (1) and (1A) are subject to regulation 9.
Making funds available to a designated person
4.—(1) A person ("P") must not make funds available, directly or indirectly, to a designated person if P knows, or has reasonable cause to suspect, that P is making the funds so available.
(2) Paragraph (1) is subject to regulations 8 and 9.
Credits to a frozen account (as amended by S.I. 2013/2071)
8.—(1) The prohibitions in regulations 4 and 5 are not contravened by a person who credits a frozen account with—
(a) interest or other earnings due on the account,
(b) payments due under contracts, agreements or obligations that were concluded or arose before the account became a frozen account,
(c) payments due under a judicial, administrative or arbitral lien or judgment as referred to in Article 8(1) of the Council Regulation, or
(d) payments due under judicial, administrative or arbitral decisions rendered in the European Union or enforceable in the Member State concerned as referred to in Article 8(1) of the Council Regulation
(2) The prohibitions in regulations 4 and 5 on making funds available do not prevent a relevant institution from crediting a frozen account where it receives funds transferred to the account.
(3) A relevant institution must inform the Treasury without delay if it credits a frozen account in accordance with paragraph (1)(b), (c) or (d) or (2).
(4) In this regulation "frozen account" means an account with a relevant institution which is held or controlled (directly or indirectly) by a designated person.
Licences
9.—(1) The prohibitions in regulations 3 to 7 do not apply to anything done under the authority of a licence granted by the Treasury.
(2) A licence must specify the acts authorised by it and may be—
(a) general or granted to a category of persons or to a particular person;
(b) subject to conditions;
(c) of indefinite duration or subject to an expiry date.
(3) The Treasury may vary or revoke a licence at any time.
(4) On the grant, variation or revocation of a licence, the Treasury must—
(a) in the case of a licence granted to a particular person, give written notice of the grant, variation or revocation to that person,
(b) in the case of a general licence or a licence granted to a category of persons, take such steps as the Treasury consider appropriate to publicise the grant, variation or revocation of the licence.
(5) A person commits an offence who, for the purpose of obtaining a licence, knowingly or recklessly—
(a) provides information that is false in a material respect, or
(b) provides or produces a document that is not what it purports to be.
(6) A person who purports to act under the authority of a licence but who fails to comply with any conditions included in the licence commits an offence.
Contravention and circumvention of prohibitions
10.—(1) A person who contravenes any of the prohibitions in regulations 3 to 7 commits an offence.
(2) A person commits an offence who intentionally participates in activities knowing that the object or effect of them is (whether directly or indirectly)—
(a) to circumvent any of the prohibitions in regulations 3 to 7, or
(b) to enable or facilitate the contravention of any such prohibition.