MONACO Law and Practice Contributed by: Donald Manasse, Donald Manasse Law Offices
4. Overseas Parties in Fraud Claims 4.1 Joining Overseas Parties to Fraud Claims While Monaco does not generally purport to exercise extraterritorial jurisdiction, overseas parties can be joined under the provisions of Article 5 of the Code of Private International Law (CDIP), which provides that Monaco has jurisdiction if one party is a Monaco resident, even where the other defendants are not. There is a caveat, which is that there will be no juris - diction if the request is made “only to bring a party who has his habitual residence or domicile outside Monaco” into the Monaco courts. Since the CDIP is relatively recent (2017), no case law applying this exception has yet been published. Where there is a seizure action, it must be vali - dated before the Monaco courts by a simple action to request payment of the sum in ques - tion. In that case, the overseas party will be a party to the action and the Monaco court will have jurisdiction (Article 6, No 7, of the CDIP). To execute on the seized assets, it will often be necessary to demand recognition of a foreign judgment. In that event, “any interested party” may bring the action in recognition (Article 15 of the CDIP) and the defendant may be the over - seas or foreign party. 4.2 Service of Proceedings out of the Jurisdiction Parties outside of the jurisdiction can be served by instructing a bailiff to file the summons or decision with the prosecutor general’s office, under the provisions of the Hague Service Con - vention. No leave of the court is required for ser - vice abroad.
example, a claim is against an ultimate beneficial owner or shareholder, and an asset is held by the corporate vehicle. However, there has been a recent tendency towards allowing the seizure of the corporate asset on the basis that the corporate vehicle is a sham. In a recent case, the Court of Appeals refused to make a New York judgment rendered against a Panamanian company’s alleged beneficial owner enforceable against that company. However, in the separate action to validate the seizure order, the same Court of Appeals rendered a judgment against the Panamanian company for the same amounts (including punitive damages, which it is not pos - sible to award in Monaco courts) awarded by the New York judgment. Where civil companies (companies that hold assets and do not trade) hold property, there has been a growing tendency of judges to allow pre- judgment liens on property, to secure the claims against the shareholders. This is particularly the case where civil companies have low capitalisa - tion (for example EUR1,500) and purchase prop - erties worth many millions of euros. 3.3 Shareholders’ Claims Against Fraudulent Directors The shareholders of a company cannot act on behalf of that company to sue fraudulent direc - tors, unless they are mandated to do so. They have standing as shareholders to sue the fraudu - lent directors both civilly as injured parties and by filing criminal complaints as victims. They could sue to have a judicial administrator named for the company, who could then sue the direc - tors on behalf of the company.
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