Frozen in Paradise: Mauritius' Power to Sanction Without UN Listings – How One Company Fought Back and Won [PART 1]

The case OLA Energy Holdings Ltd & Ors v The Financial Intelligence Unit (2023 SCJ 326) was decided by the Supreme Court of Mauritius on August 18, 2023.

Speed read:

• Ola Energy Holdings Ltd is a subsidiary of the Libya Africa Investment Portfolio (LAIP), which in turn is owned by the Libyan Investment Authority (LIA).
• These entities were subject to UN Security Council sanctions under UNSCRs 1970, 1973, and 2009 (2011), targeting Libyan assets due to concerns over terrorism financing and misuse of state funds.
• In February 2023, the Financial Intelligence Unit (FIU) of Mauritius obtained a Restriction Order from the Supreme Court, freezing all money held in banks in Mauritius.
• The FIU suspected these funds could be linked to terrorism financing or were proceeds of crime and acted under the Asset Recovery Act (ARA).
• The FIU did not need to prove a specific offence or charge anyone; It only required showing "reasonable grounds to believe" the property was terrorist, proceeds, a benefit, or an instrumentality.

Background on the Case

THE CASE involved an application by the Financial Intelligence Unit (FIU, the Respondent) for a Restriction Order under section 27 of the Asset Recovery Act 2011 (ARA) to freeze assets held in Mauritian banks by the Applicants:

• OLA Energy Holdings Ltd (Applicant No. 1),
• Libya Africa Investment Portfolio (LAIP Mauritius, Applicant No. 2),
• Rascomstar-QAF (Applicant No. 3), and
• Libya Oil (Exploration & Production) Ltd (Applicant No. 4).

These entities are all Mauritius-based Global Business License holders, operating in sectors such as energy retail, satellite telecommunications, and oil exploration.

• All Applicants are directly or indirectly owned or controlled by Libyan entities:
• The Libya Africa Investment Portfolio (LAIP Libya) and
• The Libya Investment Authority (LIA). LAIP Libya.

UN-sanctioned entities: YES AND NO

• LIA were designated as "UN-sanctioned entities" under United Nations Security Council Resolutions (UNSCRs) 1970 (2011), 1973 (2011), and 2009 (2011), which imposed asset freezes due to concerns over the Libyan civil war, human rights abuses, and potential terrorism financing.
• However, the Applicants themselves (including OLA Energy Holdings Ltd) were not directly designated as UN-sanctioned entities.
• The UN Security Council Committee's Implementation Assistance Notice No. 1 (IAN, issued in March 2012) provided guidance on these sanctions, clarifying that subsidiaries like the Applicants might be exempt if they operate independently, but this was a point of ongoing dispute (with a separate Supreme Court case, SCR 5A/227/22, pending on this issue as of 2023).

In 2023, the FIU did not need to prove a specific offence or charge anyone.

• This evidence was presented in the FIU's affidavits dated May 9, 2023, and July 4, 2023.
• The court noted that under section 27(1)(b) of the ARA, the FIU did not need to prove a specific offence or charge anyone:
• It only required showing "reasonable grounds to believe" the property was terrorist, proceeds, a benefit, or an instrumentality.

2023 FIU SUCCESS

• The FIU obtained the Restriction Order ex parte on February 28, 2023, freezing all funds in the Applicants' Mauritian bank accounts to prevent dissipation.
• The Applicants sought to rescind it under section 31 of the ARA, arguing it should have been pursued under the more specific United Nations (Financial Prohibitions, Arms Embargo and Travel Ban) Sanctions Act 2019 (UN Sanctions Act), which implements UN sanctions domestically in Mauritius.
• The court dismissed the rescission application, upholding the freeze.

2025

• In a subsequent related case, OLA Energy Holdings Ltd & Anor v Financial Crimes Commission & Anor (2025 SCJ 25), decided in January 2025, the Supreme Court lifted the restrictions, allowing OLA Energy to resume operations, but this does not retroactively affect the 2023 reasoning for the initial freeze).
• See COMSURE’s part 2 posting.

2023 Evidence Presented for the Asset Freeze

The FIU's application was based on affidavits and supporting documents, including intelligence reports. Key evidence included:

• Intelligence Report from FIU's Financial Intelligence Analysis Division (FIAD): An internal report submitted to the FIU's Asset Recovery Investigation Division (ARID) highlighted activities by entities, including the Applicants, potentially related to terrorism financing. This report identified "suspicious connections nationally and internationally," such as links to the UN-sanctioned LIA and LAIP Libya.
• Suspicion of Fund Diversion: The FIU averred that there was a reasonable belief of "diversion of funds from Libya to the local bank accounts of Global Businesses" in Mauritius. This was tied to the Applicants' ownership structure, where outflows from their accounts might ultimately route back to sanctioned Libyan entities for purposes aligned with the UNSCRs (e.g., supporting activities that threaten international peace and security).
• Risk of Asset Dissipation: The FIU emphasised the "high risk of assets being dissipated" due to the "international ramifications of the ongoing enquiry." This was supported by the Applicants' significant financial scale—e.g., OLA Energy Holdings Ltd had a turnover exceeding €5 billion in 2012 and operated in 17 African countries—raising concerns that funds could be quickly moved or hidden.
• Ongoing Investigations: The FIU referenced prior inquiries by the Financial Services Commission (FSC) in October 2020 under section 75 of the Financial Services Act 2007, and an Investigation Order under section 44 of the same Act. These revealed potential non-compliance with sanctions. Additionally, the FIU noted that since the Applicants are "corporate emanations of the State of Libya," it was unclear if outflows were being routed back to Libya for sanctioned purposes.
• Compliance with International Standards: The FIU cited Financial Action Task Force (FATF) Recommendations 29 and 30, which require financial intelligence units to act expeditiously in identifying, tracing, freezing, and seizing property suspected of being proceeds of crime or linked to terrorism financing. This provided contextual evidence that the freeze was a proactive measure in an ongoing probe.

In 2023, the FIU did not need to prove a specific offence or charge anyone.

• This evidence was presented in the FIU's affidavits dated May 9, 2023, and July 4, 2023. The court noted that under section 27(1)(b) of the ARA, the FIU did not need to prove a specific offence or charge anyone.
• It only required showing "reasonable grounds to believe" the property was terrorist, proceeds, a benefit, or an instrumentality.

Key Arguments Allowing the Freeze Despite No Direct UN Sanctions.

The court's decision to uphold the freeze centred on a preliminary legal issue raised by the Applicants:

• Whether the FIU had "misapplied" the ARA by usurping powers under section 26 of the UN Sanctions Act.
• The Applicants argued that the freeze related to UN sanctions implementation, so it should fall under the more specific UN Sanctions Act (invoking the principle generalia specialibus non derogant—general laws do not override specific ones).
• The court rejected this, allowing the freeze under the ARA.

Key arguments included:

• Independence of the ARA from the UN Sanctions Act:
• The ARA (enacted in 2011) is a general asset recovery framework aimed at recovering proceeds or instrumentalities of crime or terrorist property, even without prosecution (on a balance of probabilities).
• Its purpose, as per parliamentary debates (Hansard, November 21, 2011), is to "reinforce the fight against crime, including transnational crime" by targeting "ill-got gains."
• The UN Sanctions Act (enacted in 2019) implements UNSCRs domestically, including asset freezes under section 26, but only after the Secretary for Home Affairs declares a party as "designated" (e.g., listed by the UN).
• The Applicants were not so designated, so section 26 could not be activated.
• The court held that the two laws are not in conflict:
• The ARA focuses on recovery based on suspicion,
• While the UN Sanctions Act enforces pre-existing UN designations. No repeal or override applies, as per cases like Paw Chin Chiang Marie Desire Joe v Mrs Ramburn Basdeo (2003 MR 208) and Bank of Baroda v Koodaruth (2009 SCJ 292).
• The court cited Assets Recovery Agency (Ex parte) (Jamaica) (2015 UKPC 1):
• "Reasonable grounds for believing" do not require proof of wrongdoing, just rational reasons for suspicion.
• FIU's Statutory Powers Under the ARA:
• As the Enforcement Authority (per section 9 of the Financial Intelligence and Anti-Money Laundering Act 2002, or FIAMLA), the FIU has broad functions under section 10 of FIAMLA, including collecting, analysing, and disseminating information on suspected terrorism financing.
• This empowers it to apply for Restriction Orders under ARA section 27 if there are "reasonable grounds to believe" the property is terrorist-related.
• The court emphasised that the FIU did not "usurp" the National Sanctions Committee (NSC)'s powers under the UN Sanctions Act, as no designation had occurred.
• The freeze was a temporary investigative tool (lasting up to 12 months, extendable to 3 years on good cause), not a permanent sanction.
• Rejection of Generalia Specialibus Non Derogant:
• The Applicants cited cases like Pabaroo D.T. v Varmah K.D. & Ors (2013 SCJ 197) and Vinos v Marks & Spencer plc (2001 3 All ER 784) to argue the UN Sanctions Act is "specific" for terrorism financing linked to UNSCRs.
• The court disagreed, finding no "contradictions" or "repugnancy" between the laws (per Maxwell on Interpretation of Statutes, 12th Ed.).
• Both have distinct purposes: ARA for asset recovery; UN Sanctions Act for UN compliance.
• Safeguards and Proportionality:
• The ARA provides protections, like variation orders (sections 28 and 31) for essential payments, minimising prejudice.
• The court noted the Applicants' prejudice claims but prioritised the "interests of justice" amid the ongoing probe.
• National Interest and Broader Context:
• The FIU argued the case involved potential terrorism financing "simpliciter" (not just UN sanctions), justifying ARA action. The court accepted this, viewing the freeze as justified at the investigative stage.

Outcome and Subsequent Developments

1. The court dismissed the rescission application with costs, upholding the freeze. This aligns with Mauritius' efforts to combat illicit funds, as noted in FATF-compliant frameworks. However, in January 2025 (2025 SCJ 25), the Supreme Court lifted the restrictions after further review, citing insufficient ongoing evidence of wrongdoing and allowing OLA Energy (formerly OiLibya) to operate freely. This later ruling suggests the initial freeze was precautionary, but the 2023 decision focused on the FIU's threshold for suspicion under the ARA.

For full details, please refer to the attached 2023 judgment or visit the FIU's website (fiumauritius.org) for the PDF. Full 2023 Judgment PDF:

1. https://www.fiumauritius.org/fiu/wp-content/uploads/2023/09/ola-energy-holdings-ltd-ors-v-financial-intelligence-unit-2023-scj-326-1.pdf

Sources (Live Weblinks)

2. Full 2023 Judgment PDF: https://www.fiumauritius.org/fiu/wp-content/uploads/2023/09/ola-energy-holdings-ltd-ors-v-financial-intelligence-unit-2023-scj-326-1.pdf
3. Mauritius' Fight Against Illicit Funds (Comsure Group): https://www.comsuregroup.com/news/mauritius-fight-against-illicit-funds/
4. FIU Mauritius Page on the Case: https://www.fiumauritius.org/fiu/?p=4242
5. Full 2025 Judgment PDF: https://fcc.mu/wp-content/uploads/2025/01/OLA-ENERGY-HOLDINGS-LTD-ANOR-v-FCC-ANOR-2025-SCJ-25.pdf
6. Trinity Legal LinkedIn Post: https://www.linkedin.com/posts/trinity-legal-mauritius_trinity-legal-successfully-represented-the-activity-7105512757365514240-yeIZ
7. The Supreme Court of Mauritius Lifts Sanctions on Libya's Ola Energy: https://zahaflaw.com/news/at-vero-eos-et-accusam-et-justo-duo-dolores-et-ea-rebum-stet-clita-kasd-diam-nonumy-eirmod-tempor-invidunt-ut-labore-et-dolore-mag/
8. Mauritius Supreme Court Lifts Sanctions on OLA: https://libyaenergy.ly/mauritius-supreme-court-lifts-sanctions-on-ola/
9. Supreme Court of Mauritius Lifts Sanctions on Libyan-Owned Ola: https://www.agcnewsnet.com/article/2494
10. UN Security Council Committee on Libya Sanctions: https://main.un.org/securitycouncil/en/sanctions/1970
11. UN Documents for Libya Resolutions: https://www.securitycouncilreport.org/un_documents_type/security-council-resolutions/?ctype=Libya&cbtype=libya
12. UNSCR 1973 (2011): https://main.un.org/securitycouncil/en/s/res/1973-%25282011%2529
13. SIPRI on UN Arms Embargo on Libya: https://www.sipri.org/databases/embargoes/un_arms_embargoes/libya/libya_2011
14. Asset Recovery Act 2011 Mauritius PDF: https://mauritiuslii.org/akn/mu/act/2011/9/eng%402017-06-30/source.pdf
15. Mauritius' Game-Changer: First Recovery Order Under ARA: https://www.comsuregroup.com/news/mauritius-game-changer-the-first-recovery-order-under-the-asset-recovery-act/
16. Mauritius Asset Recovery Act 2011 (Africa Commons): https://africacommons.net/artifacts/20341297/mauritius-asset-recovery-act-2011/21241820/
17. UN Sanctions Act 2019 Mauritius (Bank of Mauritius): https://www.bom.mu/about-bank/legislations/united-nations-financial-prohibitions-arms-embargo-and-travel-ban-sanctions-act-2019
18. Implementation of Targeted Financial Sanctions (FIU Mauritius): https://www.fiumauritius.org/fiu/?page_id=2317
19. About NSSec (National Sanctions Secretariat): https://nssec.govmu.org/Pages/About_NSSEC.aspx
20. UN Sanctions Act 2019 PDF (FSC Mauritius): https://www.fscmauritius.org/media/77953/the-united-nations-financial-prohibitions_-arms-embargo-_-travel-ban-sanctions-act-2019.pdf
21. Mauritius - Global Sanctions Guide (Eversheds Sutherland): https://ezine.eversheds-sutherland.com/global-sanctions-guide/mauritius?overlay=Europe