- Background
Our client, a prominent financial entity based in Helsinki, Finland, sought legal counsel from our firm in connection with an international arbitration proceeding that implicated their interests.
Upon receiving the comprehensive documentation related to the arbitration process, our legal team conducted a thorough examination. It became apparent that there were numerous ambiguous elements within the procedure, strongly suggesting the possibility of an online deception inflicted upon our client.
The crux of the issue lay in the fact that our assisted company had already transferred a substantial sum to the purportedly fraudulent entity. Without immediate intervention on our part, there loomed a palpable threat of losing the entire amount already disbursed.
In the realm of online scams, timely recognition of victimhood is crucial, coupled with swift legal action to prevent the dissipation of capital over time.
Despite not yet realizing that they had fallen prey to an online scam, our clients demonstrated astuteness by consulting experienced lawyers specializing in cyber scams. These legal experts adeptly guided them on the most effective course of action, focusing on targeted legal measures to safeguard their assets and thwart the potential loss of the delivered capital.
For a detailed account of how we successfully reclaimed the entirety of the funds entrusted to the company we represented, I invite you to delve into the ensuing narrative. Herein, we will elucidate the intricacies of the scam, the strategic legal steps we undertook, and the triumphant recovery from the clutches of online deceit.
The method of the scam
Our client, a significant financial entity situated in Helsinki, Finland, was actively seeking financing to fund ambitious projects. In pursuit of this goal, they reached out to a company with a reputed track record in such financings, believed to have direct connections with banks capable of swiftly providing the required funds.
Upon establishing initial contact and fostering a sense of mutual trust, the financing company had our client sign two contracts:
- The primary contract detailed all aspects of the financing, including the acquisition process, associated charges, and the dispute resolution mechanism.
- The ancillary contract, on the other hand, solely governed the intermediary role, outlining distinct dispute resolution methods.
Under the main contract, disputes were slated for resolution through an arbitration procedure in a neutral location. A panel of three arbitrators, appointed by both parties, would adjudicate based on an international regulation conventionally applied in numerous international arbitration procedures. Conversely, the ancillary contract dictated that disputes be settled by a single arbitrator, located where the financing company had its registered office, and based on principles of equity.
An immediate disparity in the dispute resolution mechanisms between the two contracts was evident. However, this detail was initially overlooked, given the confidence instilled by positive online references about the financing company.
After the contracts were signed, the financing company, as per the agreement, issued an inter-bank letter of credit in favor of our client’s bank. This commitment ensured the payment of the entire requested financing amount. Unfortunately, the bank of our client failed to acknowledge the letter of credit, urging the financing company’s bank to initiate contact to conclude the procedure.
Regrettably, the non-banking entity posing as a bank failed to respond, causing our client to breach the contractual deadlines.
Subsequently, the financing company, alleging our client’s failure to meet obligations, initiated an arbitration procedure. Notably, this procedure deviated from the provisions in the main contract, opting for resolution before the arbitrator specified in the ancillary contract.
The financing company sought our client’s condemnation, aiming to recover the sums guaranteed by the contract. Unaware of the online scam unfolding, our client, based in Finland, sought legal assistance from GRB Financials to navigate the arbitration process.
How we became aware of the scam
Despite our client dismissing the unfolding online scam as absurd, they were resolute in protecting the substantial collateral pledged for the financing contract. Victims of online scams often remain unaware, leading to significant capital loss without immediate legal action.
Our represented company sought assistance for arbitration proceedings, objecting to the arbitrator in the ancillary contract, fearing the loss of collateral. Our legal team vigilantly monitored proceedings, swiftly requesting an extension for thorough documentation review. Despite a rejected jurisdictional objection, the arbitrator granted an extended deadline, allowing a comprehensive examination and robust defense.
Investigations Made
Upon obtaining an extended timeline to protect our client’s rights, we delved into a comprehensive study of the documentation and scrutinized the financing company’s motives behind initiating arbitration.
Our in-house attorneys uncovered a critical fact: the supposedly neutral arbitrator shared ties with the financing company as a subsidiary. A thorough investigation, accessing official documentation through foreign state channels, revealed alarming parallels — same registered office, telephone number, and email address. The arbitration, seemingly legitimate, was, in fact, a meticulously crafted scheme designed to guarantee an unfavorable outcome.
This discovery heightened concerns for our client, realizing the potential loss of the entire collateral if the arbitration decision were enforced. The need for a robust defense against the financing company’s deceitful tactics became paramount.
The defensive strategy
After obtaining and verifying the relevant documentation, our lawyers promptly communicated with the arbitrator overseeing the dispute. We highlighted the apparent conflict of interest between the involved companies and provided official documentation supporting this claim.
The communication explicitly cautioned the arbitrator against making any decisions due to the evident bias that would favor the company that initiated the arbitration. Our primary concern was preventing a binding decision that could potentially allow the financing company to seize the entire guaranteed sum, putting our client at risk.
Considering the circumstances and the supporting documentation, the arbitrator wisely refrained from making any decisions on the dispute, granting us a stay in the arbitration proceedings. This allowed us the necessary peace of mind to proceed with our demand for the return of the collateral funds from our client.
How we were able to recover the money
As mentioned earlier, it became apparent that the company under our assistance had fallen victim to an online scam. After securing the arbitrator’s abstention from making a decision, our primary focus shifted to recovering the collateral funds for our client.
Without delay, our legal team initiated a series of requests demanding the return of the money, deeming it unjustifiable to withhold funds from clients who were clear victims of an online scam. Following numerous persistent efforts, we successfully ensured that our client received the full amount they had provided as collateral for the contract.
Receiving expressions of gratitude from our clients, acknowledging the successful retrieval of the funds, became the ultimate professional reward for our diligent efforts.
* We take our clients’ confidentiality seriously. While we’ve changed their names, the results are real.
