Don’t take things at face value…

The Supreme Court in London recently curtailed the extra-territorial clout of the UK Serious Fraud Office (SFO).

Background

The Criminal Justice Act 1987 provides, at section 2(3):

The Director may by notice in writing require the person under investigation or any other person to produce at such place as may be specified in the notice and either forthwith or at such time as may be so specified, any specified documents which appear to the Director to relate to any matter relevant to the investigation or any documents of a specified which appear to him so to relate; and—

(a) if any such documents are produced, the Director may—

(i) take copies or extracts from them;

(ii) require the person producing them to provide an explanation of any of them;

(b) if any such documents are not produced, the Director may require the person who was required to produce them to state, to the best of his knowledge and belief, where they are.

KBR Inc (the “Appellant”) is an engineering conglomerate incorporated in the USA. It does not have a fixed place of business in the UK and has never carried on business in the UK.

In 2017, a UK subsidiary, Kellogg Brown and Root Ltd (“KBR UK”) provided the SFO with documents on foot of section 2(3) notice under threat of criminal sanction. The SFO then sought disclosure of further documents held by the Appellant outside of the UK. That notice was then subject to a judicial review.

Judgment

The Supreme Court took, as its starting point, the presumption that UK legisltation is generally not intended to have an extra-territorial effect. Beyond this, the question was whether Parliament intended to displace this presumption. It was the unanimous view of the court that it had not so intended.

Delivering the judgment, Lord Lloyd-Jones said:

It is to my mind inherently improbable that parliament should have refined this machinery as it did, while intending to leave in place a parallel system for obtaining evidence from abroad which could operate on the unilateral demand of the SFO, without any recourse to the courts or authorities of the state where the evidence was located and without the protection of any of the safeguards put in place under the scheme of mutual legal assistance

The notice was quashed.

Comment

It cannot be said that the 1987 Act is a new piece of legislation. That it has presumably been used by the SFO in the conduct of extra-territorial investigations for over thirty years may now raise a few eyebrows.

Just as the UKSC went back to first principles, it is incumbent on legal advisors not to take anything at face value.

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