Extra-territorial effect of Serious Fraud Office document requests

Publication | September 2018

Introduction

The judgment in R (on the application of KBR Inc) v The Director of the Serious Fraud Office [2018] EWHC 2012 (Admin) came out on Thursday, 6 September 2018. In summary, the Administrative Court held that section 2(3) of the Criminal Justice Act 1987 (CJA), which (broadly) gives the SFO power to require a person to produce specified documents in connection with an SFO investigation, has certain extra-territorial effect. The Court held that section 2(3) CJA operates with extra-territorial effect to compel a foreign company to produce documents held outside the jurisdiction where there is a ‘sufficient connection between the company and the jurisdiction’. The Court also indicated that a section 2(3) notice can be used to compel a UK company to produce documents that are held on a server outside of the jurisdiction. It was agreed, however, that the relevant written notice under section 2(3) CJA is to be given to a person (individual or corporate) within the jurisdiction.

Sufficient connection

The ‘sufficient connection’ test is to be applied by the Director of the SFO when determining whether to exercise the power in section 2(3) CJA. The Court did not set a test or define the factors to be considered when applying the test. However, in this case, the Court found that the following factors made out a ‘sufficient connection’

  • the company’s own involvement in the subject matter under investigation – specifically, the applicant company’s approval of and involvement in the making of certain payments that were central to the SFO’s investigation into its UK subsidiary; and
  • the fact that a ‘corporate officer’ of the company was based in the UK and appeared to carry out their functions in the UK (though this factor alone may not have been sufficient)

However, the Court held that the following factors did not make out the test in this case

  • the mere fact that the applicant company was a parent of the UK company under investigation;
  • earlier cooperation by the applicant company with an SFO request for documents; and
  • the fact that a senior corporate officer (the General Counsel and Executive Vice President) of the applicant company attended a meeting with the SFO in the UK.  

Written notice to be given to a person in the jurisdiction

The Court made clear that the relevant written notice under section 2(3) CJA must be given to a person (individual or corporate) within the jurisdiction. However, there is no requirement for the notice to be ‘served’ on the company and the rules of service under the Civil Procedure Rules have no application in respect of section 2(3) CJA. The Court indicated that the notice may be given to a representative of the company who is present within the jurisdiction. In this case, it was enough that the notice was served on the company’s General Counsel and Executive Vice President whilst she was attending a meeting with the SFO representing the applicant company. It is unclear whether that representative should be a senior representative/officer of the company. In the absence of such clarity, it is possible that we may see notices being given to junior representatives of a company.

Comment

In practice, we are now likely to see an increase in the SFO issuing section 2(3) document requests to foreign companies through handing the relevant written notices to an individual representative of that company who is based in or travels to/through the UK (possibly whether that individual representative is senior or not). It appears that the SFO may seek to do so where the foreign company is simply involved in the subject matter under investigation. This will clearly have practical implications for international organisations who may be involved in SFO investigations.

More broadly, this judgment suggests that the Courts may increasingly have regard to public policy considerations when determining the extra-territorial effect of similar statutory provisions.

We will issue a more detailed briefing in due course.


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Chloe Fryer

Chloe Fryer

London
Neil O'May

Neil O'May

London