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High Court rules foreign company must produce documents located outside the jurisdiction where there is a sufficient connection with the UK

  • United Kingdom
  • Financial services disputes and investigations
  • Litigation and dispute management - Disclosure – Other

29-11-2018

R (On The Application of KBR Inc) v The Director of the Serious Fraud Office [2018] EWHC 2368 (Admin)

Facts of the case

– As part of its investigations into suspected corruption within the Unaoil Group, the Serious Fraud Office (“SFO”) commenced an investigation into KBR Ltd, the UK subsidiary of KBR Inc, the US- ncorporated parent of a global group of companies. A few months later, the SFO issued a notice under section 2 of the Criminal Justice Act 1987 (the “CJA”) requiring KBR Inc to produce specified material.

– KBR Inc challenged the SFO’s section 2 notice on a number of grounds, including that it was ultra vires because some of the material requested was held outside the UK. KBR Inc’s main argument on this point was that section 2(3) of the CJA did not operate extraterritorially.

The decision

– The High Court granted KBR Inc permission to apply for judicial review, but subsequently found that it preferred the SFO’s arguments on jurisdiction, and its construction of section 2(3) of the CJA.

– The Court held that KBR Inc’s “own actions make good a sufficient connection between it and the UK” in that certain payments which had featured centrally in the SFO’s investigation of KBR Ltd had been approved by KBR Inc and paid through its treasury function, which was based in the USA.

– The Court’s view was strengthened by the fact that one of KBR Inc’s senior corporate officers was based in, and worked from, the UK at the relevant time.

Analysis and practical advice

– Although this decision relates to the operation of criminal statute, it potentially widens the scope of documents which might find their way into civil proceedings. This could take place where the SFO is, or becomes, a party to those proceedings, or by way of third party disclosure under the CPR. 

– It is clear that where an international company holds documents outside of the UK, the carrying out of certain operational functions or the siting of employees, particularly more senior ones, in the UK would provide a sufficient connection with the UK to give jurisdiction to UK authorities. By contrast, the Court held that the following factors would not:

– the mere fact that KBR Inc was the parent company of KBR Ltd. That was considered too broad a test which would lead to sundry parent companies of multinationals being ensnared without adequate justification;

– that KBR Inc cooperated to a degree with the SFO’s request for documents, since cooperation on a voluntary basis is to be encouraged and, if that were to give rise to the extraterritorial reach of section 2(3), such cooperation would inevitably diminish; and

– for the same reason, the attendance by a senior officer of KBR Inc at a meeting with the SFO. – Finally, it is worth noting the Court’s conclusion that the Mutual Legal Assistance procedure under the Crime (International Co-operation) Acts is an additional power which does not curtail the SFO’s discretion to use section 2(3) of the CJA.