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Court takes narrow approach to scope of Bankers' Books Evidence Act

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

19-05-2021

Wangzou Meng v HSBC Bank Plc & Ors [2021] EWHC 342 (QB)

Facts of the Case

  • The applicant, Wangzou Meng, is the Chief Financial Officer of Huawei Technologies Co Ltd (“Huawei”). In December 2018, she was arrested in Canada at the request of the US authorities, who subsequently applied for her extradition to face charges relating to bank and wire fraud.
  • The US authorities alleged that Ms Meng and Huawei had misled them and the Respondents in relation to Huawei’s activities in Iran, and its relationship with a separate company which had been accused of violations of US trade sanctions against Iran. As a result, the Respondents had been exposed to the risk of contravening US sanctions law by clearing transactions for Huawei.
  • A number of documents had been provided to the US authorities by the Respondents. An order had been made in a US court that those documents could be disclosed to Ms Meng in US criminal proceedings, but must not be used in Canadian extradition proceedings (the “US Order”).
  • Ms Meng applied to the English High Court for an order under section 7 of the Bankers' Book Evidence Act 1879 (the “BBEA”). The order sought was to allow Ms Meng to inspect and take copies of 13 categories of documents which she wished to use in support of her case in the Canadian extradition proceedings, including “Entries in any ledger, book or record in written or electronic form used in the ordinary business of the bank …”.

The Decision

  • Section 7 of the BBEA (“Section 7”) provides that “on the application of any party to a legal proceeding a court or judge may order that such party be at liberty to inspect and take copies of any entries in a banker's book for any of the purposes of such proceedings …
  • The Court considered but dismissed the argument that this could include a legal proceeding anywhere in the world, in part because other sections of the BBEA were necessarily limited to the UK. The Court concluded that it therefore had no jurisdiction to make the order sought and dismissed the application.
  • The judge, Fordham J, nevertheless went on to consider whether non-transactional records maintained for regulatory compliance purposes (as well as transactional records) could fall within the scope of Section 7. He decided that only transactional records could be covered, holding that the BBEA “is, and has always been, concerned with facilitating the proof, by evidence in proceedings, of concrete banking actions”, which are what a bank records in its books.
  • Finally Fordham J considered whether, if he had found in favour of Ms Meng on the above two issues, the Court would have exercised its discretion to grant the order sought. He held it would not, principally on the basis that (i) the Court had to proceed on the basis that the US Order was lawful under US law (noting that were there any grounds to challenge it, Ms Meng would no doubt be pursuing such a challenge); (ii) there was no reason to suppose that Ms Meng would otherwise be denied a fair hearing in the Canadian extradition proceedings and (iii) the application had failed to identify any “clear or rigorous link” between the particular documents sought and specific regulatory duties to maintain records (which documents Ms Meng said fell within Section 7) .

Analysis and Practical Advice

  • The decision confirms the relatively narrow scope of orders available under Section 7, and that – perhaps unsurprisingly – they are limited to use in connection with UK proceedings. In doing so, the Court has once again underlined that, as with Norwich Pharmacal Orders, the proper route to obtaining documents in connection with overseas proceedings is, where available, via well-established statutory “mutual assistance” schemes (e.g. the Evidence (Proceedings in Other Jurisdictions) Act 1975).
  • The decision also provides helpful guidance – for both applicants and respondent banks – on the parameters of this lesser-known route to obtaining disclosure. For example, that any applicant wishing to use Section 7 to obtain non-transactional records will face significant hurdles since, as well as showing how such records would fit within the wording of Section 7, an applicant would need to point to specific regulatory record-keeping requirements in each case.

 

 

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