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You are here: BAILII >> Databases >> United Kingdom Supreme Court >> KBR, Inc, R (on the application of) v Director of the Serious Fraud Office [2021] UKSC 2 (5 February 2021) URL: https://www.bailii.org/uk/cases/UKSC/2021/2.html Cite as: [2021] 2 WLR 335, [2021] UKSC 2, [2021] Lloyd's Rep FC 229, [2021] Crim LR 494, [2022] 1 All ER 97, [2021] 1 BCLC 651, [2021] WLR(D) 84, [2022] AC 519 |
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[2021] UKSC 2
On appeal from: [2018] EWHC 2368 (Admin)
JUDGMENT
R (on the application of
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before
Lord Lloyd-Jones Lord Briggs Lady Arden Lord Hamblen Lord Stephens
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JUDGMENT GIVEN ON |
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5 February 2021 |
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Heard on 13 October 2020 |
Appellant |
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Respondent |
Lord Pannick QC |
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Sir James Eadie QC |
Richard Kovalevsky QC |
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Jonathan Hall QC |
Jamas Hodivala QC |
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Simon Pritchard |
(Instructed by Barry Vitou, Greenberg Traurig LLP) |
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(Instructed by The Government Legal Department) |
LORD LLOYD-JONES: (with whom Lord Briggs, Lady Arden, Lord Hamblen and Lord Stephens agree)
1. The respondent, the Serious Fraud Office (“SFO”), invited this Court to proceed on the basis of the factual position at the date of the Divisional Court hearing on 17 April 2018, and we agree to do so. On 25 July 2017, at a meeting in London, the SFO gave a notice on behalf of the Director of the SFO pursuant to section 2(3) of the Criminal Justice Act 1987 (“the 1987 Act”) to an officer of the appellant company (“KBR,
Inc”). The notice required
KBR,
Inc, a US company, to collate material held abroad and produce it to the SFO under criminal penalty for failing to do so.
KBR,
Inc did not have a fixed place of business in the United Kingdom and had never carried on business in the United Kingdom.
KBR,
Inc sought to quash the notice on the ground that section 2(3) of the 1987 Act does not have extra-territorial effect.
KBR,
Inc contends that there was no jurisdiction for the SFO to issue the notice requiring the production of material held by it outside the UK.
2. KBR,
Inc is incorporated in the United States. The US Department of Justice (“DOJ”) and the Securities and Exchange Commission (“SEC”) were conducting investigations into the affairs of Unaoil, a Monaco based company, in relation to international projects involving several global companies including
KBR,
Inc whose interactions with Unaoil were a subject of those investigations.
3. KBR,
Inc has UK subsidiaries, including Kellogg Brown and Root Ltd (“
KBR
UK”) which was under investigation by the SFO. The investigation was related to the SFO’s ongoing investigation into the activities of Unaoil.
4. On 4 April 2017, the SFO issued a notice under section 2(3) of the 1987 Act (“the April notice”) to KBR
UK. The April notice made 21 requirements for the production of information and documentation “held by
KBR
UK”.
KBR
UK provided various materials to the SFO in response to the April notice. It made clear that certain material was not in its possession or control but, if and to the extent it exists, was held by
KBR,
Inc in the United States. A meeting was offered with the SFO in London to discuss the investigation and it was agreed that it should take place on 25 July 2017. The SFO insisted that it should be attended not merely by lawyers representing
KBR,
Inc but by officers of that company, and accordingly officers agreed to attend.
5. Ms Eileen Akerson, the Executive Vice President, General Counsel, and then also Corporate Secretary of KBR,
Inc and Ms Julia Symon,
KBR,
Inc’s Chief Compliance Officer, flew to the United Kingdom from the United States to attend the meeting. During the meeting, Ms Akerson was handed a section 2(3) notice (“the July notice”).
6. On the morning of 25 July 2017, and prior to the meeting, a draft of the notice had been prepared by the SFO in case “it might be necessary to hand the notice” to Ms Akerson or Ms Symon “in the event that a satisfactory response was not received as to [KBR,
Inc’s] willingness to provide the outstanding materials sought in the April notice”. In the course of the meeting on 25 July, the SFO asked whether the outstanding material requested in the April notice, not yet provided on the basis that it was located outside the United Kingdom, would be provided. In response, the SFO was told that the Board of
KBR,
Inc required time to consider the position. At that point, Ms Akerson’s name was inserted in the draft July notice and, thus completed, it was handed to her.
8. In a letter dated 20 September 2017 Pinsent Masons LLP (who were then acting for KBR,
Inc) wrote on behalf of
KBR,
Inc to the SFO seeking clarification as to who was the subject of the July notice, and explaining that in any event
KBR,
Inc did not consider the July notice to be lawful on the basis that:
(1) the July notice unlawfully required the production of documents held entirely outside the UK jurisdiction by a company that was incorporated and situated entirely outside the UK jurisdiction; and
(2) if KBR,
Inc was the intended recipient, the July notice had not been validly served.
9. The SFO was invited to withdraw the July notice and to note that if the SFO was unwilling to do so, KBR,
Inc would seek a judicial review.
10. By letter dated 21 September 2017, the SFO clarified that KBR,
Inc was the intended recipient of the July notice and went on to state:
“Section 2 Notices directed at a company are, as you know, served on an officer of the company. The July Notice is addressed to ‘Eileen Akerson, KBR
Inc’, and it contains multiple requests for the production of material ‘held by
KBR’
(distinguished from UK subsidiaries of
KBR,
Inc, which are referred to in the Notice as
KBR
UK). The Notice was validly served on an officer of
KBR,
Inc in the United Kingdom, and the Notice is enforceable against
KBR,
Inc.”
11. The SFO declined to withdraw the July notice.
12. In the Divisional Court KBR,
Inc relied upon a witness statement from William Jacobson stating, in relation to the effect of the July notice on
KBR,
Inc:
“I am informed that it would not [be straightforward to identify and collate responsive material] and that there are a number of practical and logistical hurdles to be crossed (para 5) … The data for the custodians referenced in July Notice will first need to be identified and segregated from the other custodial data in the review platform. The collation of the relevant material would require significant steps to be taken in the US (para 7) … Identifying and collating this material would be a very time consuming and burdensome task ...” (para 8)
and
“In summary, the steps which need to be taken in the US are not ‘modest’ as the defendant suggests in its Skeleton Argument.” (para 9)
The statutory provisions
“investigate any suspected offence which appears to him on reasonable grounds to involve serious or complex fraud.”
Section 2(1) provides that the powers of the Director under section 2
“shall be exercisable, but only for the purposes of an investigation under section 1 above … in any case in which it appears to him that there is good reason to do so for the purpose of investigating the affairs, or any aspect of the affairs, of any person.”
“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 description 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.”
15. Sections 2(4) and 2(5) provide:
“(4) Where, on information on oath laid by a member of the Serious Fraud Office, a justice of the peace is satisfied, in relation to any documents, that there are reasonable grounds for believing -
(a) that -
(i) a person has failed to comply with an obligation under this section to produce them;
(ii) it is not practicable to serve a notice under subsection (3) above in relation to them; or
(iii) the service of such a notice in relation to them might seriously prejudice the investigation; and
(b) that they are on premises specified in the information,
he may issue such a warrant as is mentioned in subsection (5) below.
(5) The warrant referred to above is a warrant authorising any constable -
(a) to enter (using such force as is reasonably necessary for the purpose) and search the premises, and
(b) to take possession of any documents appearing to be documents of the description specified in the information or to take in relation to any documents so appearing any other steps which may appear to be necessary for preserving them and preventing interference with them.”
The decision of the Divisional Court
18. KBR,
Inc applied for judicial review to quash the July notice on three grounds:
(1) The July notice was ultra vires as it requested material held outside the jurisdiction from a company incorporated in the United States of America;
(2) It was an error of law on the part of the Director to exercise his powers under section 2 of the 1987 Act despite his power to seek mutual legal assistance from the US authorities;
(3) The July notice was not effectively served by the SFO handing it to a senior officer of KBR,
Inc who was temporarily present in the jurisdiction.
KBR,
Inc failed on all three grounds and the application was dismissed.
19. On the first issue, which is the only issue under appeal, the Divisional Court (Gross LJ and Ouseley J) held [2018] EWHC 2368 (Admin); [2019] QB 675 that, despite the principle that, unless a contrary intention appears, statutes have territorial but not extra-territorial application, section 2(3) must have an element of extra-territorial application. Gross LJ observed that it was scarcely credible that a UK company could resist an otherwise lawful notice under section 2(3) on the ground that the documents in question were held on a server out of the jurisdiction. The policy underlying that subsection required the section to have some extra-territorial application in 1987 and the same policy should permit it to apply where technological developments had further illustrated the necessity for a degree of extra-territorial application. The question was, therefore, one of the extent rather than the existence of the extra-territorial reach of the section. While the wording of the subsection and its legislative history were inconclusive, the legislative purpose and the mischief at which it was aimed permitted of no such doubt. Accordingly, it was capable of extending to some foreign companies in respect of documents held abroad. However, a nuanced answer was required which would extend the reach of the subsection to foreign companies in respect of documents held outside the jurisdiction “when there is a sufficient connection between the company and the jurisdiction” (at para 71). The Divisional Court considered that, on the evidence before it, it was impossible to distance KBR,
Inc from the transactions central to the SFO’s investigation of
KBR
UK and accordingly
KBR,
Inc’s own actions made good a sufficient connection between it and the United Kingdom to bring it within the reach of section 2(3).
20. The Divisional Court certified two points of law of general public importance:
(1) Does section 2(3) of the 1987 Act permit the Director of the SFO to require a person to produce information held outside England and Wales?
(2) If so, does the Director of the SFO have power to do so by reference to the “sufficient connection test”?
On 8 April 2019 the Supreme Court (Lord Kerr, Lord Briggs and Lord Sales) granted permission to appeal.
The presumption against extra-territorial effect
21. The starting point for a consideration of the scope of section 2(3) is the presumption in domestic law in this jurisdiction that legislation is generally not intended to have extra-territorial effect. A particularly clear statement of this principle is to be found in the speech of Lord Bingham in R (Al-Skeini) v Secretary of State for Defence [2007] UKHL 26; [2008] 1 AC 153 concerning the scope of application of the Human Rights Act 1998:
“In resisting the interpretation, upheld by the courts below, that the HRA has extra-territorial application, the Secretary of State places heavy reliance on what he describes as ‘a general and well established principle of statutory construction’. This is (see Bennion, Statutory Interpretation, 4th ed (2002), p 282, section 106) that ‘Unless the contrary intention appears, Parliament is taken to intend an Act to extend to each territory of the United Kingdom but not to any territory outside the United Kingdom’. In section 128 of the same work, p 306, the author adds: ‘Unless the contrary intention appears … an enactment applies to all persons and matters within the territory to which it extends, but not to any other persons and matters.’ In Tomalin v S Pearson & Son Ltd [1909] 2 KB 61, Cozens-Hardy MR, with the concurrence of Fletcher Moulton and Farwell LJJ, endorsed a statement to similar effect in Maxwell on the Interpretation of Statutes 4th ed (1905), pp 212-213:
‘In the absence of an intention clearly expressed or to be inferred either from its language, or from the object or subject matter or history of the enactment, the presumption is that Parliament does not design its statutes to operate [on its subjects] beyond the territorial limits of the United Kingdom.’
Earlier authority for that proposition was to be found in cases such as Ex p Blain; In re Sawers (1879) 12 Ch D 522, 526, per James LJ, and R v Jameson [1896] 2 QB 425, 430, per Lord Russell of Killowen CJ. Later authority is plentiful: see, for example, Attorney General for Alberta v Huggard Assets Ltd [1953] 1 AC 420, 441, per Lord Asquith of Bishopstone for the Privy Council; Clark v Oceanic Contractors Inc [1983] 2 AC 130, 145, per Lord Scarman; Al Sabah v Grupo Torras SA [2005] 2 AC 333, para 13, per Lord Walker of Gestingthorpe for the Privy Council; Lawson v Serco Ltd [2006] ICR 250, para 6, per Lord Hoffmann; Agassi v Robinson [2006] 1 WLR 1380, paras 16, 20, per Lord Scott of Foscote and Lord Walker of Gestingthorpe. That there is such a presumption is not, I think, in doubt. It appears (per Lord Walker in Al Sabah, above) to have become stronger over the years.” (at para 11)
22. Similarly, Lord Rodger observed in Al-Skeini at para 45:
“Behind the various rules of construction, a number of different policies can be seen at work. For example, every statute is interpreted, ‘so far as its language permits, so as not to be inconsistent with the comity of nations or the established rules of international law’: Maxwell on the Interpretation of Statutes, 12th ed (1969), p 183. It would usually be both objectionable in terms of international comity and futile in practice for Parliament to assert its authority over the subjects of another sovereign who are not within the United Kingdom. So, in the absence of any indication to the contrary, a court will interpret legislation as not being intended to affect such people. They do not fall within ‘the legislative grasp, or intendment,’ of Parliament’s legislation, to use Lord Wilberforce’s expression in Clark v Oceanic Contractors Inc [1983] 2 AC 130, 152C-D.”
23. However, international law also recognises a legitimate interest of States in legislating in respect of the conduct of their nationals abroad. Nationals travelling or residing abroad remain within the personal authority of their State of nationality and, consequently, it may legislate with regard to their conduct when abroad subject to limits imposed by the sovereignty of the foreign State (Oppenheim’s International Law, vol 1: Peace, 9th ed (1992), Part I, para 138). As a result, in such circumstances the strength of the presumption against extra-territorial application of legislation will be considerably diminished and it may not apply at all. (See Masri v Consolidated Contractors International (UK) Ltd (No 4) [2009] UKHL 43; [2010] 1 AC 90, para 10 per Lord Mance.) The matter was stated by Lord Rodger in Al-Skeini in the following terms (at para 46):
“Subjects of the Crown, British citizens, are in a different boat. International law does not prevent a state from exercising jurisdiction over its nationals travelling or residing abroad, since they remain under its personal authority: Oppenheim’s International Law, 9th ed (1992), vol 1, Pt I, para 138. So there can be no objection in principle to Parliament legislating for British citizens outside the United Kingdom, provided that the particular legislation does not offend against the sovereignty of other states.”
“Comity arises from the horizontal arrangement of state jurisdictions in private international law and the field’s lack of a hierarchical system of norms. It plays the role of a somewhat uncertain umpire: as a concept, it is far from a binding norm, but it is more than mere courtesy exercised between state courts. The Supreme Court of Canada said in Morguard v De Savoye [1990] 3 SCR 1077, 1096 citing the US Supreme Court in Hilton v Guyot 159 US 113, 164 (1895) that:
‘Comity is the recognition which one nation allows within its territory to the legislative, executive or judicial acts of another nation, having due regard both to international duty and convenience, and to the rights of its own citizens or of other persons who are under the protection of its law.’”
26. In the present case we are not concerned with jurisdiction over the conduct abroad of a UK national or a UK registered company. Indeed, it was common ground between the parties that if the addressee had been a British registered company section 2(3) would have authorised the service of a notice to produce documents held abroad by that company. Similarly, we are not concerned with the position of a foreign company which has a registered office or a fixed place of business in this jurisdiction or which carries on business here. The addressee of the notice, KBR,
Inc, has never carried on business in the United Kingdom or had a registered office or any other presence here. The attendance by senior corporate officers at the meeting in London on 25 July 2017 and the fact that Ms Akerson was served with the notice on behalf of the company on that occasion do not alter this fact. Accordingly, the presumption against extra-territorial effect clearly does apply here.
Is the presumption rebutted by the language of the statute?
29. An intention on the part of Parliament to give extra-territorial effect to a statutory provision may also be implied, inter alia, from the scheme, context and subject matter of the legislation. (See, for example, Bilta (UK) Ltd v Nazir (No 2) [2015] UKSC 23; [2016] AC 1, paras 212-213 per Lord Toulson and Lord Hodge.) I am unable to find any clear indication, either for or against the extra-territorial effect, in the other provisions of the 1987 Act. Contrary to the submission of Lord Pannick QC on behalf of KBR,
Inc, section 17 of the 1987 Act, which provides that the Act “extends to England and Wales only” is in my view not relevant to the present issue. That section is concerned with the wholly distinct question of the extent of the legislation and simply provides that it forms part of the law of England and Wales. It says nothing about whether it has extra-territorial effect. Lord Pannick also relies on sections 2(4) and (5) of the 1987 Act which provide that where a person has failed to comply with an obligation under section 2 to produce any documents, a justice of the peace may, on information laid by a member of the SFO, issue a warrant authorising any constable to enter and search premises and to take possession of documents. Clearly this method of enforcement could not have been envisaged to apply where the addressee and the documents are outside the jurisdiction. Moreover, impracticality of enforcement is a particularly relevant consideration when determining whether a statutory provision has extra-territorial scope (Masri v Consolidated Contractors International (UK) Ltd (No 4) at para 22 per Lord Mance). This may, therefore, provide some support for the submission of
KBR,
Inc. However, while the intention behind a provision in a statute needs to be ascertained by looking at the statute as a whole, it does not follow that all provisions in a statute have the same territorial ambit. (See R (Jimenez) v First-tier Tribunal (Tax Chamber) [2019] EWCA Civ 51; [2019] 1 WLR 2956, para 34 per Patten LJ.) Sections 2(4) and (5) do not necessarily prevent the extra-territorial application of section 2(3), notwithstanding the fact that the enforcement procedure for which they provide would not be available.
31. There is, however, greater force in a further submission on behalf of the SFO. It is clear that an intention to give a statute extra-territorial effect may be implied if the purpose of the legislation could not effectually be achieved without such effect (Cox v Ergo Versicherung AG [2014] UKSC 22; [2014] AC 1379, para 29 per Lord Sumption). On behalf of the SFO, Sir James Eadie QC submits that the territorial scope of section 2(3) must be considered in the light of the public interest in the effective investigation of serious fraud, as reflected in international instruments such as the Organisation for Economic Co-operation and Development Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, 1997 (“the OECD Convention”). He submits that under the OECD Convention, States have agreed to combat bribery of foreign public officials to the fullest extent and by article 5 the parties have agreed that the “[i]nvestigation and prosecution of the bribery of a foreign public official shall be subject to the applicable rules and principles of each Party. They shall not be influenced by considerations of national economic interest, the potential effect upon relations with another State or the identity of the natural or legal persons involved”. He submits that the observations of Lord Toulson and Lord Hodge in Bilta (UK) Ltd v Nazir (No 2), para 213, concerning the need for effective investigation of company fraud informing the territorial scope of section 213 of the Insolvency Act 1986, apply mutatis mutandis to an investigation into complex fraud by the SFO using powers under section 2(3).
Legislative history
33. In R (Quintavalle) v Secretary of State for Health [2003] UKHL 13; [2003] 2 AC 687 Lord Bingham observed at para 8:
“The court’s task, within the permissible bounds of interpretation, is to give effect to Parliament’s purpose. So the controversial provisions should be read in the context of the statute as a whole, and the statute as a whole should be read in the historical context of the situation which led to its enactment.”
In the present case it is submitted on behalf of KBR,
Inc that the purpose of the relevant statutory provisions, as revealed by the context in which they were enacted, clearly establishes that section 2(3) was not intended to have extra-territorial effect. In support of this submission we were taken in detail to the legislative history of the 1987 Act and subsequent legislation in this field.
“Sections 432 to 437, 439, 441 and 452(1) apply to all bodies corporate incorporated outside Great Britain which are carrying on business in Great Britain or have at any time carried on business there as if they were companies under this Act, but subject to such (if any) adaptations and modifications as may be specified by regulations made by the Secretary of State.”
These powers were therefore exercisable by the DTI in relation to foreign companies, but only if they were carrying on or had carried on business here. By contrast, there is no comparable provision in the 1987 Act applying section 2(3) to foreign companies carrying on or having carried on business here. This is, to my mind, inconsistent with any suggestion that section 2(3) should apply to such foreign companies, let alone to foreign companies generally. The SFO is, therefore unable to derive any assistance from section 447 of the Companies Act 1985.
“Our inquiry has shown us the vital importance of close international co-operation if serious fraud offences are to be discovered and offenders properly brought to justice. We recognise that concluding such treaties is a long term matter. We believe however, that close attention must be given to the question of the level of mutual assistance which the United Kingdom is able to afford other countries, and to receive from them.”
It recommended that negotiations should be set in train with other countries to provide for reciprocal arrangements regarding the taking and receipt of evidence on commission (para 5.44 and recommendation 27).
37. The legislative history of the Parliamentary Bill which became the 1987 Act and the history of subsequent legislation on the same subject are also informative. In Comr of Inland Revenue v Hang Seng Bank Ltd [1991] 1 AC 306 at 324A-D, Lord Bridge, delivering the judgment of the Judicial Committee of the Privy Council, explained the potential relevance of subsequent legislation in the following terms:
“The principle is clearly stated by Lord Sterndale MR in Cape Brandy Syndicate v Inland Revenue Comrs [1921] 2 KB 403, 414, where he said:
‘I think it is clearly established in Attorney General v Clarkson [1900] 1 QB 156 that subsequent legislation on the same subject may be looked to in order to see what is the proper construction to be put upon an earlier Act where that earlier Act is ambiguous. I quite agree that subsequent legislation, if it proceed upon an erroneous construction of previous legislation, cannot alter that previous legislation; but if there be any ambiguity in the earlier legislation then the subsequent legislation may fix the proper interpretation which is to be put upon the earlier.’
This statement has subsequently been referred to with approval on a number of occasions by the House of Lords: see Ormond Investment Co Ltd v Betts [1928] AC 143, 156; Kirkness v John Hudson & Co Ltd [1955] AC 696, 711; Attorney General v Prince Ernest Augustus of Hanover [1957] AC 436, 473.”
“(1) Where on an application made in accordance with the following provisions of this section it appears to a justice of the peace or judge that criminal proceedings -
(a) have been instituted; or
(b) are likely to be instituted if evidence is obtained for the purpose,
he may order that a letter of request shall be issued to a court or tribunal or appropriate authority specified in the order and exercising jurisdiction in a place outside the United Kingdom, requesting it to assist in obtaining for the purposes of the proceedings evidence specified in the letter.”
“(1) Where on an application made in accordance with subsection (2) below it appears to a justice of the peace or a judge or, in Scotland, to a sheriff or a judge -
(a) that an offence has been committed or that there are reasonable grounds for suspecting that an offence has been committed; and
(b) that proceedings in respect of the offence have been instituted or that the offence is being investigated,
he may issue a letter (‘a letter of request’) requesting assistance in obtaining outside the United Kingdom such evidence as is specified in the letter for use in the proceedings or investigation.”
Section 3(3) provided that a designated prosecuting authority might itself issue a letter of request in certain specified circumstances. The Director of the SFO was a designated prosecuting authority for this purpose (article 2 and Schedule 1, Criminal Justice (International Co-operation) Act 1990 (Designation of Prosecuting Authorities) Order 1991 (SI 1991/1224)). The 1990 Act included safeguards in relation to the use which might be made of evidence obtained by virtue of a letter of request. Section 3(7) provided that such evidence should not be used for any purpose other than that specified in the letter and provided that when a document so obtained was no longer required for that purpose it should be returned to the foreign authority.
45. I have referred to this legislative history in some detail because it supports KBR,
Inc’s case. It can be seen that successive Acts of Parliament have developed the structures in domestic law which permit the United Kingdom to participate in international systems of mutual legal assistance in relation to both criminal proceedings and investigations. Of critical importance to the functioning of this international system are the safeguards and protections enacted by the legislation, including the regulation of the uses to which documentary evidence might be put and provision for its return. These provisions are fundamental to the mutual respect and comity on which the system is founded. (See generally Gohil v Gohil [2012] EWCA Civ 1550; [2013] Fam 276.) 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.
Serious Organised Crime Agency v Perry
47. KBR,
Inc draws particular attention to the decision of the Supreme Court in Serious Organised Crime Agency v Perry [2012] UKSC 35; [2013] 1 AC 182. Perry was convicted in Israel of a number of offences of fraud in relation to a pension scheme which he had operated there. The Serious Organised Crime Agency (“SOCA”) brought proceedings in England for a civil recovery order under the Proceeds of Crime Act 2002 (“the 2002 Act”) seeking to deprive Mr Perry and members of his family and associated entities of assets obtained in connection with his criminal conduct, wherever in the world those assets might be situated. On the application of SOCA a judge made a disclosure order under section 357 of the 2002 Act against Perry, his wife and two daughters, none of whom was resident or domiciled in the jurisdiction. Information notices under the disclosure order requesting information were given to Perry and his daughters by letter addressed to his house in London. The intended recipients were, and were known by SOCA to be, outside the jurisdiction of the United Kingdom. They applied to set aside the information notices. It was submitted on their behalf that the authority given by a disclosure order to give information notices only applies to notices given to persons within the jurisdiction. In making this submission they relied in particular on the presumption that, unless it clearly provides to the contrary, a statute will not have extra-territorial effect.
“The point is a very short one. No authority is required under English law for a person to request information from another person anywhere in the world. But section 357 authorises orders for requests for information with which the recipient is obliged to comply, subject to penal sanction. Subject to limited exceptions, it is contrary to international law for country A to purport to make criminal conduct in country B committed by persons who are not citizens of country A. Section 357, read with section 359, does not simply make proscribed conduct a criminal offence. It confers on a United Kingdom public authority the power to impose on persons positive obligations to provide information subject to criminal sanction in the event of non-compliance. To confer such authority in respect of persons outside the jurisdiction would be a particularly startling breach of international law. For this reason alone I consider it implicit that the authority given under section 357 can only be exercised in respect of persons who are within the jurisdiction.”
54. Secondly, Gross LJ observed that the critical consideration in Perry was that the persons to whom the notices were given were outside the jurisdiction and that it can fairly be said that Perry was not concerned with the giving of a notice to a person within the jurisdiction, in respect of documents or information held outside the jurisdiction. However, to my mind the fact that in the present case the July notice was served on Ms Akerson when she was induced to travel to the United Kingdom to attend a meeting with the SFO in London is not a material distinction. The intended recipient of the notice was KBR, Inc and it remains the case that the SFO is seeking disclosure of documents situated abroad from a company incorporated in the United States which had no fixed place of business in the United Kingdom and did not carry on business here.
“For my part, if it were possible to construe the complex provisions of POCA in such a way as to admit of limited extraterritorial effect for Part 5, but only where there is a sufficient jurisdictional connection between a part of the UK and the criminal proceeds, I should have wished to do so. I am, however, reluctantly persuaded that this cannot be achieved by construction and would involve illegitimately re-writing the statute.”
Other statutory provisions
60. The SFO also relies on a number of cases in which various powers under the Insolvency Act 1986 (“the 1986 Act”) have been considered to have extra-territorial effect. These cases include In re Paramount Airways Ltd [1993] Ch 223, In re Seagull Manufacturing Co Ltd [1993] Ch 345, In re Mid East Trading Ltd [1998] BCC 726; [1998] 1 All ER 577, In re Omni Trustees Ltd (No 2) [2015] EWHC 2697 (Ch); [2015] BCC 906 and Bilta (UK) Ltd v Nazir (No 2). This matter was not argued before us in any detail. Furthermore, I note that there are conflicting decisions in relation to the extra-territorial scope of section 236 of the 1986 Act. (See In re MF Global UK Ltd (No 7) [2015] EWHC 2319 (Ch); [2016] Ch 325; In re Omni Trustees Ltd (No 2); In re Carna Meats (UK) Ltd; Wallace v Wallace [2019] EWHC 2503 (Ch); [2020] 1 WLR 1176; In re Akkurate Ltd [2020] EWHC 1433 (Ch); [2020] 3 WLR 1077 at paras 46-55 per Sir Geoffrey Vos C.) In these circumstances, I propose to deal with the matter relatively briefly. These decisions are concerned with an entirely different statutory scheme from that in the present case and can, therefore, be relevant only by way of analogy. In the Divisional Court in the present case Gross LJ considered that the differences between the statutory regimes did not displace the analogy or obscure the similarities in terms of policy considerations. However, while it may be possible to identify comparable public interests at a very general level, as Lord Toulson and Lord Hodge made clear in their joint judgment in Bilta (at para 212) the question “whether the court can regulate the appellants’ conduct abroad … is a question of the construction of the relevant statute”. Similarly, in In re Seagull Manufacturing Co Ltd Peter Gibson J emphasised (at p 354) the need to consider whether the general presumption against extra-territorial effect was displaced by “the language of the legislation” and “the policy of the legislature in enacting the section in question”. Differences in the statutory schemes cannot be glossed over by reference to public policy interests.
A sufficient connection test
Conclusion