Expanded Disclosure Remedies for Claimants in International Cases Heard in England?
A valuable remedy open to a party in English civil proceedings is to seek a Norwich Pharmacal order. Such orders require a respondent to disclose certain information or documents to the applicant. The respondent party need not necessarily be accused of wrongdoing itself but must be involved or mixed up in wrongdoing.
There are a number of ways in which a Norwich Pharmacal order can prove useful. It may be targeted at finding out information about wrongdoers, or the wrongdoing, but it has also been used to obtain information to assist a creditor in the execution of a judgment by unearthing the existence of assets owned by a defendant that would potentially be available for attachment.
The location of the information sought
A difficult issue arises if the information being sought under a Norwich Pharmacal order is directed to a party which maintains the information outside England and Wales.
Based on the 1986 decision in Mackinnon v Donaldson, Lufkin and Jenrette Corporation, it has been assumed that that where Norwich Pharmacal disclosure is sought from a third party, the information and documents sought must be physically located in England and Wales. So, if documents were sought from a bank which maintained them in a branch in London, the Order could be made; but if the documents were maintained in an overseas branch of the bank, a Norwich Pharmacal order would not be granted or at any rate not reach those documents.
The impact of electronic storage of information
In 2011 in Rusal v HSBC, information and documents were being sought from an international law firm with an office in London. The court held that what applied to banks in Mackinnon also applied to law firms with offices in multiple jurisdictions. The difference was that whereas in earlier cases there had been an assumption that the records sought were physically located in one office or another, here all documents were held on a single electronic server and could be accessed in every office of the law firm. This effectively brought them within the jurisdiction and avoided the problem in Mackinnon. But the court decided that the question of whether to grant an order against the London office of the law firm was not limited to asking in which country the information was stored. Instead regard needed to be had to the extent to which that office had been involved (albeit innocently) in the alleged wrongdoing.
Principles to be drawn from the pre-2014 cases
A number of principles could be discerned from the cases decided before 2014:
- It was essential for an applicant to show that the bank/law firm/other third party from whom information and documents was being sought was mixed up in wrongdoing, whether innocently or not.
- If the information and documents were not held in England and Wales, the court would generally not order them to be produced.
- If the information and documents were electronically accessible in England and Wales, an order might be made but only if the third party’s involvement in wrongdoing took place within England and Wales.
- Attempts to obtain Norwich Pharmacal orders against law firms said to be innocently mixed up in wrongdoing would be scrutinised particularly carefully and would be granted only in the most exceptional cases, typically where fraud is alleged against its client.
Of course, further difficulties might, and often would, present themselves before an order would be granted, or at any rate be capable of being executed. For example:
- Save in the most exceptional of cases, no order will override a legitimate claim to legal professional privilege.
- The court will inevitably be concerned if the order being sought might involve a bank breaching legal duties of confidence imposed on it in other jurisdictions.
- The third party might seek to claim a privilege against self-incrimination (although the scope for doing so has now been substantially eroded).
Credit Suisse Trust: a new development of the principles
So previously it was thought that even if the information and documents sought were electronically accessible in England and Wales, a Norwich Pharmacal order would only follow if the third party’s involvement in wrongdoing took place within England and Wales. It now seems that such understanding needs to be revised.
In 2014, in Credit Suisse Trust v Intesa San Paulo SPA and Banca Monte Dei Pasche Di Siena, the court considered applications for Norwich Pharmacal relief brought against two Italian banks with branches in England. Underlying the application was what the court accepted was a fraud committed on Credit Suisse by its former fiduciary agent. Bank accounts held at the two respondent banks had been identified as containing some of the fruits of the former fiduciary agent’s fraud and so Credit Suisse wanted information about those bank accounts.
Neither bank contested the proceedings although they did draw attention to the fact that the wrongdoing took place in Italy and not in England and so a question arose as to whether the Italian banks could release the information given that they were subject to Italian banking confidentiality laws.
The court was concerned with two issues: (a) whether it was appropriate to grant the order given that the activities in issue took place at the Italian branches of the banks and (b) whether there was in fact any utility in granting the order.
As for (a), the court recognised the need to proceed with care but concluded that as this was a case where fraud was being alleged against the former agent, there was nothing to preclude the making of an order simply because the information was held in a foreign branch of the banks.
As for (b), the court was satisfied that one bank was prepared to provide at least some of the information sought if the English court made in order to that effect; as for the second bank, the court found that it was by no means impossible for its London branch to obtain information from Italy and that there was some prospect that it would comply with an English court order, but that, if it did not, the impact of Italian banking confidentiality laws could be assessed by the Italian court as and when the applicant tried to have the English order recognised and enforced in Italy.
For those reasons the court made the Norwich Pharmacal order sought. Had the applicants not made the sensible concession that if the English order was not complied with, they would not argue that the banks were in contempt of court but would rather seek to have the order recognised and enforced in Italy, it may be that the court would have been more reluctant to make the order.
So where does that leave the state of the law relating to the availability of Norwich Pharmacal orders in cross-border cases? First, it needs to be recognised that the Mackinnon case was decided before the advent of the electronic age and that the typical means by which businesses store information in the 21st century are very different to before. Does that mean that in future Norwich Pharmacal orders will granted liberally wherever the relevant information/documents are maintained? The answer to that is almost certainly no. But the Credit Suisse Trust decision suggests that, where fraud is asserted against a defendant, an order against a third party innocently caught up in its wrongdoing may now be available even where (a) the information is not immediately available in England and Wales and (b) the third party is not resident in England or Wales and (c) the activity which resulted in it being caught up in the defendant’s wrongdoing did not occur in England and Wales. In suitable cases, this may be a valuable addition to a claimant’s armoury given the inevitable features that flow from international business transactions.