Disputes Quick Read – 28 / 63 观点
A hugely significant judgment was handed down on 5 February 2021 by the Supreme Court in the case of R (on the application of KBR, Inc) v Director of the Serious Fraud Office  UKSC 2.
The case provides clarity on the limits of the Serious Fraud Office's (SFO) statutory powers. The Supreme Court ruled that the SFO does not have the power under Section 2(3) of the Criminal Justice Act 1987 (CJA) to compel a foreign company to produce documents held overseas.
Under Section 2(3) of the CJA, the Director of the SFO, for the purposes of an investigation, has the power to issue a notice requiring the production of documents and other information (Section 2 Notice). Failure to comply with such a notice is a criminal offence.
Historically, the SFO has interpreted this provision very broadly and it is extensively relied on by the SFO when investigating fraud and bribery cases.
In early 2017 the SFO began an investigation into KBR Ltd (KBR UK), a UK subsidiary of KBR, Inc (a US incorporated company). As part of the SFO's investigation they issued a Section 2 Notice, requiring the production of various categories of documents.
KBR UK provided several documents and stated that certain other materials were not within its possession or control. KBR UK's position on the other material was that to the extent it existed, it would be held by its parent company in the US. In response, when officers of KBR, Inc attended a meeting with the SFO in London, the SFO handed them a Section 2 Notice requiring production of material held by KBR, Inc outside the UK.
KBR, Inc applied to quash that Section 2 Notice. The High Court rejected the application, holding that the SFO could require a foreign company to produce documents held overseas pursuant to Section 2(3) of the CJA. It determined that the legislation was intended to have some extra-territorial application if there is a "sufficient connection" between the company and the UK, which on the present facts it did.
KBR, Inc appealed to the Supreme Court, whose assessment began from the presumption that the UK legislation is generally not intended to have extra-territorial effect. This presumption is rooted in both the requirements of international law and the concept of comity, which is founded on mutual respect between States.
Therefore, the key question for the Supreme Court was whether Parliament had intended for Section 2(3) of the CJA to displace the presumption, such that the SFO had power to compel a non-UK company to produce documents held outside the UK. It found nothing in the CJA itself – or in the background to its enactment – to support the notion that the presumption did not apply. The CJA did not have extra-territorial effect.
The Supreme Court therefore unanimously allowed the appeal and held that the Section 2 Notice was invalid.
The Supreme Court judgment is the latest blow to the SFO and – given the often-international element of their investigations – it may put a spanner in the works of ongoing and future investigations. The judgment gives some welcome clarity to practitioners on the limits of the SFO's statutory powers and their evidence gathering capabilities in cross-border financial crime.
While the judgment is a huge setback for the SFO, the decision will not affect the SFO's powers in relation to UK companies concerning documents in their control held overseas. In the case of international corporate groups, it may even affect the way that documents come to be stored, in the hope of putting them outside the scope of a UK investigation.
To discuss the issues raised in this article in more detail, please contact a member of our Disputes & Investigations team.
Welcome news for those pursuing fraud claims in the English Courts
作者 Nick Storrs
作者 James Bryden
作者 Stuart Broom