Supreme Court restricts power of SFO to secure evidence held overseas
Published on 8th Feb 2021
In an important decision delivered on 5 February 2021, the Supreme Court held that the Serious Fraud Office (SFO) could not compel foreign companies to produce documents located outside the UK.
The court ruled against the SFO, which had asserted that section 2(3) of the Criminal Justice Act 1987 (the Act) had extra-territorial reach. Accordingly, a notice to KBR Inc, a company incorporated in the USA, compelling it to produce documents held in America, had been unlawfully issued.
The court found that in passing the Act, the intention of parliament had been that the SFO would have to obtain evidence held abroad through international systems of mutual legal assistance and the issue of an 'international letter of request'.
Critical to the decision was the fact that KBR Inc did not have a fixed place of business in the UK and had never carried on business in the country. It was accepted by the parties and the court that, had either of these factors been present, the SFO could have secured the documents requested pursuant to the Act.
The investigation
The proceedings relate to an SFO investigation into alleged bribery and corruption in respect of oil contracts concerning a separate organisation, Unaoil. The SFO wanted evidence that it understood was held by KBR Inc and additionally a UK subsidiary, Kellogg Brown and Root Ltd.
The SFO served a notice on KBR Inc, purportedly pursuant to section 2(3) of the Act, under which the agency can compel a person or organisation to produce specified documents, with criminal sanction for failing to do so. KBR Inc argued that the notice was unlawful, principally on the basis that it required the production of documents held entirely outside the UK jurisdiction, by a company that was incorporated and situated entirely outside the UK.
In Judicial Review proceedings held in 2018, the Administrative Court ruled in favour of the SFO. KBR Inc appealed, with leave, directly to the Supreme Court. As discussed above, the appeal was allowed, with the result that the notice issued against KBR Inc has now been quashed.
Comment
The decision, although limited to non-UK companies that have not carried on business in the UK, represents a significant setback to the SFO at a time when the future of the agency has been called into question by many informed commentators.
It is unclear why the SFO chose to embark on costly legal proceedings, which the public purse will now have to pay for, when the analysis of the position as recorded in the Supreme Court's judgment, makes it plain that there was little force to the arguments put forward by the SFO.
The SFO can still obtain evidence held overseas using the often cumbersome Letter of Request process, and can also compel UK companies to produce documents held overseas, for example on a foreign server. Nevertheless, this decision does not appear to be one of the agency's finest hours.
