Banker's duty of confidentiality

A bank’s duty of confidentiality to its customers, as well as the obligation on banking institutions to preserve the details and secrets of its clients, are long-established principles. Whilst some may argue, on the basis of the Norwich Pharmacal principles, that they are entitled by law to request the disclosure of limited information from banking institutions, the Mauritian Chief Justice has recently clarified the position of the bank in respect of its overriding duty of confidentiality towards its clients and any possible latitude towards disclosure.

In the present article, we probe into how the Mauritian Supreme Court in Stanford Asset Holding Limited & Anor v Afrasia Bank Limited 2022 SCJ 333 safeguarded the statutory duty of confidentiality imposed on banks towards its customers faced with a “no-objection” by the bank.

In Stanford (supra), the Applicant applied to the Supreme Court for an order

(i) compelling the Afrasia Bank Limited (Bank) to disclose to it the full name(s), addresses, account numbers and particulars of the recipient of any part of a specified sum of money as from a specified date from a designated account held with the Bank and

(ii) directing the Bank to disclose to the Applicant all supporting documents relating to the account especially regarding the authorized signatories .

In support of its request, the Applicant argued that, pursuant to section 64(10) of the Banking Act, the Supreme Court was empowered to make an order of disclosure. Alternatively, the Applicant contended that a disclosure could be granted under the Norwich Pharmacal principles.
The Bank did not object to the Applicant’s request. However, in view of the nature of the request, the Supreme Court invited the parties to make submissions as regards the legal basis for the request.

After a perusal of all the applicable laws by the Supreme Court, it clearly emerges that there is in Mauritius:

• a strict duty of confidentiality prohibiting banks from disclosing any information relating to the banking transactions of any of its clients;
• an explicit and special legal framework for the permissible disclosure of information to third parties by a bank. This is dictated essentially by compelling public interest to safeguard the integrity of the national and international financial systems;
• a legal framework which precludes banks from making any disclosure except by compulsion of law or following a court Order;
• a comprehensive and specific legislative framework which sets out the conditions in which confidential information relating to a customer’s banking affairs may be disclosed by any of the designated authorities.

As regards the alternative argument offered by the Applicant, the Supreme Court observed that whilst the Norwich Pharmacal relief is a flexible common law remedy, it remains an exceptional and intrusive jurisdiction. Norwich Pharmacal orders are not granted on the mere asking especially against entities such as banks which are bound by a statutory duty of confidentiality to their customers. It is incumbent upon an applicant to satisfy the court that he has established that all the conditions for a Norwich Pharmacal order are present.

Given that the Supreme Court determined that the Applicant did not produce sufficient valid reasons to justify the granting of a Norwich Pharmacal order, the request was set aside in the face of the no objection from the Bank.

The position taken by Supreme Court in this judgment is a welcome one as it upholds and safeguards the sacrosanct principle of confidentiality which binds a bank to each of its customers.