The facts of the case are fairly straightforward.  KBR is a company incorporated in the United States; it has no fixed place of business in the UK and does not carry on business in the UK.  The section 2(3) notice was handed to KBR’s General Counsel by the SFO at a meeting in London, the SFO having insisted that the meeting be attended by an officer of the company.  The documents sought by the notice were held by KBR outside the UK.  At first instance, the Divisional Court ruled that section 2(3) might extend to non-UK companies in respect of documents held outside the UK ‘when there is a sufficient connection between the company and the jurisdiction’. On appeal to the Supreme Court, the fundamental question for the Court was whether section 2(3) of the CJA 1987 should be read as having extra-territorial effect, such that a company in the position of KBR would fall within its scope, and also whether the ‘sufficient connection’ test should be applied.

The Supreme Court observed that the general starting point is that a statute is not presumed to have extra territorial effect in the absence of express wording to that effect.  In this case, there was nothing to indicate that section 2(3) is intended to have extra territorial effect.  The court also rejected the ‘sufficient connection’ test as seeking to impose too broad a reading on the wording of the statute.

However, the decision only goes so far.  It is now clear that a foreign company, which has no registered office in the UK; which does not carry on (and has never carried on) any business in the UK and which does not hold any documents in the UK cannot be obliged by the SFO to produce documents by way of a section 2(3) notice.  However, if any of these conditions is not met, then the position is much more uncertain.  The court observed in passing that a UK company which holds documents abroad could still be caught within the ambit of a section 2(3) notice.  What of a foreign company which holds documents in the UK?  What of a foreign company which carries on business in the UK but holds documents abroad?  What about officers of the company who are temporarily in the UK?  What about corporate service providers who administer structures which hold assets or trading businesses in the UK?

For all of these reasons, the decision in KBR is not the final curtain on this issue, but rather the first act in a play which is likely to run and run.  Even if a section 2(3) notice cannot be served, evidence can still be sought by the SFO abroad by way of a request for mutual legal assistance, as the Supreme Court observed.  For now, one thing is clear.  If directors of offshore companies receive a section 2(3) notice, or are given any indication that a section 2(3) notice might conceivably be served, then they should seek legal advice as a matter of urgency.

 

Share
Twitter LinkedIn Email Save as PDF
More Publications
22 May 2024

Listing and Delisting Eurobonds on The International Stock Exchange

Find out more about the advantages of listing debt securities on TISE, including the wide internatio...

7 May 2024

The International Stock Exchange: Structures and Suitability

A summary of Appleby listing agent services in the Channel Islands, including the structures and sui...

1 May 2024

BEWARE: GREEKS RECEIVING GIFTS! REPRESENTATION OF EQUIOM TRUST (CI) LIMITED, IN RE MATTAS [2024] JRC 068

A recent Judgment on the principles applicable to charitable trusts, wills and their construction em...

30 Apr 2024

Secondary Pensions in Guernsey: Are you ready for it?

After several years of planning (and delays), The Secondary Pensions (Guernsey and Alderney) Law (La...

11 Apr 2024

Jersey: corporate re-domiciliation and tax residency changes

An analysis of how Jersey law offers flexible solutions for corporate re-domiciliation and tax resid...

9 Apr 2024

The Global – your offshore corporate law questions answered: April 2024

The Global is a quarterly collection of corporate expert insights and analysis across Appleby's glob...

26 Mar 2024

Listing high yield bonds on The International Stock Exchange (TISE)

Find out why TISE is the stock exchange of choice for High Yield Bonds

19 Mar 2024

Guernsey retains its EU adequacy – as expected

The post-Brexit regulatory landscape continues to throw up challenges and jurisdictional arbitrage, ...

18 Mar 2024

Parental Bereavement Leave: Jersey to implement further family leave rights

The UK introduced “Jack’s law” in 2020. Jersey is now following the UK’s example, and as of ...