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
2 Nov 2023

“Arranging” deals in investments is now a regulated activity under the Financial Services (Jersey) Law 1998

Appleby Jersey experts explain why changes to the Financial Services (Jersey) Law 1998 help protect ...

6 Oct 2023

A comparison between the GDPR and the Jersey Data Protection Law

Richard Field discusses key aspects of Jersey's recently enacted data protection legislation in comp...

11 Jul 2023

Proposed Regulation of Consumer Credit in Jersey

Find out more about the Jersey Government’s suggested regulation of the consumer credit regime and...

1 Jun 2023

What is a Pre-Let Agreement?

Whether you're a landlord or tenant looking for pre-let advice, we can help. Our expert property law...

17 May 2023

More changes to Jersey's Anti-Money Laundering Regime (AML)

Our experts look at latest proposals to the legal and regulatory anti-money laundering framework in ...

10 May 2023

Establishing a single family office in Jersey

Want to know more about establishing a family office in Jersey? Find out what a family office is and...

27 Apr 2023

Change of control of regulated entities in Jersey

Find out how Appleby Jersey has advised upon a number of changes of control scenarios in different c...

20 Mar 2023

Trusts: Comparison between the Crown Dependencies

Our Private Client and Trusts specialists in Guernsey, Isle of Man and Jersey outline some of the ke...

15 Mar 2023

Changes to the Jersey Competition Law Framework

Following the launch of the Government of Jersey's consultation on proposed changes to the competiti...

14 Mar 2023

Jersey Property Unit Trusts and the Trust Regulation Service

Our Appleby team looks at HMRC's recently updated guidance on Jersey Property Unit Trusts (JPUTs) an...