Serious Fraud Office Document Requests Have Limited Effect Against Non-UK Companies

On 5 February 2021, the UK Supreme Court handed down its judgment in the case of SFO v KBR[1], in which it unanimously held that the Serious Fraud Office (SFO) cannot use its statutory power to gather information under section 2(3) of the Criminal Justice Act 1987 (CJA 1987) to require a foreign company that does not have a registered office or carry out business in the UK to produce documents.

The Court overturned an earlier judgment by the UK Divisional Court, which had held that the power under section 2(3) CJA 1987 could be used to compel a foreign company to produce documents where there was a “sufficient connection between the company and the jurisdiction”.

Basis for the decision

The Supreme Court in KBR considered the application of section 2(3) CJA 1987 to a U.S. company which had no registered office or business operations in the UK. It was common ground between the parties that a notice issued under section 2(3) CJA 1987 (a section 2 notice) would have been effective to obtain documents held overseas by a UK company.

The Supreme Court’s starting point was the presumption in English law that legislation is generally not intended to have extraterritorial effect. The presumption against extraterritorial effect can only be overturned by express wording in the relevant statute or where it can be implied that Parliament intended the relevant provision to have such effect. Section 2(3) CJA 1987 does not contain express wording conferring extraterritorial effect. The Supreme Court found that, with regard to the purpose of the CJA 1987 and the relevant legislative history, it could not be said that Parliament intended section 2(3) CJA 1987 to have such effect. 

Further, the Supreme Court found that there was no basis for the “sufficient connection” test determined by the Divisional Court. Instead, imposing such a test would effectively involve “illegitimately re-writing the statute” and would “usurp the functions of Parliament”.  

Commentary

Following KBR, the SFO is not able to use section 2 notices as a short cut to obtain documents from a foreign company with no presence in the UK. Instead, it must follow the relevant formal MLA procedure and request assistance from authorities in the relevant jurisdiction when seeking to obtain documents in such circumstances. 

It is important to note that the judgment does not prevent the SFO from obtaining documents from a foreign company. Further, the SFO will likely continue to compel UK companies to produce documents held overseas - for example, where the relevant documents are held by the UK company on a server or physically in an office outside of the UK - via its section 2(3) CJA 1987 powers. 

Stephanie Pong and Femi Omisore, London Trainee Solicitors, contributed to the writing of this alert.

[1] R (on the application of KBR, Inc) (Appellant) v Director of the Serious Fraud Office (Respondent) [2021] UKSC 2.