Factual and Procedural Background
The Claimant ("Company A") sought permission for judicial review to challenge a Notice ("the July Notice") issued by the Defendant ("The Agency") on behalf of its Director under s.2(3) of the Criminal Justice Act 1987 ("the CJA 1987"). The Notice required Company A to produce documents held outside the United Kingdom ("the UK"). The challenge was based on three grounds: that the Notice was ultra vires for requesting material held outside the UK jurisdiction from a foreign-incorporated company; that the Director erred in exercising powers under s.2(3) despite the availability of Mutual Legal Assistance ("MLA"); and that the Notice was not effectively served by handing it to a senior officer temporarily present in the UK.
Company A, incorporated in the United States ("the US"), is the ultimate parent of a multinational group with UK subsidiaries, including Company B. The Agency initiated a criminal investigation into Company B concerning suspected bribery and corruption, linked to activities involving a third party ("Third Party C"). Company A was also under investigation by US authorities in relation to the UK subsidiaries' dealings with Third Party C.
The Agency issued an earlier Notice in April 2017 to Company B, to which there was initial cooperation from the group. However, concerns arose that the group sought to distinguish between documents held by Company B in the UK and those held abroad. Subsequently, the July Notice was issued to Company A during a meeting in the UK, handed to a senior officer present. Company A declined to comply, leading to the present judicial review challenge.
Legal Issues Presented
- Whether s.2(3) of the CJA 1987 applies extraterritorially to require a foreign-incorporated company to produce documents held outside the UK;
- Whether the Director erred in law by exercising powers under s.2(3) without first considering or exhausting Mutual Legal Assistance procedures;
- Whether the July Notice was validly given (served) by handing it to a senior officer of Company A temporarily present in the UK.
Arguments of the Parties
Appellant's Arguments
- The statutory power under s.2(3) does not operate extraterritorially and should be limited by principles of international law and comity, as well as English conflict of laws rules;
- There was an error of law in the Director's exercise of discretion by bypassing MLA procedures, which should have been considered first;
- The July Notice was not effectively served as Company A was not present in the UK and the notice was handed to an officer temporarily present, which does not satisfy territorial requirements.
Respondent's Arguments
- The SFO's investigative powers under s.2(3) have no express territorial limitation and apply to foreign companies with a sufficient connection to the UK;
- The Director's discretion to issue the Notice is separate from the power to seek MLA and is not subject to an obligation to use MLA first;
- The Notice was validly given to a senior officer of Company A physically present in the UK, satisfying the requirements for effective notice.
Table of Precedents Cited
| Precedent |
Rule or Principle Cited For |
Application by the Court |
| Masri v Consolidated Contractors Int (UK) Ltd (No. 4) [2009] UKHL 43 |
Principle of statutory construction regarding extraterritorial application; presumption against extraterritoriality unless contrary intention. |
Used to establish the starting point that statutes do not apply extraterritorially unless expressly or impliedly intended. |
| Mackinnon v Donaldson, Lufkin and Jenrette Corporation [1986] 1 Ch 482 |
Distinction between personal jurisdiction and subject matter jurisdiction; respect for foreign sovereignty. |
Supported the rejection of extraterritorial enforcement over foreign third parties without exceptional circumstances. |
| Societe Eram Ltd v Cie Internationale [2003] UKHL 30 |
International law principle against sovereign trespass; limits on enforcement relating to foreign assets. |
Reinforced the principle that courts should not trespass on foreign sovereign authority. |
| In re Paramount Airways Ltd [1993] Ch 223 |
Extraterritorial application of insolvency provisions; "sufficient connection" test. |
Adopted a flexible approach to extraterritorial jurisdiction based on a sufficient connection to the UK. |
| In re Seagull Co. Ltd. [1993] Ch 345 |
Extraterritorial reach of insolvency public examination powers; importance of public interest. |
Supported extraterritorial application where public interest demands and sufficient connection exists. |
| Bilta (UK) Ltd v Nazir (No 2) [2015] UKSC 23 |
Statutory construction of extraterritorial effect; subject matter jurisdiction over conduct abroad. |
Confirmed that extraterritorial jurisdiction depends on statutory interpretation and purpose. |
| R (Jimenez) v FTT [2018] STC 132 |
Limits on extraterritorial effect of tax investigation powers; importance of MLA. |
Distinguished on grounds of fiscal legislation and availability of MLA, not applicable to s.2(3). |
| SOCA v Perry (Nos 1 and 2) [2012] UKSC 35 |
Limits on extraterritorial effect of disclosure orders under POCA; persons outside jurisdiction. |
Found that notices could not be given to persons outside jurisdiction; distinguished from s.2(3) context. |
| R v Redmond [2006] EWCA Crim 1744 |
Use of MLA is discretionary, not obligatory; no abuse of process in bypassing MLA. |
Supported the Director's discretion in issuing notices without first exhausting MLA procedures. |
| Orexim Trading Limited v Mahavir Port and Terminal Private Limited [2018] EWCA Civ 1660 |
Procedural safeguards in service out of jurisdiction; relevance to extraterritorial notices. |
Referenced in context of safeguards and limits on extraterritorial service. |
| R v Cuthbertson [1981] AC 470 |
Limits on extraterritorial enforcement actions such as seizing foreign property. |
Distinguished as s.2(3) does not involve such coercive acts abroad. |
Court's Reasoning and Analysis
The Court began with the established principle that statutes are presumed territorial in effect unless Parliament's contrary intention appears, consistent with international comity and respect for foreign sovereignty. However, the Court found that s.2(3) of the CJA 1987 must have some extraterritorial application, particularly in light of the nature of serious fraud investigations which often involve multinational groups and documents located abroad.
The Court rejected the Appellant's argument that the power under s.2(3) was limited by the availability of MLA, holding that the Director's discretion to issue notices under s.2(3) is independent and not constrained by the existence of MLA treaties. The discretion was exercised lawfully and reasonably in the circumstances.
Regarding jurisdiction over foreign companies, the Court adopted a "sufficient connection" test, whereby s.2(3) applies extraterritorially to foreign companies holding documents abroad only if there is a sufficient connection between the company and the UK. This approach balances the need to facilitate investigations of serious fraud with respect for international boundaries and foreign interests.
Applying this test, the Court found that Company A had a sufficient connection with the UK due to its role as the ultimate parent of the UK subsidiary under investigation, the involvement of its treasury and compliance functions in processing payments central to the investigation, and the presence of a corporate officer exercising functions in the UK. The Court excluded factors such as mere parent company status, voluntary cooperation, or temporary presence of officers at meetings as insufficient alone to establish the connection.
On the issue of service, the Court held that the July Notice was validly given by delivering it to a senior officer of Company A physically present in the UK. The Court rejected the argument that provisions governing service in civil proceedings applied, emphasizing that s.2(3) does not require formal service and that the presence of the officer at the meeting was sufficient.
Overall, the Court dismissed all grounds of challenge, finding no error in the Director's exercise of discretion, proper statutory construction supporting extraterritorial application with a sufficient connection test, and valid notice.
Holding and Implications
The Court GRANTED PERMISSION for judicial review but DISMISSED the challenge brought by Company A against the issuance of the July Notice by The Agency.
The direct effect is that Company A is required to comply with the Notice and produce the requested documents held outside the UK. The Court’s decision clarifies that s.2(3) of the CJA 1987 has extraterritorial effect over foreign companies with a sufficient connection to the UK, allowing the Agency to pursue documents abroad in serious fraud investigations without being restricted solely to MLA routes.
No new legal precedent was established beyond applying and confirming existing principles of statutory interpretation and jurisdictional reach in this context.