KBR Inc, R (On the Application Of) v The Director of the Serious Fraud Office

The extraterritorial reach of a statutory power depends on construction, informed by statutory purpose, context, international comity and sovereignty. Section 2(3) of the Criminal Justice Act 1987 can require a UK company to produce documents held abroad. It can also apply to a foreign company holding documents abroad where there is a sufficient connection between that company and the UK. The connection is fact-specific. A foreign parent’s ownership of a UK subsidiary, voluntary cooperation, or attendance by an officer at a meeting is not, alone, sufficient. Approval and processing by the foreign company of transactions central to the investigation may establish the connection. Mutual legal assistance is an additional, non-exclusive power and does not restrict the Director’s discretion to issue a section 2(3) notice. A notice given in the UK to an officer representing the company requires no additional civil-procedure formality.

The claimant, a US-incorporated parent company with UK subsidiaries, challenged a notice issued by the Director of the Serious Fraud Office under section 2(3) of the Criminal Justice Act 1987. The notice required production of documents held outside the UK in an investigation concerning suspected bribery and corruption involving a UK subsidiary.

The rolled-up hearing concerned three grounds: whether section 2(3) had extraterritorial effect; whether the availability of mutual legal assistance made it unlawful to use section 2(3); and whether the notice had been effectively given when handed to a senior corporate officer attending a meeting in the UK.

1. Claim dismissed. Permission was granted, but all three grounds of challenge failed.
2. The territorial scope of section 2(3) was a question of statutory construction. The presumption against extraterritoriality remained relevant because of international comity and state sovereignty, but it was rebuttable. The court considered the statutory wording, purpose and context.
3. Section 2(3) necessarily had some extraterritorial application. A UK company could not defeat a lawful notice merely because responsive documents were held on an overseas server. The same provision extended to a foreign company holding documents abroad where there was a sufficient connection with the UK. That test was fact-specific and balanced the SFO’s public interest in investigating serious fraud against the burden imposed on a foreign company. Relevant factors could include the company’s own actions linked to the UK, its connection with the relevant transactions, and the location and nature of the business and property involved.
4. On the facts, KBR Inc’s approval and US-based processing of payments central to the investigation established the necessary connection. Its status as parent of KBR Ltd, voluntary cooperation, attendance by Ms Akerson at the meeting, and absence of UK business were not, individually, sufficient. The presence in the UK of another KBR Inc officer performing corporate functions provided additional support.
5. Mutual legal assistance under the Criminal Justice (International Co-operation) Act 1990 and the Crime (International Co-operation) Act 2003 was an additional power, not a mandatory route or a restriction on section 2(3). Practical considerations could justify direct recourse to the document holder. The Director’s power remained subject to the statutory framework, public law controls, judicial review, and the reasonable-excuse defence under section 2(13).
6. The notice was given within the jurisdiction to Ms Akerson while she represented KBR Inc. Section 2(3) did not require service under the CPR or any additional formality. The notice was therefore validly given.