R (KBR Inc) v Director of the Serious Fraud Office

The Supreme Court determined that section 2(3) of the Criminal Justice Act 1987 does not authorise the Director of the Serious Fraud Office to compel, under threat of criminal sanction, a foreign company that has no fixed place of business and has never carried on business in the United Kingdom to produce documents held abroad. The Court applied the presumption against extra-territorial effect and concluded that the wording, scheme and legislative history of the 1987 Act, read in light of international comity and the established mutual legal assistance regime, do not support the unilateral extra-territorial power contended for by the SFO. The Divisional Court's judicially‑implied "sufficient connection" test was rejected as an impermissible re-writing of Parliament's statute. The Court relied in particular on the reasoning in Serious Organised Crime Agency v Perry and on Parliament's subsequent development of mutual assistance legislation as indicating that international co‑operation, not unilateral extraterritorial compulsion, was the intended route for obtaining evidence abroad.

This was an appeal from the Divisional Court ([2018] EWHC 2368 (Admin)) concerning the validity of a notice under section 2(3) of the Criminal Justice Act 1987 served on officers of KBR, Inc in London requiring production of documents said to be held by the United States incorporated parent company in the United States.

Background and procedural posture:

• KBR, Inc is a US company with no fixed place of business or prior business activity in the United Kingdom; its UK subsidiaries, including KBR UK, were under investigation by the SFO.
• The SFO had earlier issued a section 2(3) notice to KBR UK; at a subsequent meeting in London on 25 July 2017 SFO officials handed a section 2(3) notice to a senior officer of KBR, Inc requiring production of material located abroad.
• KBR, Inc applied for judicial review seeking to quash the July notice on grounds that: (1) section 2(3) has no extra‑territorial effect; (2) it was wrong to exercise the power instead of seeking mutual assistance; and (3) service was ineffective. The Divisional Court dismissed the application but certified points of general public importance; permission to appeal to the Supreme Court was granted.

Issues framed:

• Whether the presumption against extra‑territorial effect is rebutted such that section 2(3) authorises compulsion of a foreign company to produce documents held abroad.
• Whether the Divisional Court was correct to adopt a "sufficient connection" test to read section 2(3) as applying to certain foreign companies.

Reasoning and conclusion:

• The Court began from the presumption that statutes do not have extra‑territorial effect unless a contrary intention appears. That presumption is informed by international law and comity.
• The wording of section 2(3) is wide but contains no express extra‑territorial provision or limiting connection requirement; where Parliament intends extra‑territorial reach it commonly does so expressly and it has enacted detailed mutual assistance regimes for obtaining evidence abroad (notably the Criminal Justice (International Co‑operation) Act 1990 and its successors) which include safeguards and limits.
• Legislative history (including the Roskill Report, the Companies Act provisions then in force, the enactment and later development of mutual assistance statutes and subsequent amendments) points against an implied unilateral power to compel foreign companies under threat of criminal sanction.
• The Supreme Court considered the strong analogy with Serious Organised Crime Agency v Perry and held that the presumption against extra‑territorial effect and concerns of international comity weigh decisively against construing section 2(3) to reach a foreign company with no UK presence. The Divisional Court's "sufficient connection" gloss was rejected as illegitimate judicial rewriting of the statute.

Relief sought: quashing of the section 2(3) notice (judicial review).

Appeal allowed. The Supreme Court held that section 2(3) of the Criminal Justice Act 1987 does not authorise the Director of the SFO to require, under threat of criminal sanction, a foreign company with no presence in the United Kingdom to produce documents held abroad; the Divisional Court's implication of a "sufficient connection" test was an impermissible judicial re‑writing of Parliament's statute and the statutory and historical context (including the mutual legal assistance regime and Perry) supported a limited territorial reading.

The decision under appeal was of the Divisional Court, R (on the application of KBR, Inc) v Director of the SFO [2018] EWHC 2368 (Admin). Permission to appeal to the Supreme Court was granted on 8 April 2019. The Supreme Court allowed the appeal on 5 February 2021.