R v Director of the Serious Fraud Office

The presumption against the extra-territorial effect of legislation applies with particular force where a public authority seeks to compel a foreign company, having no business or presence in the United Kingdom, to produce documents held abroad under threat of criminal sanction.

Criminal Justice Act 1987, section 2(3), does not confer that power on the Serious Fraud Office. Its language, purpose and legislative history do not rebut the presumption. Parliament instead established systems of mutual legal assistance, with reciprocal safeguards, for obtaining evidence abroad. A court cannot remedy the absence of statutory authority by implying an undefined “sufficient connection” test. That would exceed interpretation and usurp Parliament’s function.

The Serious Fraud Office served KBR, Inc, a United States company, with a notice under section 2(3) of the Criminal Justice Act 1987. The notice required it to produce documents held abroad. KBR, Inc had never carried on business or maintained a fixed place of business in the United Kingdom. Its officer received the notice while temporarily attending a London meeting.

KBR, Inc sought judicial review. The Divisional Court dismissed the claim in [2018] EWHC 2368 (Admin); [2019] QB 675. It held that section 2(3) could reach documents held abroad by a foreign company where there was a sufficient connection between the company and the jurisdiction.

The sole issue on appeal was whether section 2(3) authorised the SFO to compel this foreign company to produce documents held outside the United Kingdom and, if so, whether its reach depended upon a sufficient connection test.

1. Appeal allowed unanimously. Lord Lloyd-Jones delivered the judgment, with which Lord Briggs, Lady Arden, Lord Hamblen and Lord Stephens agreed. The section 2(3) notice was beyond the SFO’s statutory power.

2. Domestic legislation is presumed not to have extra-territorial effect unless a contrary intention appears. The presumption reflects international law and the wider principle of comity. Its invocation does not require proof that applying the legislation abroad would violate another state’s sovereignty. It applied clearly because KBR, Inc was a foreign company which had never carried on business or maintained a presence in the United Kingdom. Temporary attendance by its officers at a London meeting and service on an officer there did not alter the company’s position.

3. Whether Parliament intended extra-territorial operation depends on the statutory language, purpose and context, read with relevant interpretative principles, international law and comity. Section 2(3) of the Criminal Justice Act 1987 uses broad language, but contains no express extra-territorial provision. The possibility that a British company could be required to bring documents held abroad into the jurisdiction did not establish a power over a foreign company lacking a United Kingdom presence.

4. The legislative history rebutted the SFO’s purposive argument. The Roskill Report and successive enactments developed reciprocal mutual legal assistance procedures for obtaining foreign evidence. Those procedures included safeguards governing use and return of evidence. It was inherently improbable that Parliament simultaneously intended section 2(3) to create a unilateral power, enforceable by criminal sanction, which bypassed foreign authorities and those safeguards.

5. Serious Organised Crime Agency v Perry [2012] UKSC 35 strongly supported the conclusion. Its materially similar disclosure power did not authorise compulsory notices against persons abroad. Service on KBR, Inc’s officer during a temporary visit was not a material distinction. By contrast, the tax-information decision in R (Jimenez) v First-tier Tribunal (Tax Chamber) [2019] EWCA Civ 51 concerned a statutorily identifiable United Kingdom taxpayer and a regime without criminal liability for non-compliance.

6. The “sufficient connection” limitation could not be implied. Unlike insolvency powers exercised by a court, section 2(3) conferred an administrative power without judicial discretion or defined safeguards. An undefined connection requirement would be inherently uncertain. Implying it would amount to rewriting the statute rather than interpreting it.

1. United Kingdom Supreme Court: In [2021] UKSC 2, unanimously allowed the appeal and rejected the Divisional Court’s construction of section 2(3) of the Criminal Justice Act 1987.
2. Divisional Court of the High Court: In [2018] EWHC 2368 (Admin); [2019] QB 675, dismissed the judicial review claim. It held that section 2(3) could apply to documents held abroad by a foreign company where a sufficient connection existed between the company and the jurisdiction.