Norwich Pharmacal Orders (NPOs) oblige innocent third parties to provide disclosure which may help a claimant to identify wrongdoers in their claim.
They’re often served on lawyers, banks, or other professionals who have become ‘mixed up’ in the wrongdoing of fraudsters through no fault of their own.
Recently, the High Court refused Norwich Pharmacal relief in Ziyavudin Magomedov & Ors v Konstantin Kuzovkov & Ors [2024] EWHC 2527 (Comm), because it was thought that the order could contravene the criminal law in Liechtenstein.
In recent years, the service of NPOs and Bankers Trust Orders on respondents in foreign jurisdictions has become more common with the introduction of the gateway under Practice Direction 6B. However, this decision recognises that the English court still imposes limits on the reach of its jurisdiction.
Where an order from the English courts may be unenforceable in the foreign jurisdiction, or compliance with the NPO will contravene local laws, relief should be sought from the local courts instead.
Brief background facts
Ziyavudin Magomedov is involved in high-profile proceedings in the Commercial Court. In 2023 he began a claim for conspiracy to the value of around $13.8 billion.
In the recent hearing, Mr Magomedov applied for Norwich Pharmacal relief against three financial services companies which share the brand 1291. None of the respondents are party to the underlying proceedings.
The Norwich Pharmacal relief was sought to help the claimants identify the wrongdoers in the underlying claim.
One of the respondents to the NPO application was 1291 Private Office, a Liechtenstein company.
Reasons for resisting the NPO
1291 Private Office’s position resisting the Norwich Pharmacal relief was that:
- Disclosure of the material would contravene Liechtenstein law, by disclosing “a business or trade secret which they are obliged to protect;” and
- Any such order is incapable of enforcement in Lichtenstein
Potential criminal liability
The expert evidence indicated that “it cannot be excluded that criminal liability may arise from the disclosure of a business or trade secret.” By disclosing the information, there was a possibility that 1291 Private office “may expose themselves to a possible penalty.”
Mr Justice Jacobs considered that where there is “strong evidence” that compliance with the proposed order will in fact contravene the criminal law of the country where the respondent is incorporated and operates, the English court should be “most reluctant” to grant the order which is sought.
Is the court order sufficient protection from accusations of wrongdoing?
One of the points the judge considered was the level of protection offered to a respondent of an NPO by the very fact that they have been ordered to disclose information by the English courts.
If the respondent is UK based, then they are protected from any accusation of wrongdoing by disclosing the information. They can effectively hide behind the English court order, which comprises very real protection for them.
However, in this case, the position of 1291 Private Office was very different. The English court order was unlikely to be recognised by the Liechtenstein jurisdiction, and may not be enforceable at all there. It provided the respondent with no such protection, and left them exposed to accusations of criminal liability.
Does the NPO fall within a “legally permissible reason” to disclose the information?
The applicants tried to make the argument that disclosing the information could fall into the exception in the statute that it was for “a legally permissible reason.”
However, there was no precedent to confirm this position, and in the absence of any prior decisions in Liechtenstein law, it was considered to be too speculative to rely on that point, particularly in circumstances where the respondent may face criminal consequences.
Further, having heard expert evidence on whether or not an English order would be enforceable in Liechtenstein, Mr Justice Jacobs considered that it would not be enforceable, at least in the way that enforcement would ordinarily be understood.
Is it in the interests of justice to grant the order?
But for the Liechtenstein law point, Mr Justice Jacobs considered that this would be an appropriate case to require disclosure. The applicants had met all the necessary elements to succeed in obtaining Norwich Pharmacal relief.
However, the fact that there is a strong case that the provision of the critical information, as to the identity of the wrongdoer, would contravene Liechtenstein law, coupled with the fact that the proposed NPO is not readily enforceable in Liechtenstein, is a “decisive reason” why it was not in the interests of justice to make the order against 1291 Private Office.
Decision
Mr Justice Jacobs refused to make the NPO, and instead directed that if there is to be any order for the production of the information sought by the applicants from 1291 Private Office, those orders should be made by a Liechtenstein court, if they are made at all.
Comment
Since the introduction of the gateway under Practice Direction 6B, it has been easier to serve information orders against non-parties and serve NPOs and BTOs outside of the jurisdiction.
However, the courts do not apply this indiscriminately, and have refused such relief on a few occasions recently. For example, in Scenna v Persons Unknown [2023] EWHC 799 (Ch) (discussed here) the High Court refused to grant a Bankers Trust Order for a foreign bank to disclose information. It held that the order would only be made against foreign banks in “exceptional circumstances” because it would risk putting the bank in breach of local laws.
Where this is the case, the applicant should seek relief from the local courts instead.
