R (on the application of KBR, Inc) v Director of the Serious Fraud Office [2021] UKSC 2 (5 February 2021)
Citation:R (on the application of KBR, Inc) v Director of the Serious Fraud Office [2021] UKSC 2 (5 February 2021)
Subjects invoked: 11. 'Legal Methods'.59. 'Shipping'.
Rule of thumb:Can the Police in one country order an organisation or person domiciled in another country to provide them with information they hold as part of an investigation? No. The foreign Police service has to be contacted and let the foreign police service contact the person or organisation.
Background facts:
This case invoked the subjects of Police Processes and international law, namely the territoriality & extra-territoriality principles, as well as extradition & foreign police service co-operation.
The facts of this case were that KBR are an engineering company – they basically design and make advanced technical products in many different areas. Their engineering and manufacturing expertise often leads them provide equipment to the military, such as with army helicopters. KBR were under investigation in the UK Police, specifically by the UK Serious Fraud Office (SFO) branch/department of the UK Police, for fraud and bribery – in particular for potentially bribing political officials to use their political influence to buy KBR’s products for the army etc rather than buy products from KBR’s competitors. KBR have a UK subsidiary, but the main head office of KBR is in the USA. The UK Police sought information from KBR UK about their practices in the lobbying and procurement of public officials. However, KBR UK confirmed that most lobbying practices related to contract procurement were all done from the USA, so they did not hold any documents relating to the lobbying of public officials – all the information relating to this was not on their UK computer servers or in their UK papers files, with this information on USA computer servers or paper files in a filing cabinet in the USA. The UK Police arranged a meeting with KBR USA in London, and KBR USA directors agreed to attend. At this meeting in London the UK SFO gave KBR USA an order requiring them to provide lots of different information about their procurement and lobbying practices from their computer servers in the USA. KBR USA refused to provide to comply with this request and provide the information and so the matter went to Court.
The UK Police/SFO argued that potentially corrupt procurement and lobbying practices implemented by KBR USA from the USA were possibly adversely affecting UK companies, who were KBR’s competitors, as these competitors played by the rules of the game, rather than effectively putting briefcases of cash under the table so to speak for public officials, and they were unable to obtain Government contracts. The UK Police/SFO argued that the principle of extra-territoriality therefore applied in this matter. The UK Police Force argued that if the UK Supreme Court issued a Judgement affirming extra-territoriality applied in the scenario raised by this case, then by the principle of comity of Court Judgements, namely that a Court Judgement in one national country is also binding in another national country, then this would effectively force the KBR USA to provide the information that they were looking for. The UK Police Force stated that s2(3) of the Criminal Justice Act 1987 indicated that the UK Police Force had powers of extra-territoriality in relation to matters of this nature in which acts of potential frauds abroad were potentially harming businesses in the UK. KBR USA argued that this so-called extra territoriality principle was nonsense. KBR USA explained that the principle of territoriality applied – which means that it is only the national authorities in a country who can compel national citizens and organisations from that country to do anything – not foreign authorities. They argued that this most basic and rudimentary territoriality principle of public international law applied to ensure that as an American organisation operating within the USA it could not be compelled to do anything by the UK Police Force.
Judgment:
The Court upheld the arguments of KBR USA. The Court affirmed that the principle of extra-territoriality did not apply to this matter, and that the principle of territoriality applied instead. The Court affirmed that territoriality is the general rule of international law ie that by territoriality authorities in a national country cannot compel foreign citizens or foreign organisations in another country to do anything, except in the most extreme and exceptional of circumstances when extra-territoriality may apply. The Court affirmed that were no confirmed USA legislative Acts implementing that the UK Police Authorities could do this to American citizens/organisations, and the UK Act creating the Serious Fraud Office did not even expressly state that the principle of extra-territoriality applied to it – the UK Supreme Court were not satisfied that s2(3) of the CJA 1987 gave the UK Police powers of extra-territoriality. The Court held that there therefore were absolutely no reasonable grounds for arguing that the entirely exceptional principle of extra-territoriality applied in this matter. The UK Supreme Court affirmed that KBR USA did not have to comply with the information request from the UK Police Force. The Court held that the UK Police Force would have to contact the USA Police Forces and use the laws related to extradition and other voluntary exchanges of information if they wanted to obtain this information.
Ratio-decidendi:
‘51. … this does nothing to diminish the force of this pronouncement as to the effect of the presumption against extra-territorial effect in the domestic law of the United Kingdom which is founded on both international law and comity… 56. … It is significant that in this amendment Parliament has not conferred on SOCA the power to demand information from abroad on pain of criminal penalties but has made provision for a mutual legal assistance procedure which respects international comity through international agreement, reciprocity and mutually agreed conditions…. 63. … On the contrary, the question whether a statutory power is to have any extra-territorial effect will depend on the wording, purpose and context of the specific statute when considered in the light of domestic principles of interpretation and principles of international law and comity’. Lord Lloyd Jones
Warning: This is not professional legal advice. This is not professional legal education advice. Please obtain professional guidance before embarking on any legal course of action. This is just an interpretation of a Judgment by persons of legal insight & varying levels of legal specialism, experience & expertise. Please read the Judgment yourself and form your own interpretation of it with professional assistance.