AB Bank Limited v Abu Dhabi Commercial Bank PJSC: Norwich Pharmacal Orders

AB Bank Limited, Off-Shore Banking Unit v Abu Dhabi Commercial Bank PJSC

Reference: [2016] EWHC 2082 (Comm)

Court: High Court

Date of judgment: 12/08/2016

The facts of the case

The Claimant, AB Bank Limited, Off-shore Banking Unit, is a Bangladeshi Bank which claims to have been the victim of fraud. In 2013 it entered into a sharia-compliant agency agreement with a Singaporean company with the aim of raising funds in the UAE to lend in the Bangladeshi market. The Claimant and the Singaporean company opened a joint bank account with the Defendant, Abu Dhabi Commercial Bank PJSC, into which the Claimant transferred $20 million for the purposes of the sharia-compliant agency agreement. Shortly afterwards the money was paid out of the account and the Claimant does not know to whom. The Claimant made an application for a Norwich Pharmacal Order (“NPO”) against the Defendant, not alleging fraud, but asserting that the Defendant was sufficiently mixed up in the fraud to justify an application to find out where the money was transferred. The NPO was granted by Cooke J at a without notice hearing alongside permission to serve the Order upon the Defendant out of the jurisdiction in the UAE. The Defendant made an application for an order setting aside the NPO raising various jurisdictional issues which was heard by Teare J.

The jurisdictional gateways

The court’s permission was required to serve the claim for Norwich Pharmacal relief upon the Defendant as it was domiciled in the UAE. To obtain the court’s permission the claim had to fit within one of the 20 jurisdictional gateways set out in Practice Direction 6B.3.1.

Interim remedy in support of foreign proceedings

One of the gateways relied upon was PD 6B paragraph 3.1 (5) which is applicable where the claim is for an interim remedy under Section 25 (1) of the Civil Jurisdiction and Judgments Act (CJJA) 1982. Section 25 defines interim relief as “interim relief of any kind which the court has power to grant in proceedings relating to matters within its jurisdiction”. Teare J said that in determining whether a claim is for an interim remedy one has to have regard to the object of PD 6B paragraph 3.1 (5) which he understood as enabling service out of an application for relief in support of foreign proceedings where that relief was interim between the Applicant and the Respondent. Teare J declined to follow the authorities of other jurisdictions which considered that Norwich Pharmacal relief was interim. Teare J referred to Disclosure of Information, Norwich Pharmacal and Related Principles by Bushell and Milner-Moore, whose editors had commented that Norwich Pharmacal relief “has traditionally been seen through the eyes of English jurisprudence as a self-standing action, rather than a form of interim relief”. Accordingly, Teare J decided that the PD 6B paragraph 3.1 (5) gateway was not available to the Claimant to serve the NPO out of the jurisdiction as the NPO was a final remedy between the Claimant and the Defendant.

Injunction ordering act within the jurisdiction

The second gateway relied upon by the Claimant was PD 6B paragraph 3.1 (2) which is applicable where an applicant has applied for an injunction ordering an act within the jurisdiction. Teare J said that the question here was whether the Defendant was being ordered to do something within the jurisdiction. Teare J cast doubt on the High Court case of Bacon v Automattic Inc and others [2011] EWHC 1072 (QB) where permission had been granted ex parte to serve an application for Norwich Pharmacal relief out of the jurisdiction on the basis that the US domiciled defendants would have to do an act within the jurisdiction, namely, disclose the information sought to the claimant’s solicitors. Teare J did not consider that the NPO required the Defendant to do anything within this jurisdiction and the claim failed to pass through the gateway for that reason.

Necessary and proper party

The third gateway relied upon by the Claimant was PD 6B paragraph 3.1 (3) which is applicable where a claim is made against a party in the jurisdiction and the claimant wishes to serve the claim form upon another party out of the jurisdiction who is a necessary and proper party to the claim. Teare J criticised the ex parte decision in the High Court case of Lockton Companies International and others v Persons Unknown and Google [2009] EWHC 3423 (QB) where a claim was issued for defamation, harassment and infringement of the Data Protection Act 1998 against Persons Unknown and Google. In that case Eady J considered that Google was a necessary and proper party to an action against Persons Unknown as it was necessary to obtain an order against it to disclose information which would lead to the identification of Persons Unknown. In the present case it was not alleged that the Defendant was liable for the fraud. The claim for a NPO and the claim for fraud would never be tried together. Accordingly, the Defendant was not a necessary or proper party to the action alleging fraud and no gateway was available for serving the NPO upon the Defendant out of the jurisdiction.

Discretion

Teare J also explained what his decision would have been if the claim had been able to pass through one of the jurisdictional gateways. There was before the court a closely related action which would usually indicate that the case was a proper one where the court should exercise its discretion to order service out. However, the Defendant had provided expert evidence from a firm of UAE lawyers that the NPO would not be binding on the Defendant in the UAE and that there would be a possibility that the Defendant would be in breach of UAE law if it complied with the NPO. Further, there was another means by which the Claimant could obtain the information, that of working with the Defendant to seek the consent of the UAE Central Bank to pass the information onto the Claimant. For those reasons Teare J would not have exercised the court’s discretion to permit service out.

The Claimant’s other arguments that service of the NPO should be allowed

Submission to the jurisdiction

The Claimant alleged that the Defendant had submitted to the jurisdiction at a hearing in February 2016 where Cooke J had set aside the NPO against ADCB UK, the Defendant’s representative in the UK. Rejecting the Claimant’s argument Teare J said that Counsel had been clear that she was only acting for ADCB UK at the hearing.

Service upon the Defendant’s representative in the jurisdiction

ADCB UK was not a branch of the Defendant, its one employee focused on marketing activities of the bank within the UK. An in depth investigation had not been carried out as to the relationship between the two companies, therefore Teare J was not able to make a decision as to whether ADCB UK constituted the Defendant’s place of business within the jurisdiction.

Even if service of the NPO upon the Defendant had been permitted within the jurisdiction, Teare J said he would have discharged the NPO for the same reasons as to why he would not have exercised the court’s discretion to permit service out. There was a risk that compliance with the NPO would breach UAE law and there was another means by which the information could be obtained.

Comment

In AB Bank Limited the High Court has provided clarification on the jurisdiction of the court in respect to Norwich Pharmacal relief against foreign defendants. The ruling indicates that the courts should exercise great restraint in permitting service out of an NPO where compliance would breach the law of another country. Also, that there will be very few circumstances in which the court will allow service out where the steps to comply with the NPO would be taken out of the jurisdiction. It appears that after AB Bank Limited where information is held outside the jurisdiction by a third party, assistance should be sought from local practitioners to obtain disclosure.

In particular, Teare J agreed with the ruling in the case of MacKinnon v Donaldson, Lufkin and Jenrette Securities Corporation and Others [1986] 2 W.L.R. 453, a case properly brought before the English court against various defendants alleging fraud. In that case the claimant obtained an order ex parte against an American bank to produce documents from its New York office relating to one of the Defendants. Hoffman J discharged the order stating that it was an established principle that a state should refrain from demanding obedience to its sovereign authority on the part of foreigners in respect of their conduct out of the jurisdiction. Since MacKinnon litigators have been novel in their approach to circumventing jurisdictional restrictions on the use of NPOs, including requesting that the Respondent’s solicitors provide the information in the jurisdiction as in Bacon or issuing proceedings against Persons Unknown and the Respondent as in Lockton Companies International. However, Teare J was critical of these cases and if the reasoning applied in AB Bank Limited is followed it is unlikely that such ploys will work in future cases.

Another important point discussed in AB Bank Limited was the meaning of “Interim Relief” as defined by Section 25 of the CJJA 1982. Section 25 of the CJJA 1982 confers jurisdiction on the High Court of England, Wales and Northern Ireland to grant interim relief in support of civil litigation being conducted overseas. As far as the parties were aware there had been no previous English judicial decision on this point. Teare J said that the relief sought had to be interim between the claimant and the defendant of the NPO action. The Claimant did not intend to issue foreign proceedings against the NPO Defendant therefore the relief sought was final and Section 25 was not applicable. This interpretation of interim relief could have implications on all cases where Norwich Pharmacal relief is required in foreign proceedings. For example, in the recent High Court case of Credit Suisse Trust and another v Banca Monte Dei Pasche Di Siena [2014] EWHC 1447 (Ch) a claimant issued Norwich Pharmacal applications against Italian banks requiring disclosure of information in respect of fraud committed by one of their account holders. The NPOs were granted on the basis that the London branches would be able to provide some of the requested information and the claimant would not issue contempt proceedings against the Italian banks if the information was not sufficient, rather it would try to have the NPOs registered in Italy. From a jurisdictional view point, HHJ Waksman QC was satisfied that the application fell within the definition of interim relief in Section 25 of the CJJA 1982 as the claimant had obtained a worldwide freezing order against the fraudulent account holder in Guernsey. Details of the worldwide freezing order granted in Guernsey are not set out in the judgment, but it would be expected that the order was in personam against the fraudulent account holder and not against the Italian banks. If the reasoning of AB Bank Limited is applied to Credit Suisse Trust, it would appear that there is scope to argue that the court did not have jurisdiction under Section 25 to order NPOs against the Italian banks as they were not interim remedies in relation to the worldwide freezing order granted in Guernsey.

It should be noted that AB Bank Limited is only a High Court decision and should not be taken as an absolute authority. After this judgment this area of law is even more in need of a higher judicial authority to consider NPOs in cases where the information is not in the jurisdiction and to consider the meaning of interim relief in Section 25 of the CJJA 1982. We are not aware that the Claimant has applied for permission to appeal the ruling.