To disclose or not to disclose: the Ramilos restriction on the courts’ Norwich Pharmacal jurisdiction in aid of foreign bank proceedings

In Ramilos Ltd v Buyanovsky, it was held that the statutory regime of the Evidence (Proceedings in Other Jurisdictions) Act 1975 (the 1975 Act) limits the courts’ otherwise inherent jurisdiction to make a Norwich Pharmacal order when it comes to obtaining evidence in aid of foreign proceedings. This restriction, however, is one that in our recent experience may have gone unnoticed by some in the legal profession, even though it has important implications for third parties, commonly banks, who are the recipients of such orders.

Norwich Pharmacal

A Norwich Pharmacal order (NPO) is a disclosure order that is made under the equitable jurisdiction of the court (Norwich Pharmacal v Customs and Excise Commissioners). It is usually obtained where a party knows that wrongdoing has taken place against it but does not know the identity of the wrongdoer or lacks information to plead a claim, yet can identify a third party who has this information.

Three conditions must be satisfied:

• A wrong has been carried out (or arguably carried out) by an ultimate wrongdoer.
• There must be the need for an order to enable action to be brought against the ultimate wrongdoer.
• The person against whom the order is sought is:
  • mixed up in so as to have facilitated the wrongdoing; and
  • able or likely to be able to provide the information necessary to enable the ultimate wrongdoer to be sued.

The court will then exercise its discretion in deciding whether it is in the interests of justice to make the order sought.

Obtaining evidence for use in overseas proceedings

Even where the three threshold conditions are met, and the court would be prepared to exercise its discretion to grant the order, the Norwich Pharmacal jurisdiction cannot be used to obtain evidence for use in overseas proceedings.

This arises as a result of the exclusive statutory regime of the 1975 Act. This sets out the circumstances in which, and procedures by which, the English courts may assist foreign courts in obtaining evidence required for use in overseas proceedings. As Lord Diplock stated in Rio Tinto Zinc Corporation and others v Westinghouse Electric Corporation, the English courts’ jurisdiction in this respect “has always been exclusively statutory”.

However, Norwich Pharmacal was not cited in Westinghouse, and for a number of years thereafter it was apparently accepted that Norwich Pharmacal relief would be available in aid of actual or contemplated foreign proceedings, such as in Omar v Omar.

Ramilos Ltd v Buyanovsky

In Ramilos, a Cypriot company was the parent of a group of companies involved in the plastics industry. The company’s shareholding was divided 50/50 between the applicant BVI company and another Cypriot company called Strongfield Marketing Limited (Strongfield). The managing partner, and a shareholder, of Strongfield was Mr Buyanovsky, the respondent.

The applicant sought an NPO or Bankers Trust order (see below) against Mr Buyanovsky in order to ascertain the necessary information to bring an action against Strongfield.

The order was refused by the court, which held that:

• The extent of the disclosure sought was too wide.
• Even if the applicant had a good arguable case, it was unlikely that it could be pursued in England and instead foreign proceedings were likely.
• The relief sought was excluded by the statutory regime of the 1975 Act.

The court noted that the 1975 Act applies to a wide range of evidence, including the production of documents, and covers not just foreign proceedings which are “up and running”, but also proceedings which are being contemplated.

Impact of Ramilos

The principal point is that the 1975 Act is exhaustive in its effect, such that the Norwich Pharmacal jurisdiction is not available to obtain evidence for use in civil proceedings in a foreign jurisdiction. Although it does not appear to have been tested, one would assume that a similar position would be taken by the courts in respect of civil proceedings in EU member states, where the Taking of Evidence Regulation currently governs the position, rather than the 1975 Act.

NPOs may sometimes be accompanied by a strongly worded penal notice, which could lead a recipient to think that they must simply comply or risk the threat of committal proceedings. However, particularly in circumstances where the order concerns information over which a duty of confidentiality exists, banks or other third party respondents to a Norwich Pharmacal order would be well advised in the first instance to ascertain the location of the proceedings in aid of which the order has been sought. Notwithstanding any other grounds for challenge, where the statutory regime applies, Ramilos is authority that such an order cannot stand, and relief cannot circumvent the 1975 Act. This is borne out by our experience where such applications have successfully been resisted by banks.

Other forms of order

Of course, a Norwich Pharmacal order is not the only form of third party disclosure order that can be made by a court. In relation to overseas proceedings, these may be:

• A Bankers Trust order. This is similar to and sometimes viewed as a branch of the Norwich Pharmacal jurisdiction, although it is not necessarily dependent on this. The circumstances in which it is likely to be available are narrower, that is, where there is a fairly clear-cut case of fraud and the applicant seeks disclosure of confidential documents, usually from the defendant’s bank, to support a proprietary claim to trace assets.
• Disclosure ancillary to a freezing order. Banks are often affected as third parties to freezing orders and the court has broad powers to make ancillary orders to ensure the efficacy of a freezing order, including, in particular, disclosure as to assets held by the bank or other third party.

In both instances, however, the same restriction on the court’s jurisdiction to make such orders in aid of foreign proceedings is likely to exist. In Ramilos, the unsuccessful application was framed as one for a Bankers Trust order as well as for Norwich Pharmacal relief. Meanwhile, in the case of freezing orders, though the courts have the jurisdiction to grant freezing orders in aid of foreign proceedings under section 25 of the Civil Jurisdiction and Judgments Act 1982, this section expressly states that provision for obtaining evidence is excluded from the scope of the court’s power.

As noted above, the Taking of Evidence Regulation (the Regulation) is operative between EU member states. While the Regulation is not expressed to be mandatory, it is understood that the foreign process section would likely treat it as such. Broadly, the Regulation gives the English court a narrower discretion to refuse a request than the 1975 Act. In the context of Brexit, the Regulation will continue to apply to the UK until the end of the transition period. The position after this will depend on what is agreed (or not) between the UK and the EU, otherwise presumably the 1975 Act will apply.

This article was first published on Practical Law.