A long way from Norwich: Jurisdiction in NPOs revisited

As the area of law surrounding Norwich Pharmacal Orders (NPOs) has grown in recent years, applications for an NPO in situations where the respondent resides outside the jurisdiction has come under increasing scrutiny.

The recent High Court case of AB Bank Ltd v Abu Dhabi Commercial Bank PJSC [2016] EWHC 2082 (Comm) has provided a significant development on this issue and given an emphatic judgment on the limitations of Norwich Pharmacal relief against overseas parties.

Facts of the case

The Claimant, a Bangladeshi bank, deposited US$20 million in an account with a bank in the UAE (the Defendant) in accordance with its agreement with a Singaporean company (the agreement stated that English law would apply). The sum was subsequently transferred without the Claimant’s knowledge and the Claimant alleged they were the victim of a fraud. The Claimant sought the NPO against the UAE bank to provide information to help trace the funds (there was no suggestion that the UAE bank was involved in any fraud). The NPO was granted after a without notice hearing.

Decision

The court held that the NPO made against the UAE bank should be set aside on the basis that the court did not have jurisdiction to permit service out of the jurisdiction of an application for Norwich Pharmacal relief. Teare J stated that the claim did not come under any of the jurisdictional gateways as set out in Practice Direction (PD) 6B and therefore the order for service out of the jurisdiction must be set aside.

Teare J concluded, obiter, that even if he was found to have erred in his findings on the jurisdictional gateways, he considered that this was not a proper case in which the court should exercise its discretion and order service out of the jurisdiction due to the risk as to whether such an order would be enforceable in the UAE or indeed, consistent with UAE law. Teare J heard expert evidence on this point. Furthermore, he found that there was a way of seeking the information in the UAE (via the Central Bank) commenting that the parties should seek to co-operate, as opposed to the English court seeking “to exercise an exorbitant jurisdiction over a foreign bank”. He went on to say that authority suggested that the court should exercise restraint in such cases except in exceptional circumstances, which he held did not apply in this case as there was no urgency.

Teare J also rejected arguments that the respondent had submitted to the jurisdiction of the English court through its conduct and found the evidence inconclusive as to whether the London office of the UAE bank in fact represented a place of business for the UAE bank.

Practical advice

This case has significant implications for the use of NPOs in international cases as, following this ruling, where a third party has not submitted itself to the jurisdiction of the English court, the applicability of NPOs in cross-jurisdictional matters appears to be limited. It may be possible to persuade a court to use its discretion where there is an urgency involved in obtaining information; although this will greatly depend on the facts.

In circumstances where information is needed from a third party outside the jurisdiction, as Teare J made clear in his judgment, it is recognised that it is not an option to make that third party an additional defendant to the proceedings, simply to try and obtain information where that party is not liable in any action in that claim.

In this case, following Teare J’s comments, the only gateway which may have been applicable was under PD 6B 3.1(2); that is for the injunction sought to order that the UAE bank do (or refrain from doing) an act within the jurisdiction. Teare J referred to the order not requiring any action in the UK and stated that it could have included providing the solicitors in the UK with the requested information. In similar circumstances it would therefore be advisable to include such a provision in the order requested; although it is not clear whether in this case, this would have convinced the court that this gateway would then have applied.

Given Teare J’s obiter comments that he would still have set aside the order as there was a way for the information to be provided in the respondent’s jurisdiction, it is advisable that means by which to obtain the information in the relevant jurisdiction are explored before a party applies for an NPO. It is also advisable for experts to be consulted in respect of the local law and whether the order requested would be enforceable in the foreign jurisdiction if it were granted. Further to Teare J’s comments, parties should seek to cooperate, where possible, rather than rely on the Norwich Pharmacal principles as a primary option. Whether an English court may be more willing to use its discretion in cases where other options for obtaining the necessary information have been exhausted remains to be seen.

The relatively unremarkable circumstances of this case, where funds removed from a foreign bank have given rise to English court proceedings, serve to highlight potential limits of English law in multi-jurisdictional matters. Parties will have to fully consider whether an exclusive English jurisdiction clause in a cross-border agreement will grant them the protection of the full range of English legal remedies given the particular circumstances of the matter.