On February 5, 2021 the Supreme Court’s judgment in the case of R (on the application of KBR, Inc) v Director of the Serious Fraud Office made it clear that the Serious Fraud Office (SFO) could not use section 2 of the Criminal Justice Act 1987 to force a foreign company to hand over documentation that is held abroad.
While the Supreme Court’s decision may make it more difficult for the SFO to carry out cross-border investigations, it can also be seen as asking questions about the effectiveness of the Criminal Justice Act.
The US-based company KBR was arguing that a notice issued under section 2 of the Act – which compelled the company to disclose information – could not have such extraterritorial reach. The Supreme Court agreed with KBR. In judgement, the Court said the UK parliament had not intended for section 2 notices to be used in this way. It rejected the SFO’s argument that the Criminal Justice Act could be interpreted as giving it the power to compel companies to produce evidence that is held in other countries.
Sufficient Connection
The SFO had issued the section 2 notice in 2017. The High Court had then rejected KBR’s judicial review claim of the notice in 2018. In doing so, the High Court stated that a section 2 order can have extraterritorial reach, as long as there is a “sufficient connection” between the company and the UK.
But the Supreme Court said that the lower court’s “sufficient connection” standard is not supported by the language of section 2 of the Criminal Justice Act. This is a notable blow to the SFO. But it also raises doubts about the genuine value of the Criminal Justice Act itself.
Looking at how the SFO conducted this case can prompt questions about decisions taken by the agency. But its belief that section 2 notices need to have international reach is understandable, given the transnational nature of a lot of the crime it investigates. With the Supreme Court now having made it clear that is not the case, considerable doubt has now been cast over the future effectiveness of this part of the Act.
Alternatives to section 2 notices
The Supreme Court expressed its belief that the UK parliament intended for information held abroad to be obtained by well-established international evidence-sharing procedures, such as the Mutual Legal Assistance Treaty. But the SFO not being able to resort to such use of section 2 notices is likely to slow the pace of its investigations.
The SFO has had overseas production orders at its disposal since 2019. These do give the agency some scope when it comes to seeking data that is held abroad from communications providers. In the past, the SFO Director Lisa Osofsky has been quite open in calling for changes to the law; particularly regarding the creation of an offence of failure to prevent economic crime and on the issue of corporate liability. It would hardly be surprising if she now argued for changes to be made in relation to section 2 notices; on the basis that the law is not now equipping her agency with the tools it requires.
Conclusion
The KBR case has highlighted the important issue of the effectiveness of the Criminal Justice Act. But it did also see the SFO acting in a high-handed way. In acting as it did, it attempted to sidestep established channels in order to gain what it wanted. That approach has now been shown to have been an improper one.
This is certainly a blow for the SFO. It has been made clear to it that it cannot just fill in a form, act on its own accord and expect to gain the documents it is seeking.
The agency may now go away, consider the judgement and lick its wounds. It would certainly be no surprise if it then came back with the intention of trying to change this aspect of the Criminal Justice Act so that it accurately reflects the reality of investigating modern-day, international crime.