Supreme Court judgment in KBR v SFO appeal: detailed briefing published

As reported in our previous blog post, the Supreme Court has handed down judgment in a keenly anticipated case concerning the scope of extraterritorial application of the SFO’s document compulsion powers under section 2(3) of the Criminal Justice Act 1987 (CJA): R (on the application of KBR, Inc) v Director of the Serious Fraud Office [2021] UKSC 2.

The Supreme Court unanimously allowed the appeal, confirming that the SFO did not possess the power to compel a foreign company to produce documents held outside the UK.

Our FSR and Corporate Crime team have now published a briefing with further analysis of the decision and its practical implications for multinational corporations.

The briefing refers to the Supreme Court's interesting observations on the potential read across value for other regulatory bodies. There was some anticipation that the KBR judgments might, depending on the outcome of the Supreme Court case, be used by other law enforcement or regulatory authorities (including the FCA) in arguing that their own powers should be considered to have extraterritorial scope. This potentially included any agencies who may be involved in cross-border investigations and who have statutory document compulsion powers which are not expressly limited in their territorial scope.

The Supreme Court warned, however, against "reading across" between the document production powers vested in different UK agencies, noting that each operates under its own legislative history and context. The court distinguished the tax case of Jimenez, R. (On the Application of) v The First Tier Tribunal (Tax Chamber) [2019] EWCA Civ 51, which had followed the High Court decision in KBR v SFO, on the basis that (among other things) the powers pursuant to the Finance Act 2008 were expressly limited for the purpose of checking the taxpayer’s tax position. The powers were necessarily and only exercisable in relation to someone who is or may be liable for tax in the United Kingdom and who, to that extent, had an identifiable relationship with the United Kingdom. This, it indicated, was different to the broad ambit of section 2(3) CJA 1987 which, on the High Court’s analysis, had required limitation through the creation of the “sufficient connection” test. A further distinguishing factor was that non-compliance in Jimenez did not amount to a criminal offence, as under section 2(3).

Notwithstanding these comments, the parallel between the SFO’s document compulsion powers and those of the FCA under the Financial Services and Markets Act 2000 is noteworthy (and arguably more aligned than the tax example). The Supreme Court’s ruling may therefore provide a helpful indication that the FCA’s similar statutory powers do not extend to compel foreign group companies to produce overseas held documents, within the context of an FCA investigation into a group company based in the UK.

For more information, please read our FSR and Corporate Crime team briefing on this decision.