Supreme Court rules SFO cannot compel foreign company to produce documents held overseas

On 5 February 2021, the Supreme Court handed down judgment in the case of R (on the application of KBR, Inc) v Director of the Serious Fraud Office [2021] UKSC 2 concerning whether the Serious Fraud Office (SFO) can require a foreign company to produce documents held overseas, pursuant to its investigation powers under section 2(3) of the Criminal Justice Act 1987 (CJA).

The decision followed a “leapfrog” appeal from the High Court (see our blog post), the issue being a “point of law of general public importance”. The Supreme Court found unanimously against the broad extraterritorial impact read into the s2(3) CJA power by the High Court: the SFO could not compel the production of documents held overseas on the basis of “a sufficient connection” between the foreign company and the UK.

The practical effect of the decision for financial institutions is that foreign group entities that hold documents overseas, will not find themselves on the receiving end of a section 2(3) notice, should a UK-based group entity be under SFO investigation. Given the parallel between the SFO's document compulsion powers and those of the FCA under the Financial Services and Markets Act 2000, the Supreme Court's ruling is also 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 on the decision please see this post on our FSR and Corporate Crime Notes blog. Further analysis of the case and its potential implications for financial institutions will be published in due course.