Appeal by KBR Inc could threaten the extent of the SFO's international investigatory powers

By Louise Lanzkron

06-2019

Appeal by KBR Inc could threaten the extent of the SFO's international investigatory powers

On 8 April 2019 the UK Supreme Court granted KBR Inc leave to appeal the decision to extend the extraterritorial scope of the UK Serious Fraud Office's ('SFO's') investigatory powers[1]. The original judgment, made in September 2018 by the Administrative division of the High Court against KBR Inc, is highly controversial because it enables the SFO to compel a foreign parent company of a UK subsidiary to provide information relevant to an investigation, provided the foreign company has a 'sufficient connection' to the UK[2].

The judgment has a significant impact on the international reach of the investigatory powers of the SFO. Providing a 'sufficient connection' can be established, foreign companies with a presence in the UK may find themselves on the receiving end of a Section 2 Criminal Justice Act 1987 ('CJA 1987') Notice compelling them to release documents, should a UK-based entity be under SFO investigation.

It is not known at this stage the basis of KBR's appeal but the High Court did list some clear factors which alone would not bring a foreign parent within the scope of having a 'sufficient connection'; for example, the mere fact that KBR Inc was the parent company of KBR Ltd, the fact that KBR Inc was willing to and did cooperate with the SFO's document requests and the fact that a KBR Inc representative attended the meeting with the SFO in the UK.

The High Court recognised the ease of transferring documents across borders in this digital age where the world is becoming ever more connected. The court was conscious that if it did decide to prevent the ambit of the Section 2 Notice extending outside of the jurisdiction, the effect of a decision of this kind may have the effect of encouraging companies to transfer documents oversees in order to "forestall" a serious fraud investigation.

Without doubt the High Court decision provides a significant boost to the SFO's investigatory powers. It will be interesting to see whether the Supreme Court agrees that the SFO's powers should be extended in this way.

To read more about the decision of the High Court click here: UK Court Extends the International Scope of the SFO's Investigatory Powers

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[1] https://www.supremecourt.uk/docs/permission-to-appeal-2019-04.pdf

[2] The Queen on the Application of KBR Inc v The Director of the Serious Fraud Office [2018] EWHC 2368 (Admin)


 

Authors

Louise Lanzkron Image

Louise Lanzkron

DR Knowledge & Development Lawyer
UK

Call me on: +44 (0)20 7415 6000