The Federal Tribunal (Switzerland's Supreme Court) has provided further guidance on the objections that legal entities can raise against a letter rogatory requesting the remittance of banking documents in the context of a criminal investigation conducted abroad.

Three decisions were handed down on October 15 2001 in connection with a remittance request which Pakistan submitted to the Swiss authorities in the context of criminal investigations brought against the former prime minister Benazir Bhutto, her husband and her mother. Pakistan issued a request for all documentation regarding certain bank accounts that were held with a Swiss bank in the names of offshore companies whose beneficial owners were Mrs Bhutto, her husband or her mother.

The Swiss authorities agreed to proceed in accordance with the request for assistance, and ordered the freezing of assets deposited with a particular bank and the remittance of the banking documentation. The three legal entities concerned, the holders of the bank accounts, filed an appeal against the decision of the investigating judge before the cantonal court on the basis of serious flaws in the criminal proceedings in Pakistan. They argued that the purpose of these proceedings was to remove Bhutto from her position as a leading opponent of the regime which was in power at the time. They contended that the information which the investigating judge had remitted to the Pakistani authorities had been used to sentence Bhutto and her husband to jail, and that assurances which had been given regarding the guarantee of a fair trial and the courts' impartiality were false.

The cantonal court dismissed the appeal, finding that the right to a fair trial cannot be invoked by a legal entity that is not affected by the human rights situation in the state concerned. The mere transmission of banking documentation had no impact on the entities concerned, and they were not entitled to act to protect the interests of the beneficial owners or the persons against whom the investigation was conducted.

The Federal Tribunal has thus confirmed that legal entities cannot invoke the flaws of a foreign criminal investigation to refuse to provide assistance when requested. The only persons who can raise this objection are those who are "personally and directly affected" by the assistance measure, and who have an interest which deserves protection in having that measure cancelled or modified. With regards to human rights issues, only those persons which might suffer from the flaws of the criminal proceedings underway are entitled to raise objections against the international assistance. Similarly, in the case of fiscal matters, only persons who might be affected by a breach of the speciality principle - whereby information obtained by a foreign state can only be used in a criminal investigation, and not in other proceedings such as those related to tax issues - are entitled to raise objections against international assistance.

According to present practice, based on the best possible cooperation between courts, flaws in a criminal investigation will not lead to the refusal of international assistance, but rather to the expression of reservations and conditions.

As a result, the legal entities that are the holders of the bank accounts concerned have not been permitted to object to the request for remittance of all banking documentation regarding their accounts. The Federal Tribunal did not see how these legal entities, which had their seats in offshore jurisdictions, could be affected in any way by the human rights situation or the flaws of a criminal investigation in Pakistan. Even if Pakistan requested the confiscation of the assets at a later stage, the frozen assets would not be remitted unless the Swiss authorities were satisfied that the foreign procedure offered sufficient guarantees. At this early stage in the proceedings, therefore, the arguments raised by the offshore companies were dismissed.

These three new decisions rendered in the same context show that a bank account holder's opportunities to challenge international assistance have become more and more restricted, particularly where the holder is an offshore company. This is a direct result of the 'best possible cooperation' principle applied by the Swiss authorities.

For further information on this topic please contact Guy-Philippe Rubeli at Pestalozzi Lachenal Patry by telephone (+41 22 80 94 500) or by fax (+41 22 80 94 501) or by email ([email protected]).