In AB Bank Ltd v Abu Dhabi Commercial Bank PJSC(1) the High Court set aside a Norwich Pharmacal order made against the Abu Dhabi Commercial Bank (ADBC) on the basis that the court had no jurisdiction to permit service out of the jurisdiction of a claim form in respect of Norwich Pharmacal relief. Norwich Pharmacal orders are a specific form of equitable relief whereby a person who, while not a party to the proceedings, has become mixed up in the wrongdoing complained of (whether innocently or knowingly) is ordered to provide disclosure. It is an important jurisdiction which complements the non-party disclosure rules under Civil Procedure Rule 31.7.
While the decision helps to clarify the powers of the English courts to make Norwich Pharmacal orders against parties outside the jurisdiction, it is unlikely to be the last word on how the Norwich Pharmacal regime interacts with the rules on service out contained in Civil Procedure Rules Practice Direction 6B.
AB Bank Ltd was a Bangladeshi bank seeking to raise funds in the United Arab Emirates to lend into the Bangladeshi market. AB Bank had deposited $20 million of funds with ADBC pursuant to a Sharia-compliant agency agreement with Singapore company Pinnacle Global Fund PTE Limited. However, between March 2014 and December 2014, the amount of $20 million – which was held in a joint account with Pinnacle – was withdrawn and paid to persons unknown.
AB Bank entered into discussions with Pinnacle for the return of the funds, pursuant to which the parties agreed to amend the agency agreement to provide for English law as the governing law of the transaction and for the English courts to have exclusive jurisdiction in relation to any claims.
At first instance AB Bank obtained a Norwich Pharmacal order against ADBC at a January 2016 without notice hearing under the jurisdictional gateways set out in Practice Direction 6B. Although no allegations of fraud were made against ADBC, AB Bank considered that ADBC had information as to the identity of the recipients of the funds and therefore was sufficiently mixed up in the events giving rise to the fraud that it was appropriate to make a Norwich Pharmacal order against it. ADBC applied to have the order set aside on the basis that there was no legal basis to serve a claim form in respect of a Norwich Pharmacal order out of the jurisdiction under any of the traditional jurisdictional gateways in Practice Direction 6B.
In order to effect service of proceedings out of the jurisdiction, a litigant must satisfy one of the jurisdictional gateways under Practice Direction 6B. AB Bank submitted that its claim for Norwich Pharmacal relief came under one of three gateways. In its judgment the court considered each of the gateways in turn and agreed with ADBC that none applied so as to permit service out of the jurisdiction in respect of claims for Norwich Pharmacal relief.
First gateway: Section 25(1) of Civil Justice and Judgments Act
The first gateway relied on by AB Bank was Paragraph 3.1(5) of Practice Direction 6B, which permits service out of the jurisdiction for a claim that is an "interim remedy under section 25(1) of the Civil Justice and Judgements Act 1982". Section 25(1) provides that the High Court has jurisdiction to grant interim relief in respect of proceedings outside the jurisdiction and defines 'interim relief' as "interim relief of any kind which [the court] has power to grant in proceedings relating to matters within its jurisdiction, other than (a) a warrant for the arrest of property or (b) provision for obtaining evidence".
The court considered that this gateway was not satisfied for two reasons. First, Paragraph 3.1(5) of Practice Direction 6B and the Civil Justice and Judgements Act applies to interim relief in support of foreign proceedings – that is, no mention is made of the ability to serve a claim form in respect of interim relief out of the jurisdiction in relation to domestic proceedings. The court reasoned that this means that the object of the first gateway is to enable service out of applications for relief in support of foreign proceedings where the relief is sought against the defendant in the foreign proceedings and is interim as between the claimant and the defendant. Freezing orders are an example of a type of interim relief in respect of which service out of the jurisdiction can be sought in the manner contended by AB Bank under Paragraph 3.1(5) of Practice Direction 6B.
Second, the court agreed with ADBC's counsel's submission that it followed that this gateway could not apply because the Norwich Pharmacal relief sought in this case was not in this sense 'interim'; it was rather the final relief being sought against the respondent, as no further proceedings involving ADBC were contemplated. This was notwithstanding the fact that such an order can at first instance be made ex parte before being made final at an inter partes hearing – this did not make it interim for the purposes of Paragraph 3.1(5) of Practice Direction 6B. In reaching this conclusion, the court declined to follow the decisions of the courts of Gibraltar and the British Virgin Islands, which had found that Norwich Pharmacal relief may be said to be interim because it is ancillary to the substantive cause of action. The court in this case cited the "traditional" analysis by Buschell and Milner-Moore(2) that Norwich Pharmacal relief is seen by the English courts as a self-standing cause of action and should therefore be considered a form of final relief.
Second gateway: Paragraph 3.1(2) of Practice Direction 6B
The court also considered that the second gateway under Paragraph 3.1(2) in respect of "a claim for an injunction… ordering the defendant to do or refrain from doing an act within the jurisdiction" did not apply. This was because the steps that ADCB would need to take to comply with the injunction would be undertaken in the United Arab Emirates, not in the United Kingdom.
Third gateway: Paragraph 3.1(3) of Practice Direction 6B
The third gateway relied on by AB Bank under Paragraph 3.1(3) of Practice Direction 6B applies where:
- there is a real issue between the claimant and the defendant which it is reasonable for the court to try; and
- the claimant wishes to serve the claim form on a person that is a "necessary and proper party to that claim".
While an allegation of fraud against Pinnacle satisfied the first condition of the test under Paragraph 3.1(3), the court did not consider that the second condition was satisfied, because the claimant was seeking to serve a claim form against ADBC for Norwich Pharmacal relief which was a different cause of action; therefore, ADBC could not be said to be a proper party to the action alleging fraud against Pinnacle. This followed the principle that a party not shown to be liable in any action may not be made a party to proceedings simply in order to obtain discovery. In this regard, the court disagreed with the approach of Justice Eady in Lockton Companies International,(3) in which an order was made against Google for disclosure against "persons unknown" even though Google was not a party to the main action.
The court went on to address the question of whether, had a jurisdictional gateway been available, it was right for the court to exercise its discretion and permit service out. Counsel for ADBC submitted that it would not be proper for the court to make such an order on the basis that compliance with the order may amount to breach of the UAE Penal Code, which prohibits the disclosure of "secrets" without the consent of the individual to whom the secret pertains. According to ABDC's expert, the information sought by AB Bank would amount to a secret under the Penal Code and could be disclosed only by order of a local UAE court. The court agreed that these factors militated against the court exercising an "exorbitant jurisdiction" over a foreign bank.
The case also posed a practical question as to whether service could be validly effected on the UK branch of ADBC. Under Civil Procedure Rule 6.9, a company may be served within the jurisdiction at any place where it carries on its activities or any place of business of the company. The court considered that there was insufficient evidence to approve the validity of service of the claim form on the UK branch of ADBC. The court invoked the principle in Cape Industries v Adams(4) in finding that it was necessary to carry out an investigation of the functions of ADBC and its relationship with ADBC UK before a decision could be reached as to whether ADBC had a place of business in the United Kingdom, and that on the evidence this investigation had not been carried out.
This decision highlights the challenges faced by victims of fraud when formulating a cross-border asset recovery strategy. Norwich Pharmacal relief is an intrusive jurisdiction, especially when applied against innocent facilitators that have become caught up in the wrongdoing. To have permitted service out in this case would in principle mean that the courts have jurisdiction to make a Norwich Pharmacal order against anyone anywhere in the world, whether or not they have a connection with the jurisdiction. The case is also noteworthy for the criticism which the court heaped on previous decisions that permitted service out of Norwich Pharmacal relief and that had therefore left the law in this area in an untidy state.
The availability of cross-border remedies in fraud-related situations is a complex and evolving area of law; the increasingly cross-border nature of fraud will likely continue to generate jurisprudence on this topic. It remains to be seen whether AB Bank will be considered authoritative guidance by judges confronted with the question of how to apply the jurisdictional gateways to parties seeking Norwich Pharmacal relief in multi-jurisdictional disputes.
For further information on this topic please contact Greg Pooler at RPC by telephone (+44 20 3060 6000) or email ([email protected]). The RPC website can be accessed at www.rpc.co.uk.
(2) Disclosure of Information, Norwich Pharmacal and Related Principles, Bushell and Milner-Moore (2013), pages 223-226.
(3)  EWHC 3423 (QB).
(4)  1 Ch 433.