From 1 October 2022, Practice Direction 6B of the Civil Procedure Rules 1998 (which sets out the gateways for service of English proceedings out of the jurisdiction) will be amended to include a new gateway at paragraph 3.1(25).
The new wording covers claims or applications for disclosure to obtain information regarding: (i) the true identity of a defendant or a potential defendant; and/or (ii) what has become of the property of a claimant or applicant.
In a move which will bolster the toolkit for those pursuing fraud claims in the English Courts, the amendment clarifies and codifies the position around obtaining permission to serve Norwich Pharmacal Orders (NPOs) and Bankers Trust orders (BTOs) outside of the jurisdiction. In summary:
- NPOs are disclosure orders which allow the applicant to obtain information from a third party who has become involved or "mixed up" in wrongdoing, but who is not likely to be party to the proceedings. NPOs are commonly used to identify the proper defendant to an action or to obtain information to plead a claim.
- BTOs are only available where, on the face of it, there is a clear case of fraud. They are made against banks or other organisations that are either holding misappropriated or stolen funds or have had those funds pass through them. A claimant who seeks disclosure against a non-party must demonstrate a real prospect that the information might lead to the location or preservation of assets to which the claimant makes a proprietary claim.
The need for this amendment to Practice Direction 6B has been made apparent in several recent decisions within the crypto dispute space. In Ion Science v Persons Unknown (unreported), 21 December 2020 (Commercial Court), the judge granted permission to serve a foreign exchange with a BTO but declined to express a view on whether AB Bank Ltd v Abu Dhabi Commercial Bank PJSC  EWHC 2082 (Comm), which held that NPOs could not be served outside of the jurisdiction, was correctly decided. The AB Bank Ltd approach was followed in another crypto dispute, Fetch.ai Limited v Persons Unknown  EWHC 2254 (Comm), but the position was complicated by an inconsistent decision in Mr Dollar Bill Ltd v Persons Unknown and Others  EWHC 2718 (Ch), where permission was given to serve an NPO out of the jurisdiction.
The amendment will provide welcome clarity, with the Master of the Rolls, Sir Geoffrey Vos, stating that he hoped that developments in the Court’s rules will make the "fine distinction" between NPOs and BTOs less significant and make it generally easier to litigate issues that arise for on-chain transactions and the tracing of crypto assets.
While parties will still need permission to serve an NPO and/or BTO out of the jurisdiction, the amendment to the Civil Procedure Rules is welcome news for anyone pursuing a fraud claim through the English courts. This follows another recent and significant development in the jurisprudence regarding service of proceedings, in the case of D'Aloia v (1) Persons Unknown (2) Binance Holdings Limited & Others, where the court ordered the service of proceedings via the transfer of a newly minted NFT on the blockchain (which was only the second instance of such an order having been granted globally, and the first in the courts of England and Wales). Both of these developments are good examples of how the English Courts are able to adapt quickly to the challenges of globalisation and digitalisation.