In Magomedov & Others v. Kuzovkov & Others,[1] the High Court handed down an interesting decision examining the conflict of foreign criminal law with the discretion of the Courts of England and Wales to grant a Norwich Pharmacal Order (NPO).
An NPO is a type of disclosure order which requires third parties that are somehow ‘mixed up’ in a wrongdoing to provide certain information that would enable the wronged party to investigate the wrongdoing, potentially identify those responsible for committing the wrong, and recover their losses. NPOs are most typically served on third parties – such as banks or law firms –whose services have inadvertently been used to facilitate the wrongdoing. There are four tests that an applicant must meet to be granted an NPO.[2] These are:
- There is a good arguable case that there has been wrongdoing (the ‘Arguable Wrong Condition’).
- The respondent has been ‘mixed up’ or involved in the wrongdoing (the ‘Mixed Up In Condition’).
- The respondent is likely to have relevant documents or information necessary to enable the wrongdoer to be pursued (the ‘Possession Condition’).
- Granting the order is necessary and proportionate in all the circumstances of the case (the ‘Overall Justice Condition’).
There is an additional level of complexity added to any assessment of the Overall Justice Condition where the respondent is based in a foreign jurisdiction. The introduction of CPR 6B 3.1(25) provides a jurisdictional gateway for service abroad of information orders against nonparties. However, the courts have been reluctant to grant such NPOs in circumstances where there is a risk of conflict with local criminal law.
The High Court re-affirmed in this decision that the Overall Justice Condition is unlikely to be satisfied where compelling a respondent to disclose information pursuant to an NPO would be in contravention of local criminal law. It was re-iterated that, in such circumstances, the applicant should instead be seeking relief at source from the local courts of the respondent’s jurisdiction.
Background
Ziyavudin Magomedov is a Russian businessman who in 2023 filed a claim against several defendants – including some Russian state companies – for $14 billion. Magomedov alleges that his interests in valuable port operators in Vladivostok were illegally seized from him as part of a broader fraudulent conspiracy.
In parallel to those proceedings, Magomedov brought an NPO application against three financial service companies sharing the branding of ‘1291’. Magomedov alleged that the companies held information about the identity of certain individuals who assisted the orchestration of the unlawful conspiracy that deprived him of his shareholding in the port operators.
The first respondent was based in Liechtenstein (‘1291 Private Office’), the second respondent was based in Dubai and the third respondent was based in the UK. Magomedov was granted permission to serve the NPO application abroad on the first and second respondents.
Each of the respondents opposed the NPO application on several grounds. 1291 Private Office advanced two key grounds of opposition:
- The grant of an NPO to compel 1291 Private Office to disclose information would require it to contravene local criminal law.
- Any order of an English court (including an NPO) would not be enforceable in Liechtenstein against 1291 Private Office.
The High Court decision
The High Court went through each of the tests for the grant of an NPO application and satisfied itself on the facts that each of those tests had been met by Magomedov as against 1291 Private Office – save for the final Overall Justice Condition.
The High Court heard detailed expert evidence on the scope and application of Liechtenstein law to the question of information disclosure and, ultimately, agreed with both of the grounds of opposition advanced by 1291 Private Office – namely, that 1291 Private Office’s compliance with any NPO granted would potentially expose it to criminal liability, and an English court order would not be enforceable in Liechtenstein in any event.
The High Court specifically held that:
‘Where, as here, the party against whom an NPO order is sought is an overseas company, it is clearly relevant to take into account any potential breaches of the criminal law in the country where the company is resident or operates’.
In the circumstances, primarily because of the criminal breaches that would be consequential to any NPO granted, it was not considered in the interest of justice to grant an NPO against 1291 Private Office. Magomedov’s NPO application against 1291 Private Office was dismissed. The High Court directed Magomedov to the Liechtenstein courts to seek an information order against 1291 Private Office there.
Takeaway
This decision is a helpful summary for any applicant seeking an NPO against a respondent based in a foreign jurisdiction. The Overall Justice Condition can prove to be a real impediment to any NPO application, and consideration will need to be given as to whether it would be more effective to seek similar relief against foreign respondents from local courts.
[1] [2024] EWHC 2527 (Comm).
[2] As helpfully summarised by Judge Pushpinder Saini in Collier v. Bennett [2020] EWHC 1884 (QB) (as adopted in Stanford Asset Holdings Limited v. AfrAsia Bank Limited [2024] 1 WLR 1131 [2023] UKPC 35).
Contributors
Ben Sharrock-Mason