Justin Briggs and Joelle Chess in our Pensions Disputes Team comment on KBR v Serious Fraud Office (the “SFO”)
The Supreme Court held, on 5 February 2021, that the power for the SFO to request information under section 2(3) of the Criminal Justice Act 1987 (the “CJA”) could not be used against a company based overseas with no fixed place of business in the UK and which had never carried on business in the UK.
At first glance, this decision may appear unconnected to Pensions law. However, parallels can be drawn between the power under the CJA and the power given to the Pensions Regulator under section 72 of the Pensions Act 2004 (the “PA 2004”).
If, for example, the Pensions Regulator gave notice under section 72 to the parent company of an employer and that parent company was wholly based abroad, would this notice be effective? In its ruling, the Court said that the effects of similar provisions in different Acts of Parliament could be used by analogy to assist courts in determining the intended scope of an Act but that they should be approached with caution.
In considering whether the provision in the CJA could apply to a foreign company, the Supreme Court considered that there is a presumption that domestic law in England and Wales is generally not intended to have extra-territorial effect. It also focussed on the concept of “comity” in international relations, or the idea that countries should operate in the spirit of neighbourliness. The concept of comity conveys a level of mutual respect between countries’ legal systems meaning laws are limited by more than just international law when they operate in other jurisdictions.
The Court also stated that it is usual for Acts of Parliament to mention directly if they are intended to be enforceable overseas, which both the CJA and PA 2004 do not.
As the Supreme Court emphasised, different statutory schemes have different purposes and operate in different contexts. It could therefore be argued that the PA 2004 has substantive powers of more extensive scope than the CJA and therefore could apply extra-territorially. However, there is room for argument here and notices under section 72 of the PA 2004 to foreign companies should not be blindly complied with.
R (on the application of KBR, Inc) (Appellant) v Director of the Serious Fraud Office (Respondent)
46. Judicial decisions concerning the effect of different statutory provisions may be instructive by way of analogy but they need to be approached with some caution because they are concerned with entirely different statutory schemes, often enacted for different purposes and operating in different contexts.