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Partner Simon Bushell discusses Norwich Pharmacal Orders and their importance in an era where capital is mobile, and billions can be transferred electronically.

Simon’s article was published in Law360, 19 June 2019, and can be found here.

The English civil courts have remarkable powers to require third parties to reveal information relevant to wrongdoing. Norwich Pharmacal orders can require a third party to reveal vital information, even overriding any duties of confidentiality which might normally apply, in appropriate cases.

For example, Norwich Pharmacal orders can require third parties to reveal who is behind an offshore vehicle or trust, or to identify a signatory on a bank account. They have been used to identify the anonymous users of social media platforms in defamation cases, and to uncover complex frauds. The Norwich Pharmacal jurisdiction continues to develop to this day, having for decades proven to be a remarkably versatile remedy in a wide range of cases.

The Norwich Pharmacal jurisdiction emerged from a landmark 1974 decision of the House of Lords in Norwich Pharmacal v. Customs and Excise Commissioners.[1] In simple terms, this jurisdiction enables the English courts to require an innocent third party to hand over information relating to wrongdoing which they are mixed up in.

The Norwich Pharmacal jurisdiction can oblige a third party to disclose to a potential claimant the identity of the person against whom they may wish to claim. It can also require the production of information and documents. The English courts ‎have proven most willing to use such orders to get to the bottom of fraud and wrongdoing. The relief is also available in offshore jurisdiction such as Cyprus, British Virgin Islands and Cayman, where English legal principles apply extensively.

In an era where capital is mobile, and billions can be transferred electronically, the laws that govern the great financial hubs, such as London, are of increasing relevance globally. Two thirds of cases coming before the commercial courts in London involve non-U.K. parties. This is of course because many international commercial contracts choose English law to govern those contracts. As a result, the English courts routinely hear disputes over matters which have little to do with England. Although their international effect is subject to certain inevitable limitations, if used correctly, Norwich Pharmacal orders can be used to expose wrongdoing across the world.

Orders have been made to disclose the identity of trustees, settlors and trust beneficiaries, as well as details of the trust’s assets and even copies of the relevant deeds. The cold light of day can thus be shone on the detail of the legal structures which are often used to disguise ownership, or to avoid tax and other regulatory obligations. Norwich Pharmacal relief is an equitable remedy and, as such, is granted at the court’s discretion. Relief will only be granted where it is a “necessary and proportionate response in all the circumstances.”

Granting Relief on Norwich Pharmacal Grounds

The fundamental principles for granting relief on Norwich Pharmacal grounds can be summarized as follows. There are at least two threshold conditions which must be satisfied. These are:

1. A “good arguable” case of wrongdoing, or the existence of a right; and

2. Sufficient involvement by the respondent.

The courts have sometimes also regarded necessity as a threshold condition. Necessity is significant as regards the terms of the court’s discretion and is generally considered a balancing exercise — what other practicable means are there to obtain the information required (if any)?

There may also be other requirements in particular contexts. For example, there are statutory constraints on the disclosure of journalistic sources. Other cases may involve the consideration of fundamental human rights.

Perhaps the most significant application of Norwich Pharmacal orders has been in addressing the needs of victims of fraud. Countless frauds have been uncovered using these orders. These include bribery and corruption schemes, over-invoicing or straightforward theft. The case of Bankers Trust Co v. Shapira, applied Norwich Pharmacal principles in this context, allowing the broad disclosure of bank accounts and other material, principally for purposes of asset tracing.

These cases are significant because of the court’s clear emphasis on the obligations imposed on the third-party respondent — often a bank — to provide “full information” to the victim. These obligations override the duty of confidence that would otherwise apply. These cases are sometimes referred to as “lifting the latch of the banker’s door.” They are of significant interest to banks, which must remain keenly aware of their duties of confidence, and the limited circumstances where they can be overridden.

The Evolving Norwich Pharmacal Jurisdiction

The Norwich Pharmacal jurisdiction was significantly developed over the years. First, it was extended to post-judgment enforcement, then to the so-called “missing piece of the jigsaw,” before evolving into the flexible remedy it is today. As Lord Harry Woolf remarked in the leading case of Ashworth Hospital Authority v. MGN, “New situations are inevitably going to arise where it will be appropriate for the jurisdiction to be exercised where it has not been exercised before. The limits which applied to its use in its infancy should not be allowed to stultify its use now that it has become a valuable and mature remedy.”

This flexibility was endorsed by the U.K. Supreme Court in the case of Rugby Football Union v. Consolidated Information Systems (formerly Viagogo) (In Liquidation). The breadth of the jurisdiction was affirmed in two later cases dealing with detainees held at Guantanamo Bay, who obtained broad discovery from the U.K. foreign secretary to facilitate submissions to the U.S. authorities. The Norwich Pharmacal principles are now sufficiently flexible to allow for extensive relief to be obtained in appropriate cases.

The ability to obtain access to information and evidence in support of a litigant’s case is a fundamental aspect of dispute resolution. Documents and information from third parties may carry greater probative value, since they come from an independent source. There are, of course, established ways for litigants to obtain third-party evidence. A third party may be called as a witness and may have to produce documents, within certain limits. However, this assumes that there are proceedings on foot, and that the claimant was in a position to commence proceedings. What if no proceedings are possible without the missing information? A claimant may have no way of identifying the perpetrator of a wrong, for example. Or perhaps a vital piece of information is missing, and the plaintiff cannot properly plead their case without it.

A victim of a fraud can, for example, oblige a bank to disclose beneficial ownership, signatory details and account movements to assist in identifying the perpetrators of a suspected fraud, the source of illicit funds and the destination of any funds paid out of the account. This can enable steps to be taken to freeze assets, recover funds and identify those involved in a fraudulent scheme.

On any view, while now widely accepted, the Norwich Pharmacal jurisdiction is controversial. It is notable that one of the most creative judicial minds of the twentieth century, Lord Tom Denning, resisted the development of the Norwich Pharmacal jurisdiction when that case came before him in the Court of Appeal. However, it was then fully embraced on appeal, by all five members of the House of Lords. On the one hand. the degree of intrusion and inconvenience might appear unjustified at first glance. Yet, on the other hand, it seems reasonable to require a third party to provide assistance to the victim of a fraud or other wrongdoing when that information is readily available.

The court can impose restrictions on the use of any information or documents provided. There is, in any event, an implied undertaking restricting their use to the purposes put forward in making the application. Accordingly, the court may later require the return or destruction of any documents disclosed under an interlocutory order, and may prohibit the use of any material as evidence thereafter. These powers may mean that the court can mitigate the effect of interlocutory relief if it later transpires that it should not have been granted.

In some cases, it will be appropriate for applicants to consider whether secrecy is required to prevent the alleged wrongdoer from being tipped off about the application for relief. In such cases, the applicant can proceed by way of ex parte application, in certain circumstances.

The Norwich Pharmacal jurisdiction has adapted well to the internet age. Website operators are often targeted for relief, as they provide a platform on which others can commit wrongs, often shielded by pseudonyms. The two most obvious areas of concern are defamation and intellectual property infringement. Applications have succeeded against internet service providers, email providers and operators of search engines, internet discussion forums and online marketplaces, and against social media websites such as Facebook.

A recent High Court case in Dublin saw the Irish police force obtain a Norwich Pharmacal order against Google, requiring the company to release information relating to the identity of the poster of a defamatory YouTube video relating to a police officer.

Norwich Pharmacal orders have been adopted by common law jurisdictions around the world, where they have proven highly effective in revealing vital information about wrongdoing. They have been used to reveal both the identities of wrongdoers, and vital evidence, to assist in advancing remedies to a wide variety civil and criminal wrongs. They have proven highly adaptable, and the courts continue to demonstrate a strong willingness to use them where the interests of justice require it. The remedy is both flexible, and continually developing.

Since the Norwich Pharmacal jurisdiction came into being in 1974, its development has proceeded largely uninterrupted and it has provided remedies in an increasingly wide range of situations. In that time, the courts have learned to positively embrace the duty of a third party to reveal information relevant to wrongdoing.