KBR, Inc, R (on the application of) v Director of the Serious Fraud Office [2021] UKSC 2

The SFO served a notice under section 2(3) of the Criminal Justice Act 1987 on a US company (KBR, Inc) requiring production of documents held abroad. The Supreme Court held that section 2(3) does not have extra-territorial effect permitting compulsion of foreign companies with no UK presence to produce overseas documents.

Facts

KBR, Inc, a US-incorporated company with no fixed place of business in the United Kingdom and which had never carried on business there, was the subject of an investigation by the Serious Fraud Office (SFO) related to the activities of Unaoil. The SFO had previously served a notice on KBR UK (a UK subsidiary) under section 2(3) of the Criminal Justice Act 1987, but certain documents were held by KBR, Inc in the United States. On 25 July 2017, senior officers of KBR, Inc attended a meeting in London with the SFO, during which Ms Eileen Akerson was handed a section 2(3) notice requiring the production of documents held abroad by KBR, Inc. KBR, Inc challenged the notice on the ground that section 2(3) does not have extra-territorial effect.

Issues

Principal Issue

Whether section 2(3) of the Criminal Justice Act 1987 permits the Director of the SFO to require a foreign company, with no presence or business in the UK, to produce documents held outside England and Wales, under criminal penalty for non-compliance.

Judgment

The Presumption Against Extra-Territorial Effect

Lord Lloyd-Jones, delivering the unanimous judgment, affirmed the established presumption in domestic law that legislation is generally not intended to have extra-territorial effect. He cited Lord Bingham’s statement in R (Al-Skeini) v Secretary of State for Defence:

Unless the contrary intention appears, Parliament is taken to intend an Act to extend to each territory of the United Kingdom but not to any territory outside the United Kingdom.

The presumption is founded on both international law and comity. Lord Lloyd-Jones explained:

The presumption reflects, in part, the requirements of international law that one State should not by the claim or exercise of jurisdiction infringe the sovereignty of another State in breach of rules of international law.

Application to the Present Case

The Court held that KBR, Inc had no registered office, fixed place of business, or business presence in the UK. The attendance of officers at a London meeting did not alter this. Accordingly, the presumption against extra-territorial effect applied in full.

Statutory Language and Legislative History

The Court found no clear indication in the wording of section 2(3) or the 1987 Act that Parliament intended extra-territorial application. The legislative history, including the Roskill Report which led to the 1987 Act, emphasised obtaining evidence from abroad through reciprocal international arrangements rather than unilateral compulsion. Lord Lloyd-Jones stated:

There is, therefore, nothing in the Roskill Report which recommends the creation of a statutory power which would permit UK authorities unilaterally to compel, under threat of criminal sanction, the production in this country of documents held out of the jurisdiction by a foreign company.

Subsequent legislation (Criminal Justice Act 1988, Criminal Justice (International Co-operation) Act 1990, Crime (International Co-operation) Act 2003) established mutual legal assistance frameworks with safeguards, indicating Parliament did not intend section 2(3) to operate as a parallel unilateral power.

Comparison with SOCA v Perry

The Court relied heavily on Serious Organised Crime Agency v Perry [2012] UKSC 35, where Lord Phillips stated:

To confer such authority in respect of persons outside the jurisdiction would be a particularly startling breach of international law. For this reason alone I consider it implicit that the authority given under section 357 can only be exercised in respect of persons who are within the jurisdiction.

The similarity between section 357 of the Proceeds of Crime Act 2002 and section 2(3) of the 1987 Act was described as striking.

Rejection of the ‘Sufficient Connection’ Test

The Court rejected the Divisional Court’s approach of implying a ‘sufficient connection’ test. Lord Lloyd-Jones held that there was no basis for such an implication, which would exceed the appropriate bounds of interpretation and usurp Parliament’s function. He cited Hughes LJ in Perry:

I am, however, reluctantly persuaded that this cannot be achieved by construction and would involve illegitimately re-writing the statute.

Implications

This decision confirms that UK investigative authorities cannot unilaterally compel foreign companies with no UK presence to produce documents held abroad under threat of criminal sanction. The judgment reinforces the importance of international mutual legal assistance frameworks and the principle of comity in cross-border criminal investigations. It clarifies the territorial limits of statutory powers and provides guidance on the application of the presumption against extra-territorial effect. Parliament would need to legislate expressly if it wished to confer such extra-territorial powers.

Verdict: Appeal allowed. The section 2(3) notice issued to KBR, Inc was quashed on the ground that section 2(3) of the Criminal Justice Act 1987 does not confer power to compel a foreign company with no UK presence to produce documents held abroad.

Source: KBR, Inc, R (on the application of) v Director of the Serious Fraud Office [2021] UKSC 2