The jurisdictional limits of disclosure orders in transnational fraud litigation

International and Comparative Law Quarterly

Volumn 47, Issue 1, 1998, Pages 3-49

  Mclachlan, Campbell ^a  

^a International Law Association Committee on International Civil and Commercial Litigation   (United Kingdom)

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EID: 84953406035     PISSN: 00205893     EISSN: 14716895     Source Type: Journal    
DOI: 10.1017/S0020589300061558     Document Type: Article

References (222)

1. Rapporteur, International Law Association Committee on International Civil and Commercial Litigation. Earlier versions of this article were given at the New Zealand Law Conference, Dunedin, 10 Apr. 1996, and at the British Institute of International and Comparative Law, London, 12 Nov. 1996. The author wishes to thank Professor Richard Sutton (NZ Law Commission);
2. For an earlier development of these theories see McLachlan, “The New Hague Sales Convention and the Limits of the Choice of Law Process” (1986) 102 L.Q.R. 591.
3. Dicey, Conflict of Laws (1st edn, 1896), p.10.
4. The principal sources referred to are Collins, “The Territorial Reach of Mareva Injunctions” (1989) 105 L.Q.R. 262
5. “Provisional and Protective Measures in Inter-national litigation”, Essays in Imernational Litigation and the Conflict of Laws (1994), p.1
6. Kinsch, Le Fait du Prince Etranger (1994);
7. McClean International Judicial Assistance (1992)
8. Lowenfeld, International Litigation and the Quest for Reasonableness (1996);
9. Gee, Mareva Injunctions and Anton Filler Relief (3rd edn, 1995);
10. Aitken, “Transnational Bank Fraud” (1994) 68 Australian L.J. 790;
11. Born. International Civil Litigation in United States Courts (3rd edn, 1996);
12. Hoffmann, “Changing Perspectives on Civil Litigation” (1993) 56 M.L.R. 297.
13. See also McLachlan, “Transnational Interlocutory Measures for the Preservation of Assets”, in Lye Lin Heng (Ed.), Current Legal Issues in the Internationalization of Business Enterprises (1996).
14. Cf. McLachlan, Current Legal Issues in the Internationalization of Business Enterprises, at p.592.
15. Brannigan et al. v. Davison (1997] A.C. 238 (PC); affirming (as to part) decision of NZ CA rptd sub nom.
16. Controller and Auditor-General v. Davison [1996] 2 N.Z.L.R. 278. The decision is referred to herein by the colloquial name of the Commission of Inquiry undertaken by Sir Ronald Davison: the Winebox Inquiry. The Inquiry subsequently reported on 14 Aug. 1997, substantially finding no evidence of fraud.
17. See the discussion in McLachlan, “Splitting the Proper Law in Private International Law” [1990] B.Y.I.L. 311, 331–334
18. of Libyan A rob Foreign Bank v. Bankers Trust Co. [1989] 1 Q.B. 728
19. and Smedresman and Lowenfeld, “Eurodollars, Multinational Banks, and National Laws” (1989) 64 N.Y.U.L.R. 733.
20. See Norman, “Tracing the Proceeds of Crime: An Inequitable Solution?”, in Birks (Ed.), Laundering and Tracing (1995), pp.95, 97;
21. and McClean, Laundering and Tracing, at pp.277–286.
22. Winebox, Laundering and Tracing (Cook Islands)
23. Attorney-General for Hong Kong v. Reid. discussed infra Part IV (Vanuatu).
24. See Transparency International Building a Global Coalition against Corruption (1995).
25. Millett, “Tracing the Proceeds of Fraud” (1991) 107 L.Q.R. 71.
26. [1996] 1 Lloyd's Rep. 7 (CA).
27. Arab Monetary Fund v. Hashim [1991] 2 A.C. 114
28. [1993] 1 Lloyd's Rep. 543.
29. Republic of Haiti v. Duvalier [1990] 1 Q.B. 202.
30. See also Sumitomo Bank Ltd v. Kartika Rama Thahir et al. [1993] 1 S.L.R. 735.
31. See e.g. ISC Technologies Ltd v. Cuerin et al. [1992] 2 Lloyd's Rep. 430.
32. See International Law Association Committee on International Civil and Commercial Litigation, “Second Interim Report Provisional and Protective Measures in International Litigation”, Report of the 67th Conference, Helsinki (1996), p.185.
33. Collins, Report of the 67th Conference (1989), at pp.286, 297.
34. Arab Monetary Fund v. Hashim (No.5) [1992] 2 All E.R. 911, 913.
35. All E.R.
36. Cf. Deutsche Schachtbau-und-Tiefbohrgesellschaft mb H v.R’ Asal-Khaimah National Oil Co. (Nos.1 and 2) [1990] 1 A.C 295 (discussing the protection of third parties from internationally conflicting obligations in the grant of garnishee orders).
37. See Kinsch, A.C, at pp.92–119, 212, 214–216;
38. Lowenfeld, A.C.
39. See the discussion in Aitken, A.C.
40. See Nygh, “Transnational Fraud”
41. McLachlan, “Restitution”, in McLachlan and Nygh (Eds), Transnational Tort Litigation: Jurisdictional Principles (1996), pp.1, 83, 215.
42. See generally Rose (Ed.), Restitution and the Conflict of Laws (1995).
43. See generally Collins (1994) and McLachlan, both Restitution and the Conflict of Laws.
44. See generally Birks. Restitution and the Conflict of Laws.
45. In particular see Attorney-General of Hong Kong v. Reid [1994] 1 A.C. 324;
46. El Ajou v. Dollar Land Holdings plc [1994] 2 All E.R. 685 (CA);
47. Re Goldcorp Exchange Ltd [1995] 1 A.C 74;
48. Westdeutsche Landesbank Girozentrale v. Council of the London Borough of Islington [1994] 1 W.L.R. 938 (CA).
49. Unrep., 26 May 1978.
50. Mediterranea Raffneria Siciliana Paroli SpA v. Mabanaft GmbH (C A. unrep., 1 Dec. 1978).
51. [1980] 2 All E.R. 347.
52. Interpool v. Galani [1988] Q.B. 738 (CA);
53. see, in England, RSC Ord. 48.
54. Ballabil Holdings Pty Ltd v. Hospital Products Ltd (1985) 1 N.S.W.L.R. 155.
55. Asean Resources Ltd v. Ka Wah International Merchant Finance Ltd [1987] L.R.C (Comm.)835.
56. [1987] Q.B. 888;
57. see McLachlan, “Transnational Applications of Mareva Injunctions and Anton Piller Orders” (1987) 36 I.C.L.Q. 669.
58. Babanaft International Co. SA v. Bassame [1990] Ch. 13;
59. Derby & Co. Ltd v. Weldon (No.l) [1990] Ch. 48
60. (Nos.3 & 4) [1990] Ch. 65
61. (No.6) [1990] 1 W.L.R. 1139;
62. Republic of Haiti v. Duvalier [1990] 1 Q.B. 20Z
63. See Collins (1989), Q.B.;
64. McLachlan, “Remedies Affecting Bank Deposits”, in Cranston (Ed), Legal Issues of Cross Border Banking (1989)
65. and Legal Issues of Cross Border Banking.
66. Idem, pp.94–95.
67. Gidrxslme Shipping Co. Ltdv. Tantomar Transporters Maritimos Ltd [1995] 1 W.L.R. 299.
68. McLachlan, W.L.R., at p.675.
69. Unrep., CA. 16 Feb. 1994.
70. [1996] 1 Lloyd's Rep. 7.
71. Civil Jurisdiction and Judgments Act 1982 (Interim Relief) Order 1997 (S.I. 1997 No.302);
72. Rules of the Supreme Court (Amendment) 1997 (S.l. 1997 No.415 (L2)).
73. The Siskina [1979] A.C. 210.
74. [1990] 1 Q.B. 202.
75. Unrep., 7 June 1988, CA: Transcript No.490 of 1988.
76. Unrep., at p. 216E-F.
77. Idem, p.217A.
78. [1996] 1 A.C 241 as to which
79. see Collins, “The Siskina Again: An Opportunity Missed” (1996) 112 L.Q.R. 8;
80. McLachlan, “Provisional Measures in Aid of Foreign Proceedings: Has the English Response been Adequate?”, in Goldsmith (Ed), International Dispute Resolution: The Regulation of Forum Selection (1987), p. 169.
81. Leiduck, idem, p.305.
82. RSC Ord. 11, r.8A. S.25(7).
83. RSC Ord. S.25(2).
84. Report of Prof. P. Schlosser on the Accession.of Denmark, Ireland and the UK to the Brusseb Convention. 9 Oct 1978, paras.184–187 (1979) OJ. C59/71.
85. See e.g. the approach taken to the execution of letters rogatory both within and out-tide the Hague Convention on the Taking of Evidence Abroad 1970: Burchard v. Macfarlane [1891] 2 Q.B. 241 (CA);
86. Radio Corporation of America v. Rauland Corporation [1956] 1 Q.B. 618;
87. Re Westinghouse Uranium Contract Litigation MDL Docket No235 [1978] A.C 547.
88. Reichert v. Dresdner Bank (No.2) [1997] I.LPr. 404.
89. Rosseel NV v. Oriental Commercial Ltd [1990] 1 W.L.R. 1387
90. [1990] 3 AU E.R. 545.
91. Idem (All E.R.) p.546.
92. All E.R.
93. S & T Bautrading v. Nordling [1997] 3 All E.R. 718.
94. [1997] 3 All E.R. 724.
95. Idem, p.730.
96. Collins (1989), Idem, at p.281.
97. [1979] Ch. 439.
98. [1985] 1 W.L.R. 457.
99. See also Protector Alarms v. Maxim Alarms [1978] F.S.R. 442.
100. See McLachlan. F.S.R;
101. Gee. F.S.R. at pp.49–52;
102. RSC Ord.l 1. rr.5(2)and9(7).
103. Derby &. Co. Ltd v. Weldon (No.l) (1990] Ch. 48.
104. Idem. p.60.
105. Bsyer v. Winter (No.2) [1986] F.S.R. 357
106. Derby & Co. Ltd v. Weldon (Nos.3 & 4) [1990] Ch. 65.
107. [1992] 1 W.L.R. 919.
108. Idem. p.926.
109. Hoffmann, Idem. at pp.302–303.
110. Guide to Commercial Court Practice (3rd edn, 1995), p.62.
111. Re a Company [1985] B.CLC 333.338.
112. See also SCF Finance Co. Ltd v. Masri [1985] 1 W.L.R. 876;
113. Mercantile Group (Europe) AC v. Aiyela [1993] 3 W.L.R. 1116.
114. [1986] F.S.R. 357.
115. See infra Part V.
116. But it may be met in some jurisdictions with the objection that the instructions were not voluntarily given, as required by local legislation. See e.g. In re ABC Ltd [1984] CI.L.R. 30
117. Attorney-General v. Bank of Nova Scotia [1985] C.I.L.R. 418.
118. [1991] 2 Q.B. 310.
119. Idem, p.338.
120. (1851)1 Sim. (N.S.) 301.
121. (1867) L.R. 4 Eq. 327
122. L.R. 3 Ch.App. 79.
123. [1989] 1 W.L.R. 565.
124. W.L.R., at pp.587E-G, 636.
125. W.L.R., at p.251D-E.
126. [1980] 1 W.L.R. 1274.
127. [1974] A.C 133,175.
128. A.C, at p.1282.
129. Arab Monetary Fund v. Hashim (No.5) [1992] 2 All E.R. 911.
130. Hoffmann, All E.R., at pp 300–301.
131. Principally the hitherto largely ignored decision of Hall V-C in On v. Diaper (1876) 4 Ch.D.9Z
132. Nor can a subpoena be used to obtain discovery from a non-party: MacMillan Inc. v. Bishopsgate Investment Trust [1993] 1 W.L.R. 1372 (CA).
133. [1986] Ch. 482.
134. See also R. v. Grossman (1981) 73 Cr.App.R. 302.
135. [1986] Ch. 482,493.
136. Idem, p.494.
137. Hoffmann, Idem, at p.303.
138. See e.g. the remarks of Staughton LJ in Derby & Co. Ltd v. Weldon (No.6) [1990] 1 W.L.R. 1139,1153.
139. Arab Monetary Fund v. Hashim (No.5) [1992] 2 All E.R. 911,918.
140. Derby A Co. Ltd v. Weldon (No.6) [1990] 1 W.L.R. 1139, 1146H.
141. See e.g. the Grupo Torras litigation and the Jyske Bank litigation, which concern frauds centred in Spain and Gibraltar respectively.
142. Unrep., Hoffmann J, 18 June 1990
143. Unrep., Finesilver J, 15 July 1993, USDC Middle District Florida; upheld on appeal 16 Feb. 1995.
144. ISC Technologies & Anor v. J.-P. Rivara & Anor (Unrep., Swiss Federal Supreme Court, Dec. 1990).
145. [1994] 1 A.C 324.
146. A.C.
147. Reversing Lister A Co. v. Stubbs (1890) 45 Ch.D. 1.
148. Restatement (First) Conflict of Laws, s.94 (1934)
149. see Born. Restatement (First) Conflict of Laws, at pp.871 et seq.
150. Ings v. Ferguson 282 F.2d 149 (2nd Cir, 1960).
151. 357 U.S. 197 (1958).
152. 396 F.2d 897 (2nd Cir, 1968).
153. Cf. Restatement (Second) Foreign Relations Law, s.40.
154. Sec e.g. Alfadda v. Fenn 149 F.R.D. 28 (SDNY, 1993).
155. But cf. Minpeco SA v. Conti-commodity Services inc. 116 F.RJ). 517 (SDNY, 1987).
156. SEC v.Banca della Svizzera Italiana 92 F.R.D. 111 (SDNY, 1981).
157. See the account of the litigation in Lowenfeld, F.R.D, at chap. VII.
158. United States v. Bank of Nova Scotia II 740 F.2d 817(11thCir.1984); cert.den.469 U.S. 1106(1985).
159. F.2d.
160. X AG v. A Bank [1983] 2 All E.R. 464.
161. For comment see Lowenfeld, International Litigation and Arbitration (1993), pp.796–804.
162. [1983] 2 All E.R. 464.480.
163. [1987] A.C. 45n
164. [1986] 3 W.L.R. 414.
165. 1990] 1 H.KL.R. 277.
166. R. v. Grossman, H.KL.R.
167. H.KL.R 16, at pp.284–285.
168. [1990] 1 H.KX.R. 396;
169. see Collins (1994), H.KX.R., at pp.102–107.
170. For a further example of an Anglo-Commonwealth court's treatment of a foreign disclosure order see the discussion in Lowenfeld, H.KX.R., at pp.169–174 of the Bank of Nova Scotia cases in the Bahamas and the Cayman Islands.
171. H.KX.R.
172. But see Re Santa Fe (1984) 23 I.L.M. 511
173. [1985] E.CC. 187
174. discussed infra n.146
175. the decisions of the Fnglih courts on disclosure of the beneficial owners of shares in British companies under s.212 of the Companies Act 1985 and its predecessors: In re Geers Cross plc [1987] 1 W.L.R. 1649
176. Re F. H. Lloyd Holdings plc [1985] B.C.L.C 293;
177. Re Ashbourne Invest-merits Ltd [1978] 2 All E.R. 418.
178. See also the misconceived (and unsuccessful) attempt of a party in an ordinary commercial case to argue that the French blocking statute precluded it from giving discovery in England: The Heidberg [1993] 2 Lloyd's Rep. 324.
179. [1997] A.C 238,245–246. The Commissioner's subsequent report, completed on 14 Aug. 1997, found no evidence of fraud in this or other related transactions.
180. [1996] 2 N.Z.L.R. 278.
181. Idem, p.285.
182. Idem. p.304.
183. Idem, p.290.
184. Idem, p.303.
185. But cf. the discussion of the relativity of the commerciality test by Fox in “States in the Market Place” (1994) 110 L.Q.R. 199
186. and “The Commerciality of the Spoils of War” (1996) 112 L.Q.R. 186.
187. Art24, Vienna Convention on Diplomatic Relations 1961.
188. As to which see Shearson Lehman Brothers Inc. v. Madame Watson & Co. Ltd [1988] 1 W.L.R. 16 (HL)
189. and Mann. “ ‘Inviolability’ and other Problems of the Vienna Convention on Diplomatic Relations”, in Further Studies in International Law, p.326.
190. Cf. Rahimtoola v. Nizam of Hyderabad [1958] A.C. 379.
191. Cf. the development of a category of public interest immunity for the communications of foreign sovereigns in a territorial dispute in Buttes Gas Oil Co. v. Hammer [1981] Q.B. 223 (CA)
192. rvsd on other grounds [1982] A.C. 888 (HL).
193. Air Canada v. Secretary of State for Trade [1983] 2 A.C. 394.
194. When the Inquiry reported (A.C.), Sir Ronald Davison applied the act of State doctrine so as not to enquire into the official acts of the Cook Islands government within its own territory: Report 2.1., pp.55–64.
195. [1996] 2 N.Z.L.R. 278.290.
196. Idem, p.292.
197. Idem, p.347.
198. [1997] A.C. 238,242.
199. Idem, p.243.
200. [1997] A.C 238,250.
201. Idem, pp.249–250.
202. Idem.
203. Kinsch, Idem, at pp.87–92.
204. [1985] 2 S.CR. 278.
205. Idem, p.281.
206. Idem.
207. Applied to the defendants' considerably less meritorious plea in The Haidberg [1993] 2 Lloyd's Rep. 324.332.
208. MacKinnon, Lloyd's Rep, at p.494
209. applied in The Heidberg, idem, pp 332–333.
210. See further McLachlan, “The Impact of International Law on Civil Jurisdiction” [1993] Hague Y.B.IJL. 125.
211. See further McLachlan, “Extraterritorial Orders Affecting Bank Deposits”, in Mees-sen (Ed.), Extraterritorial Jurisdiction in Theory and Practice (1996), p 39.
212. Kerr, Law and Practice of Injunctions (6th edn, 1927), p.11.
213. A position endorsed in the context of asset freezing orders by Principle 16 of the Helsinki Principles on Provisional and Protective Measures in International Litigation adopted by the International Law Association at its 67th Conference in 1996 (“the Helsinki Principles”). See the Report of the Conference, Law and Practice of Injunctions, at pp. 185–204.
214. See also Schlosser, “Extraterritoriale Rechtsdurchsetzung im ZrvilprozeB”, in Pfister and Will (Eds), Festschrift fūr Werner Lorenz.
215. Considerations which led a New York court to reject the UK government's plea of public interest immunity for cabinet papers in litigation in which it was a plaintiff: Department of Economic Development v. Arthur Andersen & Co. 139 F.R.D. 295 (SDNY, 1991).
216. See Principles 10–15 of the Helsinki Principles, F.R.D.
217. Mann, “The Doctrine of Jurisdiction in International Law” (1964) 111 Hag.Rec 146
218. cited with approval by Hoffmann J in MacKinnon, Hag.Rec, at p.493.
219. Grupo Torras, Hag.Rec, per Steyn LJ.
220. Discussed in Lowenfeld, Hag.Rec
221. at chap.VII and McClean, International Judicial Assistance (1992).
222. Cf. Helsmki Principles and Report, International Judicial Assistance.