Applications for disclosure against an innocent third party, where there is alleged wrongdoing on the part of another, could be harder to secure following a recent ruling. The specialist commercial lawyers at Bahamas law firm ParrisWhittaker are highly experienced in advising on disclosure issues in the case of commercial disputes.
A ruling1 from the UK’s High Court, which has persuasive authority on the courts in The Bahamas, provides important clarity on disclosure orders against third parties (Norwich Pharmacal Orders).
Significantly, the ruling suggests it may now be more difficult to secure such an order in certain circumstances.
What’s a Norwich Pharmacal Order?
A Norwich Pharmacal Order (NPO) is a court order requiring an individual or a corporation to disclose documents and or information that may assist with identifying a third party suspected of wrongdoing. That could be fraud, money laundering or other alleged criminal activity.
Significantly, the subject of the NPO is an innocent party who is not party to the proceedings, nor are they themselves suspected of wrongdoing. The NPO is used to obtain essential information from that third party which is likely to help in ascertaining where the alleged criminal activity lies.
What’s the background to this case?
Burford is a litigation funder listed on the London Stock Exchange (LSE). Burford alleged unlawful market manipulation in relation to its shares and took its complaints both to the LSE and the UK’s financial regulator which decided there was insufficient evidence to support Burford’s claims.
So Burford asked the court for an NPO requiring the LSE to disclose information. The court refused the application for two reasons:
There was no good arguable case that there was unlawful market manipulation as alleged.
On the facts, justice would not in any event have demanded the LSE to provide the information had there been a good arguable case of wrongdoing.
In this particular case, the financial regulator has the exclusive power toinvestigate and decide whether to prosecute market abuse (no private prosecution could be brought). There was no “just call” for the court under its Norwich Pharmacal jurisdiction to add to or interfere with the regulator’s decisions – judicial review gives Burford a fair and sufficient protection of its interests as alleged victims of market manipulation in the circumstances.
What does this mean?
The party seeking an NPO could meet with greater resistance from the relevant third party and or the court, as a result of the ruling. Crucially, it would seem that an applicant cannot expect the court to grant an NPO in circumstances where the prosecuting authorities and or regulators have statutory powers of investigation and prosecution, and have rejected a complaint.
It is reminder that where a party is minded to make an application to the court, it is important to take a measured approach and ensure such a step is taken only if there is a good chance of success.
How can we help?
We advise and represent companies and other business clients in all types of disputes including where disclosure issues arise. Where a court application for disclosure seems inevitable, we can talk through the issues with you strategically to ensure any steps taken to apply to court are meritorious.
It is important to take early advice from the experts. Contact the experienced commercial disputes lawyers at ParrisWhittaker for strategic assistance and representation.
1Burford Capital Ltd v London Stock Exchange Group Plc [2020] EWHC 1183
