English High Court Sets Aside Bankers Trust Disclosure Orders Against Australian Banks

• Jurisdiction: United States,Federal
• Law Firm: Herbert Smith Freehills
• Subject Matter: Finance and Banking, Technology, Compliance, Financial Services, Fin Tech
• Author: Mr Julian Copeman, Ceri Morgan and Gary Horlock
• Published date: 16 May 2023

The English High Court has set aside Bankers Trust disclosure orders made against two Australian banks at a without notice hearing, which required the banks to disclose certain information regarding two of their Australian customers to the claimants. In doing so, the judge reiterated that the English court should only make disclosure orders against foreign banks in exceptional circumstances, because of the strong likelihood that compliance with such an order would put the foreign bank at risk of being in breach of local laws or regulations: Scenna v Persons Unknown and Others [2023] EWHC 799 (Ch).

In order for the English court to make a disclosure order against a foreign bank, the claimant will need to show, amongst other things, that the application falls within one of the "jurisdictional gateways" in Practice Direction 6B of the Civil Procedure Rules (CPR). There was previously some uncertainty as to whether any of the "jurisdictional gateways" applied to applications for disclosure orders, but this was resolved by the amendment of the CPR, with effect from 1 October 2022, to introduce a new "jurisdictional gateway" in respect of such applications. This amendment has been relied upon in a number of recent cases in which the English court has made disclosure orders against foreign cryptocurrency exchanges (see, for example, LMN v Bitflyer Holdings Inc [2022] EWHC 2954 (Comm), considered here).

Following the amendment to the CPR, it is now clear that the English court could, in an appropriate case, make a Bankers Trust disclosure order against a foreign bank. However, the present decision is a helpful indication that it will not routinely do so and that such orders will still only be made in exceptional circumstances. The English court will be particularly reluctant to make a disclosure order against a foreign bank where there is a real risk that providing the disclosure would result in a breach of local law, and where there is an alternative method for obtaining the disclosure through the local courts.

We consider the decision in further detail below.

Background

The claimants, a Canadian individual and his company, were victims of an alleged fraud pursuant to which they transferred money to two bank accounts in Australia and a bank account in Hong Kong. At a without notice hearing on 6 October 2022, the claimants obtained Bankers Trust disclosure orders requiring the Australian and Hong Kong banks to disclose certain information in relation to the...