UK Courts Raise The Bar To US Extradition

On 31 July 2018, the Administrative Division of the High Court of England and Wales blocked the extradition of Stuart Scott to the United States.1 As the second case this year in which the High Court has blocked extradition to the US, this judgment may be viewed as part of a broader shifting of the sands.

The Government of the United States had sought an order for Scott's extradition to face charges of wire fraud and conspiracy to commit wire fraud in connection with an allegation of fraudulent foreign exchange trading in 2011, when Scott was employed by HSBC.

The Allegations

The substance of the allegations is that Scott participated in a scheme to defraud Cairn Energy Plc ("Cairn"), a Scottish oil and gas exploration company, in connection with a foreign exchange transaction to convert approximately US$3.5 billion into sterling ("the Transaction").

In October 2011, Cairn had invited HSBC to bid for the right to execute the Transaction. HSBC succeeded in winning this instruction and in doing so, according to the US Government, entered into a fiduciary relationship with Cairn by which HSBC was required to act in Cairn's best interests.

It is the US Government's case that Scott, together with fellow trader Mark Johnson, used insider knowledge, to raise the price of Sterling/Dollar trades artificially, in advance of the Transaction, thereby maximising the profits generated for HSBC through the Transaction, to the detriment of Cairn and in breach of its fiduciary duty to Cairn.

The US Government alleges further that Scott and Johnson provided false information to Cairn, advising as to the best time to execute the trade. It is alleged that the advice given by Scott and Johnson in fact served their purposes in ensuring the trade was executed at a time when the markets were easier to manipulate.

Scott denies the allegations.

Grounds for Resisting Extradition

On 6 December 2017, the Secretary of State ordered Scott's extradition following the 26 October 2017 judgment of District Judge Snow at the Central London Magistrates' Court.

On appeal to the High Court, Scott raised four arguments:

The conduct specified in the extradition request did not satisfy the definition of dual criminality under section 137(3)(b) of the Extradition Act 2003 ("the Act"); The conduct specified in the request did not occur in the United States, as required by section 137(3)(a) of the Act; Scott's extradition should be 'barred by forum' under section 83A of the Act, in that his extradition would not be in the interests of justice; and Extradition would be contrary to Scott's right to respect for his private and family life under Article 8 of the...