High Court decision clarifies limits of Bankers Trust disclosure orders

The ruling concerned the case of Daniel Scenna, a Canadian resident, who was allegedly persuaded to make payments of US$2.9 million to accounts at banks in Hong Kong and Australia by anonymous fraudsters. Scenna sought and obtained a ‘Bankers Trust’ order against two Australian banks, which would require both banks to disclose the fraudsters’ account information to help Scenna trace his lost assets.

But at a second hearing in January 2023, the judge, James Pickering KC, discharged the Bankers Trust orders because they would put the banks in breach of Australian confidentiality and privacy laws. The judge said that such disclosure orders can only be made against foreign banks in exceptional circumstances, given the risk of compliance placing those banks in breach of local laws or regulations. He added that the Australian courts have powers to grant similar disclosure orders as in England and Wales and the banks had confirmed that, if Scenna were to make an application for such an order to the Australian courts, they would comply.

Pickering KC also said that the case did not represent a “hot pursuit” – where tracing assets is urgently required to secure justice – which might have given rise to exceptional circumstances justifying the orders. This was, at best, a “luke warm” pursuit, he said. On balance, therefore, the High Court found no exceptional circumstances to justify the orders and ruled that the appropriate course of action was to obtain a similar disclosure order from the Australian courts.

Civil fraud specialist Alexandra Algazy of Pinsent Masons noted that the judge did accept that Scenna’s application fell within one of the ‘gateways’ for service of court proceedings outside the jurisdiction of England and Wales. In October 2022, a new service gateway was introduced into Practice Direction 6B of the Civil Procedure Rules, specifically directed at obtaining this type of disclosure order from non-parties abroad. 

Algazy said: “The introduction of the new gateway last year was a welcome innovation that turned the heads of practitioners working in particular on multi-jurisdictional cryptocurrency fraud cases, where the defendants or assets in question are often located outside of the jurisdiction. However, falling within one of the service gateways is only one of the hurdles an applicant seeking a Bankers Trust order against an overseas party must overcome. They also need to satisfy the court as to the merits of their entitlement to the order.”

Algazy said that, because of this, the case “highlights that while the gateway may open up a procedural route to obtaining information from banks abroad in exceptional circumstances for the hottest pursuits, the challenges of foreign laws cannot be ignored. When the English courts are next called upon to balance the interests of victims of fraud and foreign law obligations, we can expect the gateway to be further tested. It is interesting to note that some cryptocurrency cases may be treated differently, as in those cases the geographical location of the information in question may not be known – so that it would be less reasonable to expect the victim to seek disclosure orders in the local courts.”

Algazy said that there were also a number of practical takeaways for victims of fraud seeking disclosure orders against foreign non-parties. “Victims need to consider whether it is likely that the foreign non-party will be able to comply with an order without breaching its own local laws.  They should consider obtaining local foreign law advice and including a caveat in the disclosure order sought that the respondent will not be required to do anything contrary to local laws,” she said.

Civil fraud expert Alan Sheeley of Pinsent Masons added: “Despite the gateway hurdle being overcome, the long reach of the English court may not be as long as English practitioners would like and strategy will always be key in this type of case. The ruling also emphasises that time is of the essence when making these applications.  The court will be more willing to grant relief if you can show no delay between the fraud, the discovery of the fraud and issuing the application. Applicants need to show that they have acted quickly to avoid the train of enquiry going cold.”

“Finally, it should also be considered whether it is possible to get a similar disclosure order in the relevant overseas jurisdiction in support of the English proceedings. Again, this is a question for local lawyers. If it is possible, the court may favour pursuing disclosure orders directly in the overseas jurisdiction, particularly if it is known that the information is located there,” Sheeley added.