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Think before you blink: BVI Court halts cross-border requests without consideration

The BVI Court again stepped in to ensure that proper thought and process was applied to requests made by foreign governmental bodies.

Following on from last year’s key decision monitoring requests pursuant to TAX INFORMATION EXCHANGE AGREEMENTS this time the Court carefully considered requests made by the Russian Federation to gather evidence into alleged criminal conduct. Upon an examination of the motives behind the requests, the Court injuncted the transfer of documents and ultimately required reconsideration of the decision.

Magnum Investment Trading Corporation & Niteroi Limited v the Attorney General of the Virgin Islands is the first case of its kind to successfully challenge the exercise of the Attorney General’s powers under the Criminal Justice (International Cooperation) Act. The BVI High Court’s decision means that the Attorney General, being the competent authority to handle international requests for information made under this legislation, is required to do ‘more’ than merely ‘rubber stamping’ the requests received.

In this case, the Investigative Committee of the Russian Federation requested that the Attorney General of the Virgin Islands obtain evidence to assist their alleged criminal investigations. The request was made for the production of confidential information held by the registered agent of the Claimant companies. The Attorney General, in the exercise of his powers under the Criminal Justice (International Cooperation) Act:

  1. Caused a search warrant to be issued by the Magistrate for the search of the companies’ registered agent’s premises;
  2. Seized the companies’ confidential records; and
  3. Arranged for them to be transmitted to Russia through diplomatic channels.

The Claimant companies objected to the seizure of confidential documents and to such documentation being transmitted to Russia. The Attorney General however did not take these representations into account as he felt that the legislation contemplated an automatic transmission of the documents once obtained by him pursuant to the request. As such he ignored the representations made and came to the view that he had no duty to investigate before complying with the request. Upon an application, the Claimants were successful in obtaining an interim injunction, which had the effect of aborting the delivery to Russia whilst an application for judicial review was determined.

Substantial evidence was subsequently produced by the Claimants to show that the requests from Russia had been issued for improper purposes and formed part of an unlawful campaign by Russian entitles and authorities against them and connected entities. The Claimant companies’ held a substantial interest in one of Russia’s most successful mineral fertilizer production companies. The evidence from recent years showed that the Claimants had been subjected to various corporate raids involving the corrupt exploitation of criminal, regulatory and international mutual assistance regimes. It appeared the purpose of these raids was to try and place pressure on the entities being raised as a means of obtaining control over each of them.

The BVI High Court ordered the Attorney General to reconsider his decision to transmit the documentation to Russia, this time taking into account the representations and evidence provided by the Claimants. By failing to consider such information, the Attorney General had not processed whether there were compelling reasons why the request should not be acted upon. Going forwards where a request is made, should credible or plausible doubts be  raised, the Attorney General will need to do more depending on the circumstances. In this case, more meant taking into account the Claimants’ representations and being satisfied with the lawfulness of the request made i.e. that the request is fair and reasonable.

The Courts again showed their willingness to ensure that treaties are properly regulated and tests rigorously applied before confidential documentation is handed over by authorities across borders.

 

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