In the recent decision of Burford Capital v London Stock Exchange Group, the English High Court considered the test for the grant of Norwich Pharmacal relief. In dismissing the application, the Court considered the underlying case and found that the claimant did not make out a “good arguable case” that it was the victim of any actionable wrongdoing.
Burford trades on the Alternative Investment Market, operated by the London Stock Exchange, a subsidiary of the Defendant. Over the course of the 6 and 7 August 2019, there was a sustained run on Burford’s shares causing Burford’s share price to drop by over 56 per cent, wiping out a significant portion of its market capitalisation. Burford alleged that it was the victim of a "spoofing and layering" scheme by third parties designed to unlawfully manipulate the market for its shares.
Burford sought Norwich Pharmacal relief for the disclosure by the Stock Exchange of every buy and sell event for its shares over the two day period as well as certain information that would allow them to identify the parties responsible so they may pursue legal action. Both the Stock Exchange and its regulatory body had previously investigated the claim and concluded that there is no reason to believe that there was unlawful market manipulation of Burford’s share price. After assessment of the evidence, the Court found that there is no strong case for supposing that spoofing or layering occurred; that Burford’s claim was speculative and not capable of serious argument such as to support the grant of Norwich Pharmacal relief.
It should be noted that the threshold test in the BVI is more nuanced than that in England. The test of good arguable case (ie one which is more than barely capable of serious argument, but not necessarily one which the judge considers would have a better than 50 per cent chance of success) against the wrongdoer is still good law, but in BVI it has been held that a reasonable suspicion that the respondent has been mixed up in that wrongdoing will suffice for the grant of Norwich Pharmacal.
Norwich Pharmacal relief is an important tool in the arsenal of offshore practitioners in unmasking ultimate wrongdoers and fraudsters. Thus, as an important offshore financial jurisdiction, there are sound policy reasons supporting the BVI’s nuanced approach.