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Long Live the Norwich Pharmacal!

19 Jun 2020

In a judgment delivered on 15 June 2020, in the case of A Foreign Representative in Foreign Insolvency Proceedings v Five Registered Agents in which Harneys acted for the successful applicant, Justice Jack confirmed that the BVI High Court has the power to grant Norwich Pharmacal orders (ie third party disclosure orders) in support of actual or intended foreign proceedings. The power is not affected by the Court of Appeal’s recent decision in the Broad Idea v Convoy Collateral (No.2), which determined that the BVI High Court does not have the power to grant freezing injunctions and other interim relief in support of foreign proceedings (known as Black Swan relief in the BVI).

In Broad Idea, the Court of Appeal held that the jurisdiction to grant Black Swan relief is based on there being a recognised cause of action which entitles the applicant to the substantive relief. Where there is no such cause of action, in the BVI or elsewhere, there is no basis to justify the grant of a freezing order or similar relief against the respondent.

Justice Jack in his judgment, which was concerned solely with the jurisdiction to grant Norwich Pharmacal relief, reasoned that while freezing orders are parasitic on a substantive cause of action to enforce an applicant’s substantive right, Norwich Pharmacal relief is by its nature against a party against whom there is no substantive cause of action: the Norwich Pharmacal defendant is an innocent third party.

Justice Jack further reasoned that a claim for Norwich Pharmacal relief is a procedural cause of action in its own right: one to enforce an independent duty, and is separate from any associated underlying cause of action. This distinguished Norwich Pharmacal from Black Swan relief, as Norwich Pharmacal proceedings “have an independent life” and are not parasitic on other proceedings. Thus, the Court of Appeal’s ruling in Broad Idea had no application to the Norwich Pharmacal jurisdiction.

Norwich Pharmacal relief is an important tool in the arsenal of offshore litigators in fighting commercial fraud. This clarification and reaffirmation of the basis of the court’s jurisdiction to grant such relief will be welcomed by practitioners and clients alike.

Authors

Richard Parchment Harneys front portrait image on a grey background
Julie Engwirda Harneys front portrait image on a grey background
William Peake Harneys front portrait image on a grey background