Canada: Does Offshore Banking Confidentiality Hold Up In Canadian Courts?

Last Updated: May 3 2017
Article by Michael Bunn, Sharissa Ellyn and Erik Penz

Most Read Contributor in Canada, December 2017

The April 2016 "Panama Papers" leak highlighted the attraction for transnational actors of the confidentiality available in certain offshore financial centres. Some of these jurisdictions have laws that make it a criminal offence for banks to disclose information about their clients, providing powerful protection for individuals and corporations who wish to keep their financial affairs private. However, if a bank becomes involved in Canadian proceedings, those foreign laws may conflict with the disclosure obligations imposed on litigants here. These situations raise questions about when foreign law can provide a basis to excuse production, or to refuse the answering of a question, in a Canadian proceeding, and under what circumstances a Canadian court will compel disclosure despite potential foreign legal jeopardy.

In making these determinations, Canadian courts do not apply a bright-line rule, but have developed a collection of factors they consider when deciding if a foreign statute will be applied to excuse production or testimony in Canada.

Respect for foreign laws

Canadian courts begin with respect for foreign laws and the general principle that, as our courts would not order a Canadian to break domestic law, nor should they compel a foreign litigant to break the laws of its home jurisdiction.1

This principle was recently cited and applied in TD Bank, NA v Lloyd's Underwriters,2 where an American subsidiary of the Toronto-Dominion Bank commenced an action in Ontario against its syndicated fidelity insurance underwriters for declining coverage when it was sued by investors allegedly defrauded by a customer in Florida.

TD advised the defendant insurers that it could not produce certain documents because disclosure was prohibited by American laws. These included banking records of TD customers, which were subject to privacy laws. The insurers brought a motion to compel production.

The court cited a number of factors that favoured accommodation of the Florida privacy law: the policy of the law was analogous to policies in Canadian law; Florida had the closest and most real connection to the documents at issue; the privacy interests being protected were largely those of Florida residents; the insurers had voluntarily chosen to extend coverage to operations in Florida; the penalty for violating the Florida statute was potentially severe; and the legal risk to TD in Florida was by no means imagined or fanciful.3

The court held that TD was not required to produce the documents, but granted that the insurers could seek production through the American courts.

Canadian courts generally accord comparable respect to the laws of other countries, including offshore jurisdictions.4 Litigants have occasionally tried to impugn the legal systems of offshore financial centres, but these allegations have not been seriously entertained by our courts. Many offshore jurisdictions are British Overseas Territories and, like Canada, have legal systems based on English law. Such systems are familiar to Canadian judges and, absent evidence to the contrary, are respected as equivalent to our own.5

Conflicting obligations

That said, there is a tension between respect for foreign law and our courts' reluctance to allow litigants in Canada to avoid their disclosure obligations.

The leading case of Frischke v Royal Bank6 was an exercise of the principle of respect for the laws of an offshore jurisdiction. In Frischke, evidence was sought at trial in an Ontario proceeding from the Panama City branch of RBC. No claim was being made against the bank, but investment funds that the plaintiff sought to trace had passed through its accounts. The trial judge ordered RBC to produce documents regarding the funds, but the branch manager refused because to do so would place him and the branch in breach of Panamanian civil and criminal laws, which precluded disclosure of the information.

Noting RBC's limited involvement in the proceeding and that it had attempted to comply with the trial judge's order, the Court of Appeal for Ontario declined to order that the branch provide information that would breach Panama law. The Court of Appeal queried whether production should have instead been sought through the Panamanian courts.

Conversely, Canadian courts have refused to allow foreign confidentiality statutes to be used as a shield to block relevant evidence where the prospect of prosecution under the foreign law is remote or where the person invoking the foreign law has commenced proceedings in Canada.

In Spencer v The Queen,7 the former manager of an RBC branch in the Bahamas refused to testify—in a Canadian tax prosecution when subpSnaed by the Crown—because Bahamian law prohibited bank employees from disclosing customer information without consent, on penalty of fine or jail term. However, the witness was now a Canadian resident and had not returned to the Bahamas for more than a decade. The Supreme Court of Canada upheld the Court of Appeal for Ontario that he was required to testify.

A similar outcome was reached by the Quebec courts in Arab Banking Corporation v Wightman.8 In that case, multiple foreign banks had issued a negligence claim in Quebec against a firm of auditors. At discoveries, the banks' representatives refused to answer certain questions because of the confidentiality obligations imposed by the laws of Germany and Switzerland, where they were located. The courts held that, having chosen to proceed in Quebec, where bankers' obligations of confidentiality were more limited, the banks could not rely on foreign statutes to withhold information that might otherwise be material, and ordered the questions to be answered.


Canadian courts will generally respect foreign laws, including those of offshore financial centres, and a foreign bank or branch that is merely managing its own affairs and is dragged into Canadian proceedings may be able to limit its productions and testimony in order to comply with the laws of its home jurisdiction. However, if a foreign bank issues a claim in Canada, or is directly engaged in business in Canada and becomes involved in proceedings as a result, it may be required to adhere to Canadian rules and make full production and disclosure.

This is a factor that should be carefully considered before issuing a claim in Canada, particularly for institutions that may be accustomed to more limited disclosure regimes in their home jurisdictions. If this issue is mishandled, a bank could be forced into a choice between facing non-compliance sanctions in Canadian proceedings or putting itself in legal jeopardy at home.

Michael Bunn practised in the Cayman Islands from 2007 to 2011 at a multijurisdictional offshore law firm. Sharissa Ellyn is an editor of our global blog Financial services: Regulation tomorrow. Erik Penz leads our transnational litigation group in Canada. The authors thank Guy White and articling student Geoff Mens for their assistance in preparing this legal update.


1 Frischke v Royal Bank of Canada (1977), 80 DLR (3d) 393 (Ont. CA).

2 TD Bank, N.A. v Lloyd's Underwriters, 2016 ONSC 4188 at para. 18.

3 Ibid at paras. 40-41.

4 See for example decisions re Bermuda: Gleeson v Brascan Corp., 2005 CarswellOnt 9981 (SC); Kolibri Capital Corp. v LSOF Canada I, L.P., 2004 CarswellOnt 1430 (SC); and Smith & Nephew Inc. v Marriott's Castle Harbour, 2000 CarswellOnt 1131 (Master); Anguilla: Edwards v Bell, 2003 BCSC 1602; the Cayman Islands: Milligan v Lines Overseas Management (Cayman) Ltd., 2002 CarswellOnt 1536 (Master); Turks and Caicos Islands: Skippings Rutley v Darragh, 2008 BCSC 159; and the Isle of Man: Sistem Mühendislik Insaat Sanayi Ve Ticaret Anonim Sirketi v Kyrgyz Republic, 2012 ONSC 4351.

5 Edwards v Bell, supra at para. 81(d); Skippings Rutley v Darragh, supra at para. 54.

6 Supra.

7 Spencer v Her Majesty The Queen [1985] 2 SCR 278, affirming 145 DLR (3d) 344 (Ont. CA).

8 Arab Banking Corporation v Wightman, 1996 CarswellQue 1681 (SC), affirmed 1997 CarswellQue 73 (CA).

About Norton Rose Fulbright Canada LLP

Norton Rose Fulbright is a global law firm. We provide the world's preeminent corporations and financial institutions with a full business law service. We have 3800 lawyers and other legal staff based in more than 50 cities across Europe, the United States, Canada, Latin America, Asia, Australia, Africa, the Middle East and Central Asia.

Recognized for our industry focus, we are strong across all the key industry sectors: financial institutions; energy; infrastructure, mining and commodities; transport; technology and innovation; and life sciences and healthcare.

Wherever we are, we operate in accordance with our global business principles of quality, unity and integrity. We aim to provide the highest possible standard of legal service in each of our offices and to maintain that level of quality at every point of contact.

For more information about Norton Rose Fulbright, see

Law around the world

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions