Norwich Pharmacal Orders (NPOs) are sought when claimants are aware that a wrongdoing has occurred but (i) the identity of the wrongdoer is unknown to them or (ii) the identity of the wrongdoer is known to them, but more information is needed to be able to file a claim. In this context, the courts issue NPOs to oblige third parties to disclose such information. This article discusses recent cases regarding the issuance of NPOs against banks.

The conditions for obtaining an NPO

The courts have equitable jurisdiction to issue NPOs and NPOs are considered a flexible remedy. In the recent case of Avila Management Services Ltd v Frantisek Stepanek ?.?. (2012) 1 ??D 1403, the court clarified that the conditions for obtaining an NPO are the following:

  • A wrong must have been carried out, or arguably carried out, by an ultimate wrongdoer;
  • There must be the need for an order to enable action to be brought against the ultimate wrongdoer;
  • The person against whom the order is sought must: (a) be mixed up in to have facilitated the wrongdoing; and (b) be able or likely to be able to provide the information necessary to enable the ultimate wrongdoer to be sued;
  • The court will consider whether the issuance of an NPO is necessary and to this effect it will consider (amongst others) the conduct of the ultimate wrongdoer, whether there are facts to be investigated in trial, whether it is possible for the claimant to obtain the information through another route, whether the claimant truly intends to bring a claim against the ultimate wrongdoer, etc.

The use of information received through an NPO

According to well - established case law, information obtained through an NPO can only be used in the commencement of proceedings against the ultimate wrongdoer and cannot be used in other proceedings and/or for other purposes without the permission of the court. A condition to this effect is usually included in the order (e.g. see Kaan Investments Eood and others v. Cooperative Credit Company of Makrasykas (Action with folio number 281/2014, date: 26/6/2014).

Recent NPOs cases against banks

In the very recent case Foremost Industries Ltd and others v. Alpheus Ltd and others (Action with folio number 3379/2018, date: 12.10.2020) the claimants were seeking an NPO against numerous defendants, some of them being banks. The defendants opposed to the application and one of the reasons for their opposition was the fact that they owe a duty of confidentiality to their clients.

The Court rejected this argument and mentioned that there is a public interest in disclosure which outweighs the protection of the confidentiality relationship between a bank and its customer. In short, the Court adopted the position of the English cases Banker's Trust v. Shabira (1980) 1 W.L.R. 1274 and I.B.L. v. Planet (1990) J.L.R. 294 where it was held that a customer who is accused of defrauding a third party cannot "bolt the door against him" and rely on the confidential relationship between her and the bank. The Court also said that, considering that confidentiality depends upon legitimate private business affairs being properly conducted, in NPOs cases there is a strong case to the contrary.

Similarly, in the case of Penderhill Holdings Ltd and others ? Darya Abramchyk and others (Civil Appeals with folio number 319/11 ??? 320/11, date: 13/1/2014), the Supreme Court held that the public interest overrides the confidential relationship between banks and their customers. In that case the Court emphasised that public interest overrides the duty of confidentiality when the purpose of the NPO is the disclosure of information related to fraudulent actions or criminal behaviours.

Furthermore, in the case of Melouskia Commercial Ltd and others v. Chumachenko Alisa and others (Civil Appeal with no. ?71/13, date: 30/9/2014) the Supreme Court acknowledged that the lifting of banking secrecy for reasons of public interest is regulated by Law 66 (?)/97 but clarified that this does not mean that case law should not be taken into account or that the lifting of banking secrecy is not applicable to civil actions.

Lessons to be learned

Considering the above framework, it is observed that courts might order banks to disclose information of their customers, as the public interest overrides banking secrecy when the purpose of the NPO is the disclosure of information related to fraudulent actions or criminal behaviours. However, considering that banks owe a duty to their customers to maintain their affairs confidential, banks should await a court order before complying with requests for disclosure of information.

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.