In the recent case of US Securities and Exchange Commission
v Samuel E Wyly and others ORD 2012/24, the Isle of Man's
Chief Justice, His Honour Deemster Doyle confirmed that in matters
which require evidence to be provided to foreign Courts, such
Courts should be "afforded the fullest help it is possible to
In this case, which is likely to be viewed as highly authoritative in other sophisticated offshore jurisdictions, the US Securities and Exchange Commission (the "SEC") undertook an investigation into seventeen trusts which created and owned over thirty Manx companies. It was alleged that these trusts and subsidiary companies, owned and directed by the defendants, were part of an elaborate system which enabled the defendants to engage in a thirteen year fraudulent scheme involving the trade of tens of millions of securities. As part of the investigation, a Letter of Request was sent by the Honourable Shira A. Scheindlin, asking for the High Court of Justice of the Isle of Man (the "Isle of Man Court") to grant an Order requiring certain respondents to attend and give testimony in the Isle of Man for use in the civil proceedings against Samuel E Wyly and others in the US District Court.
In his consideration of the request, Deemster Doyle had regard to his judgment in Impex Services Worldwide 2003-05 MLR 115, wherein he emphasised the Island's need to "recognise our international as well as our local responsibilities". Should any "friendly and sophisticated jurisdictions, which respect the rule of law and human rights" request assistance, the Isle of Man Court shall "answer the call positively and provide the necessary co-operation and assistance". Deemster Doyle added, as per Secilpar 2003-05 MLR 352, that where there was a "greater public interest...in ordering disclosure than in preserving such confidentiality as may exist", then the Isle of Man Court would "assist the administration of justice".
Such an assertion further confirmed the Isle of Man Court's position on judicial co-operation, recognising the international need for justice over the protection of information held on the Isle of Man. As Deemster Doyle stated in Tomlinson (Deceased) and Yerrill CP 2006/35; "in the modern global community there is no room for an insular approach."
The Evidence (Proceedings in Other Jurisdictions) Act 1975 (the "1975 Act") supports and further facilitates the Isle of Man Court's view, stipulating that when "a request issued by or on behalf of a court or tribunal...for the purposes of civil proceedings" is received, then the Isle of Man Court should "make such provision for obtaining evidence". Additionally, as deemed necessary by the Rules of the High Court of Justice of the Isle of Man 2009 (the "2009 Rules"), such applications must be "supported by written evidence and accompanied by the request as a result of which the application is made". In regulating the form and formality of the request, the existing legislation not only enables judicial co-operation, but also ensures the procedural integrity of any application made to the Isle of Man Court is upheld.
Safeguards Put In Place
With regard to the content of the request, Deemster Doyle distilled seven general principles which are to be considered in matters of co-operation with international jurisdictions:
- The Isle of Man Court will assist "so far as is proper and practicable and to the extent that is permissible" under Isle of Man Law ensuring that no procedure is undertaken, or evidence obtained which undermines the supremacy of national law.
- The Isle of Man Court should decide whether it has the jurisdiction to give effect to the request, and whether it ought to accept or refuse to make such an offer.
- The Letter of Request should be examined objectively, and the substance of the matter be regarded in each case. If there is any reasonable doubt, the Isle of Man Court may allow the parties to refer back to the issuing Court.
- The Isle of Man Court should normally use its discretion unless the application is regarded as "frivolous, vexatious or an abuse of the process of the Court."
- The Isle of Man Court can accept the request in whole or in part; subject to Isle of Man Law, the Court can delete parts of the request that are "excessive". However, the Isle of Man Court should not restructure, recast or rephrase the request.
- Requests should not be denied on the grounds of "fishing", where there is reason to believe that the witness could give relevant evidence. It is necessary, however, to protect witnesses from oppressive requirements.
- The foreign Court should be afforded the fullest help it is possible to give, with effect given to that Court's rules of evidence. If not, any questions should be admitted which may be expected to throw light on the matters in issue.
With reference to his reasoning set out earlier in the case, Deemster Doyle was satisfied that the criteria set out in the 1975 Act were met, and that as the format and content of the request was not contrary to any of the principles set out above, he exercised his discretion in favour of granting the assistance. Attention was then turned to two matters concerning the execution of the procedure through which evidence would be obtained.
Use of Special Procedures
The SEC requested that as per the Letter of Request, the United
States Federal Rules of Evidence and Federal Rules of Civil
Procedures be followed during the examination, allowing for the
videotaping of the examinations. In considering the request,
Deemster Doyle regarded Article 9 of the Hague Convention on the
Taking of Evidence Abroad in Civil and Commercial Matters, which
provided that a request for a special mode or procedure to be
followed should be complied with, unless incompatible with the law
of the state of execution.
Deemster Doyle confirmed this position in stating that "the Court will accede" to such a request, unless it is "so contrary to Manx established procedures that it should not be permitted".
US Lawyers' Ability to Examine Witnesses
A request for an order that the witnesses be examined by
relevant lawyers from the United States was opposed by several of
the Respondents. They argued that section 9(1) of the Advocates Act
1976 applied to prevent US lawyers carrying out the examination of
witnesses in "any cause or matter, civil or criminal", as
it states that "no person shall act as an advocate...in any
Court of civil or criminal jurisdiction...unless he holds an
advocate's commission and has not been suspended from
Deemster Doyle reasoned that the Claimant's application was not issued or commenced by a US lawyer but rather filed in the Isle of Man Court and presented by the US SEC's Isle of Man advocate, whilst the Claimant, First and Third Defendants and Respondents were all represented by Isle of Man advocates. Additionally, in the matter of Cromer Finance Limited CLA 2002/68, Deemster Cain stated that an "examination may be conducted with the American Counsel for the...parties present and participating and conducting the examination", a ruling which was subsequently supported further by the 2009 Rules, which state that the Isle of Man Court can appoint an examiner who is not a judge.
Deemster Doyle therefore held that whilst proceedings in the Isle of Man Court would be caught by section 9(1) of the Advocates Act 1976, the examination before an appointed examiner was "not a civil cause or matter requiring judicial determination". The proceedings before the Isle of Man Court, which section 9(1) were intended to protect, were "truly collateral to and entirely separate from" the examination of witnesses pursuant to the Federal Rules of Evidence and of Civil Procedure. Deemster Doyle reached the conclusion that section 9(1) was made with a "common sense and pragmatic approach", and that it would be an "affront to common sense and justice" to prevent those US lawyers who were more familiar with their respective cases, and who were more aware of the questions which needed to be asked of the witnesses, from conducting the examinations.
Through his judgment, Deemster Doyle not only confirmed the Island's willingness to be co-operative on international investigations, but took positive steps to ensure that assistance would be actively undertaken when adequately requested, whilst ensuring that the Isle of Man Court retains its discretion when it comes to each request. In facilitating the special procedures requested by the SEC, the Isle of Man Court has shown that not only will it co-operate in collecting evidence for use in foreign Courts, but that it will ensure that such evidence is of optimal use in such Courts. Additionally, through enabling US lawyers to examine the requested witnesses, Deemster Doyle has shown that the Island is willing to co-operate by allowing the foreign Courts to collect what evidence they require efficiently and accurately.
Overall, this judgment confirms the Island's reputation as a
sophisticated co-operative jurisdiction. Deemster Doyle, as the
Island's Chief Justice, has confirmed that the Courts here will
encourage transparency and facilitate effective exchange of
information but that they will rightly retain necessary safeguards
to ensure that due process takes place.
In the last few months, the Isle of Man has concluded Double Tax Agreements with Qatar and Singapore and signed or brought into force Tax Information Exchange Agreements ("TIEAs") with the Czech Republic, Slovenia and Turkey. The Island has now signed a total of 32 agreements which meet OECD standards; 26 TIEAs and additionally 6 Double Taxation Agreements, including agreements with 7 out of the world's 10 major economies. More specifically, it has done so with all of the top 5 global economies – US, China, Japan, India and Germany.
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.