Nature of third party disclosure orders

Third party disclosure orders, commonly referred to as "Norwich Pharmacal orders" are a well-established form of relief which allows an applicant to obtain disclosure of information and documents from a third party. Originally based on the English case of the same name1, they are a widely used tool in litigation in the BVI.

The circumstances in which a Norwich Pharmacal order may be sought include the following: (a) to identify wrongdoers, (b) to identify the full nature of the wrongdoing to enable the applicant to plead their case, (c) to trace assets and proprietary claims and (d) to aid execution of a judgment. As such, it is an effective remedy for parties who have been defrauded in some way and for those dealing with evasive judgment debtors.

In the BVI the relief is commonly sought against licensed trust companies and registered agents who have become innocently mixed up in some wrongdoing in cases where the actual wrongdoer is the underlying company and/or individuals behind the company which is being maintained by the registered agent. In addition, Norwich Pharmacal disclosure has been ordered against liquidators and company directors.2

A Norwich Pharmacal order may only be granted against a third party who is within the territorial jurisdiction of the BVI. To obtain disclosure from a third party outside the jurisdiction, an applicant may apply for a letter of request from the BVI courts directed to the local courts of the jurisdiction where the third party is located.

General principles

The conditions which must be satisfied to obtain a Norwich Pharmacal order under BVI law can be summarised as follows:3

  • There is a good arguable case that a wrong has been committed by an ultimate wrongdoer
  • The third party against whom the order is sought is mixed up in the wrongdoing and is likely to have documents or information to enable the ultimate wrongdoer to be sued
  • An order is necessary to enable action to be brought against the ultimate wrongdoer

It has been held that the third condition may be satisfied where an applicant has no straightforward or available means of obtaining the information sought and when the other conditions for obtaining the relief are met.4

It is important to bear in mind that even if these conditions are established, the court retains discretion in determining whether or not an order should be made in all of the circumstances. In this regard, the court will balance the competing interests of the parties and will take into consideration factors such as the burden of complying with the order, a respondent's duty of confidentiality, the extent to which other alternative remedies might be available and the potential consequences if the order is not granted.

Seal and gag orders

In cases where secrecy is required in connection with a Norwich Pharmacal application, an applicant may apply for an order sealing the court record and restraining the respondent from tipping off the ultimate wrongdoer - referred to as a "seal and gag order".

A seal and gag order may be granted where there are grounds to believe that once an ultimate wrongdoer becomes aware that it is being pursued, steps may be taken to stymie any Norwich Pharmacal disclosure, including by seeking to frustrate or delay any eventual claim that may be made.

Typically, a seal and gag order is sought ex parte prior to the court considering the application for Norwich Pharmacal relief, which is then dealt with on an inter partes basis.

Undertakings and costs

An applicant must generally provide a cross-undertaking in damages for any loss caused to the respondent as a result of the grant of a Norwich Pharmacal order. An applicant must also generally provide an undertaking to indemnify the respondent for reasonably incurred costs in providing disclosure in compliance with the order. If there is cause to do so, the court may require these undertakings to be fortified by a payment on account or in escrow.5

Other than in cases where a Norwich Pharmacal application is contested and an order is granted substantially in the form of the terms sought, there is rarely a basis for an applicant to seek to recover its legal costs from the respondent.

Norwich Pharmacal orders in support of foreign proceedings

In recent years the jurisdiction of BVI courts to grant interim relief in support of foreign proceedings (including Norwich Pharmacal orders) has been addressed in a number of judgments, a frequent topic of commentary and, ultimately, the subject of recently enacted BVI legislation.

The seminal decision of Black Swan Investment ISA v Harvest View Limited & Another6 established that BVI courts have jurisdiction to order free-standing relief in aid of foreign proceedings, a precedent which was followed in a line of cases in the decade thereafter until it was unexpectedly overturned by the BVI Court of Appeal in Broad Idea International Limited v Convoy Collateral Limited7.

The uncertainty caused by Broad Idea as to the scope of this aspect of BVI courts' jurisdiction was decisively resolved by the enactment on 7 January 2021 of section 24A of the Eastern Caribbean Supreme Court (Virgin Islands) Act, Cap 80 (as amended) (the Act). Section 24A of the Act expressly confers statutory jurisdiction to grant interim relief in support of existing or intended foreign proceedings and clarifies that such relief may granted notwithstanding remedies available under the Evidence (Proceedings in Foreign Jurisdictions) Act, which had also been somewhat unclear.

Accordingly, section 24A of the Act puts the jurisdiction of BVI courts to order Norwich Pharmacal disclosure against respondents in the BVI in aid of foreign proceedings on a clear statutory footing.

Conclusion

Norwich Pharmacal orders are an effective means by which those who are the victim of fraud or are dealing with an evasive judgment debtor can obtain important disclosure from third parties who have become mixed-up in some wrongdoing.

The scope of Norwich Pharmacal relief available in the BVI has continued to evolve and expand in recent years, culminating in the recent enactment of section 24A of the Act.

While the conditions that must be satisfied to obtain a Norwich Pharmacal order have become well-defined, Norwich Pharmacal relief remains a discretionary and exceptional remedy for which the court will balance a number of factors in determining whether or not an order should be made in all of the circumstances.

Footnotes

1. Norwich Pharmacal Co v Commissioners of Customs & Excise [1974] AC 133

2. See FHL v LTC & Others BVIHC (Com) 2020/48

3. See Al Rushaid Petroleum Investment Company & Another v TSJ Engineering Consulting Company Limited BVIHC (Com) 2010/37 at paragraph 18

4. UVW v XYZ BVIHC (Com) 2016/108 at paragraph 8

5. UVW v XYZ BVIHC (Com) 2016/108 at paragraph 38

6. BVIHC (Com) 2009/399

7. BVIHC (MAP) 2019/26

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.