How wide is the net? Lessons for offshore trustees after Gorbachev v Guriev

Insight

02.02.2023

How many firms of solicitors in London representing overseas trustees anticipate being served in London with an application for third-party disclosure against their overseas trustee clients, in respect of a claim which does not directly relate to the trusts in question? The answer must be: not many.

The effect of these decisions is that overseas trustees who may think that their documents are outside the grasp of the English courts by virtue of the fact that they themselves are overseas are in fact at risk of a disclosure order that may be made in England and Wales, may be served on them without recourse to the letter of request regime, and may in fact be served on their English solicitors in London instead of on them personally in the overseas jurisdiction, if their documents are held (either electronically or physically) by their solicitors in London.

The Court of Appeal’s decision will alleviate concerns to an extent. It restricted its determination to affirming the High Court’s jurisdiction to permit service out of a third-party disclosure application to when the documents in question are located within England and Wales. The decision may be narrower still—in circumstances where the documents in question, although located in England and Wales, have no other links to the jurisdiction, this may point against the court’s exercise of discretion to serve out. Where documents are located outside of the jurisdiction, the Court of Appeal has declined to provide a definitive answer, albeit the High Court affirmed the jurisdiction. In any event, the exercise of discretion would likely militate against an order permitting service out in all but exceptional cases.

Notwithstanding, the decisions have wide-ranging ramifications for the trust industry and are a salutary warning that parties outside of England and Wales are not out of this court’s jurisdictional reach. Whilst the decisions should of course not deter non-UK trustees from obtaining necessary English advice, there is a need, in potentially contentious situations, for non-contentious and contentious lawyers to coordinate to help trustees manage the risks of holding electronic copies of documents in England and Wales. More broadly, it is a helpful reminder of the fact that it is always in the trustees’ long-term interests to produce documents mindfully (i.e. having in mind the possibility of others seeing those documents in the future).

It is a further lesson that for trust practitioners the intricate provisions of the CPR must be at our fingertips. The rules within the CPR can sometimes appear overly complex and open to differing interpretations, but the rules within Pt 6 provide for sensible and effective means of achieving the overriding objective, which is that the court should deal with cases justly and at proportionate cost. These rules can work to our clients’ advantage, and disadvantage. What the court did in this case was use the CPR rules to provide for early disclosure by an efficient mechanism, so as to allow for the documents in question to be produced before trial, thus allowing the claim to proceed without serious disruption. No doubt that *P.C.B. 11 furthers the overriding objective, but furtherance of that objective is likely to be quite low down on an offshore trustees’ list of priorities when instructing London counsel. The lesson in this case is that, in order to advance our clients’ interests, a clear and purposive understanding of the CPR ’s darkest corners is essential.

If you require further information about anything covered in this briefing, please contact Rowan Cope your usual contact at the firm on +44 (0)20 3375 7000.

This publication is a general summary of the law. It should not replace legal advice tailored to your specific circumstances.

With thanks to Niamh Herrett for contributing to this article.

Please note this content was originally published in Thomson Reuters.

The full article can be accessed here.