Cayman safeguards Norwich Pharmacal information gathering for foreign cases: information vs evidence
21 October 2021
The Cayman Islands Court of Appeal (the “CICA”) recently handed down a decision in Essar Global Fund Limited and Essar Capital Limited v ArcelorMittal USA LLC. This application was initiated as part of a prolonged multi-jurisdictional battle between the parties which sought the grant of a Norwich Pharmacal Order (“NPO”) whereby Essar Global Fund Limited and Essar Capital Limited (the “Essar Group”) would be required to provide ArcelorMittal USA LLC (“ArcelorMittal”) with documentation relating to the assets and affairs of another of Essar Group’s subsidiaries, Essar Steel Limited. This application was successful and an NPO was granted by the Honourable Justice Kawaley for the purpose of assisting ArcelorMittal to collect money due pursuant to an award made by an ICC arbitral tribunal on 17 December 2017 in the amount of US$1.38 billion (plus interest) against Essar Steel Limited.
An NPO is a court order for the disclosure of documents or information from third parties who have been innocently ‘mixed up’ in a wrongdoing. The aim of securing the documents and/or information from the innocent third parties is to assist the applicant in identifying and commencing legal proceedings against the parties who are believed to have wronged the applicant and thereby recover their losses.
The NPO was challenged in the CICA on three main grounds: “the jurisdiction point”; “the wrongdoing point”; and “the enforcement point”. The latter two points were disposed of with relative speed, and the former was the subject of the majority of the CICA’s reasoning and the subject of this article. That being said, a brief synopsis of the other two points has been included for completeness’ sake.
The enforcement point maintained that an “NPO could not properly be granted to support a foreign award which was not enforceable in the Cayman Islands”. This was because, at the time of the first instance hearing, the necessary leave for the enforcement of the foreign arbitral award had not been given. Leave was subsequently given prior to the commencement of the appeal hearing and therefore the point had fallen away.
The wrongdoing point asserted that no arguable case of wrongdoing by Essar Steel Limited had been established at the first instance hearing. Whilst examining the point, the CICA provided helpful guidance in the light of unclear decisions from lower courts on the test for showing wrongdoing as a threshold for obtaining an NPO as the existence of a ‘good arguable case’, in the sense laid down by Mustill J (as he then was) in the English case of The Niedersachsen  2 LI Rep 600 at 605 (lhc):
It was concluded that, in the circumstances of the case, Essar Steel Limited’s wilful evasion of the arbitral award was sufficient to satisfy the good arguable case criteria.
The Appellants’ jurisdiction point challenge contended that the court had no jurisdiction to make an NPO in support of potential foreign proceedings because the Evidence (Proceedings in Other Jurisdictions) (Cayman Islands) Order 1978 (the “Evidence Order”) provided the exclusive means of obtaining information or documents for use in overseas litigation.
The Essar Group argued that because of the availability of the statutory Evidence Order, through which requests can be made from foreign courts for evidence, either oral or documentary, to be used in foreign proceedings which are pending or contemplated, an NPO was not available to ArcelorMittal. Essar Group pointed to the reasoning of the English courts in Ramilos Trading Ltd v Buyanovsky  EWHC 3175 (Comm) and R (Omar) v Secretary of State for Foreign and Commonwealth Affairs  EWCA Civ 118,  QB 112 which both concluded that common law remedies, such as the Norwich Pharmacal jurisdiction, were precluded once concurrent legislation was engaged.
This argument did not succeed. In dealing with this point, the CICA distinguished between the evidence that Essar Group would be obligated to provide pursuant to an Evidence Order and the information that they would be required to provide pursuant to the NPO.
The CICA, in utilizing a flexible approach, noted that “the Evidence Order only concerns the giving of evidence (whether oral or documentary) for the purposes of foreign proceedings, whereas the Norwich Pharmacal jurisdiction cannot as a matter of principle relate to evidence at all” and contrasted that to the NPO jurisdiction where there is a duty to provide information about wrongdoing. The CICA noted a potential risk in the “clear conceptual distinction between information and evidence”, but noted that “so long as care is taken to confine the Norwich Pharmacal jurisdiction to its proper scope, there can in principle be no overlap between that jurisdiction and the statutory regime relating to evidence in foreign proceedings, and accordingly no reason to regard the former as excluded by the latter.”
The CICA also considered that an additional jurisdiction to grant an order requiring disclosure of information existed under Section 11A of the Grand Court Act (2015 Revision) (“Section 11A”) which gives the court power to grant interim relief in relation to foreign proceedings. The CICA found that although an NPO is final as between the parties to the application, Section 11A is clearly contemplating relief that is “interim” in relation to the actual or projected foreign proceedings and that the existence of the power “…makes it impossible to assert that the overall intention of the legislature is to exclude Norwich Pharmacal relief in support of foreign proceedings.”
In delivering the purposeful decision, the CICA departed from the authorities of England and Wales, and sought to safeguard the use of NPO relief as a valuable weapon in the Cayman Islands for victims of wrongdoing seeking redress, particularly in such cases where funds have been dissipated via Cayman entities and where the information sought from the innocent third parties is vital to support the foreign proceedings.
This decision has been well received by all offshore practitioners who act in disclosure, asset-tracing and enforcement matters. The decision means that the ability to obtain an NPO is the same in Cayman and the British Virgin Islands where, after two decisions departed from the same authorities, section 3(5) of The Eastern Caribbean Supreme Court (Virgin Islands) (Amendment) Act 2020, put the question to rest. Given the existence of Section 11A and the decision on the effect of the powers thereunder, that is probably not a path Cayman will need to follow.
Note: In a separate application, the Appellants sought leave from the CICA for the matter to be referred to the Privy Council. Leave in this application was refused by the CICA; any subsequent application for leave to appeal will be made directly to the Privy Council. At the time of writing this article, the authors are unsure of whether or not such application has been made.
Authored by: Laura Hatfield and Jamie McGee – Bedell Cristin (Cayman Islands)
This article first appeared in the ThoughtLeaders4 Disputes magazine issue 2, September 2021.