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R (on the application of AL) v Serious Fraud Office [2018] EWHC 856 (Admin)

Blog 4 Jun 18

Litigation of a Deferred Prosecution Agreement with inter partes disclosure during the currency of ongoing criminal proceedings.


The background to the case is set out in the Judgment of Sir Brian Leveson P QBD in Serious Fraud Office v XYZ Ltd (Crown Court, 11th July 2016). A redacted version of this judgment is in the public domain. The full version will not be published until completion of the criminal proceedings. In that judgment an order was made restraining publication of the terms of the DPA pending completion of the trial. Although the judgment provides a description of the key terms of the DPA. In a subsequent order during judicial review proceedings it was directed that pending further order no reference was to be made to the identity of the claimant or any interested party. The court thereby extended protection to the identity of the lawyers acting on behalf of the company (the second Interested party).

The defendant in the judicial review was the Serious Fraud Office (“SFO”). The claimant (‘AL’) is a Defendant in the criminal proceedings. There were four interested parties. The first was the company (XYZ Ltd”) which self-reported suspected instances of the payment of unlawful commissions to the SFO. The second interested Party (ABC LLP) was the firm of lawyers which acted for XYZ Ltd in the internal investigation leading up to the self-reporting to the SFO. The third interested party (MS) was a defendant to the forthcoming criminal proceedings. The fourth interested party (DJ) is also a defendant to the forthcoming criminal proceedings.

The claim for judicial review concerned novel issues concerning the extent to which the Serious Fraud Office (‘SFO’), in fulfilling its disclosure obligations towards a defendant in criminal proceedings who had formerly been employed by a company which had self-reported wrong doing, was under a duty to obtain documents from that company in order to review them and disclose them if appropriate. In the case the SFO concluded a Deferred Prosecution Agreement (“DPA”) with the company under which, inter alia, the SFO prepared a draft indictment against the company but then, with the approval of the Crown Court, suspended that indictment. One of the conditions of the DPA for the continued suspension of the indictment was that the company would afford total cooperation to the SFO in its efforts to investigate and proceed against employees of the company who, it is alleged, engaged in the criminal payment of commissions (said to be bribes) to foreign agents to secure business for the company.

In order to decide whether to self-report the company instructed external lawyers to conduct a review, which included interviewing four senior executives suspected of wrongdoing. The interviews were not recorded but the interviewing lawyers took detailed notes. These then formed part of the material used by the company to decide whether or not it should self-report.

In due course, and before any prosecution was commenced, the SFO sought the interview notes. The company refused, asserting legal privilege. The SFO disagreed that privilege applied to first interview notes of this sort. The company persisted. After some negotiation the company agreed to allow a lawyer from the external firm to give an ” oral proffer “. Under this process the lawyer read out (but did not provide a copy of) a statement which purported to summarise the interviews with the four employees. The SFO recorded the oral summaries and then transcribed them. The SFO ultimately decided to charge 1 out of the 4 employees who had been interviewed. The other interviewees were not charged and were not prosecution witnesses. The SFO disclosed the summaries to the Defendants. The SFO was requested by the defendants to disclose the full interview notes. The SFO reverted to the company who, once again, refused. AL the defendant in the judicial review then applied to the Crown Court for an order requiring the SFO to disclose the full interview notes. The judge in the Crown Court refused upon the basis that the notes were not in the ‘possession’ of the SFO and as such the disclosure obligation in the Criminal Procedure and Investigation Act 1996 was not operative. The judge expressed ” misgivings” about the situation. The SFO then reverted to the company and asked them to reconsider; they refused. The SFO then informed the defendant that it would take no further steps against the company.

In the light of this refusal the claimant had (upon the basis that he had exhausted all available remedies in the Crown Court) sought judicial review of the decision of the SFO not to pursue the company for breach of the duty of cooperation under the DPA. It is argued that that decision was based upon a series of public law errors including; failing to address relevant considerations, taking into account irrelevant matters, irrational inconsistencies in approach, and errors of law.

It was argued for the Claimant that:

“… the nature of the challenge is both novel and wholly exceptional arising, as it does, in the context of the first criminal trial of individuals where a DPA has enabled their former corporate employer to secure deferment, on strict term(s), of a prosecution of the company for the same conduct. Rather than seeking to challenge a prosecutor’s decision to investigate or prosecute (or to decline to investigate/prosecute), this case focuses on the prosecutor’s failure to initiate proceedings outwith the extant trial process and pursuant to a discrete Court approved agreement with a view to safeguarding the fairness of the trial process “.

The claimant then argued that the High Court had jurisdiction and should exercise it and, in so doing, find that the SFO had misdirected itself, failed to consider relevant matters and adopted material errors of law, and that the decision should be quashed and remitted to the SFO to be re-taken.

The SFO, for its part, argued that there are perfectly adequate remedies available in the Crown Court and that the Claimant had not exhausted all available alternative remedies. It is well established that the Courts will interfere with a prosecutorial decision only very exceptionally and the decision not to pursue breach proceedings against the company was a “judgment call” for it to make which cannot properly be challenged on a judicial review. It was then also argued that on the facts of the case the decision of the SFO was that there was no need to procure the full interview notes because the company had asserted privilege which was ” not obviously wrong ” and the SFO was satisfied that there was nothing in the full interview notes that was not adequately captured in the summaries which had already been disclosed.

The Issues

The court identified three issues:

  1. Whether the application should be dismissed on the basis that there existed adequate alternative remedies to judicial review in the Crown Court, namely: an application or further application by a defendant for specific disclosure pursuant to section 8 of CPIA 1996; an application pursuant to section 2 Criminal Procedure (Attendance of Witnesses) Act 1965 and/or, an application that the indictment be stayed as an abuse of process.
  2. In any event should the Claim fail because it amounts to satellite litigation and is a challenge to the exercise of a legitimate prosecutorial discretion.
  3. In any event must the Claim fail because: (i) there is no further relevant material in the interview notes and there is no reason to doubt the assurances given by ABC LLP as to the ” completeness and accuracy of the oral proffers ” and/or (ii) XYX Ltd had asserted legal privilege over the material in the light of the judgment in Director of the Serious Fraud Office v Eurasian Natural Resources Corp Ltd [2017] , and this is not obviously invalid and/or (iii) it is impracticable for the SFO to review disclosure obligations under the DPA in the light of developments in the law.

Conclusion on Issue I

The court concluded that the Crown Court is the appropriate place for such arguments to be resolved. Permission to claim judicial review had already been given otherwise permission would have been refused. The Court dismissed the application notwithstanding the conclusions drawn on Issues II and III.

Conclusion on Issue II

The Claimant argued that the SFO misdirected itself as to the importance which should have been attached to the rights of the defence when it took its decision not to pursue XYZ Ltd for non-disclosure. There was an overlap between Issue II and Issue III, which also concerned an allegation that the SFO misdirected itself on issues of law relating to privilege. The court focused upon the narrow issue of rights of defence. It was not accepted that the SFO’s analysis that it had a very broad discretion on the facts of this case, to decide not to proceed against XYZ Ltd for failure to disclose was correct. The court held that there was a margin of appreciation attributable to the SFO, but it is not comparable to that applying to the a prior decision to prosecute or not. The discretion as it applies to disclosure was held to be circumscribed by Article 6 ECHR, the common law right to a fair trial, and by the Attorney General’s Guidelines. The SFO argument that in the weighing scales the interests of shareholders of XYZ Ltd in finality weigh heavily on a prosecutorial decision was held to be mistaken. Their interest is reflected in the DPA which imposes upon the company a strong continuing duty to cooperate. The shareholder’s interests are no different to those of the company. The court concluded that the SFO failed to address relevant considerations and/or had taken irrelevant considerations into account. But for the conclusion on Issue I the court held that it would have quashed the decision and remitted the issue for reconsideration.

Conclusion on Issue III

In summary: (i) In the decision letter of 13th October 2013 the SFO simply accepted the assertion of privilege made by ABC LLP even though it is the SFO’s own case that privilege does not apply and the SFO’s position was supported by current case law; (ii) the SFO had never addressed itself to the issue of waiver of privilege (either as a matter of law or as part of the company’s duty to cooperate) arising as a result of the oral proffers; (iii) The SFO adopted a test of ” -not obviously invalid- ” and in so doing it erred since its duty is to assess claims for privilege properly and not cursorily and superficially; (iv) but in any event the SFO had not provided any sort of reasoning for its conclusion that the points advanced by ABC LLP in its letter of 19th September 2017 were “-not obviously wrong- “; and (v) if and in so far as the SFO adopted an approach whereby it declined to reassess its disclosure obligations in the light of “developments” in the law because of “finality” reasons, then it erred since that is tantamount to an argument that the SFO can ignore the law and its duty to keep its disclosure obligation under review.


The court held that the SFO had failed to address relevant considerations, taken into account irrelevant matters, provided inconsistent and inadequate reasons for its decisions, and applied an incorrect approach to the law. These public law errors were material. If on proper analysis no privilege applies (either per se or because of waiver) then XYZ Ltd should simply disclose the interview records forthwith. There would be no need to pursue a cumbersome and unreliable horizontal testing exercise as an alternative. Save for the court’s conclusion on forum the application would have failed and the SFO’s decision would have been quashed and remitted for reconsideration. However, because of conclusions on Issue I the Claim failed.

Blog | 4 Jun 18

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