Resolving A Clash Of Jurisdictions
The case studies illustrate the potential for clashes between the laws of different jurisdictions applying to a bank. Regulatory requirements may differ for the one bank operating in two jurisdictions (case 1); the law in one jurisdiction makes unlawful behaviour which is at least partly conducted abroad (case 2); in one jurisdiction there is a claim for repayment by or against a bank, but another jurisdiction forbids repayment (cases 4 and 5); one jurisdiction requires a bank to disclose information, but that is in breach of the law in another (cases 3, 7); and one jurisdiction says a bank may be sued, another that the proceedings in that jurisdiction ought not to proceed (case 6). Case 2 also raises a different issue, making fraudsters liable in the jurisdiction most appropriate to prosecuting them. How are such clashes resolved?
Where the US courts have used established international procedures for obtaining evidence, such as letters rogatory, English courts have been more responsiveIn one case it was said that, although an English court might not accede to a request when this was against the public interest and there was a public interest in maintaining bank confidentiality: there is, in my view, also clearly a public interest, and a very strong one, in not permitting the confidential relationship between banker and client to be used as a cloak to conceal improper or fraudulent activities evidence of which would otherwise be available to be used in legal proceedings, whether here or abroad.
Such sentiments are likely to weigh heavily in the future.
Nevertheless, the extraterritorial claims by the United States have led jurisdictions such as the United Kingdom, France, Canada, and Australia to take power legislatively to resist them. These are the blocking and clawback statutes. Ontario took the lead with its Business Records Protection Act 1947. The UK legislation is the Protection of Trading Interests Act 1980. Such statutes may empower the executive to make orders prohibiting compliance with the requirements of other jurisdictions, prohibiting the production of documents before a foreign tribunal (which may give a foreign compulsion defence) and the enforcement of foreign judgments, and giving litigants who have satisfied a foreign judgment a right to claw back that part of a judgment which is penal rather than compensatory. It is suggested that these blocking statutes have little, if any, relevance to banking matters.
While a clash of jurisdictions may exist, it may not manifest itself, or it may be avoided. The bank may simply comply with the differing regulatory requirements of the jurisdictions where it operates. If there is regu latory liability in more than one jurisdiction, the authorities in one may not take further action following proceedings in the other. Foreign law may be recognized under ordinary rules about conflict of laws. While one jurisdiction may maintain that there is liability there, it respects an order of a foreign court to the contrary, and takes appropriate executive or judicial action. Bank regulation may avoid jurisdictional clashes by making information available to the regulators, who can then pass it on to regulators in other jurisdictions.
In England there is no directly relevant common law doctrine which enables the courts to avoid extraterritorial claims, although there is authority that an English court will take into account that a foreign law or court order purports to operate extraterritorially.
All the cases where the fact of extraterritoriality has influenced a decision involve an exercise of discretion, such as the grant of an injunction. A narrow view of the English authorities, then, is that the fact that the exercise of foreign jurisdiction has extraterritorial effect is a factor which the Court will take into account in exercising a discretion. If that exercise of jurisdiction should be given effect to on ordinary principles of conflict of laws, however, its extraterritoriality will not, as a matter of some independent principle, be refused effect by an English court.
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