Re ABC Ltd

• Jurisdiction: Cayman Islands
• Judge: (Summerfield, C.S.)
• Judgment Date: 24 July 1984
• Court: Grand Court (Cayman Islands)
• Date: 24 July 1984

Grand Court

(Summerfield, C.S.)

IN THE MATTER OF ABC LIMITED

R. Alberga, Q.C. for the applicant;

R. W. Ground, Crown Counsel, for the Attorney General.

Cases cited:

(1) Tournier v. National Provncl. & Union Bank of England, [1924] 1 K.B. 461; [1923] All E.R. Rep. 550; (1923), 93 L.J.K.B. 449; 130 L.T. 682; 40 T.L.R. 214; 68 Sol. Jo. 441; 29 Com. Cas. 129.

(2) U.S. v. Ghidoni(1984), 732 F. 2d 814, explained.

Legislation construed:

Confidential Relationships (Preservation) Law (Law 16 of 1976), s.3(2), as substituted by the Confidential Relationships (Preservation) (Amendment) Law; 1979 (Law 26 of 1979), s.3:

‘This Law has no application to the seeking, divulging, or obtaining, of confidential information-

. . .

(b) by or to-

(i) any professional person acting in the normal course of business or with the consent, express or implied, of the relevant principal . . . .’

s.4(1), as amended:

‘Subject to the provisions of sub-section (2) of section 3, whoever-

(a) being in possession of confidential information however obtained;

(i) divulges it; or

(ii) attempts, offers or threatens to divulge it to any person not entitled to possession thereof;

. . .

is guilty of an offence . . . .’

Confidential Relationships-consent of principal-consent given under court order-consent under Confidential Relationships (Preservation) Law, s.3(2)(b)(i) must be voluntarily and freely given-not so given when given on direction of foreign court on pain of criminal penalty

The applicant bank applied to the court for a direction as to whether it would be entitled under the Confidential Relationships (Preservation) Law to disclose confidential information relating to a client, pursuant to a ‘consent’ signed by the client in compliance with an order of a foreign court.

The applicant was engaged in the business of banking and trust and company management and was therefore in possession and control of confidential information relating to the affairs and business of many clients. Following a decision of the United States Court of Appeals for the 11th Circuit that an individual with a Cayman bank account but resident within the jurisdiction of a United States court was in contempt for refusing to sign a consent directive, authorising the bank to disclose confidential information relating to his affairs to a district court, the applicant applied to the court for (i) a direction whether or not it would be entitled to disclose confidential information to a foreign governmental agency pursuant to a consent signed by a client in compliance with an order of a foreign court; and (ii) a declaration whether or not a consent directive signed by a client pursuant to an order of a foreign court under pain of criminal penalty would amount to ‘consent’ under s.3(2)(b)(i) of the Confidential Relationships (Preservation) Law, as amended, so as to entitle the bank to release the confidential information.

Held, giving the direction and granting the declaration sought:

The applicant would not be entitled to disclose confidential information relating to a client”s affairs in such circumstances. A consent signed by a client in compliance with the order of a foreign court would not amount to ‘consent’ for the purposes of s.3(2)(b)m of the Confidential Relationships (Preservation) Law, as amended (and in the view of a Cayman court would create no obligations on the applicant”s part, nor any enforceable rights on the part of the foreign law enforcement agencies), for it would not be given voluntarily and freely in the exercise of an independent and uncoerced judgment but under pain of criminal penalty. Furthermore, a Cayman court should not allow its statutory power to order the bank to disclose confidential information (with its important safeguards for protecting the confidentiality of personal

affairs) to be undermined by a foreign court”s consent directive, which was in reality a direction by that court to the bank rather than by the client (page 133, lines 27–39; page 134, lines 14–20; page 134, line 41 – page 135, line 8; page 135, lines 14–29).

SUMMERFIELD, C.J.: This summons was heard in chambers

but in view of the importance of the issues raised, it is ordered

that the judgment be delivered in open court with all references

to any party or to any

...