Cayman Islands Court of Appeal confirms availability of Norwich Pharmacal relief in foreign proceedings in Arcelormittal USA LLC v Essar Global Fund Limited & ors
Norwich Pharmacal1 relief allows a claimant to obtain disclosure of information and documents held by a third party which is innocently caught up in the wrongdoing of the defendant in order to assist the claimant to pursue its claim. It is a particularly helpful remedy for claimants whose funds have been misappropriated and then dissipated through complex offshore structures, as it assists the claimant to “trace” those funds through banks, trust companies and promissory agents who may have unwittingly enabled those transfers.
In an important judgment for our international clients, the Cayman Islands Court of Appeal has confirmed that the Norwich Pharmacal relief is available in the Cayman Islands in aid of foreign proceedings, a matter on which there was some doubt in light of recent English High Court decisions2.
Arcelormittal USA LLC (Arcelormittal) sought to enforce a USD1 billion ICC arbitration award against Essar Steel Limited (Essar Steel). The English courts awarded a worldwide freezing order, multiple search orders and Norwich Pharmacal relief to Arcelormittal to aid in the enforcement of the Award in early 2019.
As part of the global enforcement process, Arcelormittal was granted a Norwich Pharmacal order in the Cayman Islands, pursuant to which various Essar companies were required to disclose documentation relating to the assets and affairs of Essar Steel to Arcelormittal.
The Essar companies appealed on the basis, amongst other things, that: (1) the court had no jurisdiction to grant Norwich Pharmacal relief; and (2) there was no arguable case of wrongdoing by Essar Steel. The appeal failed for the reasons summarised below.
The Appellants argued that Norwich Pharmacal relief in the Cayman Islands is not available if the purpose of that relief is to allow an applicant to pursue claims in foreign jurisdictions, arguing that orders for the provision of information in aid of foreign proceedings could not be made unless authorised by Caymanian statute. The Appellants relied upon the Evidence (Proceedings in Other Jurisdictions) (Cayman Islands) Order 1978 (the “Evidence Order”), which they argued presented an “absolute bar on the use of Norwich Pharmacal relief”.
The Court rejected this argument. It held that in that the Evidence Order was relevant to evidence, whereas Norwich Pharmacal applications seek “information about wrongdoing” and not evidence.
The Court agreed with the Essar companies that the failure to pay the arbitration award alone did not demonstrate wrongdoing (noting that the Essar companies were entitled to use or dispose of their assets as they wished). However, the Court inferred wrongdoing. It found that the Essar companies’ actions in, amongst other things, intra-group debt write-offs and capital reductions via share purchases between companies and preferential transactions constituted a good arguable case that they had deliberately evaded payment under the Award.
Conclusion: a positive development for victims of wrongdoing
In holding that Norwich Pharmacal relief concerns information needed to establish a claim, not evidence, the Court in Arcelormittal v Essar has clarified its scope and provided certainty to claimants that the relief is available in support of foreign proceedings.
The Court has therefore ensured that Norwich Pharmacal relief remains a useful tool in the Cayman Islands for victims of wrongdoing seeking redress. They should be reassured that if funds have been dissipated through the Cayman Islands, they should be able to obtain information from entities that have innocently assisted the transfers in aid of their English or other foreign proceedings.
1 The name of the relief derives from the name of the case: Norwich Pharmacal Co. & Others v Customs and Excise Commissioners  AC 133.
2 In particular, R (Omar) v Secretary of State for Foreign Affairs  EWCA Civ 118; Ramilos Trading Ltd v Buyanovsky  EWHC 3175 (Comm).