Flying Too Close To The Sun: The U.K. Supreme Court Places New Limits On The SFO’s Overseas Investigative Power

Vinson & Elkins LLP

Vinson & Elkins LLP

In a striking rebuke, the U.K. Supreme Court found that the U.K. Serious Fraud Office (“SFO”) overstepped its authority when it tried to access corporate documents from the United States. The U.K. Supreme Court’s message to British investigators was clear: your anticorruption enforcement reach may be broad, but it is not unlimited. The February 5, 2021 ruling sharply limited the SFO’s ability to demand documents and testimony from entities that operate wholly outside the United Kingdom, even if they have subsidiaries that operate in the country and are the subject of an SFO investigation. As a result, the SFO will be forced to rely on international cooperation agreements and cumbersome treaty processes to obtain evidence in extraterritorial investigations moving forward and will no longer rely on their “Section 2” (U.K. subpoena) powers alone. Though the decision is not a complete roadblock for the agency, which is tasked with investigating foreign bribery and corruption under the U.K. Bribery Act (“UKBA”) — the U.K.-equivalent of the U.S. Foreign Corrupt Practices Act (“FCPA”) — and other financial crimes, it has the potential to cabin the SFO’s ability to investigate extraterritorial violations of U.K. law.

According to the Supreme Court’s decision and other public records, the decision originated from an anti-bribery investigation into Monaco-based Unaoil and its international projects with several global companies, including U.S.-based KBR, Inc. (“KBR”). KBR is not a U.K. registered entity, has no offices or presence in the United Kingdom, nor does it do any business in the United Kingdom. However, one of KBR’s subsidiaries, Kellogg Brown and Root Ltd. (“KBR UK”), is a U.K. registered entity.

In 2017, the SFO issued a demand for documents and information to KBR UK in relation to its investigation of Unaoil, pursuant to section 2(3) of the Criminal Justice Act 1987 (a so-called “Section 2 notice”).1 KBR UK produced materials in response, and further indicated that there was certain responsive material that, if it existed, was in the possession of KBR in the United States. Unable to physically serve a Section 2 notice abroad, the SFO requested a meeting with KBR in London to discuss the investigation, and insisted that KBR’s corporate officers attend.2 At the meeting, the SFO served KBR’s General Counsel with a Section 2 notice, demanding the production of specified materials held in the United States under pain of criminal penalties. KBR challenged the Section 2 notice in court, arguing that as a non-U.K. entity that has no direct business in the country, it was beyond the reach of the SFO’s Section 2 power, and that SFO should have pursued the evidence through mechanisms such as Mutual Legal Assistance Treaties (“MLATs”) and international cooperation agreements between the United States and United Kingdom that were specifically designed for this purpose. Though rejected by the U.K. Divisional Court, the argument wound its way to the country’s Supreme Court.


The Supreme Court ultimately agreed with KBR. The SFO argued that Section 2 must have some extraterritorial reach, but the Supreme Court disagreed that reach was broad enough to cover KBR, drawing a sharp line between companies that have a legitimate connection to the United Kingdom and those such as KBR, which have no connection to the jurisdiction aside from their corporate officer’s brief presence at a meeting in London.3 While the Court acknowledged that it would be “scarcely credible” to argue that a U.K. entity could evade compliance with Section 2 by positioning their documents on a server outside the United Kingdom, such an argument provided no support for the SFO’s position that Section 2 permitted it to demand documents from a non-U.K. entity with no office, presence, or business operations in the United Kingdom.4 The court also rejected the creation of a “sufficient connections” test, noting that it would “involve illegitimately re-writing” the Criminal Justice Act.5

The Court also agreed with KBR that Parliament intended for evidence held overseas by non-U.K. entities to be secured through international cooperation mechanisms, such as MLATs. It would hardly make sense, the Court reasoned, to establish MLATs in order to promote international legal cooperation if the SFO could simply use its existing Section 2 authority to unilaterally demand the production of documents by non-U.K. entities.6


The Court’s decision has a number of implications for multinational companies concerned with the SFO’s broad enforcement reach. The UKBA is similar to the FCPA7 in that it has one of the broadest jurisdictional mandates in the world. The UKBA reaches not only domestic entities and actions that occur in the United Kingdom, but also misconduct that occurs entirely abroad if committed by a company that simply does business in the United Kingdom.8 Anti-bribery and corruption investigations and enforcement have increased dramatically in recent years, including an increasing trend of cross-border cooperation between national enforcement agencies and, consequently, an increasing number of settlements with multiple jurisdictions. In a stunning recent example, French aircraft manufacturer Airbus SE paid nearly $4 billion to U.S., U.K., and French authorities to settle an eight-year investigation into bribery and trade violations.9 However, this ruling makes clear that Section 2 is not a blank check to access evidence anywhere in the world if controlled by an entity that does not have a nexus to the United Kingdom, even if said entity has parents, subsidiaries, or joint venture partners that do.

Another complicating factor for the SFO is the elimination of the legal cooperation agreements with the European Union (“E.U.”) post-Brexit. Where previously the SFO could rely on the E.U. to secure cooperation, the United Kingdom must now re-engage with E.U. member states individually and negotiate one-off MLATs or other cooperation agreements, especially in light of the significance that the Court’s decision places on following the formalistic procedures outlined in these treaties. Those procedures are cumbersome and can be quite lengthy.

While this decision is no “get out of jail free” card, and the SFO’s authority to investigate extraterritorial offenses remains robust, companies that do not do business in the United Kingdom should not necessarily assume that their information is subject to disclosure. In the wake of the Court’s dramatic decision, the SFO’s investigative toolbox has become a bit smaller.

1 R (on application of KBR, Inc.) (Appellant) v Director of the Serious Fraud Office (Respondent) (“Opinion”), ¶¶ 1-3.

2 Opinion at ¶ 4.

3 Opinion at ¶¶ 26, 54.

4 Opinion at ¶ 30.

5 Opinion at ¶ 65.

6 Opinion at ¶ 45.

7 15 U.S.C. §§ 78dd-1, et seq.

8 U.K. Bribery Act 2010, Section 7.

9 U.S. Department of Justice, Press Release, Airbus Agrees to Pay over $3.9 Billion in Global Penalties to Resolve Foreign Bribery and ITAR Case,

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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