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Disclosure versus confidentiality, which one carries the day?

  1. In a landmark decision, the Judicial Committee of the Privy Council (“JCPC”) held, in the case of Stanford Asset Holdings Ltd & anor v AfrAsia Bank Ltd & ors [2023] UKPC 35, that the duty of confidentiality of a Mauritius bank does not arise from the Banking Act 2004 but exists at common law and equity.
  2. In February 2022, as a result of an alleged fraud, over USD 11 million was fraudulently transferred from a bank account belonging to Stanford Asset Holding Limited at AfrAsia Bank Limited (“AfrAsia”) to the bank account of Key Stone Properties Limited (“Key Stone”). Approximately USD 4 million remains in the account of Key Stone and has been frozen. The remainder has been transferred into the accounts of unknown third parties. The Appellants brought an application before the Supreme Court of Mauritius seeking to compel AfrAsia to disclose information about the identity of the recipients of any of the allegedly misappropriated funds.
  3. On 29 September 2022, the Supreme Court refused to grant a disclosure order on the basis that: -
  1. there was no power to order disclosure under the Banking Act; and
  2. Norwich Pharmacal relief should be refused because the Appellants had alternative remedies available to them, and there were ongoing law enforcement investigations into the alleged fraud.
  1. This decision has been overturned by the JCPC which held that it is “well established that the Mauritian courts enjoy the same jurisdiction to grant equitable remedies, exercised in accordance with the same principles, as the High Court in England and Wales[1]. “It plainly follows that...the Mauritian Courts have jurisdiction to make interim orders for disclosure in accordance with Norwich Pharmacal, whether as the sole relief sought or as adjuncts to freezing orders”.
  2. Section 64 does not impose a duty of confidentiality on banks themselves, as opposed to on individual employees and agents, “that duty arises, rather, at common law and there is accordingly no difficulty about giving effect to a common law...exception to it of the kind recognised in Norwich Pharmacal”.
  3. In essence,
  1. Section 64 of the Banking Act serves to regulate the duty of secrecy owed by banks to their customers, however the restrictions to disclosure under thereunder do not prevent our Courts from granting Norwich Pharmacal relief, such to the conditions for that type of relief to be satisfied;
  2. The disclosure order was necessary as it was the only means of finding out where the misappropriated funds had gone; and
  3. Notwithstanding the ongoing investigation into the alleged fraud by the relevant authorities, the JCPC found that the disclosure order was still necessary, especially in view of the need for the Appellants to make progress in tracing their funds and commence proceedings to recover them.

It is interesting to observe that the tracing and recovering of funds has trumped the restrictions to disclosure under our banking law, particularly when it seems the funds were only alleged to have been transferred fraudulently. It appears that, going forward, our Courts will now be willing to order the disclosure of information even on allegations of wrongdoing.

[1] Ibid, at paragraph 31