There has been an exponential increase in global business since the turn of the century. International trade is no longer the preserve of the Fortune 500. Every corner shop in Croydon is a customer in the international marketplace, importing goods from around the world. Every bank in the city has a branch in a more far-flung city.
But as the opportunities for businesses to operate on an international scale increase, so do the opportunities for fraud. The civil law often affords the choice of jurisdiction; the criminal law is not so generous. An individual cannot opt into, or out of, a country’s criminal code. So what about the fraudulent transactions that appear to occur offshore? Can cross-continental crime be properly prosecuted in England and Wales?
General principles
The primary basis of English criminal jurisdiction is territorial, it being the function of the English criminal courts to ‘maintain the Queen’s peace within her realm’ (Board of Trade v Owen [1957] AC 602, per Lord Tucker at p. 625).
Nevertheless, the extra-territorial ambit of the English criminal courts can be extended expressly by Parliament. This was epitomised by the obiter opinion of Lord Morris in Treacy v DPP [1971] AC 537 at pp. 552–3:
In general… acts committed out of England, even though they are committed by British subjects, are not punishable under the law of this country. But, as Parliament is supreme, it is open to Parliament to pass an enactment in relation to such acts… It would be open to Parliament to enact that if a British subject committed anywhere an act designated as blackmail he would commit an offence punishable in England. Such an enactment would, however, have to be in clear and express terms: specific provision would have to be made with regard to acts committed abroad…
Fraud offences
(1) Fraud Act offences
The Fraud Act 2006 is clear: sections 1 to 9 – including key offences of fraud by false representation, failure to disclose information and abuse of position – and 11 to 13 extend to England and Wales and Northern Ireland only[1].
Nevertheless, ‘specific provisions’ Lord Morris predicted are contained within sections 1–6 Criminal Justice Act 1993, extending the jurisdiction of the English courts to try certain specified offences of dishonesty. The listed offences are divided into groups; Group A offences include a number of offences under the Theft Act and the Fraud Act 2006.
By virtue of section 2, the court has jurisdiction to try a Group A offence where any one of the ‘constituent elements’ of the offence occurs in England and Wales. Therefore, if a defendant is in England at the relevant time when he took steps in furtherance of the fraud, then English courts would have jurisdiction to try him here for offences under the Fraud Act 2006.
Furthermore, section 3(1) emphasises that a person may be guilty of a Group A offence, whether or not he was in England and Wales at any material time, and whether or not he was a British citizen at any such time.
(2) Conspiracy to defraud
Section 3(2) provides that on a charge of conspiracy to defraud in England and Wales, a defendant may be guilty of an offence irrespective of whether (a) he became a party to the conspiracy in England and Wales; or (b) any act or omission or other event in relation to the conspiracy occurred in England and Wales.
A defendant commits a conspiracy to defraud in England and Wales if any one of the conditions set out in section 5(3) are satisfied, namely that:
(a) A party to the agreement constituting the conspiracy, or a party’s agent, did anything in England and Wales in relation to the agreement before its formation, or
(b) A party to it became a party in England and Wales (by joining it either in person or through an agent), or
(c) A party to it, or a party’s agent, did or omitted anything in England and Wales in pursuance of it.
In any event, the common law has moved on since Board of Trade v Owen (ibid). The Court of Appeal in R v Smith (Wallace Duncan) [2004] EWCA Crim 631 held that a crime may sometimes be regarded as committed within the jurisdiction if ‘a substantial part of the offence’ was committed in England and Wales, and there are no reasons of comity which indicate that the courts ought not to try the case here[2]. In particular, it was held that it is not necessary that the ‘final act’ or the ‘gist’ of the offence should occur within the jurisdiction.
(3) Bribery Act offences
Finally, the Bribery Act 2010 came into force on 1 July 2011. The key offences are contained in section 1 (bribing another person), section 2 (being bribed) and section 6 (bribery of foreign public officials).
Reflecting recent trends in widening jurisdiction, the Act has sweeping provisions to capture criminality. Section 12(1) applies to offences under section 1, 2 and 6, and sets out a weaker test than the common law was willing to develop for conspiracy to defraud, requiring ‘any act or omission which forms part of the offence’ to take place in the United Kingdom; there is no qualifier that it be a ‘substantial’ part.
Even if no act or omission which forms part of an offence under those sections, section 12(3) widens the net. If a person’s act or omissions done or made outside the United Kingdom would form part of such an offence if done or made in the United Kingdom, and that person has a close connection with the United Kingdom, then proceedings for the offence may be taken at any place in the United Kingdom.
The potential for extra-territorial prosecutions is huge. British citizens, British nationals and individuals ordinarily resident in the United Kingdom are all deemed people with close connections with the UK (section 12(4)).
As for section 7 – failure of commercial organisations to prevent bribery – if the organisation is incorporated or formed in the UK, or if it carries out its business or even part of its business here – then an offence is committed irrespective of whether the acts or omissions take place in the UK.
So what about those fraudulent transactions that appear to occur offshore? The English courts are ready and waiting.
Jennifer Kay, Junior Associate
[1] Section 15(2) Fraud Act 2006. The exception is provided by section 15(3): Section 8 Fraud Act 2006, so far as it relates to the Armed Forces Act 2001 (c.19), extends to any place to which that Act extends.
[2] This has since been supported (obiter) by Lord Hope in R (Purdy) v DPP [2010] 1 AC 345 and subsequently applied by the Court of Appeal in R v Sheppard [2010] 2 All ER 850.
