What is a Norwich Pharmacal Order?
A Norwich Pharmacal Order (NPO) is a legal mechanism that allows an applicant to compel a third party to disclose information when that party, whether knowingly or not, has become involved in or facilitated wrongdoing. The principle was established in the landmark case Norwich Pharmacal Co. v Customs and Excise Commissioners [1974] AC 133.
Unlike standard disclosure orders, NPOs are equitable remedies that apply before or outside traditional litigation frameworks. They are sought against third parties who are not necessarily parties to the underlying dispute but possess information critical to pursuing legal redress. The court grants such orders cautiously, only when required in the interests of justice.
When is a Norwich Pharmacal Order Used?
NPOs are used to identify wrongdoers, trace assets, or obtain information needed to advance a legal claim. NPOs are particularly effective where third parties, such as banks or internet service providers, hold relevant but otherwise confidential information.
Banks are frequently subject to NPO applications in fraud cases, as they hold key information about the accounts used to transfer or dissipate stolen funds. Victims of fraud use NPOs to track the movement of assets and identify those involved in the dissipation.
NPOs are commonly used to identify individuals who post defamatory or illegal content online, by requiring internet service providers or website operators to disclose the identity behind an IP address.
NPOs are also used to trace the source of counterfeit goods or intellectual property violations, including breaches of copyright or trademarks. They can compel parties who received confidential information to reveal the source of the breach.
NPOs may be directed at the Land Registry to determine whether stolen funds were used to purchase property, or to identify the owner of certain assets.
Commonly, NPOs can assist in international disputes where the wrongdoing has a connection to the UK, and information held by the UK-based entities is crucial. They are often sought pre-action to enable the applicant to formulate a claim or identify proper defendants.
Criteria for Granting a Norwich Pharmacal Order
In order to obtain an NPO, an applicant must satisfy a number of criteria.
Firstly, the applicant must establish that there is a good arguable case that there has been wrongdoing. It must be more than just arguable that there has been wrongdoing. Examples include fraud, intellectual property breaches, or asset dissipation.
Next step would be proving that the respondent must have been "mixed up" in the wrongdoing, even if innocently, meaning their involvement facilitated or enabled the wrongdoing. Examples include acting as a conduit for fraud, such as a bank processing transaction, or holding relevant information as part of their operations, like an internet provider with user data. An NPO cannot be granted against a party who is merely a witness to the wrongdoing or whose involvement is purely incidental.
Additionally, the respondent must possess information or documents critical to identifying the wrongdoer, tracing assets, or enabling the applicant to pursue their claim. For example, a bank may hold details of financial transactions, or an internet service provider may have IP address data linked to anonymous wrongdoers.
It is important to remember that a person seeking a NPO must demonstrate that the order is both necessary and proportionate to the circumstances of the case. It must be just and proportionate for the respondent to provide the information, rather than requiring the applicant to obtain the information through other means, such as an application for pre-action disclosure from the wrongdoer under the Civil Procedure Rules or via an internal investigation. However, NPOs are not considered a remedy of a last resort, and their use does not depend on exhausting other options.
Obligations on a Party Seeking an NPO
An applicant seeking an NPO must comply with certain requirements.
The most important requirement is to provide a “full and frank disclosure.” This means that the applicant must clearly present to the court not only the arguments and evidence supporting their application, but also anything that might weigh against the making of an order. Failure to meet this obligation can lead to any NPO that is granted being set aside (no longer valid).
A second general requirement is to give a “cross-undertaking in damages.” This means that if it is later determined that the NPO should not have been granted, the applicant will compensate the respondent and any innocent third parties who suffer loss, such as an individual whose confidential information becomes public. The applicant must demonstrate their ability to meet this obligation if it arises.
Finally, an applicant seeking an NPO is usually also required to give the respondent an indemnity (compensation) in respect of the costs of the application and of complying with the order. The cost of an indemnity usually will be relatively low, if the requested information can be easily provided. The applicant will also generally pay their own costs for seeking an NPO. This is different to the usual position in civil litigation that the “loser” pays the “winner's” costs. The costs of the NPO can potentially be recovered against the wrongdoer in subsequent proceedings at the later stage.
Procedure for Applying for an NPO
An NPO can be applied for as part of an existing legal action or before any legal action has commenced. If the NPO is sought before proceedings have started, the applicant should consider which court any subsequent proceedings would be brought in and apply to the same court. This is most often a branch of the High Court. If there are existing proceedings in place, the respondent should be joined as a party to the proceedings for the purpose of making the NPO.
An applicant needs to prepare an application and file it with the court. This includes a witness statement setting out the circumstances that have led to the application and showing how the criteria for an NPO have been met. A draft of the NPO should also be filed for the court to approve.
Often, the respondent to the application will be given notice of the application. Applications made “on notice” are typical when the respondent, such as organisation, is expected to voluntarily provide the requested information.
In certain circumstances, the application may be made on a “without notice” basis, without the respondent being aware that an NPO is being applied for. This happens if the applicant believes that there is a risk that the respondent may inform the wrongdoer (although a legal gagging order can be sought to prevent them from doing so). For example, in fraud cases, there may be a concern about stolen assets being dissipated. This would trigger such urgency that there is no time to provide the respondent with formal notice of the application.
In cases where notice is given to the respondent, the applicant should consider ways to prevent the wrongdoer from finding out about the proceedings. These measures include holding hearings held in private, restricting access to court files for a limited period, and using initials in court papers instead of real names. The court may also issue gagging orders to prevent the respondent from disclosing the proceedings or the existence of the order, except to their legal advisers.
Once an application for an NPO has been made, a court will set up a hearing date of the application. However, if the matter is not urgent, the applicant may request the court to decide the application on the written submissions without a hearing.
The hearing’s length will depend on the complexity of the application. The court will take into consideration the number of respondents, whether any of them object to the application, and the amount of information provided.
Lastly, it is possible for the applicant to recover the cost out from the wrongdoer as part of any legal action that is brought. It is important to remember that if it is later found that the NPO should never have been made, the applicant who obtained it must compensate the respondent (and any innocent third parties who suffer losses). This would include covering the costs of the respondent’s application to oppose the NPO.
What Happens After an NPO Is Granted
After an NPO is granted, it must be served on the respondent. There is a flexibility in how this can be done, with courts permitting the NPO to be served electronically in certain cases. If an NPO has been made without notice to the respondent, full details of what was said at the hearing must be provided with the NPO.
The respondent will be given a time limit within which they must provide the information required by the NPO, usually within 28 days.
It is important to note that the information obtained by the applicant requested in an NPO can only be used for the legal proceedings that they outlined when making the application. If the same information is needed to be used for other reasons, a separate application should be made to the court for permission to do so. Such instances may include a private prosecution or in a related criminal investigation.
Alternatives to an NPO
One alternative to an NPO is a Bankers Trust order. This is an order that requires a financial institution (such as a bank) to disclose facts that would help locate assets before they can be dissipated (moved elsewhere or spent). Similar to NPOs, a Bankers Trust order can be made on a “without notice” basis.
The key difference between an NPO and a Bankers Trust order, is that an NPO is used to identify the wrongdoer and finding evidence of wrongdoing, a Bankers Trust order, on the other hand, is used as a way of protecting a person's right to own a particular asset that has been taken from them (proprietary interest).
Conclusion
NPOs serve as a valuable tool for obtaining information from third parties where such disclosure is essential to advancing legal proceedings. Their intrusive nature, however, demands that applications be carefully prepared to meet the court’s exacting standards.
Those considering an NPO are advised to seek legal counsel to ensure the process is properly managed. Fortior Law has significant experience with NPO applications in both England and Cyprus and can provide comprehensive assistance.
