Supreme Court orders disclosure under Taxes Acts but defers decision pending Isle of Man legal ruling.

THE SUPREME COURT

[Appeal No: 267/2007]

Murray J.

Hardiman J.

Fennelly J.

Clarke J.

MacMenamin J.

In the Matter of s. 908 of the Taxes Consolidation Act, 1997 as substituted by s. 207(i) of the Finance Act, 1999

Between/

Paul Walsh

Applicant/Appellant

And

National Irish Bank Limited

Respondent

Judgment of Mr. Justice Clarke delivered the 25th January, 2013.

1. Introduction

1.1 There have been many developments in the law relating to both disclosure obligations and confidentiality in recent years. It is fair

to say that the law has developed in different ways in different jurisdictions. Given the cross border nature of many of the issues with

which courts in various jurisdictions are concerned, it is hardly surprising that conflicts may arise between disclosure obligations owed

in one jurisdiction and potential duties of confidence or obligations to respect privacy owed in other jurisdictions. What are the courts

to do when a clear disclosure obligation in one jurisdiction potentially or arguably conflicts with a possible duty to retain confidentiality

or to respect privacy in another jurisdiction? There are, often, no easy answers to such questions.

1.2 The backdrop to these proceedings involves a possible obligation on the part of the respondent ("the Bank") to make disclosure of

what would ordinarily be considered confidential information concerning customer accounts held at its branch in the Isle of Man. The

disclosure is sought by the applicant/appellant in his capacity as an authorised officer of the Revenue Commissioners. In that context,

I will refer to the applicant/appellant as "the Revenue" save where the context requires personal reference. I will set out in some more

detail the full application which the Revenue brought before the High Court seeking an order under s. 908 of the Taxes Consolidation

Act, 1997 as amended ("the Taxes Acts"). However, for the purposes of this brief introduction it should be noted that the Revenue

sought disclosure of three categories of information. The first two categories were directed to be disclosed by the High Court (Kearns

P.) with an order in that regard being made on consent on the 27th March, 2006, while the third category was refused after a

contested hearing before McKechnie J. The Revenue have appealed to this Court against the refusal to grant disclosure of that third

category. Before going on to analyse the issues which arose on this appeal, it is appropriate to start by setting out a brief account of

the procedural history of this application.

2. Procedural History

2.1 On the 24th February, 2006, by notice of motion, the Revenue applied for the disclosure to which reference has been made. The

application was grounded on an affidavit of Paul Walsh, who is, of course, the applicant, which affidavit was replied to on behalf of

the Bank by an affidavit of Kieran Clarke.

2.2 The reliefs sought in the Revenue's application, by reference to an appendix to the grounding affidavit filed, were as follows:-

“[A]n Order pursuant to Section 908, Subsection (5), that in relation to transfers of payments to or from Northern Bank

Ltd and Northern Bank (IOM) Ltd and in relation to persons holding deposits with the Isle of Man branch of National Irish

Bank that the Respondent do make available for inspection by the Applicant, from books, records or documents

maintained by the Respondent or from books, records or documents to which the Respondent has access, the following

information (the specified information)

(A) A schedule, whether in electronic or paper form, where the payment or transfer from Northern Bank Ltd,

whether in paper, electronic or other form, was in a sum equal to or exceeded £5,000 or €6,350 and was made to

or from accounts maintained by the Respondent relating to customers of the Respondent with an address in the

State setting out:

(1) the date of the transfer,

(2) the amount of the transfer,

(3) the account number into which or from which the transfer or

(4) payment was made,

(5) the name and address of the account holder(s) to which transfer or payment was made or from

which the transfer or payment was made.

(B) A schedule, whether in electronic or paper form, where the payment or transfer to or from Northern Bank

(IOM) Ltd exceeded £5,000 or €6,350 and was made to or from accounts maintained by the Respondent with an

address in the State setting out:

(1) the date of the transfer,

(2) the amount of the transfer,

(3) the account number into which or from which the transfer or

(4) payment was made,

(5) the name and address of the account holder(s) to which transfer or payment was made or from

which the transfer or payment was made.

(C) A schedule, whether in electronic or paper from, of all deposit holders with an address in the State having

accounts with the Isle of Man branch of National Irish Bank where the balance on the account exceeded £5,000 or

€6,350 at anytime setting out:

(1) the name and address of the account holder

(2) the date the account was opened and the amount of the opening balance

(3) the maximum balance on the account over the life of the account and

(4) if applicable the date of the closure of the account.

Time in which the Respondent is to furnish the specified information to the Applicant:-

(1) Within 12 weeks from the date of this order in respect of

(i) all payments or transfers in the period from 1st January 2002 to the date of the Order and

(ii) the information requested under paragraph (C) above,

(2) Within 18 weeks from the date of this order in respect of all payments or transfers, in the period

from 1st January 1999 to 31st December 2001,

(3) Within 24 weeks from the date of this order in respect of all payments or transfers in the period

1st January 1996 to 31st December 1998,

(4) Within 30 weeks from the date of this order in respect of all payments of transfers in the period

1st December 1994 to 31st December 1995.

2.3 As indicated earlier the High Court made the orders sought at paragraphs (A) and (B) on consent, but declined to grant the relief

sought at paragraph (C). It is clear that the type of information in respect of which disclosure was sought in paragraphs (A) and (B)

differs from that sought in respect of paragraph (C). In addition it is clear that paragraphs (A) and (B) are concerned with separate

corporate entities (although within the same group) which operate outside this jurisdiction whereas paragraph (C) is concerned with a

branch of the same institution, even though the branch is located outside of this jurisdiction and in the Isle of Man. It seems likely

that the reason for the distinction between the sort of information whose disclosure was sought in paragraphs (A) and (B) compared

with that sought in paragraph (C) is referable to that latter distinction. The information sought in paragraphs (A) and (B) refers to

transactions between the Bank (in this jurisdiction) and the other named and related banks outside the jurisdiction. Thus, the

Revenue did not seek disclosure of information concerning the accounts held at those separate commercial entities within the same

group which operate outside this jurisdiction but rather sought disclosure of information relating to the relevant specified transaction

between the Bank in this jurisdiction and its sister companies operating outside the jurisdiction. There was, thus, no attempt to seek

disclosure directly from foreign banks concerning the affairs of their customers. Rather what was sought was information held within

the Bank in this jurisdiction which might cast light on accounts which persons with Irish addresses held with those foreign banks. On

the other hand, in relation to category (C) (presumably because of the fact that the accounts covered in that category were

accounts held directly with the Bank – albeit at a branch outside the jurisdiction) more direct information concerning the actual

accounts themselves was sought.

2.4 The application was, as has been indicated, brought under s. 908 of the Taxes Act as amended. That section, in relevant part, is

in the following terms:-

" (1) In this section –

‘judge’ means a judge of the High Court,

‘a taxpayer’ means any person including -

(a) a person whose identity is not known to the authorised officer, and a group or class of persons

whose individual identities are not so known, and

(b) …

(2) An authorised officer may, subject to this section, make an application to a judge for an order requiring a

financial institution, to do either or both of the following, namely –

(a) to make available for inspection by the authorised officer, such books, records or other documents

as are in the financial institution’s power, possession or procurement as contain, or may (in the

authorised officer’s opinion formed on reasonable ground) contain information relevant to a liability in

relation to a taxpayer,

(b) to furnish to the authorised officer such information, explanations and particulars as the authorised

officer may reasonably require, being information, explanations and particulars that are relevant to

any such liability,

and which are specified in the application.

(3) An authorised officer shall not make application under subsection (2) without the consent in writing of a

Revenue Commissioner, and without being satisfied –

(a) that there are reasonable grounds for suspecting that the taxpayer, or, where the taxpayer is a

group or class of persons, all or any one of those persons, may have failed or may fail to comply with

any provision of the Acts,

(b) that any such failure is likely to have led or to lead to serious prejudice to the proper assessment

or collection of tax (having regard to the amount of a liability in relation to the taxpayer, or where the

taxpayer is a group or class of persons, the amount of a liability in relation to all or any one of them,

that arises or might arise from such failure), and

(c) that the information –

(i) which is likely to be contained in the books, records or other documents to which the application

relates, or

(ii) which is likely to arise from the information, explanations and particulars to which the application

relates,

is relevant to the proper assessment or collection of tax.

(4) …

(5) Where the judge, to whom an application is made under subsection (2), is satisfied that there are reasonable

grounds for the application being made, the judge may, subject to such conditions as he or she may consider

proper and specify in the order, make an order requiring the financial institution –

(a) to make available for inspection by the authorised officer, such books, records or other

documents, and

(b) to furnish to the authorised officer such information, explanations and particulars,

as may be specified in the order.

(6) …

(7) …

(8) …

(9) …”

2.5 It was not disputed in the High Court that the formal requirements necessary to establish an entitlement to apply for an order

under the section had been established by the Revenue. In addition, it is clear from the section that the making of an order is not

mandatory (the section uses the word "may" rather than "shall") and that, if making an order, the court can impose conditions. Thus,

subject to one point to which I will shortly turn, the main issue before the High Court (and before this Court on appeal), in respect of

category (C), was as to whether there were circumstances which might make it appropriate for the court, notwithstanding the fact

that the conditions for the making of an order under s. 908 of the Taxes Acts appeared to be present, to decline to make an order.

The one additional point concerns an issue as to whether it can be said that the branch of the Bank in the Isle of Man can be

regarded as a separate entity not governed by the Irish regulatory regime so that the relevant branch might be said to be outside the

definition of "financial institution" as used in the relevant provisions of the Taxes Acts.

2.6 It should also be noted that, in the replying affidavit filed on behalf of the Bank, to which reference has been made, there was

exhibited an opinion from Mann and Partners, a firm of lawyers practising in the Isle of Man. That opinion was concerned with the

circumstances in which it might be possible, consistent with the law of the Isle of Man, to obey an order made by the courts of

another jurisdiction for the disclosure of banking information. It does need to be noted that it was accepted by counsel for the

Revenue on this appeal that no point had been raised in the High Court as to the fact that, strictly speaking, there was no evidence

of Isle of Man law before the court for there was no sworn evidence from Isle of Man lawyers verifying the contents of that opinion.

Rather the opinion was simply exhibited to an affidavit sworn by an official of the Bank. Likewise, it needs to be noted that no

counterview as to the relevant law of the Isle of Man was placed before the High Court either in the form of an affidavit or other

evidence or in the form of submissions. However, it is said on behalf of the Revenue on this appeal that the trial judge went beyond

the contents of the opinion in question in making his findings concerning Isle of Man law. This is an issue to which it may be

necessary to return.

2.7 Against the background of that procedural history, it is next necessary to turn to the issues which arose on this appeal.

3. The Issues

3.1 In light of the judgment of the trial judge, the written submissions filed by the parties on this appeal and the oral argument, it

seems to me that the following issues arise.

3.2 First, it was argued on behalf of the Bank that, on a proper construction of the relevant provisions of the Taxes Acts, the branch

of the Bank in the Isle of Man is to be treated as a separate entity not regulated by the Central Bank and thus, it is said, not a

"financial institution" for the purposes of the relevant provisions of the Taxes Acts. The Revenue contest that argument. It seems to

me that it is logical to address that issue first, for then if the Bank is correct then the section does not apply to disclosure of the

information sought in the first place and none of the other issues would arise. In the event that the Revenue succeed on that first

issue, however, then a series of other questions would fall for determination.

3.3 The second issue is as to the proper approach which should be adopted by a court when faced with a potential conflict between

a disclosure obligation in this jurisdiction and an obligation of confidence or privacy or the like in a potentially relevant other

jurisdiction. The Revenue argue that the proper approach is that the court should make a disclosure order but include in the terms of

the relevant order appropriate measures to allow the court in the other relevant jurisdiction, in this case the Isle of Man, an

opportunity to consider the matter on the basis of an appropriate application by any party affected by the order. The Bank argues

that it would be inappropriate for the Irish courts to make such an order in circumstances where, it is said, the proper law of the

banking relationship between the Bank and its customers is that of the Isle of Man and where it would be contrary to the comity of

courts for the Irish courts to make such an order. In addition, it is said that, in making an order in such circumstances, the Irish

courts would be acting extra-territorially on foot of a provision of the Taxes Acts which, it is argued, does not have extra-territorial

effect. It follows from the argument raised under this heading by the Bank that three further issues potentially arise.

3.4 The third issue is, therefore, to the extent that it might be relevant, a consideration of the proper law applicable to the banking

relationship between the Bank and its customers at its branch in the Isle of Man.

3.5 The fourth issue concerns the role of the comity of courts and the extent to which it would, as the Bank argues, and as the trial

judge accepted, be inappropriate to make an order which might be said to impinge on the proper jurisdiction of the courts of the Isle

of Man.

3.6 The fifth issue concerns extra-territoriality. In reality there are two sub-questions. The first is whether an order of the type

sought by the Revenue amounts to an exercise of extra-territorial jurisdiction. If it does, a second question arises as to whether s.

908 of the Taxes Acts is to be construed as having a sufficient extra-territorial effect so as to permit the order to be made.

3.7 Before going on to consider those issues, it is appropriate to turn first to the judgment of the High Court.

4. The High Court Judgment

4.1 McKechnie J. gave judgment in this matter on the 4th May, 2007 (Walsh v. NIB [2007] IEHC 325). At para. 2 of his judgment

McKechnie J. sets out a useful synopsis of the facts in the following terms:-

"The respondent is the National Irish Bank Limited, which, as a licensed Banker, is authorised to conduct business in this

State. In 1991 it opened a Branch in the Isle of Man and provided inter alia deposit facilities until December 2002, when it

surrendered its banking licence to the Isle of Man authorities. The remaining deposits at that time were closed, either by

way of transfer to other banks or by cheque to the relevant customer. It also has a sister bank, Northern Bank Limited

which is the biggest retail bank in Northern Ireland. At one time Northern Bank (IOM) Limited, which incidentally operated

the respondent’s branch in that jurisdiction under a service agreement, was also an associate of the respondent

company. Both National Irish Bank and Northern Bank Limited were acquired by the Danish Banking group, Danske, in

March, 2005. Today they remain wholly owned subsidiaries of that group."

4.2 There have been some changes in that factual position which I will address in due course.

4.3 McKechnie J. noted that there was an implied term in any contract between a bank and its customer to the effect that the Bank

will not divulge confidential information concerning the customer save in the presence of countervailing circumstances. Thus the

starting point was that the Bank owed its customers a duty of confidence. McKechnie J. also went on to consider the proper law of a

banking contract holding that the general rule is to the effect that an account is governed, in the absence of an agreement between

the parties, by the place where the account is held. McKechnie J. also noted the similar provisions as to applicable law to be found in

the Contractual Obligations (Applicable Law) Act 1991, which gives effect in domestic Irish law to the Rome Convention on the Law

Applicable to Contractual Obligations 1980 ("The Convention").

4.4 On that basis, McKechnie J. concluded that the proper law of the banking contract between the Bank and it customers, both at

common law and under the Convention, was that of the Isle of Man. McKechnie J. went on to hold that s. 908 of the Taxes Acts did

not apply, by reason of a lack of territoriality, to the branch of the Bank in the Isle of Man but that even if the section did apply he

would "not deliberately offend the integrity of the Isle of Man or its judicial system by granting and order which I knew they would

strongly object to". To do so would, in the view of McKechnie J., "be downright disrespectful to a sovereign jurisdiction and would be

the antithesis of showing due respect for the comity of courts".

4.5 Against the background of that brief description of the judgment of the trial judge it is appropriate to turn to the issues which

arise on this appeal. As indicated earlier, it seems to me that the appropriate starting point is to consider the question of the

definition of "financial institution", for if the Bank was to succeed on that point, the remaining issues would not arise. I now turn to

that question.

5. Is the Bank a "Financial Institution"?

5.1 The definition of "financial institution" for the purposes of the relevant provisions of the Taxes Acts, as of the time when the

Revenue applied to the High Court, was to be found in s. 906A(1) of the Finance Act 1997 as inserted by s. 207(i) of the Finance Act

1999 and subsequently amended by s. 68(c) of the Finance Act 2000. "Financial institution" is stated to mean:-

“(a) a person who holds or has held a licence under section 9 of the Central Bank Act 1971,

(b) a person referred to in section 7(4) of the Central Bank Act, 1971, or

(c) a credit institution (within the meaning of the European Communities (Licensing and Supervision of Credit

Institutions) Regulations, 1992 (S.I. No. 395 of 1992)) which has been authorised by the Central Bank of Ireland to

carry on business of a credit institution in accordance with the provisions of the supervisory enactments (within

the meaning of those Regulations)”.

5.2 I have already noted the factual description of the trial judge in relation to the relevant business of the Bank at its branch in the

Isle of Man. As is clear from that description, by the time the Revenue came to seek the information which is at the heart of this

application, banking business at the relevant branch in the Isle of Man had ceased. However, the Bank was still in operation and, as is

clear from the provisions of the Taxes Acts just cited, the definition of "financial institution" includes a person who "has held" a licence

(under s. 9 of the Central Bank Act, 1971), every bit as much as a person who "holds" such a licence. It is important to record that

no issue was raised before this Court arising out of the fact that, as the courts are well aware from many other proceedings, the Bank

no longer operates in this jurisdiction as an Irish licensed entity, its business having been subsumed into Danske Bank A/S ("Danske").

Danske, it would appear, simply uses the term "National Irish Bank" as a trading name. The precise status of the Bank as of now was

not established in evidence. It may well be that, as the records which the Revenue sought were records kept by the Bank in the

course of its business, no point could be made arising out of the changed status of the operation of the relevant banking business in

Ireland since the time when the original application to the High Court was made. Be that as it may, and given that no point was raised

before this Court, it seems to me that it is appropriate to assess this issue on the basis that, at the time when the relevant records

would have been kept, the branch in the Isle of Man in question was a branch of the Bank.

5.3 Therefore, at the material time, the Bank was a company registered in Ireland. It was regulated by the Central Bank and thus,

prima facie, came and comes clearly within the statutory definition. In passing, in that context, it is worthy of some note that the

two other banks mentioned in paragraphs (A) and (B) of the order actually made would not come within that definition for they are,

from an Irish perspective, foreign banks operating outside Ireland and not, therefore, subject, so far as the evidence before the court

is concerned, to any regulation by the Central Bank. Thus it would appear that no direct order against those banks could have been

made for such banks were not financial institutions within the meaning of the relevant provisions of the Taxes Acts. It would appear

to be for that reason that the orders sought and made under paragraphs (A) and (B), which related to those banks, were significantly

different in form from the orders sought under paragraph (C) against the Bank.

5.4 However, be that as it may, the real issue under this heading comes down to a consideration of the counter argument put forward

on behalf of the Bank to suggest that its branch in the Isle of Man should not be considered to be a financial institution for the

purposes of the section. The argument is in two parts. First, it is said that there is legal authority for the proposition that a foreign

branch of a bank which operates in a separate country and is, at least in part, therefore, subject to the laws of that second country,

must be treated as a separate entity even though it has the same corporate personality as the rest of the Bank.

5.5 In that regard, reliance was placed on the decision of the Court of Appeal in R. v. Grossman (1981) 73 Cr. App. Rep. 302. Mr

Grossman had been charged in Wales with offences involving tax evasion. When gathering evidence into the alleged offences, the

Revenue sought to inspect copies of entries in relation to an account held by Mr Grossman in a branch of Barclays Bank in the Isle of

Man. Initially, an application was made to the courts in the Isle of Man under the Manx Bankers’ Books Evidence Act 1935. However,

this application was refused as that Act was held to apply only to legal proceedings in the Isle of Man. Mr Grossman then absconded

but, following his re-arrest, an application was made to the English High Court under the English Bankers’ Books Evidence Act 1879 to

inspect the same account. The order sought, in this instance, was addressed to Barclays Bank Ltd., the parent company, based in

London and the order was granted ex parte. This decision was then appealed to the Court of Appeal. In the interim, the Isle of Man

branch obtained an injunction from the Deemster in Douglas against the disclosure. In allowing the appeal, Lord Denning M.R. stated

at pp. 307-308:-

“I think that the branch of Barclays Bank in Douglas, Isle of Man, should be considered in the same way as a branch of

the Bank of Ireland or an American Bank, or any other bank in the Isle of Man, which is not subject to our jurisdiction.

The branch of Barclays Bank in Douglas, Isle of Man, should be considered as a different entity, separate from the head

office in London. It is subject to the laws and the regulations of the Isle of Man. It is licensed by the Isle of Man

government. It has customers there who are subject to the Manx laws. It seems to me that the court here ought not in

its discretion to make an order against the head office here in respect of books of the branch in the Isle of Man in

regard to customers of that branch. It would not be right to compel the branch – or its customers – to open their books

or reveal their confidences in support of legal proceedings in Wales.

Any order in respect of the production of the books ought to be made by the courts of the Isle of Man – if they will

make such an order. It ought not to be made by these courts. Otherwise there would be a danger of a conflict of

jurisdictions between the High Court here and the courts of the Isle of Man. That is a conflict which we must always

avoid. From a practical point of view, it seems to me that, in order to have inspection of the books of a bank in England

and Wales, an application should be made under the 1879 Act here: and that for inspection of the books and entries in

the Isle of Man the application should be made under the Isle of Man statutes. This case does not come under the Isle of

Man statutes. It is no good going there. It seems to me that, although this court has jurisdiction to order the head

office here to produce the books, in our discretion, it should not be done.”

5.6 There may well, therefore, be purposes for which it is appropriate for a court to treat a foreign branch of a bank as being

separate from the rest of the bank. However, it does not seem to me to follow that such a distinction is relevant for the purposes of

deciding whether a company is a financial institution for the purposes of the Taxes Acts. The fact is that the Bank chose to conduct

its business (or at least part of it) in the Isle of Man by means of a branch rather than by means of a separate legal entity

incorporated in the Isle of Man and operating as part of the same group of companies. Doubtless, there were good reasons for the

Bank choosing so to do. However, such choices have consequences. The fact remains that the same legal entity was doing business

in the Isle of Man through one of its branches as did business through its ordinary branch network in Ireland. The banking obligations

undertaken through the Isle of Man branch (such as the obligation to repay monies deposited) were obligations of the Bank in just the

same way as obligations undertaken through a branch in Dublin or elsewhere in Ireland.

5.7 Obviously, the law applicable to transactions conducted in the Isle of Man may have been different. That is an issue to which it

may be necessary to turn in due course. But any large company doing transnational business may well find itself with various

obligations which are governed by the laws of different countries. The fact that an Irish company may sell its goods or services in

many countries around the world, and, in so doing, enter into contracts which are governed by the respective laws of the countries

into which it sells, does not alter the fact that the company remains a single legal entity governed in accordance with the laws of

Ireland even though some of its business may fall to be considered, in the event of dispute, in accordance with the laws of another,

or indeed many other, countries. The fact that, therefore, some of the business of the Bank (being the business conducted through

its Isle of Man branch) may be governed to a greater or lesser extent by the laws of the Isle of Man does not, it seems to me,

provide any justification for departing from the clear words of the section.

5.8 I am satisfied, therefore, that for the purposes of the definition of "financial institution" to be found in s. 906A of the Taxes Acts,

the Bank qualifies as such a financial institution just as much in respect of business transacted at its Isle of Man branch as any of its

branches in Ireland. For the purposes of the section, the Bank is an indivisible entity which comes within the terms of the section.

5.9 Before passing from this aspect of the case I should record one argument put forward by counsel on behalf of the Bank. Counsel

pointed out, correctly so far as it goes, that there may well be non-Irish banks of whom it is required that aspects of their business

conducted in Ireland (e.g. in the IFSC) be subject to regulation by the Central Bank. On one view it might follow that such a non-Irish

bank might expose itself to orders being made against it under s. 908 in respect of any aspect of its business even if that business

had no connection with Ireland. If, it was said, any part of the business of such a foreign bank required regulation by the Central Bank

then the whole business of the Bank, wherever conducted, would be caught by the definition of "financial institution". On that basis it

was argued that the term "financial institution" ought to be construed narrowly. However, it seems to me that the questions which

might arise in the scenario depicted by counsel would raise many different issues to those which arise on the facts of this case and it

does not, therefore, seem to me to be necessary to address those issues unless and until the Revenue seek an order under s. 908 of

the Taxes Acts against a bank whose only connection with Ireland is that it has a branch in Ireland which is regulated by the Central

Bank and where the order sought seeks disclosure of information arising outside the context of that Irish branch.

5.10 I am, therefore, satisfied that the Bank is a financial institution for the purposes of s. 908 of the Taxes Acts and that the

relevant definition extends to any business conducted by the Bank at its branch in the Isle of Man. It follows that the other issues

earlier identified need to be considered. I will shortly turn to the first of those issues, being the proper approach to be adopted in

circumstances of conflict between a disclosure obligation in Ireland and a foreign confidentiality or privacy obligation arising under the

laws of another relevant jurisdiction. However, before so doing it is necessary to say something about the course of these

proceedings both in the High Court and on appeal in this Court with particular reference to the issues which were, and more

importantly were not, raised.

6. The Course of the Proceedings

6.1 As has been pointed out earlier, the evidence before the High Court consisted of two affidavits filed on behalf of the respective

parties. The only "evidence" as to the law of the Isle of Man was a letter from Isle of Man lawyers exhibited in the affidavit filed on

behalf of the Bank. No contrary evidence was filed on behalf of the Revenue and no point seems to have been made by the Revenue

at the hearing before the High Court as to the unsatisfactory nature of the evidence of Isle of Man law then before the court.

6.2 It will be necessary to turn to the status of that letter in due course. However, it does need to be noted that, in the ordinary

way, foreign law is treated as a matter of fact to be established, in the Irish courts, in the ordinary way by sworn evidence of that

fact. An affidavit from an appropriately qualified lawyer is the normal way in which evidence as to foreign law is to be established.

Likewise, a party who wishes to dispute such evidence is required to put forward its own contrary evidence from a likewise suitably

qualified lawyer. In the case of a dispute, then it may well be necessary that both lawyers be cross-examined so as to assist the Irish

court in coming to a conclusion.

6.3 It should, in that context, be clearly understood that reference to case law or other materials from foreign jurisdictions is not an

appropriate way, in the absence of evidence from a suitably qualified lawyer making reference to such materials, to establish the law

concerned. Irish courts may well have occasion to consider the case law of other jurisdictions which may provide persuasive authority

as to the proper approach to be adopted in like circumstances in Ireland. However, when so doing the Irish courts are simply referring

to materials which may be of assistance in interpreting Irish law. Where an Irish court is required, for the purposes of determining the

proper result of litigation, to reach a conclusion as to relevant foreign law, then such a conclusion cannot be reached simply on the

basis of counsel referring the Irish court to statute or case law from the relevant jurisdiction.

6.4 In addition it does also need to be noted that some of the arguments advanced before this Court had not been made before the

High Court. However, no objection was taken on either side to such arguments being presented. It again should be emphasised that

this Court is a court of appeal. Arguments should not be raised on appeal, save in unusual and exceptional circumstances, where the

argument was not raised before the court of first instance. However, where such arguments are included in the written submissions

filed on behalf of a party it is incumbent on its opponent to draw attention to the fact that the argument was not raised in the High

Court and, if it is considered appropriate, to object to the argument being raised on appeal on that basis. Where an argument is raised

for the first time in oral submissions before this Court which goes beyond the scope of the arguments raised in the High Court then it

is incumbent on the relevant party's opponent to draw attention to that fact at the earliest possible moment and, again if considered

appropriate, to object to the argument being raised on that basis.

6.5 For the reasons addressed there were, therefore, many unsatisfactory aspects to the course of these proceedings. The precise

consequences of those difficulties will be addressed in due course.

7. Transnational Conflict between Disclosure and Confidentiality – the Proper Approach

7.1 It seems to me that a starting point for any consideration as to the proper approach to be adopted by the Irish courts where

disclosure and confidentiality obligations may arguably come into conflict on a transnational stage would be to consider the

consequences of no order being made by the Irish courts of the type sought by the Revenue in this case. In those circumstances,

could any application for disclosure be made to the courts of the Isle of Man which had even a remote chance of success?

7.2 It was suggested by counsel on behalf of the Bank that the proper course of action for the Revenue to have adopted would have

been to apply, at first, to the courts in the Isle of Man who, it is said, are the proper courts to determine any disclosure obligations.

However, it seems to me that there is a fundamental problem with that proposition. On what basis, and relying on what legal power,

could the Revenue make an application to the Isle of Man courts? Clearly, the Taxes Acts are Irish statutes which apply only in

Ireland. There could be no basis for the Revenue seeking to make an application under s. 908 of the Taxes Acts directly to the courts

in the Isle of Man. It is inconceivable that those courts could entertain such an application for the application would be based on a

statutory power contained in the legislation of what, from an Isle of Man perspective, is a foreign jurisdiction. That much was

accepted by counsel on behalf of the Bank. However, it was suggested that it might be possible to make an application to the Isle of

Man courts under the s. 7 of the Isle of Man Bankers’ Books Evidence Acts 1935, as amended by the Statute Law Revision Act 1981,

which provides:-

“On the application of any party to a legal proceeding a judge may order that such party be at liberty to inspect and

take copies of any entries in a banker’s book for any of the purposes of such proceedings. An order under this section

may be made either with or without summoning the bank or any other party, and shall be served on the bank three

clear days before the same is to be obeyed, unless the judge otherwise directs.”

7.3 It has to be said that no evidence as to Isle of Man law in this regard was before either the High Court or this Court. It was, it

also has to be said, conceded that, on the authorities to which the court was referred, it was unlikely that any such application could

succeed. That concession may well be correct. The authority which comes closest to the facts of this case is Re Blayney and Grace,

2001-03 MLR 13. In that case, inspectors were appointed under s. 8 of the Companies Act 1990 to investigate the affairs of National

Irish Bank Limited, in circumstances suggesting, amongst other matters, tax evasion and fraud. These inspectors sought to inspect

the books of the Isle of Man branch of that institution “for the purpose of preparing a list of deposit accounts … giving details of the

names of the accounts and addresses of account holders and account balances”, under s. 7 of the Act of 1935.

7.4 In refusing the application, Deemster Cain held that the investigation being conducted by Messrs. Blayney and Grace, pursuant to

the Companies Act 1990, did not amount to a “legal proceeding” as set out in s. 2 of the Act of 1935. He stated at p. 6 of his

judgment:-

“McCormack v Campbell supports the view which I take that an investigation into the affairs of a company does not

become a “legal proceeding” merely because the inspectors have power to require a person to produce to them “any

books or documents in his custody or power relating to the company” under investigation and have the power to

examine such person on oath. I am therefore satisfied that the investigation by the inspectors into the affairs of the

Bank is not a “legal proceeding” for the purposes of the 1935 Act.”

In addition, he was of the view that “legal proceeding” referred only to a legal proceeding within the Isle of Man, and not one in a

foreign jurisdiction, and that the court’s discretionary power under s. 7 should be rarely used.

7.5 That result is hardly surprising. As noted, the purpose of Bankers' Books Evidence Acts (which have parallels in many common law

jurisdictions) is simply to assist in the presentation of routine evidence before the courts and avoid the necessity of requiring an

official of a bank to attend, presumably on foot of a subpoena duces tecum, to give evidence every time a party wished to establish

at an ordinary civil trial what, in many cases, will be routine banking information. The Bankers' Books Evidence Acts are not intended

primarily as a means of securing the disclosure of information not otherwise available. Rather, those Acts are designed to facilitate the

giving, in a convenient way, of evidence which could be secured in any event by requiring the attendance in court of a relevant

official of the Bank concerned accompanied by relevant extracts from the Bank's records. In that context, it is worth noting that s. 6

of the 1935 Isle of Man legislation precludes the calling of a bank official to prove matters which could have been established by an

application under s. 7 (unless leave of the court is obtained). It is obvious that any relevant banking witness could only be

subpoenaed if the witness concerned was within the relevant jurisdiction being the same jurisdiction as the one in which the court

process to which the witness's evidence was considered to be relevant was being maintained.

7.6 In the absence of evidence it is not possible for this Court to reach a conclusion on the issue. However, it seems highly unlikely

that an application by the Revenue to the Isle of Man courts under the Isle of Man Bankers’ Book Evidence Act 1935 could succeed.

No other suggestion was put forward as to any mechanism by which the Revenue could seek to invite the Isle of Man courts to direct

disclosure of the type sought in paragraph (C). The inevitable conclusion that must be reached is it has not been shown that there is

any apparent mechanism available to the Revenue Commissioners to seek such disclosure. It follows that if the Bank is right in its

contention that the Revenue should have gone first to the Isle of Man courts, then it follows that the Revenue would almost certainly

have failed in any such application, not necessarily because the Isle of Man courts might have felt that disclosure was, in all the

circumstances, not permissible, but rather because no appropriate jurisdiction to give the Revenue standing and/or a legal basis to

make an application to the Isle of Man courts could be invoked.

7.7 However, in the event that this Court were either to make an order under s. 908 of the Taxes Acts, or give a clear indication that

it intended to make such an order, then the situation would be different. Without the benefit of either an order or a clear indication

from the Irish courts that an order will be made, then there is no real basis for any interested party seeking to invoke the jurisdiction

of the Isle of Man to determine, in a definitive fashion, the relevant rights and obligations of interested parties under Isle of Man law.

It does not, of course, necessarily follow that the Irish courts would, by virtue of the comity of courts, be obliged to refrain from

making an order, in all circumstances, even if compliance with such an order were to be determined, by the competent courts in the

Isle of Man, to be a breach of Isle of Man law. The balancing exercise required is one to which it will be necessary to return.

7.8 However, it is clear, for the reasons already analysed, that the Revenue could have no basis for seeking to invoke the jurisdiction

of the Isle of Man courts. Where the basis put forward on behalf of a party seeking to resist an order under s. 908 of the Taxes Acts

derives from the comity of courts and the suggestion that compliance with the order sought would amount to a breach of the law of a

foreign jurisdiction, then it seems to me that the appropriate course of action is to first determine whether it would otherwise be

appropriate to make an order under the section and then to consider how best to deal with the potential issues arising from the

comity of courts. There may be cases where it is clear that compliance with a disclosure order made under s. 908 of the Taxes Acts

would or would not be a breach of the law of a relevant foreign jurisdiction. In such clear cases the court must then exercise a

balance between, on the one hand, the public policy objectives of the section in assisting the Revenue in dealing with tax evasion

and, on the other hand, the comity of courts.

7.9 However, there may be cases where, either because, as here, of a lack of a proper evidential basis or where the law of a foreign

jurisdiction and its application to the facts may be the subject of legitimate debate, the position will not be clear.

7.10 In such cases it seems to me to follow that the courts in this jurisdiction should, assuming that all other circumstances point to

the making of an order under s. 908 of the Taxes Acts, either make an order or give a clear statement of intent to make such an

order subject to appropriate conditions, so as to confer on any parties concerned an ability to seek to invoke any relevant jurisdiction

of the courts of the relevant foreign jurisdiction designed to clarify whether disclosure is permitted under the laws of that jurisdiction.

I will return in due course as to the terms which any such order should contain. However, for the reasons which I have sought to

analyse, in the absence of any such order the Revenue do not even get to first base. With the benefit of such a measure, there is at

least an opportunity to have the matter canvassed before the courts of the Isle of Man. For those reasons, it seems to me that

counsel for the Revenue was correct in arguing that the proper course of action to adopt was to apply first to the Irish courts. It

follows that, in those circumstances, two of the remaining issues only arise in a limited way and I, therefore, turn briefly to those

issues being the question of the proper law and that of extra territoriality.

8. Proper Law and Extra Territoriality

8.1 First, it seems to me that s. 908 of the Taxes Acts does not have extra territorial effect. It is a measure of Irish law that applies

to the Bank because it is an Irish bank which may be required to make available certain information and materials in Ireland to the

Irish Revenue. It seems to me, therefore, that the section does not have to operate extra territorially in order that the Irish courts

have jurisdiction to make an order of the type sought. Extra territoriality is not, therefore, in my view, of any relevance to this case.

8.2 Neither does it seem to me that, in reality, the question of the proper law of any contract which the Bank may have with its

customers who hold accounts at its branch in the Isle of Man is directly relevant to the issues which this Court has to decide. It is in

this context that the unsatisfactory nature of the evidence and the progress of this case in both the High Court and this Court (on

which I have already commented) comes into focus. This Court is faced with having an unsworn letter from a firm of Isle of Man

lawyers coupled with legal submissions, based on an analysis of some decisions of the Isle of Man courts, addressed on behalf of the

Revenue, much of it for the first time on appeal in this Court. That is a highly unsatisfactory basis on which to invite this Court to

reach a view as to relevant Isle of Man law. If, therefore, it seemed to me that a determination of the proper law of the banking

relationship between the Bank and its customers with accounts at its Isle of Man branch was essential for the purposes of disposing

of this application, the parties would face great difficulties in maintaining much of the argument presented to this Court. It is of the

highest importance that parties put their full case before the High Court and do not seek to reinvent the case on mature reflection

when the High Court proceedings have not gone as well as might have been hoped. It is also of the utmost importance that the

evidential basis for any case is properly made out in the High Court. That evidential basis includes proper evidence of any foreign law

which is said to be relevant.

8.3 However, a number of points need to be made about the proper law of the relevant contractual relations. First, it does not

necessarily follow that the proper law is the same in the case of each relevant customer of the Bank. Second, it does not follow that

the fact that the proper law governing the ordinary banking relationship between the Bank and its customers is necessarily decisive as

to the position which might be adopted by the courts in the Isle of Man or, indeed, as to the balance to be struck between the Irish

public policy contained in the Taxes Acts and the comity of courts. In truth, the principal provision of Isle of Man law which is referred

to in the expert view exhibited in the Bank's affidavit (being that a bank owes a high degree of confidence to its customers relying on

Tournier v National Provincial and Union Bank of England [1924] 1 KB 461) does not seem to me to be materially different to the law

of Ireland on the same point. The question which arises is not necessarily as to what the proper law of the contract between the

Bank and its relevant customers may be but rather as to the extent to which the courts in the Isle of Man may, in certain

circumstances, be prepared to recognise disclosure obligations arising from a non-Isle of Man jurisdiction (whether in the context of

inter partes discovery or disclosure obligations to regulatory authorities and whether arising under orders of courts or in some other

way such as directly under statute). These are all matters for the Isle of Man courts to consider. It does not seem to me that it is

appropriate, on the materials before this Court, to conclude that there could be no circumstances in which the Isle of Man courts

might consider it appropriate to recognise a disclosure obligation arising under a court order of another jurisdiction and in particular a

jurisdiction which is the place of incorporation of the Bank against whom disclosure is sought.

8.4 It may well be that many, indeed possibly all, of the relevant banking contracts have, as their proper law, the law of the Isle of

Man although it is possible that, in all the circumstances, and particularly where a relevant customer is Irish resident, the banking

contract concerned might be governed by Irish law. To the extent that a determination as to the proper law might be considered, by

the courts of the Isle of Man, to be relevant to determining the views of those courts as to disclosure, then a decision as to the

proper law is one to be made by the courts of the Isle of Man. Whether other factors (beyond the relevant proper law) are also to be

taken into account in deciding the view of the courts of the Isle of Man on disclosure are again matters for those courts and not for

this Court.

8.5 I could envisage that, if it were absolutely clear that the courts of a relevant second jurisdiction might regard disclosure on foot

of an order made under s. 908 of the Taxes Acts as being in breach of the laws of that other jurisdiction, there would be little point in

adopting the procedure which has found favour in this case. Adopting a process which allows the views of the Isle of Man courts to

be obtained if desired, and thus allows the courts in this jurisdiction to reach a final view as to the obligations, in Irish law, on the

Bank, in the light of obtaining the views of the Isle of Man courts, has merit. However, such a process would not make sense if the

position in Isle of Man law was clear, for in those circumstances a final view on the position in Irish law could be reached straight

away.

8.6 However, that is not the case here. It is not possible to predict with certainty what view the Isle of Man courts may take. There

are, for example, some suggestions in some recent decisions of the Isle of Man courts to the effect that disclosure may, in an

appropriate case, be allowed in aid of revenue investigations. Whether that be so, and if so, to what extent it may arise on the facts

of this case, is of course, a matter for the Isle of Man courts.

8.7 In Gladstone v Brunning (CP 2004/146) (Deemster Doyle, 7 March 2006), the High Court of Justice of the Isle of Man granted

recognition to a trustee in bankruptcy appointed in the United States of America and was willing to give the trustee “any necessary

and appropriate assistance”, as there were “no strong and compelling reasons to justify this Court in refusing such recognition and

assistance”. In so doing, the Court ordered the vesting of monies held in a financial institution in the Isle of Man in the trustee and

recognised that the transfer of these monies to her was permissible if an application was made for the discharge of the then existing

Restraint Order. I note that at para. 82 of the judgment, Deemster Doyle states:-

“Friendly and sophisticated jurisdictions, which respect the rule of law and human rights, need to be aware of that if

things go wrong in their jurisdiction, and persons in the Isle of Man have information that would assist them, then the

Manx courts, in a proper case and, if necessary, subject to suitable safeguards will offer judicial co-operation and

assistance when that is reasonably requested by the judicial authority in that friendly jurisdiction. When the call for help

comes, the Manx courts will, in proper cases, answer the call positively and provide the necessary co-operation and

assistance.”

8.8 Similarly, in Brittain v. Impex Services Worldwide Ltd (CP 2003/96) (Deemster Doyle, 26 January 2004), in response to a Letter of

Request by the Royal Courts of Justice, the Court exercised its jurisdiction to come to the assistance of the liquidator appointed in

respect of Impex, a company incorporated in England and Wales. In circumstances where there were suspicions that Impex had been

involved in tax evasion and that Impex had a significant trading relationship with certain Isle of Man companies, the Court ordered the

examination of and the production of documentation by officers of those Isle of Man companies.

8.9 Most recently, in Wine v Wine (CP 2007/10) (Deemster Doyle, 29 May 2007), the Isle of Man courts were faced with allegations

that, following the breakdown of a marriage, the husband was attempting to improperly deal with assets located in the Isle of Man, in

which his wife had an interest. As proceedings in relation to the breakdown of their marriage were still pending in Israel, a number of

wide-ranging orders were sought by the wife to protect the status quo. Recognising the court’s obligation to prevent the island being

used to facilitate wrongdoing, freezing injunctions and disclosure orders were made relating to a number of companies based on the

island, with whom, it was claimed, the husband had a connection. Re-iterating the Court’s position, Deemster Doyle said at paras. 73

and 74:-

“73. This jurisdiction does not exist to assist those who seek to evade their responsibilities to their wives. This

jurisdiction does not exist to assist wrongdoers to hide their assets or the proceeds of their wrongdoings. This

jurisdiction does not exist to assist those who seek to evade their creditors or their taxes. This jurisdiction does

not exist to assist wrongdoers to evade foreign courts, foreign insolvency officers or foreign regulatory authorities.

74. It is the policy of this jurisdiction to assist parties, foreign courts, foreign regulatory authorities and foreign

insolvency officers, where appropriate and subject to any suitable safeguards, in the provision of full information

and documentation to enable a proper, just and fair determination of any issue or dispute in the principal

jurisdiction of such issue or dispute.” [emphasis added]

8.10 It would, of course, for the reasons already analysed, be wrong of this Court to attempt to reach a conclusion as to relevant

Isle of Man law in the absence of admissible proof of the state of the law in the Isle of Man and the unsatisfactory way in which

these proceedings have progressed. If this were the sort of case where the private rights of individuals under, for example contract or

tort, depended on the court reaching a conclusion as to relevant Isle of Man law, then the case might well turn on the burden of

proof. However, this is not such a case. This is not a case, for example, where it is necessary to make a finding as to the proper law

of a contract in order to determine the legal rights and obligation of parties to that contract. Rather, this is a case where a

determination as to the proper law of the relevant banking contracts and the terms of that law may (or may not) be a factor or a

significant factor in the view which the courts of that jurisdiction should take on the proper approach to adopt. For those reasons it

does not seem to me that it is necessary, or indeed appropriate, for this Court to express any view on the proper law of the relevant

banking contracts.

8.11 In that context it does seem to me to be important to emphasise a distinction between two different types of circumstances

where questions of foreign law may be relevant. In the first type of circumstance, foreign law is relevant because, in accordance with

the principles of Irish private international law (or increasingly frequently by virtue of relevant European Union regulation) it is, as a

matter of Irish law, required that the Irish courts apply an appropriate foreign law in determining a specific dispute. In a particular

context, Irish private international law or appropriate European Union regulation may mandate that the law to be applied in respect of

a contractual dispute is the law of a specific foreign jurisdiction. In hearing evidence of, and determining, the relevant principles of

the specified foreign law of contract, the Irish courts are doing no more than applying Irish private international law. Such an exercise

is not really concerned with the comity of courts. Rather, it is a necessary part of the proper determination of a legal dispute in

accordance with Irish law precisely because Irish law recognises the law of a foreign jurisdiction as being applicable rather than Irish

law. Such cases are not ones where the Irish courts are obliged, in accordance with Irish principles of comity, to recognise the

jurisdiction of the courts of a foreign country.

8.12 To determine that Isle of Man law is the proper law of any particular banking contract and to determine the confidentiality

obligations of a bank to its customer in accordance with Isle of Man law in such a case would be determinative of the private law

rights and obligations of the Bank and customer concerned should they arise in litigation in the Irish courts. However, reaching a

conclusion as to the proper law of any of the banking contracts which underlie this case and determining, if the proper law be Isle of

Man law, what the private law rights and obligations of the Bank and its relevant customers may be is not necessarily decisive of the

public law issues which arise on this appeal. Those issues are concerned with comity being the extent to which the Irish courts should

defer to views of the courts of the Isle of Man on the balance to be struck rather than with questions of proper law as such. It

remains, therefore, to consider the question of comity.

9. Comity

9.1 The trial judge came to the view that it would be in breach of the principles of the comity of courts for the courts of Ireland to

make an order under s. 908 of the Taxes Acts in the circumstances of this case. In so doing, McKechnie J. said the following at para.

52:-

“Even therefore if the Revenue Commissioners are correct in submitting that s. 908 applies to National Irish Bank, with

its registered office in Dublin, I would not deliberately offend the integrity of the Isle of Man or its judicial system by

granting an order which I knew they would strongly object to. To do so would be downright disrespectful to a sovereign

jurisdiction and would be the antithesis of showing due respect for the comity of courts. I would therefore decline to

grant the order sought.”

9.2 However, it seems to me that the form of process already analysed in this judgment does not impinge on the comity of courts.

This court is not, in any way, telling the courts of the Isle of Man what to do. Indeed, as already indicated, this Court proposes to

make an order which has inbuilt conditions designed for the very purpose of allowing an application to be made to the courts of the

Isle of Man to obtain the views of those courts as to any relevant position in Isle of Man law. I will turn in early course to the precise

form of condition which should be imposed in that regard. However, by imposing such a condition this Court is fully recognising the

important role of the courts of the Isle of Man in this process.

9.3 It is clear from some of the comments already made in the course of this judgment that there remains the necessity that, even if

the courts of the Isle of Man were to rule that disclosure would be unlawful so far as Isle of Man law is concerned, a final decision

remains to be taken in this jurisdiction (whether by the High Court or by this Court) as to how any conflict thereby arising would be

resolved. In those circumstances there would be a clear conflict. The courts in this jurisdiction would have held that, as a matter of

Irish law, the Bank, as an Irish corporate entity, was obliged to make disclosure. The courts of the Isle of Man would have held that

the Bank, notwithstanding being an Irish corporate entity, was, by virtue of operating a branch in the Isle of Man, obliged to maintain

the confidence of its customers at that branch notwithstanding any order of the Irish courts to the contrary. In those circumstances,

but only at that stage, would the question of the comity of courts come into stark relief. The courts of this jurisdiction would then

have to decide whether to actually make an order made under s. 908 of the Taxes Acts in the light of the decision of the Isle of Man

courts. That issue would, undoubtedly, raise important and difficult questions as to the comity of courts as, doubtless, any issues

arising before the Isle of Man courts might likewise involve such issues.

9.4 In that context it should be emphasised that the first, and indeed primary, task of the Irish courts is to determine whether, as a

matter of Irish law, it would be appropriate to make an order under s. 908 of the Taxes Acts. In circumstances where it is suggested

that compliance with such an order might render a party open to being found in breach of the law of another jurisdiction then the

Irish courts must, of course, consider what weight should be attached to that factor in reaching an overall determination as to

whether the order should be made. In such a case, it is desirable that the courts have available to them an appropriate level of

assurance so that the court can determine with confidence what the true position in the law of the relevant foreign jurisdiction

actually is. It is for that reason, in particular, that the current case is highly unsatisfactory. However, where, in circumstances such

as arise in the present case, it is possible to fashion an order which gives a reasonable opportunity to obtain, in as definitive a way as

possible, a ruling which would clarify the position in the relevant foreign jurisdiction, then the courts should lean in favour of adopting

an order which facilitates that process. Even if, therefore, there had been proper evidence placed by both sides before the High Court

as to relevant Isle of Man law which required the trial judge to choose between two conflicting views, there could, in a particular

case, still be merit in adopting a process which would allow for a definitive ruling from the Isle of Man courts. The reason for such an

approach is that Irish courts should not, without sufficient clarity as to the consequences of the proposed measure, make an order

which might place a party in a position of having to find itself in breach of the laws of another country. That there may well be

circumstances where the Irish courts will be required to make such orders even though they may have such adverse consequences

cannot be doubted. But in reaching any ultimate conclusion as to the competing requirements of the public policy behind Irish

statutory measures and the comity of courts, it is appropriate that the Irish courts have available to them sufficient clarity as to the

consequences of making any order sought.

9.5 For the reasons already analysed, it is clear that this Court does not have, currently, that level of clarity. If it should not prove

possible to achieve an appropriate level of clarity within a realistic timeframe then, of course, this Court may have to do the best it

can and balance the relevant competing values without the best information. However, where it is possible to avoid such a situation

then the court should act in a way which minimises the risk of it making an order based on an inadequate or incomplete view of

relevant foreign law.

9.6 In those circumstances the appropriate course of action for this Court to adopt is to determine, at this stage, that it is, subject

to what follows, appropriate to make an order under s. 908 of the Taxes Acts in the form sought by the Revenue in this case.

However, for the reasons which I have sought to analyse, it is appropriate in the circumstances of this case that the court adopt a

procedure which enables any interested party to obtain a definitive ruling from the courts of the Isle of Man and to make provision for

the matter being re-entered before this Court to enable this Court to have regard to any such ruling which may be obtained in a

timely fashion. It follows that it is necessary to consider the precise regime to be put in place.

10. The Regime to be put in place

10.1 The form of order suggested on behalf of the Revenue involved a stay being placed on the obligation of compliance for a

sufficient period to enable either the Bank or any relevant customer affected to make whatever application they might be advised to

the courts of competent jurisdiction in the Isle of Man. In that context, argument was made on behalf of the Bank to the effect that

an order which in substance required its customers to apply to the courts in the Isle of Man could have the effect of requiring, in

reality, some level of disclosure of the fact that the customer concerned held an account in the relevant branch. To counter that

argument, it was suggested on behalf of the Revenue that there was no reason in principle why the Bank itself could not make an

appropriate application.

10.2 While it is not for this Court to be prescriptive as to what form of application might properly be made to the courts in the Isle of

Man, it seems to me that there is much merit in the procedure adopted in Pharoan v Bank of Credit and Commerce International SA

(1998) 4 All E.R. 455. In that case, an American firm, FAC, issued a subpoena in New York against Price Waterhouse, an English firm

of accountants, seeking production of documents held by Price Waterhouse relating to allegations that the Bank of Credit and

Commerce International (“BCCI”) had fraudulently conspired to obtain control of FAC. At that time, an injunction had already been

granted in the English High Court to a customer of BCCI restraining BCCI from disclosing any information relating to him to a third

party. Price Waterhouse had concerns that they too may have been subject to the same duty of confidentiality and sought leave

from the English courts to comply with the US subpoena. Rattee J., in the Chancery Division, granted liberty to Price Waterhouse to

disclose the documents sought, subject to the proviso that all reasonable steps had to be taken to suitably redact the documents.

10.3 The fact that this Court has concluded that an order should be made against the Bank places on the Bank an obligation, at a

minimum, to use its best endeavours to clear out of the way any possible impediment to its compliance with the intended order. It

appears to follow that the proper course of action for the Bank to adopt, should it wish to invoke the jurisdiction of the Isle of Man

courts, is to make a positive application, seeking whatever form of relief it may be advised is appropriate, which would, if successful,

enable it to make the disclosure which will be required by an order of this Court without any concern of being in breach of Isle of Man

law. If the Bank decides to make such an application, and that is a matter for the Bank, there would be a clear obligation on the

Bank, by virtue of the stated intention of this Court to make an order under s. 908 of the Taxes Acts, to pursue such an application

bona fide and in the manner best calculated to seek to obtain a result in favour of disclosure. Whether, and if so to what extent, any

relevant customers can or should also be a party to such an application is not a matter on which this Court can express any view.

Likewise, any customer who wishes to invoke any relevant jurisdiction of the Isle of Man courts is, of course, absolutely free so to do.

10.4 It follows that the appropriate form of process is one which provides the Bank with a period of twelve weeks within which it can,

if it so wish and be so advised, make an application to a court of competent jurisdiction in the Isle of Man in which the Bank bona fide

seeks to persuade the courts of the Isle of Man that compliance with an order of this Court would not be in breach of the laws of the

Isle of Man.

10.5 I am also satisfied that liberty to apply should be given so that the Bank may apply to this Court in the event that such an

application is pending before the courts of the Isle of Man to the intent that, provided that the Bank moves with reasonable

expedition and that there is a prospect of a timely conclusion to any application in the courts of the Isle of Man, this Court would be

minded to extend the period prior to which it would intend to make a formal order under the Taxes Acts.

10.6 It finally is necessary to turn to the situation which might arise in the event that the result of any application which might be

made to the courts of the Isle of Man leads to a clear conflict between the obligations of the Bank to the courts in this jurisdiction as

compared with the courts of the Isle of Man. In those circumstances, it is appropriate to give the Bank liberty to apply to this Court

to determine what the position should be, having regard to the comity of courts, in the light of any conflict which might thereby be

seen to arise. It should be made clear that it would be open, in those circumstances, if it is considered appropriate in all the

circumstances of the case, to extend the period prior to the making of a formal order to enable due consideration to be given to any

issues thereby arising.

10.7 In passing, it is appropriate to set out the reasons why I consider it better that the matter come back to this Court, (in the

event that a conflict between the obligations of the Bank to the Irish courts and to the courts of the Isle of Man arises), rather than

have the matter remitted back to the High Court. First, it is important to emphasise that the question of the balance between the

public interest obligations arising under s. 908 of the Taxes Acts and possible obligations arising under the comity of courts are

already before this Court. As already indicated, if the position of the Bank in Isle of Man law were clear, then this Court would now

have to engage in the relevant balancing exercise and come to an appropriate conclusion. For the reasons already analysed, the

situation is not clear and, to assist in seeking to achieve clarity, a process has been put in place to enable an appropriate application

to be made to the Isle of Man courts.

10.8 Clearly if the Isle of Man courts do not place any potential barrier in the way of compliance by the Bank with an order to be

made under s. 908 of the Taxes Acts then, in the light of the findings of this Court, such an order will undoubtedly be made. If,

however, a conflict between the position in Irish and Isle of Man law emerges then the relevant balancing exercise will need to be

conducted by this Court. However, in those circumstances there will be no new facts which will need to be determined. The only

question which would, in that eventuality, remain for consideration by this Court is as to how to balance the competing public interest

and comity obligations in the light of whatever decision might be come to by the Isle of Man courts. In such circumstances, it does

not appear to me that anything would be gained by remitting the matter back to the High Court, for the only new matter which would

require to be taken into account would, in those circumstances, be the determination of the Isle of Man courts and the issue of the

relevant balance to be struck is already before and has, to an extent, already been considered by, this Court.

10.9 Finally, it should be emphasised that it is essential that this Court make a final decision one way or the other in a timely fashion.

While the process already identified does permit of some extension in the relevant 12 week period it should be emphasised that it

might, in certain circumstances, become necessary for this Court to make a final decision without having the benefit of a definitive

view as to the position in Isle of Man law if it should transpire that a timely definitive ruling on that position was unlikely. This would

particularly be the case if it could be suggested that there was any delay on the part of any interested party in invoking the

jurisdiction of the courts of the Isle of Man or in progressing any proceedings in those courts in a highly efficient manner.

11. Conclusions

11.1 For the reasons set out in this judgment, I am, therefore, satisfied that this Court should, at this stage, make clear that it is of

the view, subject to what follows, and that an order should be made under s. 908 of the Taxes Acts in the terms of paragraph (C) of

the application made to the High Court by the Revenue.

11.2 On the facts of this case, and for the reasons already analysed, this cannot reasonably be described as a case where it is

sufficiently clear as to whether compliance with such an order would be in breach of the Isle of Man law. It follows that, in the

circumstances of this case, a process should be put in place which gives the Bank an opportunity to seek to obtain a definitive ruling

from the courts of the Isle of Man as to whether compliance with the order proposed to be made would be in breach of the laws of

the Isle of Man and with provision for the matter to be reconsidered by this Court in the event of a finding by the Isle of Man courts

that such compliance would be in breach of Isle of Man law. For the reasons already analysed, I am satisfied that the Bank, if it

pursues that course, is under an obligation to seek bona fide to persuade the courts of the Isle of Man that there would be no

breach.

11.3 In summary, in my view, the order of this Court should provide for:-

(a) A determination that, subject to the balance of the order, an order under s. 908 of the Taxes Acts in the terms

sought by the Revenue should be made;

(b) a decision to defer making such an order for a period of 12 weeks;

(c) liberty to the Bank to apply to this Court (within such 12 week period) for an extension of that period in the

event that a relevant application is pending before the courts of the Isle of Man in circumstances where any

relevant party has moved with reasonable expedition; and

(d) liberty to apply to this Court in order to invite this Court to consider whether it should, in all the circumstances,

not make the order at (a) either at all or in the form sought in the event of a ruling by a court of competent

jurisdiction in the Isle of Man to the effect that compliance with the order made at (a) would render any relevant

party in breach of the laws of the Isle of Man.