Isle of Man: Manx Court’s Approach To Disclosure Of Banking Records To Foreign Revenue Authorities Unchanged

On 27 November 2013 His Honour Deemster Corlett provided his Judgment in the Isle of Man High Court Case of Danske Bank A/S v (1) Irish Revenue & Commissioners (2) HM Attorney General for the Isle of Man and (3) The Financial Supervision Commission (CHP 2013/48), a case concerning bank confidentiality.

The Claimant in the case was Danske Bank of Copenhagen, Denmark, the successor of National Irish Bank, who sought a declaration from the Isle of Man Courts that it would not be breaching its duty of confidentiality by providing details of customers who held accounts at the former Isle of Man Branch of the National Irish Bank.

The case came before the Court in the context of proceedings before the Irish Supreme Court under which an Order was made providing that: information requested by the Irish Revenue should be made available to it, subject to confirmation from the Isle of Man Courts that to do so would not constitute a breach of Isle of Man Law.

On 5 December 2013 Isle of Man Newspapers published an article "Manx Court rules on bank confidentiality" stating "Now Deemster Andrew Corlett has delivered his definitive ruling which states the bank will commit no breach of duty to its customers under Manx law by complying with an Order of the Irish Supreme Court over the disclosure of account information to the Irish Revenue Commissioners." Whilst Deemster Corlett's Judgment was determinative of the issue, His Honour made clear that this determination was made in light of the unusual circumstances of this particular case, and did not constitute a change in the attitude of the Isle of Man Courts to a bank's duty of confidentiality to its customers.

The "exceptional facts of this unusual case" included that none of the banking records, documents or information requested by the Irish Revenue were situate in the Isle of Man, the Isle of Man Branch of National Irish Bank Ltd having been closed for a number of years with Irish National Bank Ltd having surrendered its banking licence as long ago as 2002. Those records, documents and information were in fact situate in Belfast, Northern Ireland. Deemster Corlett states at Parargaph 71 of his Judgment: I make it clear that, had therelevant account information been located in the Isle of Man, I may well not have been prepared to make the declaration sought".

Manx law in relation to a bank with a place of business and banking records in the Isle of Man was, in the Judgment, described as being "entirely clear". There are four exceptions to the general rule that disclosure of information by banks to third parties will not be permitted as laid down by the historical English Court of Appeal decision in Tournier v National Provincial and Union Bank of England [1924] 1 KB 461:

"Compulsion of law" in this context is limited to Orders of the Isle of Man Court or disclosure in accordance with one of the well-known statutory exceptions to confidentiality, such as disclosure under the Isle of Man Criminal Justice Acts. As Deemster Corlett states at paragraph 73 of the Danske Bank Judgment, "there should ordinarily be no question of a Tournier exception based on compulsion of foreign law."

In conclusion, whilst the Danske Bank Judgment may appear on its face to erode the duty of confidentiality owing by a bank to its customers, on closer inspection, it does no such thing. The Judgment is expressly confined to its own unusual facts. A bank's duty of confidentiality to its customers remains. Disclosure to foreign authorities (or any other third party) outside of the recognised Tournier exceptions will constitute an actionable breach of customers' confidentiality.

A copy of Deemster Corlett's Judgment in the case can be viewed at www.judgments.im

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.