Privacy and Confidentiality – The last bastion or a tactical retreat?
The Courts of offshore jurisdictions tend to be somewhat removed from the central issues in international proceedings – with those being more apt to be fought in the larger centres – London, New York, etc. We that pursue the practice of law in the courts of Gibraltar, as our counterparts in other British overseas territories – whatever their proper denomination – are regularly called upon, however, to assist in proceedings ancillary to those in the main arena.
Traditionally, the level of secrecy attaching to fiduciary relationships pertaining in offshore centres was comparable to that pertaining in the larger commercial hubs. Indeed, because of the importance of confidential relationships to the maintenance of confidence in an offshore centre there resulted the enactment of specific legislation whereby the obligation of confidentiality of the fiduciary – banker, trustee, nominee or otherwise – was buttressed by criminal sanctions in the event of breach of that duty. The favourite case of the offshore practitioner was Government of India v Taylor Government of India v Taylor – indeed at times it may have seemed the only case on many lips.
Such precepts achieved their greatest level of transcendence, it is suggested, in or about 1995. By that time the great majority of common law jurisdictions in the offshore world had legislation styled “Confidential Relationships Ordinance” or similar. The Confidential Relationships (Preservation) Law of the Cayman Islands (1976) was one of the earlier examples of this type of legislation. It is interesting to note that that statute was revised and updated in 2009 – in light of the changing international promontory and the significantly different professional considerations pertaining. The preoccupations of the law in 2009 – as now – were clearly very different to those that had obtained in 1976. Looking at the modifications, with their clear interest in upholding justice – however international or transnational that might in fact be, of removing the doubts of practising lawyers as to where they stand in relation to confidentiality and by confirming the supremacy of the Grand Court (of Cayman) as to when a professional may breach his obligation of confidentiality. Perhaps the greatest merit here is to ensure that the professional himself is not the one to judge whether such a breach is merited – surely one of the most difficult decisions to make for oneself, given the extremes of professional culture and even emotion that make a calm decision that much more elusive.
As we are most of us aware, a plethora of international initiatives has resulted in significantly increased levels of cooperation both judicial and by State and quasi State organisations within and without law enforcement, often resulting from the polymorphous European and other international institutions and the treaties and conventions that sustain them. The OECD, EU, UN and now the US – led FATCA initiative have all assisted in breaching the citadel of confidentiality that once surrounded offshore affairs. In the process, notions of the privacy and the reliability of professional secrecy have had to be largely rethought. So far from the sort of compartmentalisation that once characterised not just liability to assessment enforcement of tax obligations outside the State relative to nationality, domicile and residence, we now see a material and philosophical change so that the condition of smaller territories, vulnerable to sanction, to blacklist and to the sort of direct action to which larger states are seldom if ever subjected, has threatened to become more akin to that of vassal state.
There may be some truth in the suggestion that confidentiality and secrecy as a way of professional life in relation to the conduct of offshore affairs were apt to breed bad practice as well as less than elegant solutions – that did not, perhaps, adequately dovetail with the legal prescriptions in the client’s home territory. Whatever the case, lawyers in offshore practices must now be more creative than ever – only now more of their time is devoted to the deconstruction of legal montages, in such manner as to have the least negative consequences possible in the round. It is anticipated that in the pursuit of just such goals the offshore territories are likely to develop new and deviant jurisprudence that is as purposive as it is distinct from main stream Common Law tradition. No doubt such cases will as ever, be qualified by later jurists as “very much decided on their facts”.
It is notable that as the law and its practitioners have adapted to today’s more qualified notion of confidentiality, more and more privacy orders are being made in the Common Law world – regarding proceedings in being, reporting of information deriving from Freedom of Information requests, etc. Is it not ironic, then, that privacy is achieving greater significance even to the point where rights not traditionally acknowledged in the Common Law would seem to be finding more and more judicial approval just as the very notion of confidentiality would seem to be in the process of redefinition.