Given the increasing prevalence of regulatory and law enforcement investigations into businesses of all sizes and across all sectors, scrutiny of search warrants has intensified as their prominence has also grown. Alistair Graham and Stephen Moi, from the Litigation and Dispute Resolution practice at Mayer Brown, explore the uncertainties of modern search warrant laws and why the rules must change.
A search warrant is a legal document authorizing a police officer or other official to enter and search premises. Search warrants are a vital tool used by investigators for the preservation of evidence, especially in cases where there is a perceived risk of concealment or destruction of evidence. The importance and use of these are ever-growing given the increasing numbers of investigations carried out by regulators, law enforcement agencies, and other agencies discharging public functions.
These considerations must, however, be balanced against individual and business rights’ to privacy and freedom from state intrusion. It is therefore critical to businesses that the legal framework is clear and accessible, so so that senior management can understand the fundamentals of a search warrant – in particular, their legal rights and obligations as individuals and as a business.
The UK Law Commission has recently launched a public consultation on reforming the law on search warrants. A number of problems have been identified regarding these laws.
First, there are 176 different powers, created by laws spanning the past 150 years, by which search warrants may be issued, resulting in a confusing patchwork of legislation; a recipe for inconsistency in an area that concerns fundamental rights of individuals and businesses. As the UK Courts have recognised, the laws are “an unfortunate jumble of legislative provisions”, making it difficult enough even for the legal profession to understand and keep track of, let alone CFOs and other executives.
Second, much of the legislation was enacted in an age prior to the widespread use of electronic material and equipment, and so is aimed at searching and seizing evidence in the form of physical property. The law needs to be updated to take account of technological advances and how these have changed the practical realities of searching for, and dealing with, investigatory evidence.
As a result of the uncertainties of the current legal framework, some commentators regard the legal safeguards for businesses and individuals to be inadequate, causing disproportionate costs and delays for all parties, and disruption to (sometimes collapses of) investigations.
The recent case of ‘BES Limited and others v Preston Crown Court’ provides a timely example of the uncertainty and lack of clarity in search warrant laws. The case concerned investigating authorities’ duties under the Criminal Justice and Police Act 2001 (CJPA) to “search and sift”; that is, to conduct an initial review of material seized from a business or an individual to identify and return material falling outside the scope of the warrant (and therefore presumably irrelevant to the investigation), except where it would not be “reasonably practicable” to do so. Similarly, investigating authorities are required to return materials that are legally privileged.
In 2016, the Trading Standards Authority (the Authority) obtained a warrant to search and seize computer equipment against the Claimants to investigate allegations that they had sold utilities (gas, electricity, and telephone lines) to consumers fraudulently. Given the nature of the business (which employed substantial telesales operations) and the allegations, the search warrant was very broadly framed and captured virtually all data on the Claimants’ IT servers. More than 200 million documents and 770,000 audio recordings of telephone conversations were seized for the Authority by Lancashire Constabulary and copied, with the physical devices then returned.
One year later, the Claimants applied to the Crown Court for the return of property falling outside the scope of the search warrant. The Authority agreed to return hard copy documents but refused to return electronic data, saying it would take too much time and resource. The High Court agreed with the Authority, because it would require diverting resources away from the investigation, and the Claimants still retained their data so their business operations had not been disrupted.
This case illustrates a number of issues with the current legal regime, of which businesses should be broadly aware.
First, it provides one example of legislation drafted in a different technological era. Indeed, it is only due to the recent development of data analytics tools and sophisticated search function technology that investigators are able to manage and make use of such vast quantities of data.
Second, the decision raises the question of whether the “search and sift” requirement still makes sense in relation to electronic data. The requirement is meant to maintain privacy and property rights and to minimise the disruption caused to investigated businesses and individuals. However, the majority of the time, data is copied rather than seized and thus is not too disruptive to business operations. The High Court also recognised the need at times for prosecutors and investigators to retain evidence sets in their entirety “for the purpose of proving provenance and continuity“. These factors would appear to suggest that the policy reasons for “search and sift” are, on balance, becoming less applicable.
On the other hand, and as Philip Marshall QC argued on behalf of the Claimants, search warrants can be a very substantial and damaging intrusion into private law business rights. In particular, amongst the data seized there may be legally privileged material, and legal privilege is – in the UK and other jurisdictions – a fundamental human right. Arguably, therefore, privileged material must in all circumstances be identified, segregated, and returned or destroyed. These are, no doubt, all key considerations that will need to be balanced by the Law Commission, as CFOs and senior management need to know where they stand.
Third, the case perhaps exemplifies what the Law Commission’s consultation paper describes as “the current system [enabling] well-resourced claimants to bring tactical cases to delay the criminal justice process“. Observing that the Claimants had waited a year before applying for the return of seized property and had also brought a separate civil action for damages against the Authority, all without ever questioning the lawfulness of the search warrant, the Court’s decision appears to have been influenced by a suspicion that the Claimants’ application was an attempt to disrupt the Authority’s investigation by making it run up a “blind alley“, “to achieve a pointless result“. The application, it was said, had “the appearance of litigation for its own sake” – something that businesses would do well to bear in mind.
Overall, the decision reflects the current state of the rules on search warrants: outdated and uncertain. An application has been made for permission to appeal to the Supreme Court on the basis that it raises a point of general public importance. While this would provide greater clarity on the points raised in this case, the Supreme Court would only be able to decide the points relevant to this appeal on the basis of the current legislation. The broader task of consolidating, clarifying, and modernising UK search warrant laws will fall to the Law Commission and Parliament.
