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Manx court rules on bank confidentiality

Community news

Community news

Some 140 bank customers could be affected by a Manx high court ruling on tax disclosure with the Irish Revenue.

In an unusual case, Danish-based Danske Bank had sought a declaration from the courts that obligations of client confidentiality would not preclude them from co-operating with an Irish Supreme Court order.

This concerned the disclosure to the Irish Revenue of documents and information concerning depositors resident in the Republic with accounts at the Isle of Man branch of National Irish Bank(NIB).

NIB Ltd formerly had a branch in the Isle of Man but its banking licence was surrendered as long ago as 2002. Danske took over NIB in 2004. Danske itself has no branches in the island but it does have at least one branch in Dublin.

In 2006 the Irish Revenue sought an order in the High Court of Ireland seeking the disclosure of documents relating to NIB customers with accounts in the Isle of Man.

The bank resisted the order on the grounds that it might be in breach of its duty of confidentiality to its account holders.

Mr Justice McKechnie ruled that without a domestic court order, any attempt by a foreign court to compel disclosure of an Isle of Man bank account would be incompatible with Manx law.

The Irish Revenue appealed to Irish Supreme Court which broadly supported the appellant’s case but deferred making an order to enable the bank to obtain a definitive ruling from the Manx court.

Danske did just that. The Attorney General and the Financial Supervision Commission represented the 140 customers likely to be affected by the proceedings.

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.

In his judgment, Deemster Corlett said it was important to stress that the court was not being asked for an order that disclosure of bank information be made – but to provide a definite ruling for the Supreme Court.

He pointed out that this concerned a bank that no longer has a presence in this jurisdiction – and neither do the documents and information sought.

The Deemster said his ruling was designed as far as possible to avoid any further litigation in the Manx courts although Irish resident account holders had the perfect right to bring a case.

 

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