Compelling Nominee Directors to Disclose Asset Data in Arbitration
Compelling nominee directors to disclose asset data requires leveraging statutory inspection rights and auxiliary court orders to override corporate secrecy.
Bankers Trust Orders
Meaning
An equitable disclosure remedy directs non-party financial institutions to reveal information about accounts holding misappropriated funds. Courts grant bankers trust orders to assist victims of fraud in tracing and freezing their assets before they are moved beyond reach. This remedy is highly effective in international asset recovery operations.
Equitable Jurisdiction
Judges issue these instructions based on the inherent power of equity to assist a plaintiff who has a proprietary claim to the funds. When applying for bankers trust orders, the applicant must present clear evidence that their funds have been stolen and can be located in the target accounts. This jurisdiction is exercised with caution because it overrides the duty of confidentiality owed by a bank to its customer.
The applicant must also provide an indemnity to the bank for the costs incurred in complying with the court’s instruction.
Proprietary Connection
The remedy requires the claimant to show a strong prima facie case that the money in the account belongs to them. This distinguishes bankers trust orders from other third-party disclosure mechanisms that only require the respondent to be mixed up in the wrongdoing. The claimant must demonstrate that the funds have been traced directly into the specified bank account.
Disclosure Boundary
Restricting the scope of the order to information necessary to locate the specific assets prevents abuse. To limit overreach, bankers trust orders will not be granted for general discovery of a defendant’s wider financial affairs.