Court of Appeal upholds disclosure order despite risk of prosecution in Iran

The Court of Appeal has upheld a first instance decision requiring the claimant Iranian bank to produce customer documents in unredacted form, subject to measures to protect their confidentiality, despite the fact that compliance would put the claimant in breach of Iranian law: Bank Mellat v HM Treasury [2019] EWCA Civ 449.

This case gives a helpful illustration of the court’s approach where a party asserts that the production of documents under its disclosure obligations will contravene foreign criminal law. The court will balance the actual risk of prosecution in the foreign jurisdiction against the importance of the documents to the fair disposal of the trial. While the risk of prosecution will be a factor to weigh in the balance, it will not be determinative.

It is interesting to compare the High Court’s similar decision, albeit in a contrasting context, in the recent case of ACL Netherlands BV v Lynch (considered here). In that case the court declined to grant a party permission to use documents received on disclosure in the English litigation in order to comply with a US grand jury subpoena. Both decisions deal with a scenario where documents are required for proceedings in one jurisdiction but production will put the party in breach of its obligations under the (civil or criminal) law of another jurisdiction. Both decisions highlight the difficulties that may be faced by a party that finds itself caught between conflicting obligations in this way.

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High Court refuses permission for collateral use of disclosed documents and witness statements to respond to US grand jury subpoena

In a decision illustrating the court’s strict approach to the rule prohibiting the use of disclosed documents and witness statements for a collateral purpose, the High Court has refused a party permission to provide disclosed documents and witness statements to the US Federal Bureau of Investigation (FBI) for the purpose of complying with a US Grand Jury subpoena: ACL Netherlands BV v Lynch [2019] EWHC 249 (Ch).

The court’s permission was required because under CPR 31.22 (in relation to disclosed documents generally) and 32.12 (in relation to witness statements), a party may only use disclosed material for the purpose of the proceedings in which it is disclosed, subject to certain exceptions including where the court gives permission.

On the facts of the case, the court held that the applicant had not established cogent and persuasive reasons in favour of granting permission, as it was required to do. The court also considered that the grant of permission might have occasioned injustice, particularly given that the trial in the civil proceedings was imminent.

The decision highlights that the fact that a party may be facing legal compulsion to produce documents is not a “trump card” leading necessarily to the grant of permission (although in any event the court was not satisfied here that compulsion had been established). Courts considering such applications will not apply a mechanistic approach and will consider all the circumstances in weighing the competing public interests involved. That is the case even if refusing permission may result in a party finding itself effectively stuck between a rock and a hard place, unable to comply with a legal demand from an enforcement or regulatory agency – though that will be a relevant factor. Continue reading

Open Justice:  Rule changes to increase transparency in the civil courts

From 6 April 2019, a number of changes to the Civil Procedure Rules will come into effect with the intention of reinforcing the principle of open justice and clarifying how it operates in the civil courts. The amendments include:

  • emphasising the general rule that hearings are to be held in public, and clarifying the test for when a court may direct a private hearing or party/witness anonymisation
  • making it clear that the general rule applies not only to traditional hearings in a courtroom, but also those held in chambers or via telephone/videolink
  • a new express duty on the court to take reasonable steps to enable public access to hearings
  • a new procedure requiring orders for a private hearing or anonymisation to be published on the courts’ website
  • a new power for judges to direct a represented party to compile and share with a litigant in person a note of a hearing pending the receipt of a transcript.

Jan O’Neill, a Professional Support Lawyer in our Disputes team, has published a post on Practical Law’s Dispute Resolution blog discussing the changes.  Click here to read the post (or here for the Practical Law Dispute Resolution blog homepage).

High Court restrains claimants from using defendant’s privileged material obtained from third parties in unknown circumstances

A recent High Court decision demonstrates that, whilst confidentiality is a prerequisite to a claim for privilege, information will not cease to be confidential unless it is in fact known to a “substantial number of people”: Winstone v MGN Ltd [2019] EWHC 265 (Ch).

In the present case, the court found that the quality of confidentiality had not been lost where the contents of the privileged material had come into the hands of a small group of investigative journalists and at least one investor, and may have (though the evidence did not establish that it probably did) come into the hands of others.

The decision is consistent with previous judgments which suggest that the courts may take quite a robust view as to when privileged material has (or has not) entered the public domain, so as to lose the requisite quality of confidentiality, particularly where the privileged material has been obtained in breach of confidence (see this post) or through inadvertence (see this post) – that is, outside the disclosure process in legal proceedings, where different principles apply (as considered here).  Continue reading

High Court upholds claim to privilege in respect of underlying instructions to law firm relating to escrow monies

The High Court has rejected an application for disclosure of documents containing the underlying instructions to a law firm acting for a party funding a transaction, in circumstances where the law firm provided a confirmation to the seller as to the nature of its irrevocable instructions regarding escrow monies: Raiffeisen Bank International AG v Asia Coal Energy Ventures Ltd [2019] EWHC 3 (Comm).

The court rejected an argument that the instructions were not confidential, or that privilege had been waived, because the client had authorised the law firm to state what instructions it had been given. The judge emphasised that underlying instructions do not cease to be confidential just because the client authorises the solicitor to divulge information it has received in confidential communications from the client. The question is whether the client has given the solicitor authority to disclose the underlying communications.

Caution is needed however. It may be difficult to distinguish between cases where the client has given the solicitor authority to disclose the underlying communications and cases where it has merely authorised the solicitor to divulge information received from the client without disclosing the underlying communications. Particular care should also be taken where a party is considering referring to lawyer/client communications in the context of legal proceedings. If the court finds that the underlying privileged material is being deployed in the proceedings it may order those communications to be disclosed along with any other documents relevant to that issue, under the principle of collateral waiver or the “cherry picking rule”.

The decision also illustrates the broad protection which can be afforded to lawyer/client communications under the head of legal advice privilege. The privilege is not limited to requests for legal advice or the provision of advice, but will include the entire continuum of communications between solicitor and client relating to a transaction in which the solicitor has been instructed, provided that they are directly related to the solicitor’s performance of his professional duty as legal adviser. Here that principle meant that instructions regarding the holding and transfer of escrow monies were privileged, even if they did not contain advice on matters of law. Continue reading

Court of Appeal confirms Morrisons vicariously liable for employee’s deliberate actions in first successful UK class action for data breach

The Court of Appeal has today dismissed an appeal against the High Court’s decision that Morrisons was vicariously liable for its employee’s misuse of data, despite: (i) Morrisons having done as much as it reasonably could to prevent the misuse; and (ii) the employee’s intention being to cause reputational or financial damage to Morrisons itself: Wm Morrisons Supermarkets Plc v Various Claimants [2018] EWCA Civ 2339.

This case highlights the wide reach of data protection. An organisation can be liable for data breaches even if it has taken appropriate measures to comply with the data protection legislation itself, and even if it is the intended victim of the breach. In this respect, the decision will also concern employers who can now be vicariously liable for the actions taken by a rogue employee even with appropriate safeguards in place to protect employee personal data. In addition to civil liability, organisations may suffer further damage as a result of negative publicity and impact on share price.

The fear for organisations will now be that this decision, combined with the legislative changes made by the GDPR, increased public awareness of data protection issues, and the publicity that the case has attracted, could spark a new wave of court cases from workers and customers in the event of a data breach. Whilst individuals may not themselves be entitled to significant sums, if the data breach affects large numbers of individuals, the total potential liability for organisations could become commensurately large. In this regard, it will be interesting to see how the court approaches the issue of quantum in the case against Morrisons.

The Court of Appeal suggested that insurance could be the answer to “Doomsday or Armageddon arguments” about the effect of its decision. However, it remains to be seen whether this will be an effective tool that can be used to offset the increased risks that organisations now face.

Importantly, the case also related to data breaches which occurred prior to 25 May 2018 (ie prior to the implementation of the GDPR). In the post-GDPR world where there is an express right for individuals to be compensated for non-material damage (ie distress), it could become even easier to bring such actions. With multiple data breaches having hit the headlines since 25 May 2018 (including the Conservative Party Conference, Butlin’s, British Airways, Dixons Carphone, Facebook and Google+), it will be interesting to see the impact of this decision on future individual compensation claims and whether or not this case opens the floodgates for data breach class action claims in the UK.

For more information see our data protection update on the decision.

Court of Appeal overturns decision granting very broad non-party access to court documents

The Court of Appeal has overturned a High Court Master’s order granting non-party access to the entirety of the hard copy trial bundles in a case that settled before judgment. The decision helpfully clarifies the extent of the court’s discretion to grant non-party access to court documents, both under the CPR and under its inherent jurisdiction: Cape Intermediate Holdings Limited v Dring [2018] EWCA 1795.

The upshot of the decision is that the court has no discretion to permit non-parties to inspect the trial bundles generally, or documents merely referred to in skeleton arguments, witness statements/expert reports, or in open court. In addition to formal documents kept on the court file, which may be provided to non-parties under CPR 5.4C, the court has an inherent jurisdiction to permit inspection of:

  • witness statements and expert reports that stand as evidence in chief during trial (but not documents exhibited to them);
  • documents which are read or treated as read by the court, ie because they have been read out in open court, the judge has been specifically invited to read them (whether in open court or outside court), or it is clear or stated that the judge has read them;
  • skeleton arguments/written submissions and similar advocates’ documents deployed at a public hearing; and
  • any other specific documents necessary for a non-party to inspect in order to meet the principle of open justice.

In terms of the exercise of its discretion, the court has to balance the non-party’s reasons for seeking inspection against the parties’ interests in preserving confidentiality. The court is likely to lean in favour of granting permission where the principle of open justice is engaged and the applicant has a legitimate interest in inspection – and this decision confirms that the principle of open justice will be engaged as soon as there is a hearing of the matter, whether or not it settles before judgment. Conversely, where the open justice principle is not engaged, the court is unlikely to grant permission unless there are strong grounds in the interests of justice.

This decision will be welcomed by litigants as restoring more limited boundaries to the court’s discretion to grant non-party access to court documents, in contrast to the very broad approach taken by the Master in this case. However, even following the Court of Appeal’s decision, it is clear that litigating parties cannot prevent documents becoming publicly available by settling the case before judgment. The principle of open justice will be engaged once there is a hearing; a judicial decision is not required.

Rachel Lidgate, a partner in our disputes decision, considers the decision further below. Continue reading

High Court finds right of freedom of expression outweighed by right to privacy in relation to press coverage of police investigation

In a recent decision, the High Court engaged in the exercise of balancing a broadcasting organisation’s right to freedom of expression under Article 10 of the European Convention of Human Rights (“ECHR”), against the right to privacy of the target of a police investigation under Article 8 of the ECHR. It was held that the subject of the investigation had a legitimate expectation of privacy in respect of the fact of the police investigation and that the Article 8 right outweighed the Article 10 right on this occasion: Sir Cliff Richard OBE v The British Broadcasting Corporation and The Chief Constable of South Yorkshire Police [2018] EWHC 1837 (Ch).

The BBC has indicated in a recent press release that it may appeal the decision, stating that the High Court judgment “creates new case law and represents a dramatic shift against press freedom” which is not “compatible with liberty and press freedoms”. Hyperbole aside, this judgment has provided welcome clarification of certain aspects of the law of privacy.

First, the court held that “on the authorities, and as a matter of general principle, a suspect has a reasonable expectation of privacy in relation to a police investigation”. In making that ruling, the court paid heed to the reality of the social stigma which surrounds suspects in police investigations, acknowledging that the presumption of innocence is not perfectly understood and applied, and the public is not universally capable of keeping an open mind.

Secondly, the court held that reputational damage can be taken into account in assessing damages for privacy claims. Reputational damage is not, therefore, the sole province of defamation (as the BBC had argued).

As a matter of more general interest, in weighing the claimant’s Article 8 rights more heavily than the BBC’s Article 10 rights, the court accorded substantial weight to the questionable way in which he found the BBC had obtained its information. This will no doubt place the motives and methods of media organisations, and what may previously have been regarded by them as “good old fashioned journalism”, under potentially uncomfortable scrutiny.

Neil Blake, Christopher Cox and Angela Liu consider the decision further below. Continue reading

Notable increase in interim privacy injunctions sought and obtained in the second half of 2017

In March 2018, the Ministry of Justice published quarterly provisional civil justice statistics for England and Wales.

These statistics include interesting details regarding the increase in court applications for privacy injunctions in 2017. The guidance to the Civil Justice Statistics Quarterly bulletin published in December 2017 notes that the statistics provided in respect of privacy injunctions relate to “applications concerned with data protection and rights to respect for private and family life protected by Article 8 of the European Convention on Human Rights (ECHR), whether the injunction is sought by an individual, a public authority, or a company.” It is important to note that the statistics only relate to civil proceedings in the High Court at the Royal Courts of Justice and the Court of Appeal.

According to the statistics, over the course of 2017, 14 applications were made for new interim privacy injunctions, over double the number that were made in 2016. Of the 8 new interim privacy injunction applications made in the last six months of 2017, all 8 were granted (a significantly higher success rate than in the first six months of the year).

The figures also show a steady increase in the number of applications for privacy injunctions made from 2015 onwards after the number of such applications being brought fell dramatically in 2014. While the previous decline may be attributed to a number of factors (including the growth of social media platforms over this period and the use of those platforms to circumvent such injunctions), the increasing number of applications made for privacy injunctions in 2017 together with the significant success rate that parties achieved pursuing such applications in the last six months of 2017, suggest that the privacy injunction constitutes a valuable and viable option available to parties in their attempts to protect their Article 8 rights.

For more information contact Neil Blake or Christopher Cox in our disputes team. Continue reading

High Court grants non-party broad access to documents relied on at trial despite case having settled before judgment

In a recent decision, a High Court Master has taken a broad view of the documents that should be made available to a non-party where a case settled after trial: Dring v Cape Distribution Limited [2017] EWHC 3154 (QB).

The decision draws a clear line between documents which are read or treated as read by the judge, which are subject to a default position in favour of granting access so long as the applicant has a legitimate interest in the documents – though the court must still conduct a balancing exercise in relation to any harm to other parties’ legitimate interests. In contrast, where documents are not read or treated as read by the judge, there must be strong grounds for thinking that access is necessary in the interests of justice.

The obvious question is which documents are treated as read by the judge. Here the Master took a broad view, essentially finding that the entirety of the paper bundle should be treated as read, though not documents which appeared only in an electronic bundle that was made available for reference in court on the basis that any documents relied on would be copied across to the paper bundle.

The decision emphasises that the courts do not merely provide a public service to the parties to a particular case; previous cases also form the basis of advice to other parties. That means that litigating parties are not free to determine the extent to which aspects of the proceedings should become public. Where parties have legitimate concerns regarding sensitive material, they should take steps to protect it before it is ventilated in court, for example by seeking an order that the court sit in private for the relevant part of the hearing. The present decision suggests that where parties do not take such steps, the court may have little sympathy if they reach a settlement on confidential terms and then seek to prevent material put before the court becoming publicly available.

This issue is topical, as the rules relating to open justice in CPR 39 are currently being considered by a sub-committee of the Civil Procedure Rule Committee (CPRC). The sub-committee’s preliminary note filed for the CPRC’s October meeting suggests it is considering possible amendments to strengthen the rules and help promote awareness that parties cannot waive the public’s right to open justice. Continue reading