Collateral use

The second half of 2020 saw several decisions regarding the use of documents disclosed on a party to civil proceedings for a purpose that is different or collateral to those proceedings.  For the general rule on limitations of such use, please see our Parallel Proceedings microsite here.

• In Libyan Investment Authority v Societe Generale SA [2020] EWHC 3659 (Comm), the Court held that permission for collateral use would be granted under CPR 31.22(1)(b) if there were special circumstances which constituted a cogent reason for permitting such use. Whilst there is a strong public interest in facilitating the just resolution of civil litigation, whether that public interest warrants releasing a party from CPR 31.22 depends upon the particular circumstances of the case. The Court also has to be satisfied that there is no injustice to the disclosing party. In this case, permission was granted as without the documents the claimant would be unable to resist a summary judgment/strike out application in related proceedings.

• In Lakatamia Shipping Company v Nobu Su [2020] EWHC 3201 (Comm), the Court gave retrospective permission under CPR 31.22 for the first claimant to use documents obtained via a search order in these proceedings, in related proceedings. The public policy justification for this was that the related proceedings arose out of, and were closely related to, the first claimant's efforts to enforce its judgment debt against the defendant.  Despite granting retrospective permission, the Court sanctioned the claimant for its "serious" breaches of the collateral use rules, by noting its views in a formal judgment and ordering the claimant to pay indemnity costs. In its judgment, the Court referred to the lack of clarity in the drafting of CPR 31.22 and reminded lawyers to take a cautious, two-stage approach to the collateral use of case materials by applying for permission for collateral use to review documents as soon as a potential issue has been identified and applying for permission to deploy the documents subsequently, if required.

• The Court held in National Bank Trust v Yurov [2020] EWHC 757 (Comm) that to justify an order for collateral use of information obtained under compulsion of a worldwide freezing order ("WFO"), the applicant must establish that (a) there were cogent and persuasive reasons to permit the collateral use, and (b) the release from the WFO undertaking would not cause injustice to the disclosing party. Other relevant considerations included whether it was in the public interest to disclose the documents and the open justice principle where the material had already been referred to in open court.

• In PJSC National Bank Trust v Mints [2020] EWHC 3253 (Comm), the Court applied the collateral use release in CPR 31.22(1)(a) (the document has been read to or by the court, or referred to, at a hearing which has been held in public) to information obtained under compulsion of a WFO.  By virtue of the defendants' asset disclosure being referred to in open court at the return date hearing and read by the judge when preparing his judgment, the Court held that those documents were now in the public domain and had lost their confidential status despite the claimant giving the standard cross-undertaking (see PD 25A) not to use them for any other purpose. We consider routes that can be taken to avoid this scenario in our article here.

• In IFT SAL Offshore v Barclays Bank [2020] EWHC 3125 (Comm), the Court was satisfied that there were cogent and persuasive reasons for discharging the claimant's undertaking not to use documents obtained from the defendant under a Norwich Pharmacal order for the purposes of proceedings against the defendant. In reaching its decision, the Court concluded that in the absence of estoppel or abuse of process it should not obstruct the fair and just resolution of a case. The Court was not persuaded that allowing the documents to be used could set a precedent that might facilitate speculative claims against banks by victims of fraud.

• In Slade v Abbhi [2020] EWHC 2181 (Comm), the Court found that for the purpose of the exception in CPR 31.22(1)(a), a Part 71 examination was a "hearing" that had been held in "public".  However, the Deputy Master limited his conclusions to the facts of the case because the question of whether Part 71 examinations constituted "public" hearings was a point of principle, more suitable for determination by a High Court judge.  Nevertheless, his findings could be helpful for those dealing with similar considerations.

• In Vneshprombank LLC v Bedzhamov [2020] EWHC 2114 (Ch), the Court held that the claimant's solicitors could disclose certain electronic documents obtained under a search order (the majority of which came from third parties) to employees of the claimant's Russian liquidator and litigation funder, provided that each employee entered into stringent express undertakings against collateral use of such documents. Additionally, the Court required a submission to the jurisdiction of the English courts in respect of any undertaking-related disputes (and the provision of an English address for service), establishing that the English courts should be relied upon to resolve any future issues on the matter.

See our parallel proceedings microsite for further insight into the issues that arise when an incident leads to multiple legal proceedings and/or enforcement actions.