ENGLISH DISCLOSURE AND FOREIGN BLOCKING STATUES Graeme Halkerston and Michael Furness QC

1. ENGLISH DISCLOSURE AND FOREIGN BLOCKING STATUESGraeme Halkerston and Michael Furness QC

2. Why is this topical? The Secretary of State for Health and Others v. Servier Laboratories Limited [2013] EWCA 1234

3. What is a blocking statute? A statute which criminalises the provision of information or documentation in the course of legal proceedings outside the jurisdiction unless the provision of information is through a defined domestic or international gateway.

4. European Model Generally drafted with a view to curbing perceived encroachment of US litigation on domestic business. On face requires disclosure through Court-to-Court process. Classic example – French Law 80-538, amending Law 66-678 Article 1 bis: Without prejudice to international treaties or agreements and laws and Regulations in force, it is prohibited for any person to request, search for or communicate, in writing, orally or in any other form, documents or information of an economic, commercial, industrial, financial or technical nature for the purposes of establishing evidence in view of foreign judicial or administrative proceedings or in relation thereto. Article 2 The persons referred to in Articles 1 and 1 bis shall promptly inform the competent Minister, upon the receipt of any request concerning such communications. Article 3 Without prejudice to harsher penalties provided for by law, any breach of the provisions of Articles 1 and 1 bis of the present law shall be punished by a six month imprisonment and a fine of 18,000 Euros or either one of these penalties only”

5. Offshore Model The Offshore Model generally imposes obligations of confidentiality on professionals in receipt of confidential information broadly similar to Tournierprinciples, but criminalises improper disclosure. Key element of many Offshore Model statutes is the need to apply to the OFC Court for directions prior to the disclosure of any information. The Confidential Relationships (Preservation) Law is the classic example of the Offshore Model.

6. A Third Model? Data Protection • These issues are arising in the context of foreign data protection laws. • Is indication the OFCs are moving towards replacing classic Offshore Model statutes with data protection legislation. • Critical issue is whether legislation gives general disclosure gateway for legal compulsion and whether that applies to foreign litigation

7. What does it apply to? Any information gathering process against a litigation participant or third party subject to information gathering jurisdiction of the Court • Standard and specific disclosure • Part 18 Requests • Oral testimony by witnesses • Insolvency document gathering processes • Insolvency oral examinations • Third party evidence, e.g. Norwich Pharmacal applications

8. Key Cases – A Whirlwind Tour • Mackinnon v. Donaldson, Lufkin and Jenrette Securities Corporation (1986) • MS Heidberg v. Grosvenor Grain and Feed Company (1993) • Brannigan v. Davison (1997) • Morris v. BanqueArabe(2000) • In re Casterbridge(2002) and (2003) • Masri v . Consolidated Contractors (2011) • Elmo-Tech Ltd v. Guidance Ltd (2011) • Secretary of State for Health v. Servier Laboratories (2012) and (2013) • National Grid Electricity Commission Plc v. ABB (2013)

9. Morris v. Banque Arabe (2000) Neuberger J. First CPR case. Good place to start. After BCCI collapse, liquidators sought disclosure from French bank as part of s.213 claim. Bank provided lists but objected to inspection on basis of French statute, arguing the Hague Convention process should be used.

10. Morris v. Banque Arabe (2000) Neuberger J. A party could object to disclosure or inspection under CPR because of duty of confidence under a foreign law. Was then a discretion, but objecting party needed to show “real risk of prosecution”. Court would normally lean in favour of ordering disclosure. Reviewed evidence on the French statute Found production of document would infringe the statute. But the chances of prosecution were “weak”, “very low”, “purely theoretical”, “nil, practically speaking”. Considered Hague Convention route. Rejected, in part because of Bank’s delays and in part because not clear it would be effective.

11. French Cases before Servier Most of the reported cases deal with the French statute. But this gives a misleading impression of the balancing exercise of the Court when exercising discretion because an argument based on that statute is so weak on the key “risk of prosecution” issue. • There has been only one recorded prosecution in the 40 plus years of the statute. • Judicial notice that French companies gave disclosure in England regularly. • Expert evidence was that almost no chance of prosecution.

12. Servier– the final blow to the French statute? Disclosure issues in two competition cases. French companies relied on the statute. Was another argument, namely that the Taking of Evidence Regulation was mandatory for the English Court. The Regulation argument was rejected by the Court of Appeal. Court of Appeal confirmed that the first instance exercise of discretions in favour of disclosure could not be challenged.

13. Servier– the final blow to the French statute Core points from judgment on the blocking statute issue: • Confirmed at appellate level that there was a discretion. • Affirmed the “real risk of prosecution” approach. • The French companies could not establish a real risk of prosecution. • Strong rejection of court-to-court processes. Party-to-party disclosure was “plainly the more appropriate course”.

14. Brannigan(1997) PC(NZ) Cook Islands confidentiality law issue arose with witnesses to Winebox Inquiry. PC held that self-incrimination only could be raised which risk was of incrimination for a domestic crime. But PC indicated, albeit obiter, that it would appropriate for Court to have discretion on requiring the provision of evidence that would constitute a criminal offence.

15. Casterbridge – The Offshore Model • Casterbridge was a St. Vincent and Grenadines company. Director of C was CDL, another St. Vincent company. J was English resident director of CDL. • C ran a timeshare development in Essex and was wound up in public interest in England. • Official Receiver sought oral examination of J. J objected on basis of St. Vincent statute, which was word for word same as Cayman statute. J issued a s.4 application.

16. 1st case (2002) Burton J. held: • Unlikely St. Vincent Court would prevent disclosure of information. • Risk of criminal sanction was relevant but not as great as J held out. • The information was very important to Official Recevier. • Balancing the factors, ordered public examination. • Hope was the St. Vincent Court would follow English order.

17. 2nd case (2003) • In fact St. Vincent Court refused to permit disclosure of information on the s.4 application. J applied to set aside order. • But before 2nd hearing St. Vincent repealed the statute. • This second point made outcome clear, since it was “wholly unrealistic” that J would face sanction given the repeal.

18. What are client’s interests? • Limit disclosure • Avoid conflict between OFC and English obligations • Protection from third party objections and claims

19. Discretionary factors • Is the a real risk of prosecution? Gateway issue. Need evidence of normativity of blocking statute. • Court will lean in favour of disclosure. • How important are the documents? • What is the disclosing party’s links to England and OFC? • Are other information gathering processes available? • Conduct of disclosing party.

20. How approach Offshore Model issue? • Do not wait until disclosure arises and then raise issue. • Be seen to be proactive. • Take steps in the OFC: –Activity –Narrows down issues –Increases evidence of risks • Disclosure is not binary. Are range of protections to raise both in OFC and in England. (Phoenix and Berezovsky)

21. Thank you

22. REMEDIES AGAINST THIRD PARTIES FOR BENEFICIARIES ENTITLED UNDER A WILL OR INTESTACYJames McCreath