Bank Mellat v HM Treasury
| Jurisdiction | England & Wales |
| Judge | Lord Justice Gross,Lord Justice Peter Jackson,Lord Justice Coulson |
| Judgment Date | 15 March 2019 |
| Neutral Citation | [2019] EWCA Civ 449 |
| Docket Number | Case No: A4/2018/2445 |
| Court | Court of Appeal (Civil Division) |
| Date | 15 March 2019 |
[2019] EWCA Civ 449
Lord Justice Gross
Lord Justice Peter Jackson
and
Lord Justice Coulson
Case No: A4/2018/2445
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM BUSINESS AND PROPERTY COURTS
COMMERCIAL COURT
Mrs Justice Cockerill DBE
Royal Courts of Justice
Strand, London, WC2A 2LL
Timothy Young QC, Amy Rogers and Rupert Paines (instructed by Zaiwalla & Co LLP) for the Appellant
David Foxton QC, Philippa Hopkins QC and Helen Morton (instructed by Government Legal Department) for the Respondent
Hearing dates: 19 and 20 February 2019
Approved Judgment
INTRODUCTION
The English Court welcomes litigants from all parts of the world. Gratifyingly, it enjoys a much prized reputation for fairness. There is no “home ground” advantage; it matters not whether the litigants are domestic, foreign, governmental or private. All are treated the same.
For all litigants, the procedure in this Court is governed by the lex fori – English law. That is the norm internationally, as a matter of the conflict of laws. Disclosure and the inspection of documents form a part of the law of procedure governed by the lex fori. On occasions, a tension can arise between the English law requirement for the inspection of documents and the provisions of foreign law in the home country of the litigant.
Where such a tension arises, it is for the Court to balance the conflicting considerations: the constraints of foreign law on the one hand, and the need for the documents in question to ensure a fair disposal of the action in this jurisdiction, on the other. That balance is struck by a Judge sitting at first instance, making discretionary, case management decisions. As is well-established, this Court will only interfere if the Judge has erred in law or principle or has (in effect) reached a wholly untenable factual conclusion.
This is an appeal by the Iranian Appellant (“the Bank”) against the judgment and order of Cockerill J, made on 19 September 2018 (“the judgment” and the “order” respectively), on the application of the Respondent (“HMT”) under CPR Part 31.19(5), requiring the production of documents in unredacted form but subject to various confidentiality provisions. As will be seen, it is common ground that production of the Iranian documents covered by the order and with which this appeal is solely concerned, would constitute a breach of Iranian law.
The background concerns a claim by the Bank for damages under the Human Rights Act 1998 (“the HRA 1998”) against HMT, in respect of loss it allegedly suffered as the result of a “financial restriction”, the Financial Restrictions Iran Order 2009 (“the 2009 Order”), made by HMT in October 2009 and held unlawful by the Supreme Court, by a majority, in 2013: Bank Mellat v HM Treasury (No. 2) [2013] UKSC 38; [2013] UKSC 39; [2014] AC 700.
In overview, the issue at the trial, fixed for June 2019, is whether the Bank can prove that the losses it allegedly suffered were caused by the 2009 Order. The pleaded quantum of the Bank's claim has been some US$4 billion; a recent amendment suggests a reduction to some US$1.7 billion, plus interest. In very broad terms, the Bank's claim divides into two parts. The first part is now put at some US$31.7 million plus, relating to specific transactions (letters of credit (“L/Cs”), bank guarantees and penalties) said to have failed in consequence of the 2009 Order. The second – and far larger part – does not turn on existing, specific transactions and includes as its most sizeable component a claim for over US$800 million relating to the Bank's share of the Iranian foreign currency L/C market; the allegation is that the Bank's existing share of that market in October 2009 was approximately 25%; but for the 2009 Order, that share would have been maintained and increased to about 35%.
The litigation is massive and complex. Though loosely described as a quantum trial, major issues of causation are live. For example, the trial is intended to determine challenges as to the lawfulness of further United Kingdom (“UK”) financial restrictions orders made in 2011 and 2012 (“the follow-on measures”). The knock-on effect on causation in respect of the Bank's claim is readily apparent. So too, questions of causation will arise with regard to measures taken elsewhere (including by the European Union (“EU”), the United Arab Emirates (“UAE”) and South Korea), allegedly attributable to HMT encouragement (“the copycat orders”). Further, insofar as it is claimed that the Bank lost business due to the 2009 Order, we are told that there will be an issue as to the extent to which other international measures (not challenged in these proceedings, such as US sanctions) had the effect of reducing Iranian trade more generally. Still further, there may be “cut-off points” as to the second part of the Bank's claim (not linked to specific transactions), turning on the meaning to be given to “possessions” within Article 1 Protocol 1 to the European Convention on Human Rights (“A1P1” and the “ECHR”, respectively).
As we understand it, some 33,000 documents have been disclosed by the Bank since 2016. Of those documents, around one third (roughly 12,500 documents) are said to contain confidential banking data in relation to identifiable customers, said to be protected under Iranian, Turkish and South Korean law – the Bank having overseas branches in Turkey and South Korea.
In a nutshell, the documents in question had hitherto been produced in redacted form. Pursuant to CPR Part 31.19(3), the Bank contended that it had a “right or a duty to withhold” inspection of the documents in question on the grounds that they contained confidential information, such that production of the documents in unredacted form would expose the Bank to the risk of criminal prosecution in Turkey, Iran and South Korea.
It is unnecessary to trace the history of the parties' respective positions. Suffice to say that by the time the matter reached this Court, the Bank's case was that customer identities were to be redacted and the needs of the trial could be catered for by way of ciphers representing those identities. For its part, HMT contended for the production of unredacted documents but only to members of a “confidentiality ring” (“the confidentiality club”) and in ciphered form, with a master list of cipher codes being available to members of the confidentiality club – and not for use in open court.
Cockerill J ruled that the risk of prosecution under Turkish law was such that no master list should be provided to HMT in respect of documents in Turkey. The Turkish aspect of the case is now academic as the Bank has recently indicated that it will not be pursuing its claim in respect of losses allegedly suffered by its Turkish branch.
With regard to the South Korean documents, the Judge ruled in favour of HMT and the Bank has not appealed.
As already noted, this appeal is solely concerned with the Iranian documents where the Judge ruled in favour of HMT – the parties essentially dividing on the production of a master list accessible to members of the Confidentiality Club.
It is to be underlined that the Bank resists the order (made by Cockerill J) root and branch. The Bank has not sought to engage with the constitution of the Confidentiality Club, for example by seeking to confine its membership. Nor has the Bank adopted any intermediate position on the documents covered by the order; there is no fall-back contention that even if some documents must be produced unredacted others must not. The Bank's position is all or nothing.
THE JUDGMENT AND THE ORDER
After recounting the history of the proceedings, Cockerill J helpfully outlined their scope as follows (at [12]):
“A number of interesting legal issues arise, including questions as to causation, whether the interference in the Bank's enjoyment and control of its possessions has been caused by the 2009 order, the extent to which it can prove its loss, whether an award of damages is necessary to afford just satisfaction to the Bank and, if so, in what sum. In this respect it is relevant to note that there has been a recent amendment to the defence in April 2018 to plead that by reason of the Bank's own conduct and/or its ownership and/or control by the Government of Iran no order for damages is appropriate. Alternatively, there should be a significant reduction in any damages awarded.”
The Judge then went on to deal with the topic of sampling (which does not arise at least directly on this appeal) before turning to the question of redactions. After noting the parties' positions (as they then were), Cockerill J observed (at [47]) that the “relevant legal principles were not very much in issue”:
“It is agreed that obligations of confidentiality arising under some other legal system do not provide an automatic entitlement on a party litigating in this forum to withhold documents from disclosure and it is a matter for the court's discretion whether production should be ordered.”
After citing authority (to which I shall return), the Judge (at [50]) noted the HMT submission that it was relevant to the Court's discretion “how real any risk of prosecution in the foreign state is found to be”. Ultimately (at [51]), it was agreed between the parties that:
“….the question is a discretionary one. The issue….is to what extent the fact that risk is invoked by the claimant affects the principle and to what extent the interest of the litigant trumps those of the party claiming that it is not legitimate to comply.”
Coming to her conclusions, the Judge (at [79]) did not accept that there was “exactly the same presumption in favour of disclosure” where, as here, the disclosure of confidential information was said to be contrary to...
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