BNP Paribas v Deloitte and Touche LLP
| Jurisdiction | England & Wales |
| Judge | Mr Justice Morison |
| Judgment Date | 28 November 2003 |
| Neutral Citation | [2003] EWHC 2874 (Comm) |
| Court | Queen's Bench Division (Commercial Court) |
| Docket Number | Case No: 2003/946 |
| Date | 28 November 2003 |
[2003] EWHC 2874 (Comm)
IN THE HIGH COURT OF JUSTICE
QUEENS BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
The Honourable Mr Justice Morison
Case No: 2003/946
Mr R Stewart QC & Mr G Chapman (instructed by Prettys Solicitors) for the Claimants
Mr D Joseph QC (instructed by Gibson, Dunn & Crutcher LLP) for the Defendant
Hearing dates: Monday 24 November 2003
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
There is an arbitration in being between BNP Paribas and Avis arising out of an agreement under which BNP effectively acquired a group of Avis' companies recently bought by Avis from Cendant, which itself subsequently merged with Avis. The arbitration is governed by the ICC Rules and three distinguished arbitrators have been appointed. The place of the arbitration is London and the 1996 Arbitration Act applies to it. The Agreement, pursuant to which the companies were acquired, is governed by the Laws of the State of New York. In the most general terms, BNP allege that Avis made false and fraudulent misrepresentations about the value of the business of the companies and, in consequence, they paid substantially over the odds for them. The amounts involved in the claim are very substantial [hundreds of millions of US$]. Avis deny that they misrepresented the value of the businesses and rely, in part, on the fact that BNP conducted its own due diligence inquiries [through accountants Ernst & Young] and also rely on the fact that the Avis' accounts for 1999 and 2000 were audited by Deloitte & Touche LLP (D & T), English auditors, and signed off without qualification. In support of Avis' case in the arbitration, a witness statement made by the relevant audit partner of D & T [Mr Mullins] has been filed. It is on the basis of the defence and the witness statement that this application has been made. No allegations are being made against D & T in the arbitration and none has been suggested in correspondence by either of the two parties.
The terms of the application are:
"that the Claimants [BNP] do have permission pursuant to CPR Rule 34.4 to issue and serve the witness summons in the form attached to this Application Notice because
1. The Defendant [D & T] has in its power, possession custody or control documents which are relevant to arbitration proceedings to which the [BNP] are a party and/or which are referred to in the witness evidence served in those arbitration proceedings.
2. The application complies with section 43 of the Arbitration Act 1996 and CPR Rules 31.14(1)(b), 31.17 and/or 34.4 and paragraph 7.1 of the Practice Direction to CPR Part 62.
The draft witness summons addressed to D & T shows that a witness is summoned to attend the Court on a date to be specified "to produce the following documents – The documents set out in Appendix 1 to the Arbitration Claim Form in this matter issued on 24 October 20003, a further copy of which is served herewith". The schedule contains some 20 items of which two have been dropped.
As part of the background, I was shown a copy of an agreement made between Avis and D & T called a "Joint Defence Agreement". This agreement recited the role played by D & T, namely that they performed "certain services for Avis, including services rendered in connection with efforts to finalise an agreed post-closing balance sheet pursuant to the [Acquisition Agreement]" and "in order to pursue an effective defence of the Arbitration, [D & T] and Avis have concluded that from time to time their interests will be best served by sharing or generating documents, factual material, mental impressions, memoranda, interview reports, litigation strategies and other information including the confidences of [D & T] or Avis – all of which will hereafter be referred to as "Defence Materials" and "it is the purpose of this Agreement to ensure that any exchange and/or disclosure of Defence Materials does not constitute a waiver of any privilege or immunity otherwise available to [D & T] and Avis respectively". This Agreement was made on April 2 2002, shortly after BNP had demanded arbitration in accordance with ICC Rules.
The other part of the background material to which I was specifically referred was a letter from the arbitral panel dated May 28 2003. The panel expressed their belief that the documents listed in the schedule shown to them [the same as that annexed to this application] "are or may be relevant to the issues in dispute in this arbitration and gives its permission to the parties to request their production from [D & T], if necessary, pursuant to section 43 of the Arbitration Act 1996." Both BNP and Avis were asking for this approval from the arbitrators. The position of Avis has changed to this extent: I am told that Avis neither supports nor opposes the present application. Avis wish to remain neutral and, although served with the Court papers they did not appear or take any part in the arguments which I heard. BNP were represented by Roger Stewart QC and D & T were represented by David Joseph QC. I am grateful to them for their help.
This application raises a point of some importance. Does the Court have power under the Arbitration Act 1996 to order a third party [that is a person who is not a party to the arbitration in question] to make disclosure of documents? Strictly, this question only arises were I to conclude that by reason of the extent of the request in this case, this is, effectively, an application for disclosure rather than an application for production of specified documents. Mr Stewart says that it is the latter; Mr Joseph says that it is the former. But as his second argument, Mr Stewart argues that the court has power to make a third party disclosure order in aid of an arbitration.
However it is dressed up, it seems to me clear that this is an application for disclosure rather than production in evidence of documents brought to the tribunal under a subpoena. The categories of documents in the Schedule are wide: for example "notes memoranda and/or other documents relating to the preparation of the statutory accounts for 31 December 1999 and the adjustments included therein" [item 2A] and items 5, 6, 7A, 13, 14, 16 and 17. Had this been an application in the classic sense of a witness being required to produce documents, the cases show that to be effective a subpoena duces tecum as it used to be called or a witness summons to produce documents as it is now called must relate to specific documents which can be identified. The court must be astute to ensure that
"what is essentially a discovery exercise, whereby the applicant is seeking production of documents with a view to ascertaining whether they may be useful rather than with a view to adducing them in evidence as proof of some fact is not disguised as an application to produce particular documents." Per Sir Donald Nicholls VC in Panayiotou & Others v Sony Music Entertainment (UK) Ltd [1994] CH 142 at page 153.
As the Vice Chancellor was saying, there is an important distinction between requiring documents to be produced as...
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Table of Cases
...330, 331 BNP Paribas & Others v Deloitte & Touche LLP, [2003] EWHC 2874 (Comm) ..............................................................................................325 491 Boxer Capital Corp v JEL Investments Ltd, 2015 BCCA 24 ............................... 84–85 British Cable & W......
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Court Involvement in Commercial Arbitration
...proceeding.” 70 This is discussed in Section H, below in this chapter. The question 67 Above note 66 at paras 38, 40, and 45. 68 [2003] EWHC 2874 (Comm) at para 13. 69 [1994] 3 HKC 263. 70 Ontario domestic Act, above note 12, s 29(4). 325 J briAn CA sEy remains whether or not other jurisdic......