BNP Paribas v Deloitte & Touche LLP [QBD (Comm)]
| Jurisdiction | England & Wales |
| Judge | Morison J |
| Judgment Date | 28 November 2003 |
| Date | 28 November 2003 |
| Court | Queen's Bench Division (Commercial Court) |
Queen's Bench Division (Commercial Court).
Morison J.
R Stewart QC and G Chapman (instructed by Prettys Solicitors) for the claimants.
D Joseph QC (instructed by Gibson, Dunn & Crutcher LLP) for the defendant.
The following cases were referred to in the judgment:
Panayiotou v Sony Music Entertainment (UK) LtdELR[1994] Ch 142.
Sedgwick Group Plc v Johns-Manville Fibreboard Corp (The Asbestos Insurance Coverage Cases) [1985] 1 WLR 331.
Sunderland Steamship P & I Association v Gatoil International Inc (The Lorenzo Halcoussi)UNK[1988] 1 Ll Rep 180.
Wakefield v OuthwaiteUNK[1990] 2 Ll Rep 157.
Arbitration Disclosure of documents Whether court had power to order third party to arbitration to make disclosure of documents CPR, r. 31.17, 34.4 Arbitration Act 1996, s. 43.
This was an application which raised the question whether the court had power under the Arbitration Act 1996 to order a third party to the arbitration in question to make disclosure of documents.
There was an arbitration in being between BNP Paribas and Avis arising out of an agreement under which BNP effectively acquired a group of companies bought by Avis from Cendant, which itself subsequently merged with Avis. The arbitration was governed by the ICC Rules and three arbitrators had been appointed. The place of the arbitration was London and the Arbitration Act 1996 applied to it. The agreement, pursuant to which the companies were acquired, was governed by the laws of the state of New York. In general terms, BNP alleged that Avis made false and fraudulent misrepresentations about the value of the business of the companies and, in consequence, BNP paid substantially over the odds for them. The amounts involved in the claim were very substantial (hundreds of millions of US$). Avis denied that they misrepresented the value of the businesses and relied, in part, on the fact that BNP conducted its own due diligence inquiries (through accountants Ernst & Young) and also relied 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's case in the arbitration, a witness statement made by the relevant audit partner of D & T had been filed. No allegations were made against D & T in the arbitration. Shortly after BNP had demanded arbitration in accordance with ICC Rules Avis and D & T entered into a joint defence agreement. That agreement recited that D & T had 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 that 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 that 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.
BNP applied pursuant to CPR, r. 34.4 and s. 43 of the Arbitration Act 1996 for D & T to produce certain classes of documents which were said to be relevant to the arbitration proceedings.
Held, dismissing the application:
1. However it was dressed up, it seemed clear that the application was one for disclosure rather than production in evidence of documents brought to the tribunal under a subpoena. To be effective a witness summons to produce documents had to relate to specific documents which could be identified. Here, the request was for classes of documents and the plain purpose of the application was to enable BNP to go through them to see if they could undermine the reliance made in the defence on work done by D & T. The application was not for the production in evidence of specific, identified documents but for disclosure from a third party.
2. Section 43 of the 1996 Act did not give the court, in respect of arbitration proceedings, power to order disclosure from a third party. That result was not surprising. Arbitration was a private process of adjudication agreed to by the parties to it. The privacy of the process and the autonomy of the parties distinguished arbitration from actions in the courts, and there should be no automatic assumption that one could read across from one to the other. There was no compelling need for the courts to be given an equivalent power to CPR, r. 31.17 to order disclosure against a third party to an arbitration.
3. There was nothing in the Uncitral Model Law which suggested that the court should assist with the process of disclosure. Indeed, disclosure questions had been taken from the court (by the repeal of s. 12(6) of the Arbitration Act 1950) and given back to the arbitral tribunal. That was recognised by s. 33 and 34 of the 1996 Act including s. 34(2)(d) which made disclosure by the parties a matter for the arbitral tribunal.
4. The application was for the production of classes of documents as opposed to an application for the production in evidence of specific identified documents. Accordingly the application did not fall within s. 43 because it had been too widely framed. It was an application which in court proceedings would have been apt...
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