The Libyan Investment Authority (incorporated under the laws of the State of Libya) v Societe Generale S.A. and Others
| Jurisdiction | England & Wales |
| Judge | Mr Justice Hamblen |
| Judgment Date | 26 February 2015 |
| Neutral Citation | [2015] EWHC 550 (QB) |
| Court | Queen's Bench Division |
| Docket Number | Claim No: 2014 Folio 260 |
| Date | 26 February 2015 |
2015 EWHC 550 (QB)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice
Rolls Building
Mr. Justice Hamblen
Claim No: 2014 Folio 260
(otherwise known as Walid Giahmi or Walid El-Giahmi)
Mr. R. Masefield QC, Mr. E. CummingandMr. R. Blakeley (instructed by Enyo Law LLP) appeared on behalf of the Claimant.
Mr. A. Polley and Mr.S. Phipps (instructed by Herbert Smith Freehills LLP) appeared on behalf of the First to Fourth Defendants.
Mr. P. Girolami QC, Mr. G Hayman and Mr. T. Richards (instructed by Mishcon de Reya LLP) appeared on behalf of the Fifth Defendant.
Mr. A. Hunter QC and Mr. A. Scott (instructed by Swan Turton LLP) appeared on behalf of Person B.
Thursday, 26 February 2015
(12.00 pm)
APPROVED JUDGMENT
Introduction
This is a restored CMC listed by order of Eder J, made on 6 February 2015, to determine whether and on what terms an order for a confidentiality club made by Eder J on 23 January 2015 (the "confidentiality club order") should be continued.
The purpose of the confidentiality club order is to keep confidential the identities of 20 individuals (Persons A to S and Person U the "relevant individuals") who are identified in the banking documents of the fifth defendant, Mr Giahmi, as recipients of funds from him and of three others (Persons T, V and W) who are otherwise identified in such documents. The documents in question are relatively few, being 56 documents running to 124 pages.
The main issues for present determination are:
(1) whether the confidentiality club should be maintained in respect of Persons D, L, N and R;
(2) whether Mr Ali Baruni, a consultant to the claimant, should be admitted to the confidentiality club.
Background
The Libyan Investment Authority ("LIA"), the named claimant, is a sovereign wealth fund of the State of Libya. These proceedings, issued on 7 March 2014, make allegations of bribery and corruption in connection with five transactions between November 2007 and July 2009 (while Colonel Gaddafi was still in power) between the LIA and the SocGen defendants (the "disputed transactions").
The first to fourth defendants (the "SocGen defendants") paid Mr Giahmi through his Panamanian company Leinada, which is now dissolved, five payments totalling about US$58 million (the "Leinada payments") in connection with the disputed transactions.
The LIA alleges that the Leinada payments were made for fraudulent and corrupt purposes with the object of directly or indirectly influencing the LIA's decision to enter into the disputed transactions by the payment of bribes or the making of threats.
The defendants' case is that the Leinada payments were payments for deal-making and consultancy services which Mr Giahmi had rendered to SocGen and which were not out of the ordinary course of legitimate business.
A central issue in these proceedings is the ultimate destination of the Leinada payments. The case for the LIA is that part of the Leinada payments were paid as bribes to representatives of the LIA; further or alternatively that part of the Leinada payments were paid "to the personal benefit of members of the Gaddafi family and/or their representatives and in particular Mr Giahmi", which individuals then sought to influence the LIA's decision making by the making of threats.
Mr Giahmi denies this allegation. He contends that the allegations that he was a "representative" of the Gaddafi family and involved in bribery or the making of threats are wholly false.
Mr Giahmi pleads specifically to the alleged destination of the Leinada payments at paragraph 28.5 of his Defence as follows:
"The Leinada payments were transferred by Leinada to Mr Giahmi in their entirety and were solely used for his own legitimate purposes. No part of the Leinada payments was paid to any LIA employee, Libyan leader or public official. Mr Giahmi will give full disclosure of relevant records and will rely at trial upon expert forensic accountancy evidence, verifying the legitimate destination and (to the extent possible) present whereabouts of the proceeds of the Leinada payments."
At the CMC before Eder J on 12 November 2014, the LIA made an application in relation to paragraph 28.5 of Mr Giahmi's defence for early disclosure and inspection of bank and accounting documents relating to Mr Giahmi's receipt, transfer and/or use and the present whereabouts of the Leinada payments (the "relevant records").
Eder J ruled that early inspection of the relevant records was appropriate because it would have the effect of giving the LIA further information of paragraph 28.5 of Mr Giahmi's defence and would allow the LIA to consider at as early a stage as possible whether to approach the recipients of funds with a view, for example, to seeking disclosure or to add additional defendants.
Eder J also accepted a suggestion, initially made by Mr Masefield QC for the LIA, that a confidentiality club could be established by agreement between the parties. Eder J accordingly made the CMC order in a form requiring Mr Giahmi to give disclosure and inspection of the relevant records by 29 January 2015, but providing that none should be given before the parties had agreed a confidentiality club, in default of which the matter should be restored to court, and giving Mr Giahmi liberty to apply by 19 January 2015 for an extension of time to comply with the disclosure and inspection obligations.
The CMC was restored to court and was heard before Eder J on 2 January 2015. The issues at that stage were: (1) whether there should be a confidentiality club at all; (2) whether Mr Baruni should be admitted to the club; (3) whether two in-house lawyers employed by the SocGen defendants should be admitted to the club; and (4) how many external solicitors, barrister and forensic accountants should be admitted.
Eder J adjourned the determination of issues 1 to 3 until after Mr Giahmi had provided the relevant records but ordered a confidentiality club in the interim to which only external lawyers and forensic accountants were admitted.
On issue 4, as to which Mr Giahmi's position had been that the other parties were proposing too large a number of external representatives for inclusion within the club, Eder J indicated that he was provisionally minded to rule against Mr Giahmi on the point and Mr Giahmi did not maintain his objection.
On 29 January 2015, Mr Giahmi gave inspection by the provision of copies of 15 files of relevant records (367 documents and 792 pages) pursuant to paragraph 3 of the case management order and gave disclosure of relevant records no longer in his control. Mr Giahmi gave supplementary inspection of relevant records in the week commencing 2 February 2015.
Copies of the relevant records were provided to the other parties free of any specific confidentiality regime and subject only to the usual prohibition against collateral use. But 56 of the relevant records so provided (the "sensitive relevant records") were redacted to protect the identity of individuals identified therein. Unredacted versions of the sensitive relevant records have been provided only within the confidentiality club. Mr Giahmi has provided the other parties with a confidential schedule (the "code document") identifying each individual in question and anonymising them with a letter code, Persons A to W.
The matter came back before Eder J on 6 February 2015. At that hearing, Eder J heard argument on issue 3, identified above, namely whether in-house lawyers employed by the SocGen defendants should be admitted to the club and ruled that they should be admitted. However, Eder J adjourned to a further hearing the other confidentiality issues on the application of Person B, who, by a recently instructed solicitor who appeared on his behalf, explained that he wished to file evidence and make submissions but had not yet been able to do so.
According to the disclosure letters provided by Mr Giahmi, some US$20.4 million of the Leinada payments were passed by Mr Giahmi to Person B allegedly for onward investment on Mr Giahmi's behalf. Mr Giahmi claims not to have access to any records of these transactions.
At the resumed hearing, Person B has been represented by counsel and has relied on witness statements provided by him.
The law relating to confidentiality clubs
The starting point is that each party should be allowed unrestricted access to inspect the other parties' disclosure subject to the implied undertaking that the disclosure will not be used for a collateral purpose — see CPR31.22; Church of Scientology of California v Department of Health [1979] 1 WLR 723 per Brandon LJ at 743F.
It is for the person seeking the imposition of a confidentiality club to justify any departure from the norm. In order to do so, the proponent of the confidentiality club must establish that there is a real risk, either deliberate or inadvertent, of a party using his right of inspection for a collateral purpose — see the Church of Scientology case at 743G.
Where it is demonstrated that there is such a risk, any restriction imposed should go no further than is necessary for the protection of the right in question. As the Court of Appeal stated in Roussel UCLAF v ICI [1990] RPC 45 at 54:
"The object to be achieved is that the applicant should have as full a degree of disclosure as will be consistent with the adequate protection of the (right)."
The provision of protection by the use of confidentiality rings...
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