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England and Wales High Court (Chancery Division) Decisions
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Cite as:  EWHC 70 (Ch)
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Rolls Building, Fetter Lane, London, EC4A 1NL
B e f o r e :
| IN THE ESTATE OF PLATON ELENIN (also known as BORIS BEREZOVSKY) Deceased JOINT STOCK COMPANY "AEROFLOT – RUSSIAN AIRLINES"
THE GOVERNMENT OF THE SAMARA REGION OF THE RUSSIAN FEDERATION
Mr Alexander Winter (instructed by Addleshaw Goddard LLP) for the First Respondent
The Second Respondent did not appear and was not represented
Mr William Henderson (instructed by Signature Litigation LLP ) for the Third to Sixth Respondents
Hearing date: 20 December 2013
Crown Copyright ©
MR JUSTICE MORGAN:
The background facts
The rival positions
The test to be applied
"It is sometimes said that in taking this element into account, the court has to perform a balancing process. The metaphor is one well worn in the law, but I doubt if it is more than a rough metaphor. Balancing can only take place between commensurables. But here the process is to consider fairly the strength and value of the interest in preserving confidentiality and the damage which may be caused by breaking it; then to consider whether the objective - to dispose fairly of the case - can be achieved without doing so, and only in a last resort to order discovery, subject if need be to protective measures. This is a more complex process than merely using the scales: it is an exercise in judicial judgment."
(1) is disclosure of the information necessary for the purpose of disposing fairly of the proceedings;
(2) can the information be provided to the court some other way not involving disclosure in breach of confidentiality;
(3) is it open to the court to place restrictions on the use of the information;
(4) if the answer to (3) is "yes", should those restrictions be imposed?
The importance of the confidential information
The alleged consequences of disclosure
"6. The late Mr Berezovsky and the AP family agreed the settlement of litigation between them (the "Settlement") in September 2012. The terms of the Settlement are confidential, and I am informed that the present application is not for disclosure of, or reliance by Ms Berezovskaya on, the express terms of that agreement, but on the AP Confidential Information (as defined in the Order of Mr Justice Morgan on 30 October 2013).
7. I was involved in the negotiation of the Settlement on behalf of the AP Family. The confidentiality of the Settlement was an important aspect of it for both the AP Family and Mr Berezovsky. On the AP Family's part, the confidentiality was not simply about keeping private their family finances. More important was the experience of years of living under the taint that a connection with Mr Berezovsky would have on assets. It is considered toxic in Russia to be in business with, or to do a deal with, Mr Berezovsky and the AP Family have lived with the difficulties of being connected with Mr Berezovsky for many years (notwithstanding that Mr Berezovsky and Mr Patarkatsishvili separated their business interests in 2006, for exactly those reasons).
8. Since his departure from Russia and his conviction in absentia for fraud and money laundering (among other crimes), attempts have been made to attack Mr Berezovsky's assets worldwide. Those attacks have often stemmed from the Russian government, and have also been undertaken by Aeroflot (which is majority owned by the Russian government – see page 1 of BM2) in a number of jurisdictions.
9. It was therefore important that any deal done with Mr Berezovsky would be private, hence why stringent confidentiality restrictions were contained in the Settlement. What the AP Family did not want, and fear would materialise from a disclosure of the terms of the Settlement, was for attacks purportedly aimed at Mr Berezovsky to be aimed at them and assets belonging to them, causing significant destruction of value and potential danger to individuals.
10. By way of supplement to what I said in Marson 1: the root of the current problem for the AP Family is that there are, even since his death, continuing efforts to attack assets linked, or thought (incorrectly) to be linked, to Mr Berezovsky. The AP Family's assets have been and continue to be the subject of large scale attacks by the Russian Government on that exact basis. It is exactly those attacks which the AP Family fears will get worse and be more difficult to deal with if the AP Confidential Information is disclosed to Aeroflot or becomes public. Even the publication of information only as to how much has been and will be paid by the AP Family under the Settlement would be prejudicial because by disclosing the amount those trying to link the AP Family to BB would feel themselves able (wrongly) to assert more strongly that there was such a linkage. The Russian State (through the Russian prosecutor's office) and Aeroflot are the main institutions which are trying to establish such a linkage. The coincidence of their aims, the size and state ownership of Aeroflot, and the vast legal and practical powers wielded by the Russian state means that disclosure to Aeroflot would as a practical matter result in the disclosed material being available for those purposes. I do not by that suggest that breach of the restrictions on use of the witness evidence, or of any express order of the Court governing use of documents would be deliberate on the part of any individual within Aeroflot, but that the size of the organisation and the pressures and desires within Russia to attack anything or anybody which or who might be suggested had a connection to Mr Berezovsky, mean that in reality confidentiality of the information could not be maintained if it was disclosed to Aeroflot. I have less knowledge of the Government of the Samara Region, but it is clearly an organ of the state.
11. Some of the attacks already undertaken against the AP Family's assets are set out below. I have in this statement only set out the very headline details or matters which I refer to in more detail in Marson 1, and I have not named the businesses in question so as to not worsen the problems described by giving any false linkage with Mr Berezovsky, for the reasons more fully described in Marson 1.
Attacks on the assets of the AP Family based on alleged links with Mr Berezovsky
12. The AP Family are the ultimate owners of several large companies which operate in Russia and other countries which used to be in the Soviet Union and are now in the Commonwealth of Independent States (the "CIS").
13. Since before the Settlement, and (notwithstanding Mr Berezovsky's death) to this day, many of those assets have been and are under constant attack by authorities in Russia, and by the authorities in other CIS states (at the instigation of the Russian authorities). In very headline terms, those attacks include the following:
(a) Freezing injunctions taken out over the shares and property of various companies in both Russia and other CIS states;
(b) Criminal investigations being opened against senior management of those companies, resulting in individuals having their homes searched, and being forced to flee the countries in which they live for fear of arrest. As well as the personal impact on relevant individuals, the financial and reputational impact of those disruptions for the relevant companies has been significant;
(c) Freezing of company bank accounts for all payments except tax and payroll payments; and
(d) The companies being refused financing based on the governmental action, leading to cashflow crises."
(1) The evidence contained in it is somewhat general as Mr Marson says that he does not want to go into more detail than is necessary. It is possible to criticise the general nature of some of this evidence on the ground that, if the matters described as attacks on the assets of the AP Family have already occurred, then Aeroflot and the Russian Federation will know about it and there ought not to have been a difficulty in Mr Marson giving the court more specific evidence on the subject.
(2) It is clear from the statement that Aeroflot and the Russian Federation are already aware that there were links and business associations between the deceased and the AP Family. Indeed, the existence of the AP Settlement has already been referred to in open court at earlier hearings in these, or connected, proceedings.
(3) It is the AP Family's case that Aeroflot and the Russian Federation have already sought to "attack" assets in the name of the AP Family on the ground that those assets are in some relevant way connected to the deceased. Mr Marson gives some information as to the nature of the attacks but it is not possible to form any view as to whether the legal processes initiated by Aeroflot or by the Russian Federation are well founded or based on good arguable grounds which have yet to be determined or are ill founded and illegitimate and/or known to be ill founded and illegitimate. Plainly, the conduct complained of would be more disturbing if it were known to be ill founded and illegitimate. I suppose that the AP Family might say that even if the conduct complained of were well founded, they do not want to be exposed to it and they wish their affairs to remain confidential, but a court is likely to be less sympathetic to a case put forward on such a ground, if it were to be put forward.
(4) If the AP Family's case is that previous attacks on their assets have been ill founded, then I can understand why they do not wish to refer to the existence of further assets which they own and thereby expose themselves to ill founded attacks on those assets also.
(5) I find it difficult to assess the reality and the substance of the concerns expressed in the evidence but I am prepared to accept that the evidence shows a genuinely held fear of harm, possibly even serious harm, to the interests of the AP Family.
Possible restrictions on the use of the information
"(1) Restricting the disclosure of the AP Confidential Information, or its redacted or codified version, to a very limited number of persons within Aeroflot (preferably lawyers) – being the persons who are essential to giving instructions in relation to these proceedings
(2) Such disclosure to be by way of provision of a single hard copy of the AP Confidential Information, or its redacted or codified version, which (as per para. 4 of the 30/10/13 order) should not be permitted to leave one specified office; be inspected only by the named persons and not itself be copied, scanned or otherwise converted into electronic form.
(3) Extracting or imposing express undertakings or confidentiality orders (i) so as to maintaining confidentiality as per paras. 5 and 6 of the 30/10/13 order and (ii) expressly providing that use shall not be made of it otherwise that for the purpose of these proceedings.
(4) Ordering (subject to any further order of the court, such order shall not be made without at least 7 days notice to the AP Family) that the AP Confidential Information shall not be made public or disseminated outside the specified confidentiality ring and shall not be read to or otherwise provided to the court in a manner which would or might have that result; and in particular that (i) any part of any witness statement containing any of the AP Confidential Information shall not be open to inspection (CPR 32.13); (ii) any witness statement containing any of the AP Confidential Information shall not be put in evidence at a hearing in public (CPR 32.12(2).
Further or alternatively,
(5) Ordering redaction and/or codification of the most sensitive parts of the AP Confidential Information"
"Four questions appear to me to arise on this appeal. First, is it shown that, if the plaintiffs are given an unrestricted right of inspection of the defendants' documents, there is a real risk that they would use such right for a collateral and harmful purpose? Second, if so, does the court have power to impose restrictions on the plaintiffs' right of inspection in order to prevent or discourage such use? If the court has such power, third, what kind of restrictions can be imposed? Fourth, what method should the court use to impose them?"
(1) that there was a real risk that the plaintiffs would use the disclosed documents for a collateral and harmful purpose in harassing the patients;
(2) that in such a case, the court had power to impose restrictions on the use of the disclosed documents to prevent or discourage use for a collateral purpose;
(3) the restrictions which might be imposed included restrictions on the persons who might inspect and take copies of the documents, on the distribution of copies of the documents and the dissemination of the contents of the documents; and
(4) suitable restrictions could be imposed by making an order allowing inspection only on terms or by making an order allowing inspection only subject to undertakings given by the party concerned.
"With regard to the second question, the principles applicable are, in my view, as follows. 1. A party to litigation has a prima facie right of unrestricted inspection of the documents of which discovery has been made by the other party so far as may be necessary to dispose fairly of the case or for saving costs. 2. A party is not entitled to use his right of inspection for any collateral purpose. 3. If it is shown that there is a real risk of a party using his right for a collateral purpose, the court has power to impose restrictions on such right in order to prevent or discourage him from doing so. I think that this power is derived from the inherent jurisdiction of the court to prevent abuse of its process rather than from anything in R.S.C., Ord 24 itself. … The power in question appears to have been exercised only, or almost only, in cases involving secret trade processes or analogous matters: see Warner-Lambert Co v Glaxo Laboratories  RPC 354, and the authorities there cited.
In my view, however, the principle on which the power has been exercised in such cases is of general application and applies in particular to a case like the present one where the collateral purpose potentially involved is the harassment of third parties."
"But who are the plaintiffs? A company, like the plaintiffs, must act and inspect through agents and I can see nothing outrageous in requiring some limitation on the dissemination of confidential information to a company. Why should confidential information be disseminated and not restricted to as few persons as possible and as necessary for justice and a fair disposal of the action?"
"Similarly, where the whole object of the proceedings is to protect a commercial interest, full disclosure may not be possible if it would render the proceedings futile. This problem occurs in intellectual property proceedings. It is commonplace to deal with the issue of disclosure by establishing "confidentiality rings" of persons who may see certain confidential material which is withheld from one or more of the parties to the litigation at least in its initial stages. Such claims by their very nature raise special problems which require exceptional solutions. I am not aware of a case in which a court has approved a trial of such a case proceeding in circumstances where one party was denied access to evidence which was being relied on at the trial by the other party."
The decision in Church of Scientology was cited to the Court of Appeal in Al Rawi but was not mentioned in the judgments of that court and it was not cited to the Supreme Court in that case.
"41. In patent and similar cases it may be necessary to limit severely the officers or employees of a party who may have access to the evidence. But as Lord Dyson said, he was not aware of any case in which the trial had proceeded without any access by a party to the evidence, and Mr. Marshall was unable to cite one.
42. As I mentioned in court on Tuesday, 24 April 2012, I asked the current specialist patent judges, Kitchin LJ, Floyd J and Arnold J, whether they had any experience, either at the bar or on the bench, of such a trial. None of them could remember any instance of it.
50. In the light of the decision and discussion in Al Rawi, it is my view that at common law the court has no jurisdiction to deny a party access to the evidence at trial. But if the jurisdiction does exist, it is in my judgment so exceptional as to be of largely theoretical interest only."
"I take the view that following the intense scrutiny of the legal principles and the evidence before the court, which occurred at the hearing and which is one of the great advantages of an oral hearing, it became apparent for reasons quite other than what was reported by the current patent judges that the application being made by Mr. McKillen was on principle quite unsustainable. But I shall need to consider, and would have needed to consider in any event, the grounds on which the application was made so far as the evidence is concerned and it is of course relevant to do so in the light of what is proposed in that letter."
"74. It will be apparent therefore that there was no conceivable basis for an order that the defendants are not to have full access to all the evidence at trial, even assuming that I had jurisdiction to make such an order. Nor is there any basis for a continuation of a regime which denies the defendants access to the documents disclosed by Mr. McKillen which are, as I have mentioned, until used in court, subject to the duty not to use otherwise than for the purposes of the proceedings.
75. The issue which therefore arises is whether I should accede to the request made in counsel's letter to impose terms on the defendants as regards their access to documents used in open court. I shall not do so for two principal reasons. First, I do not consider that the evidence justifies any such order. Secondly, in so far as any alternative formed part of Mr. McKillen's application, it was touched on very lightly and there was no discussion of the principles applicable and indeed whether the court could and, if so, on what grounds would impose these restrictions in relation to documents used in open court. It seems to me an area in which the court would wish to be satisfied as to the jurisdictional basis of making any such order and the relevant principles. No attempt was made to develop this part of the case and, quite rightly, the defendants' counsel did not respond to a case which had not been put.
76. I think on both those grounds it would not be appropriate to impose the restrictions suggested."
(1) Restricting the disclosure of the AP Confidential Information to certain named persons within Aeroflot (probably a small number of persons) – being the persons who are reasonably needed to give instructions in relation to these proceedings.
(2) In addition to disclosure to Aeroflot's lawyers in accordance with the order of 30 October 2013, such disclosure to be by way of provision of a single hard copy of the AP Confidential Information to each named person so that each hard copy is not to leave a specified office for each named person; may be inspected only by the named persons and may not itself be copied, scanned or otherwise converted into electronic form.
(3) On terms that each named person shall give an express written undertaking (i) to maintain the confidentiality of the information and (ii) that use shall not be made of it otherwise than for the purpose of these proceedings.
(4) The parties, and the AP Family, are to have permission to apply as to how the AP Confidential Information shall be dealt with at the hearing of the substantive applications and as to whether such hearing, or any part of it, should be in private.
(5) The parties, and the AP Family, are to have permission to apply as to the terms which should be imposed as to the destruction or return of the AP Confidential Information at the conclusion of the substantive applications.
The position of Samara