Disclosure - Striking The Right Balance Between A Fair Trial In The English Courts And The Risk Of Prosecution Abroad

To order limited disclosure or not to order limited disclosure - striking the right balance between a fair trial in the English Courts and the risk of prosecution abroad

SUMMARY

"If you join the game you must play according to the local rules"1, as the adage goes.

In Bank Mellat v Her Majesty's Treasury2, the Court of Appeal had to consider the right balance between the need to fairly dispose of English proceedings brought by Bank Mellat (the "Bank"), and the risk to the Bank of prosecution in Iran if it complied with the English Court's order for unredacted disclosure.

The Court of Appeal upheld the decision of the first instance judge that, notwithstanding the attendant risk of criminal prosecution in Iran, certain unredacted documents be produced to a confidentiality club. The Court of Appeal ruled that the unredacted customer identities to be disclosed were highly relevant to the Bank's claim for very substantial damages, based on an alleged loss of custom as a result of international sanctions.

In a decision underlining the potential for conflict between the laws of different jurisdictions, the Court of Appeal held that the ability of the English Courts to conduct proceedings in accordance with their own law and procedure should not be overridden by foreign law, even when compliance with the English Court rules entailed an actual risk to a party of prosecution abroad as a result.

BACKGROUND

The case concerned a complex claim brought by the Bank against Her Majesty's Treasury (the "Treasury") in respect of losses allegedly suffered by the Bank as the result of sanctions against Iran, introduced by the Treasury in 2009. Two broad categories of losses were claimed; the first involved specific transactions said to have failed in consequence of the sanctions, whilst the second, far larger, category, related to the Bank's anticipated loss of market share of the Iranian foreign currency letter of credit market.

At first instance, the Bank had been ordered, during disclosure, to produce documents in unredacted form but subject to various confidentiality provisions, despite the fact that it was common ground between the Bank and the Treasury that compliance with the first instance order would constitute a breach of Iranian law.

In appealing the first instance decision, the Bank sought permission to produce documents in a more restrictive, unredacted form, arguing that more extensive disclosure would expose the Bank to a risk of criminal...