The Court considers "greater practical experience" of expert witnesses crucial in assessing applications for the disclosure of documents restricted by foreign law

In Aabar Holdings S.À.R.L v Glencore Plc & Others , the High Court dismissed applications to withhold documents relating to criminal investigations abroad, on the basis that disclosure could lead to prosecution under foreign law.

The judgment reiterates the threshold principles to be satisfied and provides useful guidance on the factors the Court will take into account when considering foreign law expert evidence.

Background

The main proceedings involve a shareholder class action brought by investors against Glencore and others, under s90 and s90A of the Financial Services and Markets Act 2000 in connection with alleged bribery and corruption in the business activities of certain subsidiaries within the Glencore Group.

As part of their disclosure obligations in the proceedings, the Defendants were required to disclose certain documents relating to investigations in a number of jurisdictions.

Two of the Defendants, Glencore and Ivan Glasenberg, applied to vary the disclosure order to allow them to withhold certain documents from disclosure relating to investigations by the Dutch Public Prosecutors Office ("DPPO") on the grounds that disclosure would constitute a criminal offence under the Dutch Criminal Code ("DCC"). The Claimants opposed the applications.

As is often the case, the parties' respective Dutch law experts took opposing views on the questions of whether (i) disclosure would constitute an offence under Dutch law, and (ii) there was a real risk of prosecution.

The principles

Parties seeking to derogate from their disclosure obligations on these grounds must satisfy the three-stage test derived from Bank Mellat v HM Treasury [1]:

• Stage 1: Would or might compliance with the order breach foreign criminal law?
• Stage 2: If so, is there a real (i.e. actual) risk of prosecution in the foreign state?
• Stage 3: If stage 1 and 2 are satisfied, a balancing exercise is carried out to weigh the risk of prosecution in the foreign state against the importance of the documents for inspection in the English Proceedings.

Expert evidence regarding the foreign law relied upon will often be key in determining these questions – particularly at Stages 1 and 2. The scope of foreign law expert evidence, as emphasised by the Court in this case[2], includes:

• Informing the court of the relevant contents of the foreign law;
• Identifying judgments or other authorities, explaining their status as sources; and
• Where there is no authority directly in point, assisting the English judge in making a finding as to what the foreign court's ruling would be if the issue were to arise for decision there.

The decision

The Court dismissed both applications, determining that they failed each stage of the Bank Mellat test.

The Court reached this decision largely accepting the evidence of the Claimants' Dutch law expert, over that of the Defendants' expert. The Court found the experience of the Claimants' Dutch law expert to be crucially important - particularly in relation to real world aspects of their evidence and their opinion evidence as to the actual risk of prosecution.  The Court noted the Claimants' expert's "greater practical experience of the application of the DCC and of dealing with the DPPO, in terms of how the DPPO operates and makes decisions whether to prosecute or not, as well as factors and matters likely to be considered by the DPPO in coming to that decision".

The Court also accepted the Claimants' argument that the firming up of the Defendants' expert's opinions between his first and second reports, without sufficient explanation, called into question the reliability of that evidence.

On the issue of risk of prosecution, the Court highlighted that no evidence of any prior prosecutions under the relevant provisions of the DCC had been adduced. The Court emphasised the importance of demonstrating that the foreign law provision is not just the text of an "empty vessel" but is regularly enforced so that the threat of prosecution is real.

The Court also noted that, whilst the DPPO did not consent to disclosure of the relevant documents in correspondence with the Claimant's solicitors on the basis that it would "risk damage to the criminal case", the DPPO did not actually state that it considered that disclosure would breach the DCC or that Glencore or anyone associated with it would be prosecuted.

The Court went on to state that, whilst the relevant risk to consider at Stage 2 of Bank Mellat test is the risk of prosecution, the risk of sanction can be relevant at Stages 2 and 3. In particular, at Stage 2, the potential sanction is likely to be an operative factor considered by a prosecuting authority in deciding whether to prosecute.

The Court held that it "defied belief" that there was a real risk of prosecution given the likely sanction, the uncertainty as to whether an offence had been committed, and the possibility of convincing defences which would result in a discreet fine if the prosecution succeeded. 

When considering the balancing exercise at Stage 3, the Court rejected Glencore's suggestion that the limited number of documents (three in total) justified their non-disclosure. The Court made clear that "an individual document can, in of itself, be important", particularly a document generated by an investigating authority. However, the Court ordered that a confidentiality club be imposed to address concerns that the disclosure would impede the Dutch criminal investigation.

Takeaways

The Court's judgment makes it clear that to succeed in such an application there are several aspects regarding evidence that parties should be mindful of. This includes:

1. Instructing experts with appropriate and practical experience. Parties should seek experts who have actual experience working with the prosecuting authority, understand how it functions, how it reaches decisions and what factors are relevant in reaching those decisions.
2. Providing clear, concrete examples of enforcement of the relevant statute and sanctions applied.
3. Ensuring that experts who develop or adjust their opinions in a reply report clearly explain the basis for doing so.
4. Correspondence with relevant authorities can be helpful but will not be determinative.
5. Arguments surrounding the number of documents to withheld from disclosure are unlikely to be persuasive either way.
6. Considering whether the client's objectives can be achieved through the use of appropriate confidentiality arrangements.

The judgment demonstrates the high threshold that applicants seeking permission to withhold disclosure must overcome and the importance of parties' expert selections.

[1] Bank Mellat v HM Treasury [2019] EWCA Civ 449

[2] The Court applied the guidance set out in the Court of Appeal's decision in MCC Proceeds Inc v Bishopsgate Investment Trust plc [1999] CLC 417 at [23]-[24].