Orders for disclosure contrary to foreign law

Disclosure is matter of the law of the forum. However, where the effect of an order for the disclosure of certain documents will be to place a foreign party in breach of its home law, this can place the English court in an interesting and difficult position. The relevant principles were well summarised earlier this week in a “cut-out-and-keep” passage by the Court of Appeal in Bank Mellat v HM Treasury [2019] EWCA Civ 449.

That case concerned an order for disclosure by an Iranian bank of unredacted documents said to contain confidential customer information. It was common ground that disclosure of these documents would constitute a breach of Iranian law. In upholding the order for their disclosure in unredacted form made pursuant to an application under CPR r. 31.19(5), the Court of Appeal said this (at [63]):

“Pulling the threads together for present purposes:

i) In respect of litigation in this jurisdiction, this Court (i.e., the English Court) has jurisdiction to order production and inspection of documents, regardless of the fact that compliance with the order would or might entail a breach of foreign criminal law in the “home” country of the party the subject of the order.

ii) Orders for production and inspection are matters of procedural law, governed by the lex fori, here English law. Local rules apply; foreign law cannot be permitted to override this Court’s ability to conduct proceedings here in accordance with English procedures and law.

iii) Whether or not to make such an order is a matter for the discretion of this Court. An order will not lightly be made where compliance would entail a party to English litigation breaching its own (i.e., foreign) criminal law, not least with considerations of comity in mind (discussed in Dicey, Morris and Collins, op cit, at paras. 1-008 and following). This Court is not, however, in any sense precluded from doing so.

iv) When exercising its discretion, this Court will take account of the real – in the sense of the actual – risk of prosecution in the foreign state. A balancing exercise must be conducted, on the one hand weighing the actual risk of prosecution in the foreign state and, on the other hand, the importance of the documents of which inspection is ordered to the fair disposal of the English proceedings. The existence of an actual risk of prosecution in the foreign state is not determinative of the balancing exercise but is a factor of which this Court would be very mindful.

v) Should inspection be ordered, this Court can fashion the order to reduce or minimise the concerns under the foreign law, for example, by imposing confidentiality restrictions in respect of the documents inspected.

vi) Where an order for inspection is made by this Court in such circumstances, considerations of comity may not unreasonably be expected to influence the foreign state in deciding whether or not to prosecute the foreign national for compliance with the order of this Court. Comity cuts both ways.”

Readers should note that the court’s inquiry into the actual risk of prosecution is essentially a factual question. It is distinct from the question of interpretation or application of the foreign law (see [70i]).

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