Various Airfinance Leasing Companies & Ors v Saudi Arabian Airlines Corporation

It is now 6.30 p.m. in the vacation on 29^th December 2020. The court has before it an application made ex parte on notice on behalf of the defendants ("Saudia"). It is an interim injunction to restrain disclosure of confidential information both against the claimants and the person who is said to be their de facto controller, International Airfinance Corporation, an intended third party. The injunction is sought until a return date.

The claimants and Saudia are already involved in High Court proceedings in respect of leases relating to 50 Airbus aircraft to Saudia on long-term leases. Under the terms of those leases, financial information of Saudia which is not in the public domain must be provided to the lessors by no later than today. There is a concern that without an injunction that information will be leaked, in particular to the media, along with other confidential information relating to the parties' dispute.

The claimant has appeared before the court through Mr Charles Béar QC, together with Mr Giles Robertson and Mr Jonathan Barnes of counsel. The facts are set out in a witness statement of Anas Bafaqeeh, dated 24 December 2020. The general background is as follows. Saudia is the national airline of Saudi Arabia, and is wholly owned by the Kingdom of Saudi Arabia. The intended third party, International Airfinance Corporation ("IAFC"), is a Dubaibased business, although registered in the Cayman Islands, and specialising in finance for aviation. The 50 leases are long-term leases on substantially identical terms save as to rent, and expire at various dates between 2027 and 2032. The sums involved are very large and the amounts of the rent and other maintenance payments for the full lease term is likely to be over $1.5 billion. IAFC is the servicer of each lease, and is the person with whom Saudia is to communicate: see clause 20(p) of each lease. It was that party that originally signed term sheets with Saudia before the leases were incepted, and it was the original lessor under each lease before the reversion was acquired of the leases by the first claimant. The second claimant is the parent of the first claimant. When each aircraft was delivered, the rights and duties of the lessor were novated over to one of the lessors - the first claimant. It is submitted that they have no practical existence independent of IAFC, which acts on their behalf in all respects: see the witness statement of Mr Bafaqeeh at para.57(e) and (i).

There are a number of disputes that have arisen between the parties which appear from the particulars of claim. It is not necessary for the purpose of this application to go through the details of that. However, it suffices to say that they relate to the amounts to be paid by way of rent payments, to alleged breaches in relation to maintenance obligations, to alleged failures to provide timely financial statements, and to what payments are due. The relief claimed includes various declarations in relation to the obligations and as to whether they trigger events of default. There are also claims made for what are said to be arrears in relation to payments of basic rent, maintenance payments and other payments, and damages.

In the course of this year there have been without prejudice discussions to attempt to settle the dispute or aspects of it. In the course of those without prejudice discussions there was a claim

The mediation agreement provided at clause 16 that the parties, their representatives and advisors and the mediator agreed, in relation to all information and statements disclosed in the mediation, to keep them confidential and not to use them for a purpose other than the mediation, with the usual exclusions, including as may be required by law.

This application arises following attention of the media in relation to the dispute. On 26 October 2020 an email was sent by Reuters to Saudia in which it was stated that Reuters was working on a story on which they wished to have the comment of Saudia. The email went on to say:

The next day, on 27 October 2020, an email was sent by Reuters to Mr Springthorpe of Norton Rose Fulbright, the solicitors on behalf of Saudia. That email read as follows:

The response on behalf of Saudia, by email of 27 October 2020, was as follows:

It is to be noted that the reference to court documents being seen by Reuters in the email sent by Reuters to the solicitors for Saudia appears to indicate that Reuters had in some way had access to the claim form and/or the particulars of claim in this case. That is because at that stage there had not been an acknowledgement of service, and copies of the documents in the proceedings would therefore not in the normal course have been available to a non-party: see CPR 5.4C. This was all proximate in time to preparation for a mediation which was due to take place, and did take place, on 9 November 2020. It was also proximate to the service of the claim form which was served under cover of a letter of 2 November 2020.

On 28 October 2020 there was an email sent without prejudice and subject to contract from the solicitors for Saudia, together with various attachments. [REDACTED]

[REDACTED]

On 5 November 2020, pursuant to the leases, there was provided an unaudited consolidated financial statement in relation to Saudia, comprising a condensed interim consolidated statement of comprehensive income for the half year ended 30 June 2020. [REDACTED] That information is regarded as highly confidential by Saudia. It is not in the public domain. Saudia is a private company and it its accounts are not published. [REDACTED] The information was only provided to IAFC because of the provisions in the lease. The information was not expressed to be confidential but it is said that it would have been understood to be confidential.

[REDACTED] There is a confidential annex that is attached to the witness statement of Mr Bafaqeeh, which refers to the change. The significance of this is that the information [REDACTED] appears to have been provided to Reuters. On 17 November 2020 Reuters wrote to the Media Relations of Saudia and stated the following:

Again, there was a response by the Media Relations of Saudia, of 18 November 2020, to the effect that it did not comment on financial matters and would stand by its contractual commitments.

Saudia submits that it appears from the email of 17 November 2020 that [REDACTED] Saudia's case, to which I shall refer in more detail below, is that it is likely that that information came from IAFC/the claimants in this case.

There was then an article that was published by Reuters on 18 November 2020 referring to [REDACTED]

The reference to [REDACTED] appears, says Saudia, to be the result of a leak of information in without prejudice negotiations between the parties. In a without prejudice letter, dated 9 April 2020, from Saudia to IAFC, [REDACTED] In a response, also without prejudice, dated 12 April 2020, from IAFC, [REDACTED]. Saudia draws attention to the fact that although the press coverage was referring [REDACTED] appears to have come from the request that was made in without prejudice correspondence. [REDACTED]

At para.22 of the particulars of claim, there was reference to a dispute in relation to alleged overpayment of basic rent as alleged by Saudia. The last sentences of para.22 read as follows:

Saudia submits that much of the material in Reuters' November article can only have been drawn from Saudia's confidential information that was provided to IAFC. In particular they draw attention to the following:

Saudia submits that the only possible sources of this information are Saudia, the IAFC parties and their respective advisers. The material has not been sent to anybody else. It submits that the possibility that advisers leaked the material in breach of their professional duties should be "quickly discounted". Saudia itself has no interest in leaking the material. IAFC denies the leak and says that the publicity was not in IAFC's interest. The claimant submits that in fact there is a high probability that the leak does come from IAFC and that it was deliberate. The suggestion that it was not in their interests is contrasted with the particulars of claim referring, at para.22, to Reuters' November article, [REDACTED]. They also draw attention to the fact that the only parties that would have thought that the [REDACTED] was still applicable after 13 November 2020 were the IAFC parties, because the matter had been the subject of a correction that had not yet been disclosed to IAFC parties at that stage. Thus, when the article was published on 17 November 2020, the [REDACTED] was by that stage historic, but not known to be so by the IAFC parties. That, it is said, strongly suggests that the documents that Reuters have seen came from IAFC. [REDACTED]

There has been correspondence between the solicitors in relation to this matter. The allegations of misuse of confidential information have been put by the solicitors for Saudia to the solicitors for the IAFC parties. They have responded in letters dated 21 December 2020 and 23 December 2020. In summary, the IAFC solicitors, King & Spalding, say the following:

In the evidence of Mr Bafaqeeh, at paras.58 to 59, it is stated that the effect of the leak of Saudia's confidential information is to damage Saudia. The details of the leases are commercially sensitive and would affect the terms Saudia could achieve in negotiations with other lessors. Similarly, the details of Saudia's financial situation affect what it is able to negotiate with third parties and the payment terms it can achieve. Mr Bafaqeeh explains the wider fear that, in view of the information IAFC has access to, there is a danger that there could be further breaches of confidential information which could cause very substantial damage to Saudia. Its immediate fear is because under the terms of the leases it must disclose financial information to the IAFC parties by today, 29 December 2020. These contain detailed information not in the public domain: see Mr Bafaqeeh, para.59(c).

Saudia relies on obligations of confidence established in contract and in equity. In contract the leases refer to clause 20(j), to which reference has been made above. Clause 20(j) acknowledges the confidential and sensitive nature of the lease terms contained therein and the transactions contemplated thereby. It is right to say that the parties have not been careful to label the information they exchange as being sensitive and confidential information. The obligation in clause 20(j) refers to non-public proprietary information, which is specified as of a sensitive and confidential nature by the parties. The IAFC parties have an argument as to whether, in the absence of such labelling, the information is to be regarded as confidential. As regards the future, Saudia is going to be providing that label. There is an argument that the correct construction of clause 20(j) is that it extends generally to the information that is provided under the lease, even in the event that the parties do not make the matter clear by the labelling process.

Reliance is also placed on the term sheets, to which reference has been made above, and to the obligation of confidentiality. Under the term sheets, reliance is also placed on the mediation agreements referred to above. Even in respect of documents which predate the mediation agreement but which were produced or arise in relation to the mediation, it has been held that that was covered by a confidentiality clause in the case of Instance v Denny Bros [2000] FSR 869. In respect of the without prejudice correspondence, it is submitted that there is an implied agreement between the parties that without prejudice correspondence shall not be disclosed: see Unilever v Proctor Gamble Co [2000]1 WLR 2436, 2442. The implied agreement extends to those who are "commercially and corporately connected" with the parties to the communications: see Instance v Denny Bros, above, at p.884. This therefore covers the information about [REDACTED] and also other without prejudice letters between the London solicitors.

Further, or in the alternative, Saudia relies on duties of confidence imposed as a matter of equity in accordance with the principles set out in the judgment of Coco v AN Clark [1968] FSR 415. To the extent that non-labelling of documents provided pursuant to the contracts means that the contractual clause cannot be imposed, it is submitted that the acknowledgement about the confidential and sensitive nature of the information is such that the parties and their agents must have understood that their dealings were protected by equity and that that covers all of the confidential information about whose disclosure Saudia complains.

Saudia also makes a claim in relation to economic torts. That is made particularly in respect of the IAFC parties, who are fixed with the consequences of the behaviour that has been determined by the same directing minds.

Further, as regards the application of English law, that is set out at paras.32 to 33:

The usual principles for the grant of an interlocutory injunction are set out in American Cyanamid v Ethicon, that there must be shown a serious question to be tried, in the sense that the claim is not frivolous or vexatious and that the claimant would not be adequately compensated in damages and that the balance of convenience favours the granting of an injunction. In this case damages are obviously an inadequate remedy, having regard to the sensitivity of the lease information, the internal financial information and the negotiation information.

However, the American Cyanamid threshold of an arguable case is subject to section 12 of the Human Rights Act 1998, to which I now turn. It reads as follows:

As is apparent, section 12 is engaged where the court is considering whether to grant relief which might affect the exercise of the Convention right to freedom of expression. In those circumstances, the court is required to be satisfied under section 12(3) that the applicant is likely to establish that publication should not be allowed. In my judgment, it is necessary to consider section 12 in this case because what is at stake is the freedom of expression in relation to the information to which reference has been made. The word "likely" means more likely

There are obvious difficulties in relation to applying the standard as to whether a claimant would succeed at trial at a stage like this where the court is being invited to hold the ring and provide short-term relief. That is a matter that was considered by Lord Nicholls in Cream Holdings v Banerjee, where he said the following:

It is especially apparent from the last sentence that the necessary flexibility of the application of section 12(3) not having a single rigid standard is particularly important in connection with a "short-lived injunction", which is necessary to enable the court to hear and give proper consideration in relation to a short-lived injunction.

These matters were considered further recently by Miles J in a case called Fortescue Metals v Argus Media Group [2020] EWHC 1304 (Ch) at para. 29:

“Lord Nicholls explained that there may be exceptional cases where the court may depart from this general approach. The Claimants accept for the purposes of this hearing that the general rule in [22] of Cream Holdings applies and that they need to satisfy the court that they are more likely than not to obtain a permanent injunction at trial.”

The court has regard, in the circumstances of this case, to the importance of the Convention right to freedom. There are difficulties at this stage in not having all of the available information before me in assessing, without hearing argument from both sides, an examination of the public interest in disclosure. However, there is sufficient that is before the court for the court to conclude in the flexible manner contemplated by Lord Nicholls in Cream Holdings v Banerjee that it is appropriate to grant a short-lived injunction in this matter. The claimant has raised more than an arguable case in relation to the nature of the confidentiality and the damage to the claimant by the disclosure of the confidentiality. This is a very different case from cases where, for example, in Cream Holdings, an ex-employee raised a public interest defence concerning some form of corruption. This is a case where the claimant seeks to protect details of its own internal finances and its commercial terms on which it deals, and the conduct of its disputes with lessors, including their negotiations. There is also a public interest in maintaining confidentiality. That enables parties to conduct without prejudice negotiations and to assume, in the context of its commercial relationships with its counterparties, that the starting point will be that the confidentiality will be maintained.

Although it is right that the case is based upon inferences, in my judgment, on the information that I have been provided, there are sufficiently strong inferences against the IAFC parties for the claimant to apprehend that such information as has been provided to the press has come from IAFC. I do not in any way make a pre-judgment in relation to that, only to say that there is a reasonable basis for that belief on the part of Saudia at this stage. In the context of further confidential information being provided under the lease agreements in particular on 29 December 2020 and with undertakings being refused, there is a serious risk that there will be further confidential information leaked to the press unless the IAFC parties are restrained.

This is a case where on the information before the court at this stage it is more likely than not that the information referred to is confidential and, should have protection against the claimants. There are difficulties in not having all the information to date, but against that the IAFC parties have had the opportunity to deal with the allegations which has been taken into account. They have also been notified about the evidence and about the hearing, and they have refused to provide undertakings. They had no obligation to attend and there is no discourtesy by their non-attendance. However, the requirement in section 12(2)(a) has been satisfied,. In my judgment, on the basis of the information before the Court, I conclude that it is more likely than not that publication will not be allowed. Alternatively, if that were not the case, the degree of likelihood is still, in my judgment sufficient to satisfy the flexible approach in Cream Holdings as cited above. This is a very different case from Cream Holdings where the employee raised a public interest defence. This is a case where the Applicant seeks to protect details of its own commercial finances and conduct of disputes with lessors including the negotiations. There is also a public interest in maintaining confidential information that enables parties to conduct without prejudice negotiations and inherent in commercial relationships.

A point can be made against Saudia that there has been delay on its part. It has known about this matter since the time of the publication of Reuters, and in particular the November publication. The relevance of its delay is that it might be said that it therefore did not regard the matter as sufficiently serious to bring an application at an earlier stage. However, on the basis of the information which I have seen, delay is simply a matter to be taken into account. There may have been an expectation that they would have been able to have resolved the matter in the course of correspondence, but recent correspondence has led to a total denial and a refusal to provide undertakings. In these circumstances, although delay is a factor against Saudia, in my judgment, it is still appropriate to make an order in their favour.

In those circumstances, I am satisfied that it is right in the circumstances of this case to make a proportionate order in order to protect that confidentiality. In my judgment, the draft order that has been provided to the court is an appropriate order in respect of the negative injunction that is sought.

Turning now to the terms of the draft order, in my judgment, the Saudia has satisfied the court that it is appropriate to make an order in the negative form as set out in para.7 of the draft order, and containing the confidential Schedule 2 to the order. That should be for a limited period. It is to be until a return date. The return date, unless I have some information to the contrary, should be in the first week of term, which is to commence on 12^th January. It should be at the earliest possible date for the court after 12^th January 2021. It is impossible at this time to be able to fix the date itself. The parties should endeavour to bring the matter on at the earliest opportunity to the Commercial Court.

An order is sought, at para.9, in a mandatory form, that the respondents should, within seven days of service of the order, disclose to Saudia’s solicitors the following:

That is a mandatory order. It requires the respondents to provide information relating to publications. The submission of Mr Béar QC on behalf of Saudia is that the information sought is that this should provide no prejudice to the claimants, bearing in mind that there have been denials about the disclosure of information. Further, as regards the position of Saudia, it is important to them at an early stage to be able to go to the recipients of the information and to seek such undertakings or remedies as may be available in order to prevent the information from leaking further. In my judgment, it is inappropriate at this stage for a mandatory injunction to be granted. In reaching that conclusion, I have in finding following matters, namely:

Paragraph 11 is to be amended because that is to be limited in time, but I am prepared, on the information received, to grant injunctions in the form of paras.12 and 13. To that extent I therefore grant the relief that has been sought.

Following consideration of the draft order, after giving judgment but before approving it, the court refused the injunction in para. 14 of the draft order because there was no intention to inform third parties at this stage. At that time also, a return date of 13 January 2021 was fixed.

A part of the judgment contains information which Saudia submit is part of the confidential information which they wish to protect. It remains for the Court to consider further which parts of the judgment may be published and which, if any, are to remain in private. Only as an interim measure, until that exercise has been considered by the parties and the Court and permission has been given, this judgment be subject to the restraint set out above the heading of this action.