Anan Kasei Co., Ltd & Anor v Neo Chemicals & Oxides (Europe) Ltd & Anor

I have before me an application by the Defendants herein (together, Neo) regarding the framing or formulation of a confidentiality ring intended to protect certain highly confidential documents that have been disclosed by the Claimants (together, Rhodia) in these proceedings.

The order that is sought is framed in the following terms by Neo in the draft order that is before me:

“Kevin Morris be permitted to have disclosed to him the confidential witness statement of Edward Mackay and the confidential annex to the Claimants’ Points of Claim on the terms set out in the letter dated 13 July from Hogan Lovels LLP to Bird & Bird LLP.”

I shall refer to the documents in issue – and, as can be seen, as matters stand these documents are relatively narrow in scope – as the Confidential Material. There is no dispute between the parties that the Confidential Material is highly confidential to Rhodia. Before me, that was accepted by Neo. There may have been some suggestion, in the past, that Neo did not accept that the Confidential Material was as confidential as Rhodia was suggesting. But that contention was not maintained before me; and I proceed on the basis that this is highly confidential material to Rhodia; and that it would be damaging to Rhodia were the confidentiality of the Confidential Material to be breached.

It is necessary to provide some context:

Rhodia is prepared to allow – and has allowed – Neo’s lawyers and accounting experts to consider the Confidential Material, albeit subject to the terms of a confidentiality ring. What Rhodia is not prepared to allow is for anyone within Neo – apart from the lawyers and the experts admitted to the confidentiality ring – to see or consider the Confidential Material. In short, Rhodia is (in the first instance) contending for a confidentiality ring that excludes Neo and admits only the persons instructed by Neo to

The courts have long been sensitive to protecting confidential information. Thus, where an otherwise relevant document contains irrelevant material, redaction is permitted; equally, where a document is sensitive to third parties – but not to the parties to the case – a hearing can be conducted without open reference to that document, if necessary in private. Confidentiality rings have come to be used – often in competition and intellectual property proceedings – where a document is (i) relevant but (ii) so sensitive that even the persons involved in the litigation entitled to see the document must be limited to named persons, who are admitted to the confidentiality ring, giving certain undertakings as the price for admission to the ring.

It is clearly understood that the foregoing methods of protecting confidential information constitute derogations from the normal regime that have to be justified by reference to factors specific to the case in question. The normal regime is that disclosure of documents takes place, and that the party receiving another’s disclosed documents receives those documents subject to the express undertaking contained in CPR 31.22 of the Civil Procedure Rules to use a disclosed document only for the purpose of the proceedings in which that document has been disclosed.

Before ordering a confidentiality ring – even with the consent of the parties to the proceedings – a judge is well-advised to considered carefully the need for such protection of confidential material. That is because confidentiality rings constitute – in theory and (if tightly drawn) also in practice – a form of “closed material” procedure of the sort warned against in the Supreme Court decisions of Al Rawi and Bank Mellat. (Footnote: ²) Such processes must be considered with care, because: (Footnote: ³)

Exclusion of a party to the proceedings from a confidentiality ring obviously requires particularly clear and cogent justification. Thus, in TQ Delta v. Zyxel, (Footnote: ⁵) Henry Carr J stated:

“21.

In my judgment, the authorities discussed above establish that it is exceptional to limit access to documents in the case to external eyes only, so that no representative from the party which is subject to the restriction can see and understand those documents. An external eyes tier does not require justification for the restriction by reference to individual documents. It enables one party to decide to exclude all representatives of the opposite party from access to any document that it chooses, and places the onus on the party seeking access to apply to court to obtain it. That approach, in my judgment, is wrong in principle…

…

24.

An external, eyes only, tier enables a blanket exclusion of access by one of the parties to the relevant parts of key documents. This is incompatible with the right to a fair hearing under Article 6 of the European Convention on Human Rights, and with the principles of natural justice. It is incompatible with the obligations of lawyers to their clients. The principles on which solicitors are obliged to act on behalf of clients instructing them require the sharing of all relevant information of which they are aware.”

Similarly, Roth J stated in Infederation v. Google:⁶

“…In my view, the important points to emerge from the authorities are that: (i) such arrangements [that is, confidentiality rings excluding a client, party to the proceedings] are exceptional; (ii) they must be limited to the narrowest extent possible; and (iii) they require careful scrutiny by the court to ensure that there is no resulting unfairness. Any dispute over admission of an individual to the ring must be determined on the particular circumstances of the case.”

Mr Copeland sought to justify the total exclusion of the client from the confidentiality ring on the basis that: (i) actually very few documents were being withheld (i.e. the Confidential Material was limited in scope and the generality of documents would be available to Neo); and (ii) that whilst the Confidential Material was relevant to the proceedings and needed to be seen by the lawyers and the experts, there was no need yet for Neo itself to see the Confidential Material.

I do not regard these points as in any way sufficient to justify limiting the confidentiality ring to external eyes only. As to this:

I conclude that the justification for an external eyes only ring has not been made out; and I stress that the burden of the argument rests on the party seeking an external eyes only ring, in this case Rhodia. I can see nothing in the present case to justify so draconian an order.

That conclusion was supported by the contentions made by Neo in support of a confidentiality ring that included a client representative of Neo. Those contentions were threefold. In short, it was contended that a client representative needed to be party to the ring:

Neo’s submissions regarding the scope of the confidentiality ring – namely, that it should include a client representative – and Neo’s submissions that the client representative should be Mr Morris and not someone else (Rhodia suggested a Mr Suleman) were closely related. It is to that question that I now turn.

It seems to me that where a party contends that a particular person should be allowed into the confidentiality ring, the court should be slow to second guess that contention. It is, after all, a basic right of every party to conduct litigation as he, she or it sees fit. That does not mean a party can, by bare assertion, dictate the terms of a confidentiality ring: there will always court scrutiny, and the touchstone for that scrutiny is fairness.

In this case, whilst I consider that Rhodia has advanced excellent reasons for protecting the Confidential Material by way of a confidentiality ring, those reasons are insufficient to justify the exclusion of Mr Morris from that ring: