Global menu

Our global pages

Close

High Court grants release from collateral undertaking relating to the use of documents under a Worldwide Freezing Order

  • United Kingdom
  • Financial services disputes and investigations
  • Litigation and dispute management - Freezing Orders

19-04-2021

PJSC National Bank Trust and another v Mints and others [2020] EWHC 3252 (Comm)

Facts of the case

  • A worldwide freezing order (“WFO”) was granted against the Defendants (“Ds”) on 28 June 2019, further to proceedings brought by the Claimants (“Cs”).
  • In applying for the WFO, Cs gave the standard undertaking that they would not without permission of the Court use any information obtained as a result of the WFO for the purposes of any other civil or criminal proceedings (the “Collateral Undertaking”).
  • Cs later became subject to an order of a Russian criminal court requiring them to give disclosure of the material provided by Ds pursuant to the WFO (the “Russian Order”), which they were advised by their Russian lawyers if they did not comply with would expose them to serious criminal sanctions.
  • Cs, finding themselves in the invidious position of potentially having to choose between either breaching the terms of the WFO or the Russian Order, applied to the Court for release from the Collateral Undertaking.

The Decision

  • In reaching his decision, Jacobs J had regard to the following:

1. the exception to the standard prohibition in CPR 31.22 on the collateral use of disclosed documents where a document has been read to or by the Court, or referred to, at a public hearing;

2. that the “vast majority of the material” in question was “already in the public domain”, as a consequence of being previously read out in open court at the return hearing;

3. that at no stage during the application for the WFO or prior to or at the return hearing, did Ds take any steps to seek to preserve confidentiality in the material disclosed; and

4. the principle established in Crest Homes v Marks [1987] 2 All ER 2074 that the Court “will not release or modify the implied undertaking given on disclosure save in special circumstances and where the release or modification will not occasion injustice to the person giving disclosure”.

  • In the circumstances, Jacobs J held that the Cs’ release from the Collateral Undertaking would “not occasion injustice on any of the Defendants”, and that there were “special circumstances” given the serious criminal sanctions Cs’ lawyers advised they would otherwise face.
  • While there was competing Russian law evidence from Ds, Jacobs J considered it “unrealistic” to suggest that Cs should “second guess the professional advice of their own lawyer” where they risked “criminal sanctions which could damage their personal reputation, their livelihood and potentially their liberty”.

Analysis and practical advice

  • If preserving confidentiality in documents disclosed pursuant to a WFO is of importance, the judgment demonstrates the need to take steps in this regard at an early stage, preferably before disclosure is provided (if feasible), but in any event before the relevant material is at risk of entering the public domain. This might be achieved by an application for:

1. any relevant hearing to be heard in private under CPR 39.2(3); or

2. an order under CPR 31.22(2) to prohibit or restrict the materials use after disclosure, including where it has been referred to in open court (an application not just available to parties to the relevant proceedings, but “any person to whom the document belongs”).

  • Importantly, this judgment does not point to the release of collateral undertakings under WFOs becoming more commonplace. Rather, the Court will continue to require the existence of “special circumstances” which constitute cogent and persuasive reasons before permitting such use, with Jacobs J pointedly drawing a distinction between the facts of this case and the situation where a claimant is seeking to be released in order to further proceedings abroad.
  • However, this case does demonstrate that the Court will be prepared to find such “special circumstances” where there is a real risk that the relevant party would otherwise be liable to serious criminal sanction, in particular where such collateral use would assist a foreign court in rectifying wrongs arising out of fraudulent conduct.

 

 

For more information, please contact: