‘Comity cuts both ways’: the Court of Appeal on production of documents in breach of foreign criminal law

The Court of Appeal has recently had occasion to consider whether to order disclosure – and, more precisely, production and inspection – of documents, when production of those documents by the party in question is prohibited by foreign criminal law.

In this case, an Iranian bank is bringing a very significant claim against HMT, seeking damages for loss said to have resulted from an order made by the Treasury in 2009, which was subsequently held by a majority of the Supreme Court to have been unlawful: Bank Mellat v HM Treasury (No.2) [2013] UKSC 39. Quantum and causation are, unsurprisingly, key issues. Thousands of documents disclosed by the Bank were produced to HMT for inspection only in redacted form, the Bank having claimed ‘a right or duty to withhold inspection’ of what was said to be confidential customer information: CPR r.31.19(3). By the time the matter came before the Court of Appeal, the only remaining issue concerned documents located in Iran, and the right or duty relied upon for the purposes of r.31.19(3) was said to be that imposed on the (Iranian) bank by Iranian criminal law. HMT sought production of the documents for inspection by members of a ‘confidentiality club’, and subject to other protections. The bank opposed production of the documents in unredacted form entirely.

The Court of Appeal helpfully summarised (at para. 53) the approach to proving foreign law in English proceedings, then turned (at paras. 54-62) to consider the authorities concerning the obligation of a party to produce and/or permit inspection of documents where doing so would involve a contravention of foreign criminal law. The Court of Appeal drew out a number of principles, which can be distilled:

• questions of disclosure and production, like other procedural questions, are governed by the law of the forum – here, English law; and
• as a matter of English law, courts in England have jurisdiction to order production of documents in English proceedings, even though foreign criminal law might prohibit the party the subject of that order from doing so. Whether to do so is a matter for the Court’s discretion:

'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.’

The Court also observed that where production and inspection is ordered, that order can – through the use of specific confidentiality regimes, for example – be tailored in the interests of comity to minimise concerns under the foreign law. More robustly, Lord Justice Gross also made the point that ‘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’.

Applying that approach, the Court of Appeal had little hesitation in concluding that Mrs Justice Cockerill had exercised her discretion properly. The documents were, in the Court’s view, plainly important to the just disposal of the proceedings. As to the risk of prosecution in Iran, the Court distinguished between the questions of:

• whether production would (absent an Iranian Court’s permission) be contrary to Iranian law – the expert evidence had stated, and the Judge had accepted, that it would be; and
• what was the actual risk that the Bank would be prosecuted for such a breach.

The Court of Appeal agreed with the Judge that the Bank’s evidence did not satisfactorily establish that the risk of prosecution was such as to outweigh the importance of the documents being produced for inspection in unredacted form, particularly in light of the additional confidentiality protections proposed.

Importantly for parties and practitioners, in doing so, the Court made the point that expert evidence addressing the first question (what does foreign law provide) did not necessarily say anything about the second (what is the actual risk of prosecution). Indeed, the Court described the second as ‘an altogether more mundane and, essentially, factual question’. Parties approaching this issue in the future will want to consider whether their expert’s expertise and experience extends to that question, and also whether factual evidence – eg, of the foreign prosecutor’s practices or guidelines – can be identified.