Overridding Confidentiality

The recent case of Gray Construction v Harley Haddow (which can be found here) in the Court of Session has given some useful guidance on the circumstances in which a Court may order confidential documents to be disclosed and the balancing of confidentiality with the administration of justice.

Background

In the case, Harley Haddow (“HH”) applied to the Court for disclosure of documents held by Gray Construction (“GC”) relating to an arbitration between GC and the National House Building Council (“NHBC”).  The documents contained the subject matter of the arbitration, the parties’ pleadings and the terms on which the arbitration was settled.  GC had commenced an action against HH to recover the sums which it had spent in the arbitration with NHBC, including the settlement sum it had paid to NHBC of £110,000. 

The Judge, Lord Hodge, had no difficulty ruling that the documents which HH were trying to recover were confidential.  Although there was no case  law on this point, he said that the nature of arbitration was such that confidentiality was implied and the parties would have expected the documents disclosed (which were not otherwise publicly available) to be protected by confidentiality.  Moreover, confidentiality and privacy were amongst the main attractions for parties to try to resolve disputes via arbitration. 

The circumstances in which confidentiality can be overridden

Notwithstanding this finding, the Judge ruled that confidentiality in this context was not absolute and could be overridden in certain circumstances, for example, in the interests of justice.  In this case, in order to defend itself in the Court action, HH argued that it required to investigate the pleadings in the arbitration between NHBC and GC and the circumstances in which the settlement was reached.  GC argued that instead of disclosing the documents it could produce a sworn statement from their solicitor who advised it on the arbitration and that this evidence could be tested in cross examination.  The Court had to consider therefore whether HH could reasonably and fairly prepare its defence without the disclosure of the confidential documents and/or whether the information/documentation could be obtained from an alternative source.    

The decision

The Judge ruled that it would not be fair to allow HH to rely only on the evidence of GC’s solicitor as this could mean that facts about the arbitration and settlement only emerge for the first time at the trial.  Moreover, GC had not yet produced such a sworn statement and the date for the Court trial had been provisionally set for around 3 months from the date of HH’s application for disclosure of the confidential documents.  Accordingly, the Judge ordered the documents to be disclosed under the proviso that the documents could only be used for the purpose of the Court action.

Comment

It is always sensible to try to ensure that confidential documents are protected and are not disclosed except in circumstances in which their confidentiality is maintained.  However, this case is a useful reminder that the right to confidentiality is not always absolute and it can be trumped by, for example, the interests of justice.  It is also important to bear in mind that the documents which were ordered to be disclosed in this case had no ‘inherent quality of confidence’.  They were only confidential because they were disclosed in the context of the arbitration.  If, for example, the documents contained trade secrets or client lists, the decision of the Court may have been different.

Mark Cruickshank

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