Summary

On 29 June 2015, the High Court agreed to vary three orders made under Part 34 of the CPR so that the Respondents (three UK-based firms specialising in corporate investigations who had been commissioned by Rio Tinto PLC to provide business intelligence reports on the political and commercial situation in Guinea), did not have to disclose the identities of their sources to the Applicant.  The court considered that the public policy reasons behind upholding the confidentiality of the sources (particularly the risk of potential harm to the individual sources and their families) outweighed the potential relevance of the information to issues in the underlying proceedings, which the court considered to be marginal, at best. 

Case Reference: Rio Tinto PLC v Vale S.A. and Others [2015] EWHC 1865 (QB)

The facts

Rio Tinto PLC (“Rio”) brought proceedings in the US against Vale S.A. (“Vale”) and others for fraudulent conspiracy and corruption.  Rio alleged that Vale and its JV partner, BSGR, fraudulently conspired to cause Rio to lose its iron ore mining concessions with the Government of Guinea in December 2008, in order to acquire the rights themselves (although the Government of Guinea subsequently annulled the rights on the basis that they had been procured through bribery). 

Vale argued that Rio’s claim, brought on 30 April 2014, was time-barred.  Under US law, the relevant limitation period was four years from the date on which the injury was suffered.  Rio argued that Vale had concealed the truth and relied upon the US defence of “equitable tolling”, which is broadly similar to the concept in s. 32 of the Limitation Act 1980 under English law (i.e. that the limitation period is postponed until the injured party discovered (or could with reasonable diligence have discovered) that he had a claim).  There was therefore an issue concerning the steps Rio had taken to investigate its claim.

The Respondents (Livingstone and Company Ltd (“Livingstone”), Africa Risk Consulting Ltd (“ARC”) and Begbies Traynor (Investigations) Ltd (“BTI”)) had been commissioned by Rio between 2009 and 2010 (i.e. after the withdrawal of its concessions) to produce business intelligence reports on the situation in Guinea, focussing particularly on the activities of BSGR (the “Reports”).  Vale obtained disclosure of the Reports in the US proceedings (subject to a Protective Order precluding anyone other than the parties’ attorneys from seeing them).  Vale then applied to the English court for an order requiring the Respondents to produce certain information for the purpose of the US proceedings.  The parties were unable to agree on whether the Respondents should be required to identify the individuals from whom they obtained the information they used to compile the Reports (i.e. their sources).

The court’s balancing exercise

Generally, the court’s power to make orders to enable evidence to be taken for foreign proceedings is limited by the terms of the Evidence (Proceedings in Other Jurisdictions) Act 1975.  The court’s starting point is that it is obliged to give effect to the request of the foreign court unless there is good reason not to do so. The court will generally give effect to the request so far as is proper and practicable and to the extent that it is permissible under English law.  A relevant consideration is whether a respondent to the request would be required to breach a confidence towards someone else if the order was granted.  Where issues of confidence exist, the court is required to perform a balancing exercise:

“to consider fairly the strength and value of the interest in preserving confidentiality and the damage which may be caused by breaking it; then to consider whether the objective – to dispose fairly of the case – can be achieved without doing so, and only in a last resort to order discovery, subject if need be to protective measures” (per Lord Wilberforce in Science Research Council v Nasse [1980] AC 1028).

In conducting its balancing exercise in the current case, the court considered the following factors:

  • The potential impact of disclosure on the individual sources: The evidence provided by the Respondents was that their sources would only carry out research for them on the basis that their identities would not be revealed.  Further, some sources would fear for their safety or wellbeing (and that of their families) if their identities had to be revealed.
  • The potential impact of disclosure on the Respondents: All three Respondents also contended that their reputations and businesses could be damaged if it became public knowledge that they had disclosed the identities of their sources, although the court noted that this alone would not prevent disclosure and that: “the risks that the breaches of confidence pose to the individuals concerned are of far more importance and carry far more weight with the court in this context”.
  • The terms on which the Respondents were engaged by Rio: The court noted that ARC’s terms imposed an obligation of confidentiality on Rio.  Livingstone and BTI were engaged on Rio’s standard terms, which contained an obligation of confidentiality on those Respondents but not vice versa. Accordingly, the court considered a number of other clauses in the terms to see if it could imply a duty of confidentiality upon Rio.  Ultimately, the court considered it did not have to resolve this issue, given there were public policy reasons why disclosure might be refused.  It was satisfied that, whatever the contractual position, the sources had been given assurances or undertakings that their identities would be kept confidential and, if those identities had been disclosed to Rio (which the court acknowledged, they had not), Rio would be under a duty of confidentiality too.
  • The importance and relevance of the information to be disclosed:  The court considered this one of the most critical factors but ultimately believed that identities of the sources would be of “peripheral relevance” to the matters in the US proceedings.  The limitation defence would require an assessment of what Rio knew between December 2008 (when it lost its concession) and April 2010 (the date on which Rio argued the limitation period should begin).  The majority of the Reports were commissioned after April 2010.  Accordingly, the court could not see how providing the identities of the sources who contributed to those reports would materially advance either party’s arguments in respect of the limitation point.

The court ultimately ruled that it was “not necessary for the fair resolution of those issues for Vale or its legal representatives to know who the sources are, and the serious nature of the proposed breaches of confidence coupled with the potential risks to the informants outweigh any justification for disclosure.”  However, the court did vary the orders to require Livingstone and ARC to provide anonymised descriptions of the sources, with an explanation of which aspects of the information in the Reports were provided by which source.  (There was no similar requirement on BTI, as the individuals who had prepared the report on its behalf had since left the business and BTI was therefore unable to provide the requisite information.)

Comment

This decision will come as a welcome relief for those investigation firms that rely on information obtained from confidential sources as part of their services to clients.  While clear that the court will perform a balancing exercise between the rights of the relevant parties on the specific facts in question, it does suggest that the court will afford protection to those who may face risk of retaliation or persecution for reporting in challenging political climates.   
 
While not a definitive factor, it is advisable for those firms that rely on information from confidential sources to impose confidentiality obligations on their clients regarding their sources, to assist the court in its balancing exercise should it become an issue subsequently.