So, your documents are going to be tendered in evidence, but they contain commercially sensitive material. What can you keep secret and how?

It’s a common enough occurrence in court proceedings; Documents will be tendered - either as standalone exhibits or as annexures to an affidavit – and they contain confidential or commercially sensitive information. These could be documents sourced from the parties, or documents obtained under compulsion from third parties (for example under a subpoena). Where a regulator such as ASIC or the ACCC is a party to the matter, they may also tender documents which they have obtained from a third party under a compulsory statutory production notice.

These documents may contain information that the owner views as extremely confidential or commercially sensitive. They may disclose things such as the secret formula for a product, the sales revenue and costs of production for a particular product, the identities of customers, strategic matters, or the confidential terms of contracts. The desire to keep this information under wraps is perfectly understandable; even more so when the person tendering the document is not its actual owner.

Legislation and Court rules recognise this tension. Orders can be made to restrict access to documents or evidence which recounts their contents, and preserve confidentiality. However, when all applications are viewed through the prism of the primacy of open justice, decisions don’t always fall in favour of the person seeking the order.

Moving quickly and gathering strong, credible evidence of the commercial significance of the evidence and the advantage it would give competitors, or the harm it would generate if disclosed, is imperative. These applications have to be very well prepared.

Four eyes of the needle?

Let’s take the Federal Court legislation as an example.[1]

The Federal Court can make suppression or non-publication orders where such an order is necessary to do at least one of the following:[2]

  • to prevent prejudice to the proper administration of justice;

  • to prevent prejudice to the interests of the Commonwealth or a State or Territory in relation to national or international security;

  • to protect the safety of any person; or

  • to avoid causing undue distress or embarrassment to a party to or witness in criminal sexual assault proceedings.

For most businesses, the latter three categories will not be relevant – although, on rare occasions, the national or international security category may be, such as where a dispute concerns security assessments, contracts dealing with substantial infrastructure or defence and intelligence related procurements.

Instead, the main footing for a business is to assert that the disclosure of the commercially sensitive or confidential material will prevent the proper administration of justice. The “administration of justice” category is not just focussed on how the court system or justice system operates. Rather, the view is wider and does take commercial affairs into consideration.

The courts have stated that suppression or non-publication orders are appropriate in the following circumstances:

  • to protect “the orderly conduct of commerce”;[3]

  • to ensure “that obligations of confidence be not lightly overruled and the legitimate expectations of confidentiality as to private and confidential transactions and affairs be not lightly disregarded”;[4]

  • to prevent the “revelation” or “leaking of trade secrets to competitors”;[5]

  • to prevent the “[disclosure of] market-sensitive information which would be of significant value to trade rivals”;[6]

  • to “[encourage] parties to make [dispute resolution] agreements and to abide by them where they otherwise apply to the dispute in question”. Here the agreement required the subject matter of the dispute to be kept confidential, thus facilitating the resolution process.[7]

As for what is “necessary”, it is a very high standard. This is to be contrasted with, and distinguished from, less demanding standards, such as whether the order sought would be ”convenient, reasonable or sensible”.[8] Further, it is not concerned with trivialities. The mere fact that a party may claim commercial or personal “embarrassment or unfortunate financial effects”, may not be a sufficient foundation.[9]

It is also clear that the concept of what constitutes the “interests of justice” is not closed and must alter from time-to-time, whether by restriction or extension, as social conditions and legislation develop.[10]

Nevertheless, the courts are keen to make clear that the mere fact of trade rivalry and commercially sensitive information is not always enough. As always, the facts matter, and the burden is on the person attempting to claim extra protection.[11] For example, on some occasions, the fact that the information is old will mean that there is no basis for its protection.

However, in its case against the ACCC, Cement Australia, succeeded in obtaining an order, because it could demonstrate an interrelationship between the information and present arrangements, which gave it currency.[12] Similarly, in ACCC v Air New Zealand, Singapore Airlines was dealing with 10-year-old information, but the court accepted evidence that the methodology in question remained current. The release of that information would have exposed Singapore to real commercial prejudice. [13]

As these case show, commercial sensitivity can be a basis for the making of confidentiality orders; for the Courts do not intend, except where necessary, to disrupt the orderly conduct of commerce.

Once you’ve jumped these hurdles, you will then need to demonstrate how long the order should last. The Federal Court Rules require a sunset date for the order. This is also the case with the New South Wales and Victoria legislation. Other states (which operate under more general legislation and the inherent power of the Courts to regulate their affairs when dealing with suppression requests) will take a similar approach – as enduring secretiveness is not consistent with the concept of open justice. The “end date” can be revisited if circumstances change – requiring either a longer or shorter period.

In summary, here’s what to do if your documents could be tendered in evidence and you want to attempt to keep any commercially sensitive material confidential:

  1. When producing documents to a regulator under a compulsory notice: ensure upfront that you make clear the commercially sensitive nature of the documents and that you expect to be consulted or notified in advance of the tendering of the documents, or reference to them in open court, so that you have ample opportunity to make a claim.

  2. If producing documents in response to a subpoena: take the same approach.

  3. If you need to make an application for suppression orders: gather detailed evidence about the significance of the information, its restricted nature and the detriment its exposure could do to your organisation, other organisations or the “competitive process”.

  4. Gather evidence about how long the information needs to be kept confidential. Be prepared to identify any review dates so that sunset orders don’t waste the protection you have gained.