Introduction
Facts
High Court
Court of Appeal
Comment


Introduction

In Gorbachev v Guriev,(1) the Court of Appeal held that, under section 34 of the Senior Courts Act 1981, (the Senior Courts Act), the English court has jurisdiction to make an order against a foreign third-party for disclosure of documents located within England and Wales. Further, the Court of Appeal held that the English court has jurisdiction to make an order for service of an application for third party disclosure out of the jurisdiction, pursuant to the jurisdiction gateway in paragraph 3.1(20) of Practice Direction 6B (gateway 20).

Facts

The substantive claim centres on a dispute between Gorbachev (the claimant) and Guriev (the defendant) regarding their respective interests in a Russian-based fertiliser business, PJSC PhosAgro. A relevant issue at trial (currently listed for January 2023) will be how and why the claimant was financially supported through two Cyprus-based trusts, T U Reflections Limited and First Link Management Services Limited (together, the trustees), which are alleged to have been operated by the defendant's close associates.

The trustees were advised from 2006 onwards by a partner at an English law firm, who subsequently moved to another English law firm (the trustees' solicitors). As such, the trustees' solicitors hold documents belonging to the trustees within England, which, on the claimant's case, are likely to be relevant to the issues above. The claimant therefore applied against the trustees' solicitors for disclosure of these documents under rule 31.17 of the Civil Procedure Rules (CPR) ("orders for disclosure against a person, not a party") and section 34 of the Senior Courts Act.

Legal framework
Section 34 of the Senior Courts Act, together with CPR 31.17, allow the English court to order a third party to provide disclosure of documents relevant to an issue in the claim. However, typically, disclosure from foreign third parties is obtained via the separate "letter of request"(2) procedure whereby the English court issues a letter of request to the relevant overseas court to obtain evidence for use in English proceedings. As recently noted by Justice Cockerill in Nix v Emerdata Ltd,(3) letters of request are "the proper, courteous, respectful method of obtaining evidence within a foreign jurisdiction from a foreign party [which] is a very sensitive topic in many jurisdictions".

However, what was not clear in this case was whether the letter of request procedure was appropriate in circumstances where the documents were physically situated within the jurisdiction.

An application for third party disclosure under CPR 31.17 must be made by an application notice under CPR part 23 and must be served on the third party. In the case of a foreign third party, the court must give permission to serve the application out of jurisdiction. One requirement for obtaining such permission is that there is a good arguable case that the application against the foreign respondent falls within one of more of the "gateways" in paragraph 3.1 of Practice Direction 6B.

The claimant relied on gateway 20 in these proceedings, which applies "where a claim is made under an enactment under which proceedings may be brought".

Accordingly, the key questions in the present case were whether:

  • section 34 of the Senior Courts Act and CPR 31.17 did indeed allow an application for third party disclosure to be made against parties outside of the jurisdiction but whose documents were held within the jurisdiction; and
  • permission to serve such an application out of the jurisdiction could be granted under gateway 20.

High Court

In response to the claimant's application, made initially only against the trustees' solicitors, the trustees' solicitors argued that no order could be made against them because the documents were held on behalf of their clients, the trustees. While the claimant did not accept that point, he applied to join the trustees to the application and applied for permission to serve the application out of the jurisdiction and by alternative means on the trustees' solicitors. The application was granted by HHJ Pelling QC.

The trustees applied for Pelling's order to be set aside. The trustees' application was heard by Justice Jacobs. He had to consider whether an application for non-party disclosure pursuant to CPR 31.17 was a "claim" or "proceedings" as defined under gateway 20, such that permission to serve the application outside the jurisdiction could be granted under that gateway. He held that it was, explaining his decision by referencing, among other things, the definition of "claim" in CPR 6.2 (an interpretation provision relating to service), relevant case law and the natural meaning of the words.

Second, Jacobs considered whether the "enactment" relied upon permitted proceedings to be brought against persons outside the jurisdiction (bearing in mind that legislation is generally not intended to have extra-territorial effect). On this point, Jacobs held that there is nothing in section 34 of the Senior Courts Act that expressly or impliedly provides that an application under this provision can only be brought against persons in England and Wales.

Therefore, Jacobs refused to set aside service of the application for third party disclosure, a decision that the trustees appealed.

Court of Appeal

The issues on appeal were as follows:

  • Does the court have jurisdiction to make an order for disclosure of documents against a third party outside of the jurisdiction?
  • If that jurisdiction exists, was the court wrong to exercise its discretion to permit service out of the jurisdiction?
  • Was the court wrong to permit alternative service on the trustees, via the trustees' solicitors?

On the issue of jurisdiction, the Court of Appeal held that the court does have jurisdiction to make a disclosure order against the trustees and that permission to serve an application for such an order may be given pursuant to gateway 20. In so finding, the court considered the presumption against extra-territoriality and the decision in Nix, which concerned an application for third party disclosure against a foreign respondent whose documents also were situated abroad. On the basis of the presumption against extra-territoriality, Justice Cockerill held in that case that "the Court has no jurisdiction to make orders against third parties who are resident outside of the jurisdiction" and that even if the Court had jurisdiction, exercising that jurisdiction would constitute "trespassing on the letter of request regime".

While recognising the importance of the presumption against extra-territoriality, the Court of Appeal held that this had "little or no application" in the extant case because of "the critical fact" that the documents, subject to the third-party disclosure application, were located in England. It considered that, in sending the documents to England, the trustees made the documents subject to the jurisdiction of the English court and accepted the risk that, like any other documents within the jurisdiction, they may be subject to production in the English courts. As such, ordering the production of the documents in England "involves no infringement of the sovereignty of any other states and no breach of comity". Further, even though the trustees were located abroad, given that the documents were located in England, there would be no difficulty in enforcing an order for their production.

Further, in considering that the court had jurisdiction to make a disclosure order against foreign trustees, the Court of Appeal held that there was no circumvention of the letter of request procedure. Indeed, given that the documents are in England, the Court of Appeal noted that, if the letter of request procedure were followed, a foreign court may take the view that the production of such documents was a matter for the English courts in any event. If so, the Court of Appeal noted that without relief being available under section 34 of the Senior Courts Act and CPR 31.17, it "may well be the case that [the documents] cannot be obtained at all".

On the issue of discretion, the Court of Appeal noted that Jacobs had recognised that, because the documents are in England and concern transactions (some of which had taken place within the jurisdiction) in respect of which the trustees had engaged English solicitors for advice, the position was different to that in Nix. Additionally, it would be convenient to determine the claimant's application together with its, as yet unresolved, application for disclosure against the trustees' solicitors. On that basis, the Court of Appeal held that Jacobs' exercise of discretion in favour of the claimants "could not be said to have been wrong".

The Court of Appeal declined, however, to conclude whether the outcome would have been different had the documents also been located out of jurisdiction. It did so because it was unnecessary on the facts of this case, and it considered "it preferable to leave this question to be decided in a case where it makes a difference".

Finally, as to service by alternative means, CPR 6.15 enables a court to make an order for alternative service where it appears that there is "a good reason" to do so. At first instance, Jacobs considered that there was a good reason to allow for alternative service given that the application for third party disclosure needed to be determined quickly in view of the imminent trial date. The Court of Appeal concluded that there was no error in Jacobs' conclusion rendering it necessary for it to intervene.

Comment

For parties and their legal advisors wishing to obtain documents located in England and Wales but belonging to a third party based outside of the jurisdiction, this decision helpfully confirms the availability of relief under the regime provided by section 34 of the Senior Courts Act and CPR 31.17. That regime is likely to be faster and enables broader relief to be obtained than via the letter of request procedure.

Conversely, foreign parties now know that they may be made subject to such disclosure orders, at least in respect of documents held within the jurisdiction. As such, they may now wish to consider carefully which documents to hold within the jurisdiction, whether with their legal advisors or otherwise.

However, there remains some uncertainty as to whether the court has jurisdiction to make such an order where both the third party and the relevant documents are located out of the jurisdiction. Cockerill held in Nix that it did not. On this point, the Court of Appeal noted that while such a case:

is likely to be rare…even if jurisdiction exists to make an order against a third party for production of documents held abroad, in view of the availability of the letter of request procedure it would only be in an exceptional case that it would be appropriate to exercise that jurisdiction.

It is therefore likely that the letter of request procedure would be the appropriate course in such circumstances.

For further information on this topic please contact Dan Wyatt or Harvey Briggs at RPC by telephone (+44 20 3060 6000) or email ([email protected] or [email protected]). The RPC website can be accessed at www.rpc.co.uk.

Endnotes

(1) [2022] EWCA Civ 1270.

(2) Obtained via an application under Evidence (Proceedings in Other Jurisdictions) Act 1975 with the relevant rules in CPR 34 13 and Practice Direction 34A.

(3) [2022] EWHC 718 (Comm).