A recent decision has important implications for the approach the court should take in ordering disclosure of documents held in France where such disclosure may breach the so-called French blocking statute (French law no 68-678 of 26 July 1968, as amended): National Grid Electricity Plc v ABB & ors  EWHC 822 (Ch).
In broad terms, the French blocking statute prohibits persons located in France from requesting, searching for or communicating “documents or information of an economic, commercial, industrial, financial or technical nature” for use in foreign litigation. The prohibition attracts criminal sanctions.
The High Court (Roth J) held that it was appropriate to order disclosure regardless of whether this would infringe the French blocking statute. The critical question was the likelihood of a prosection being brought, which the judge concluded was “virtually inconceivable” on the facts of this case and bearing in mind that only one successful prosection has ever been brought under that legislation.
Subject to appeal (which is due to be heard between 17 September 2013 and 17 January 2014) the decision suggests that an English court is unlikely to refrain from ordering disclosure against French parties to litigation on the basis of the French blocking statute.
This may of course cause difficulties for French parties, who could be at risk of criminal prosecution in France as a result of compliance with an English court order. Alexandra Neri, a partner in our Paris office who regularly advises on information governance issues, comments: “In pre-judging the approach of the French authorities to a breach of the blocking statute, the English court’s decision puts French parties in a very difficult position. By complying with an order of a foreign court, they put themselves at risk of criminal prosecution in France, however theoretical the English court might consider that risk to be.”
The question of disclosure arose in the context of a large-scale follow-on damages action against various defendants in respect of an illegal cartel relating to heavy electrical equipment used in power substations. The trial of the action is due to commence in June 2014.
A number of defendants to the action, who are French companies, objected to the claimant’s application for specific disclosure on the basis of the French blocking statute. They contended that providing such disclosure would put them in breach of this prohibition, which attracts criminal penalties, and it therefore should not be ordered.
In light of this objection, the court initially excluded the French defendants from the disclosure orders while requests were issued to the French Ministry of Justice to permit the disclosure to be conducted in France via the direct route under Council Regulation (EC) 1206/2001 (the “EU Evidence Regulation”). This provides for two alternative routes for the taking of evidence in another EU member state:
- The taking of evidence by a court following a request transmitted directly between the requesting court and the court to which the request is directed (“the court-to-court route”).
- The direct taking of evidence by the requesting court, ie without requesting the assistance of the courts of the state where the evidence is to be obtained (“the direct route”).
Those requests were rejected by the French authorities, in part on the basis that such requests were not required when the English court could simply order the French defendants to provide disclosure. Whilst recognising that the requests avoided the risk of prosecution under the French blocking statute, they said this would be an abuse of process since in reality no taking of evidence was required to achieve the desired result.
The claimant therefore renewed its application for disclosure against the French defendants.
The court held that the French defendants should be subject to an order for disclosure in the same way as all the other defendants.
The French defendants accepted that the court had a discretion as to whether it should order disclosure from a foreign party notwithstanding that compliance might violate a prohibition under an applicable foreign law. The judge assumed, without deciding, that production of the documents by the French defendants would infringe the French blocking statute.
The critical question, the judge said, was the likelihood of any prosection being brought against the French defendants. The French law experts were agreed that the Public Prosecutor had a discretion whether or not to institute a prosecution and in exercising that discretion he would take into account the public policy reasons underlying the statute. In that regard:
- It was striking that the one instance of a successful prosecution under the French blocking statute arose on very exceptional facts where the disclosure was not made pursuant to a court order and was in fact procured by fraud. French companies frequently give discovery in English legal proceedings but, it seems, are not prosecuted.
- The French blocking statute was introduced because of concerns in France at what were seen as abusive discovery requests being made of French companies facing litigation in particular in the US, but even when French companies comply with US disclosure orders it appears that they are not prosecuted.
- It was “virtually inconceivable” that where, as here, the court was exercising jurisdiction over a company pursuant to an EU regulation in respect of violations of fundamental provisions of EU competition law, the public authorities of an EU member state would exercise their discretion to institute criminal proceedings against that company for complying with the procedural rules of the courts of the member state where the proceedings were brought.
The judge rejected the French defendants’ argument that the court should instead issue a request under the court-to-court route of the EU Evidence Regulation, since the Regulation was not basically concerned with the provision of disclosure between parties to litigation at all and since significant time had already been lost through an abortive attempt to use the direct route under the Regulation.