The Contracting Compass initiative provides insight on English Law issues relevant to oil & gas contracts. The initiative comprises a series of seminars each accompanied by a dedicated White Paper .
In the first of two topics to be covered in the 2018 Contracting Compass series we focused on Confidentiality, Trade Secrets and Legal Professional Privilege.
Confidential information is a key asset which flows through many different parts of a business. Whilst any leaks can be plugged and contained they cannot be reversed and so the impact and loss of value for the business can be significant.
The best way to protect confidential information is to keep it secure and not to share it. However this is not realistic as business progression relies on the exchange of confidential information.
The White Paper outlines the law of confidentiality, trade secrets and legal professional privilege and provides practical drafting tips to protect information so covered.
Almost any type of information can be protected as confidential information. In the UK, the law of confidentiality is not governed by statute but has instead been developed through the case law. In order for confidentiality to apply, the information must meet two criteria: (1) it must be confidential in nature and (2) it must be disclosed in circumstances importing an obligation of confidence.
The starting point in protecting confidentiality is drafting or reviewing a confidentiality clause or agreement. It is important to consider whether the agreement covers the information of one party or both. In addition to considering whether both parties will be disclosing confidential information, consideration should be given to whether third parties might access the confidential information disclosed under a contract. The drafting of the confidentiality clause must ensure that the confidential information can be appropriately disclosed without triggering a breach of contract.
Breach of confidentiality can occur where confidential information is disclosed to an unauthorised party, where confidential information is used for an unauthorised purpose, or where confidential information is used to the prejudice of the disclosing party without obtaining their consent. The remedies for breach of confidentiality are either an injunction (interdict/implement order in Scotland and injunction in England) prohibiting a party from carrying out a certain act or requiring an act to be done or monetary relief (damages or account of profit).
Trade secrets are protected by the Trade Secrets (Enforcement, etc.) Regulations 2018. A trade secret is not generally known or readily accessible to persons within circles that normally deal with this kind of information and has commercial value because of its secrecy. The best way for organisations to protect trade secrets is to identify them, put in place a procedure to be followed in the event of an unauthorised disclosure, provide employee training and implement audits and other protective measures.
Communications between companies and their legal advisers may be covered by legal professional privilege. There are two types of legal professional privilege. Legal advice privilege applies to confidential communications which pass between a client and a client’s solicitor which have come in to existence for the purpose of giving and receiving legal advice. Litigation privilege applies to communications between a solicitor and a client or between either of them and a third party made for the “dominant purpose of litigation” in circumstances where litigation is current, pending or reasonably contemplated.
Legal professional privilege can be waived and may be lost due to a loss of confidentiality in the material. The best way to protect legally privileged information is to procure a contractual undertaking from any third party to whom documents are disclosed that the documents are privileged and that the provision of the documents is not a waiver of that privilege.