​Upholding an interim injunction preventing publication of commercially sensitive information provided by a hedge fund manager to potential investors, the Court of Appeal confirmed that the test for restraining publication in breach of a duty of confidence is whether the public interest in disclosure is outweighed by the public interest in maintaining the confidence. The decision highlights the importance of imbuing commercially sensitive information of this kind with the necessary quality of confidence, in order for it to be subject to protection: Brevan Howard Asset Management LLP v (1) Reuters Ltd (2) Maiya Keidan (3) Person or Persons Unknown [2017] EWCA Civ 950

Balancing exercise – public interest in publication v public interest in maintaining confidence

The claimant hedge fund manager wanted to restrain the defendants (an international news agency, one of its financial journalists and an unknown person or persons alleged to have disclosed the information in question) from publishing information based upon documents that the claimant sent to 36 potential professional investors on confidential terms.

Interim injunction awarded

At first instance, Popplewell J was satisfied that the claimant would more likely than not establish at trial that it would be entitled to restrain publication, and awarded an interim injunction. The Court of Appeal agreed.

Clear that information was confidential

It was clear that the information in question came from documents disclosed in confidence by the claimant – each potential recipient was informed before receiving the information that it was confidential and highly sensitive and each recipient was provided with a unique password-protected set of documents. The documents were also clearly marked private and confidential, not for onward distribution and with a detailed disclaimer regarding their use. The judge considered that the confidential nature of the information would have been apparent to the defendants even before this was expressly asserted by the claimant.

Hedge funds’ effect on economy a matter of public interest

The judge accepted that there was a number of factors supporting a public interest in publication. These included that: hedge funds and their effect on the economy were a legitimate matter of public interest and debate; and the investors in the claimant’s funds included institutional investors acting for the benefit of (among others) pension plan holders and public employees who would not otherwise be provided with the information which would enable them to influence and hold the institutional investors to account.

Must be a public interest in breaching confidence

The judge noted that it was not sufficient for the defendants to show that there was a public interest in publication of the information in question; there had to be a public interest in breaching the confidence which attached to the information.

Weighing the public interest in publication against the public interest in breaching the confidence that attached to the information, the judge decided in favour of maintaining confidence as:

  • it concerned confidential financial information provided to potential investors relevant to their decisions to invest – potentially concerning investments worth tens of millions of dollars;
  • it is important that hedge funds are incentivised to make full and candid disclosure of information to potential investors without fear of publication;
  • there was no question of the publication being necessary to correct a false impression created by the claimant, to reveal any illegal or immoral dealing on its part, to expose any hypocrisy or improper practice, nor even to demonstrate incompetence.

On appeal, the Court of Appeal held that the judge had applied the correct test and upheld the interim injunction.

COMMENT

The right to freedom of expression in Article 10 ECHR is not absolute. Certain restrictions to the right may be permissible, including where necessary to prevent the disclosure of information received in confidence. Where interim relief is sought which would restrict a respondent’s right of freedom of expression, s12 of the Human Rights Act 1998 requires the court to be satisfied that the applicant is likely to establish at trial that publication should not be allowed.

This case illustrates the factors that the court will take into account when considering whether to grant an interim injunction in a financial services context where it is said that publication would be in breach of a duty of confidence. While a fact-sensitive balancing exercise will always be required, notwithstanding any public interest in disclosure of particular information, it is clear that defendants will need to go further and demonstrate that this outweighs the public interest in maintaining the confidentiality in question.

On breach of confidence more generally, the steps taken by the hedge fund manager claimant to highlight the confidential nature of the documents were important to the judge’s conclusions that the documents were probably impressed with a quality of confidence. Financial institutions sharing valuable commercial information should also take note of the importance of highlighting the sensitive and confidential nature of such information at all stages.