In very broad terms, parties to English litigation disclose documents that they or their opponents may want to rely upon — even if the disclosed documents are adverse to the disclosing party. Parties may seek orders for further disclosure in certain circumstances. The rules on disclosure are set out in Part 31 of the Civil Procedure Rules (the CPR) and Practice Directions 31A, 31B, and 31C (the last of which is new and applicable to competition cases only).
A recent decision in Vodafone Group Services Ltd & Ors v Infineon Technologies AG & Ors[i] highlighted some limits of further disclosure orders.
Certain Vodafone group companies have commenced a damages claim following on from a decision of the European Commission, in which the Commission found that Infineon Technologies and certain other smart card chip manufacturers had participated in a European Economic Area (EEA)-wide cartel involving the supply of smart card chips. Vodafone’s estimated damages are said to be approximately £150 million and the parties were likely to spend around £30 million in total to take the case to trial.
A question arose as to whether the court should order further disclosure so that it could assess quantum more accurately. Each party put forward a number of additional categories of documents that it required the other parties to disclose. Birss J took the view that the costs of further disclosure for a number of the requested categories would be too high when taking account of the possible improvement in the precision of the quantum analysis. As a result, some of the further disclosure was deemed to be disproportionate. Birss J stated that “it might be that the best evidence was not required”. In certain circumstances, Birss J made modified further disclosure orders in an effort to bridge the proportionality gap.
Birss J also decided that, as the Samsung defendants were only likely to be liable for approximately 3% of the damages, they could provide disclosure on a narrower basis (taking into account the cost that they were likely to incur in the proceedings).
What is proportionate disclosure?
When considering disclosure, the court is required to observe the “overriding objective” of the CPR; namely, that cases should be dealt justly and at proportionate cost. The court should limit disclosure to what is necessary. This involves due consideration of the:
- Amount of money involved
- Importance of the case
- Complexity of the issues
- Financial position of each party
Proportionality in competition law cases
The introduction of the new Practice Direction 31C clarifies the approach in relation to competition law cases and codifies earlier case law. When considering the scope of disclosure, the courts will take into account a number of additional factors, including the:
- Legitimate interests of all parties and third parties concerned
- Extent to which the claim or defence is supported by available facts and evidence justifying the request to disclose evidence
- Scope and cost of disclosure
- Likelihood that the new information will be relevant to the parties in the procedure
- Confidentiality of the relevant information and the arrangements in place for protecting such confidentiality
Approach adopted in other cases
The English High Court also limited the scope of further disclosure orders based on considerations of proportionality in two other recent decisions:
- Monde Petroleum SA v. WesternZagros Ltd: The court rejected a late application for further disclosure (made just five weeks before the trial date). An important consideration was the likely additional £2 million in disclosure costs, which was considered disproportionate.
- Claverton Holdings Ltd v. Barclays Bank PLC: The court questioned whether the requested disclosure would lead to new facts or if the application was a “fishing expedition”. As further disclosure would require extensive work, and as any benefit was difficult to foresee, the court rejected the application as disproportionate.
Birss J’s decision aligns with recent court practice that disclosure will be strictly circumscribed by considerations of proportionality. The decision also provides helpful guidance as to how the courts will assess proportionality in the context of applications for further disclosure.
Parties are unlikely to obtain extensive disclosure orders if the costs of the disclosure exercise outweigh any benefit. The decision also indicates that a party’s potential share of any ultimate liability can be a factor when considering the scope of that party’s disclosure. Applications for further disclosure may also be refused if they are not made in a timely manner or if the court is not convinced of the benefit of more information.
Parties should, therefore, spend time before commencing litigation, and throughout the litigation process, considering what disclosure is actually required to prove or defend their case. Parties should also consider whether they could reduce litigation costs without reducing the scope of disclosure. For example, parties could use innovative document review platforms to make the disclosure process more time- and cost-efficient.
This post was prepared with the assistance of Mihail Krepchev and Veronika Koehnlein in the London office of Latham & Watkins.