Libyan Investment Authority v Societe Generale SA & 5 Ors (2016)
A confidentiality club was necessary to protect persons in Libya who were reported to have received sizeable sums of money from a source associated with the Gaddafi regime, even though that might to some extent inhibit the claimant's ability to prepare its case.
The claimant Libyan Investment Authority applied for an order that the confidentiality club applicable to the proceedings be set aside and replaced by a restricted information regime (RIR).
The claimant alleged that certain transactions, which involved the payment of US$2.1 billion by it to the first defendant and its affiliates, were part of a fraudulent and corrupt scheme involving the payment of US$58.4 million by the first defendant to the fifth defendant, via the sixth defendant Panamanian company. It was alleged that the claimant's employees and officers had been influenced by bribes and threats to cause the claimant to enter the disputed transactions. It was said that the fifth defendant was able to effect that scheme through his links with the regime of Colonel Gaddafi. The fifth defendant had disclosed the names of more than 50 individuals who received part of the proceeds of the payments made to the sixth defendant or other sums, on terms that the names were only provided to those within a confidentiality club, since wider disclosure would expose them, and their families and property in Libya to violence. The confidentiality club provided that confidential material could only be communicated between relevant persons, such as the parties' solicitors, by means of a secure system. The claimant wanted the club replaced by an RIR on the grounds that the club seriously interfered with its ability to prepare its case for trial, in particular by taking statements from possible witnesses. The RIR would not require the information to be communicated only by way of a secure system and would permit confidential information to be disclosed to third parties so long as they had given an undertaking to keep it confidential and to submit to the jurisdiction of the English court. The issues were: (i) whether the claimant was entitled to make the application in the light of a previous decision of the court concerning the club; (ii) whether disclosure of the individuals' names would give rise to a risk to life, limb or property; (iii) if so, what were the reasonable and proportionate steps required to protect them.
(1) The court had previously considered the position of four individuals and decided that two should be covered by the club and two should not. However, the court had not on that occasion considered and determined whether in principle there was a need for the club. The issue whether the club was a reasonable and proportionate method of protecting the individuals from the relevant risk had in effect been reserved for a later hearing and the claimant was not prevented from asking the court to consider that question (see paras 9-14 of judgment).
(2) The imposition of a confidentiality club required a real and immediate risk to life, limb or property, Libyan Investment Authority v Societe Generale SA  EWHC 550 (QB) considered and Rabone v Pennine Care NHS Foundation Trust  UKSC 2,  2 A.C. 72 followed. Persons in Libya were not within the jurisdiction and were not protected by the ECHR art.2 and art.3, Al-Skeini v United Kingdom (55721/07) (2011) 53 E.H.R.R. 18 applied. However, the test at common law was the same as that under art.2 and art.3 save that subjective fears of a risk to life and limb could be taken into account at common law even in the absence of objective verification. It was not suggested that that difference was relevant in the instant case (paras 15-26).
(3) Those within the risk profile, namely persons in Libya who were reported as having received sizeable sums of money from a source associated with the Gaddafi regime, were still at risk in 2016 from criminal and politically linked militias in search of financial gain. The risk was real and immediate, albeit low. Only some of the individuals were within the risk profile (para.52).
(4) The reasonable and proportionate way to protect the individuals within the risk profile was to retain the club but to amend it so as to incorporate a "negative resolution procedure" in relation to third parties to whom the claimant wished to divulge confidential information. Under that procedure the claimant would first inform the other parties of the name of such a third party with a short description of their identity. The other parties would then have the opportunity to object to disclosure and the court would if necessary rule on the objection. The confidentiality club order, as amended, might inhibit to some extent the claimant's ability to prepare its case, but the protection it afforded to the individuals who were at risk was the minimum necessary (paras 67-68).