The Libyan Investment Authority v Societe Generale SA & Ors [2016] EWHC 375 (Comm)

Case No CL-2014-000144[2016] EWHC 375 (Comm)IN THE HIGH COURT OF JUSTICEQUEEN'S BENCH DIVISION COMMERCIAL COURTVenue Royal Courts of Justice Rolls Building, 7 Rolls Buildings Fetter Lane, London EC4A 1NLDate 09/03/2016
Before
MR. JUSTICE TEARE
Between
THE LIBYAN INVESTMENT AUTHORITYClaimant(1) – (4) SOCIETE GENERALE SA ANDDefendantsOTHERSDefendant(5) WALID MOHAMED ALI AL-GIAHMI (6) LEINADA INC.Defendant
Roger Masefield QC, Andrew George QC, Richard Blakeley and Craig Morrison andSamuel Ritchie (instructed by Enyo Law) for ClaimantAdrian Beltrami QC, Alexander Polley and Sandy Phipps (instructed by Herbert SmithFreehills) for First to Fourth DefendantsPaul Girolami QC, George Hayman and Tom Richards (instructed by Mishcon de ReyaLLP) for Fifth and Sixth DefendantsAndrew Hunter QC and Andrew Scott (instructed by Swan Turton) for Person BHearing Hearing dates: 10 – 12 February 2016
JudgmentMr. Justice Teare :
[1]Whilst a bloody civil war rages in Libya the Claimant, the Libyan Investment Authority (“the LIA”), has commenced proceedings alleging that certain trades, which involved the payment of US$2.1 billion by the LIA to Societe Generale SA (“SocGen”) and its affiliates, the First to Fourth Defendants, were part of a fraudulent and corrupt scheme involving the payment of US$58.4 million by SocGen to Mr. Al- Giahmi, the Fifth Defendant, via Leinada Inc. (the Sixth Defendant), a Panamanian company owned and controlled by the Fifth Defendant. It is alleged that certain employees and officers of the LIA were influenced by the payment of bribes and the making of intimidatory threats to cause the LIA to enter the disputed trades. It is said that the Fifth Defendant was able to effect this scheme through his links with the Gaddafi regime. These allegations are denied by all of the Defendants.[2]In the course of disclosure by the Fifth Defendant the names of more than 50 individuals who received part of the proceeds of the Leinada payments or other sums have been identified. The Fifth Defendant was willing to disclose those names on terms that the names were only provided to those within a Confidentiality Club. Accordingly they are known outside the Confidentiality Club not by their actual names but by letters of the alphabet (hence, “the Alphabet Individuals”). It is the Fifth Defendant’s case that wider disclosure of the names of the Alphabet Individuals would expose them, their families in Libya and their property in Libya to violence. It is common ground that Libya is “a dangerous place”.[3]The Confidentiality Club has been in existence since early 2015. Its terms provide by paragraph 2 that “Confidential Material is received, held, accessed and communicated between Relevant Persons only on or by means of a Secure System”. Confidential Material is defined by Part C of the Schedule as “unredacted versions of those documents which the Fifth Defendant has been ordered to provide to the Claimant”. Relevant Persons are listed by name in Part A of the Schedule (they include solicitors, counsel, forensic accountants and IT and data management teams) who will have given an undertaking in the form prescribed by Part B of the Schedule. A Secure System is defined by Part D of the Schedule and includes a secure online e-disclosure platform, provision for one hard copy set to be kept in one office, email communications to be encrypted and restrictions on oral communications. A party to whom Confidential Material is disclosed will procure (see paragraph 6) that it will not be disclosed to persons who are not “Relevant Persons”.[4]The LIA has now applied for an order that the Confidentiality Club be set aside and replaced by a Restricted Information Regime (“the RIR”) on the grounds that the Confidentiality Club seriously interferes with the ability of the LIA to prepare its case for trial, in particular, by taking statements from possible witnesses. The Confidentiality Club prevents the LIA from disclosing the names of the Alphabet Individuals to possible witnesses. The RIR suggested by the LIA will not have this effect but will give what the LIA says is a reasonable and proportionate degree of protection to the Alphabet Individuals.[5]The terms of the suggested RIR define Restricted Information as “information derived from the Fifth Defendant’s disclosure which is not already in the public domain”. Relevant Persons are defined as including those named as Relevant Persons under the Confidentiality Club order but include additional named persons. Paragraph 4 of the proposed order provides that no Relevant Person shall disclose any Restricted Information to any Professional Third Person (defined as professional teams out of the jurisdiction such as foreign lawyers) unless that Professional Third Person has given an undertaking in the terms set out in Part C of the Schedule (in essence to keep it confidential and to submit to the jurisdiction of this court). Paragraph 5 provides that Relevant Persons and Professional Third Persons may communicate Restricted Information amongst and between themselves without restriction provided that all written communications containing Restricted Information are marked as “Confidential and Restricted Information subject to the terms of this order”. Paragraph 6 provides that no Relevant Person shall disclose any Restricted Information to any Third Person (defined as individuals who are not a Relevant Person or a Professional Third Person) unless that Third Person has given an undertaking in the terms set out in Part D to the Schedule (in essence to keep it confidential and to submit to the jurisdiction of this court).[6]The two principal differences between the Confidentiality Club order and the proposed RIR order appear to be these. First, under the former the confidential information cannot be disclosed by a recipient of it save to another Relevant Person. Under the latter the recipient may disclose it to third parties so long as the third person gives the required undertaking. Second, under the former the confidential information can only be communicated and discussed amongst Relevant Persons by means of the described “secure system”. Under the latter it may be communicated and discussed provided that written communications are headed “Confidential and Restricted Information.”[7]This application has given rise to the following main issues: i) Is the LIA entitled to make this application? It is suggested that the LIA is not so entitled because of an earlier decision by Hamblen J. in February 2015 concerning the Confidentiality Club. ii) Would disclosure of the names of the Alphabet Individuals give rise to a risk to life, limb or property? iii) If so what are the reasonable and proportionate steps required to protect the Alphabet Individuals?[8]I have received submissions not only from leading counsel on behalf of the LIA, SocGen and the Fifth Defendant but also from leading counsel on behalf of Person B, one of the Alphabet Individuals, who is said to have received about US$24 million of the Leinada payments and against whom the LIA has now commenced separate proceedings (which have been consolidated with the proceedings against SocGen and the Fifth Defendant). The resolution of the LIA’s application is a matter of considerable concern to all parties but for different reasons. The expressed concern of the LIA is that the Confidentiality Club unnecessarily, unreasonably and/or disproportionately interferes with its ability to prepare its case for trial. The expressed concern of the Fifth Defendant is that the proposed RIR will expose the Alphabet Individuals to a risk to life, limb and property. Person B says that the proposed RIR will expose him and his family to such risk. SocGen is also concerned that the Confidentiality Club inhibits its ability to defend itself against the claims of fraud which have been made against it.

The entitlement of the LIA to make this application

[9]It was submitted by Mr. Girolami QC on behalf of the Fifth Defendant (supported by Mr. Hunter QC on behalf of Person B) that, in circumstances where Hamblen J. in February 2015 had considered whether four of the Alphabet Individuals should be covered by the Confidentiality Club and had determined that two should be and two should not be, it was not open to the LIA, absent a change of circumstances, to put back in issue the “risk profile” which gave rise to the need for the Confidentiality Club or the engagement of the court’s obligation to protect life, limb and property. Mr. Girolami supported his submission by reference to the statement of principle by Lord Neuberger in Thevarajah v Riordan [2015] UKSC 78 at paragraphs 15-18 to the effect that an application to vary or revoke a previous interlocutory order requires a material change of circumstances.[10]Mr. Girolami took me through the events leading up to the hearing before Hamblen J. and to the written submissions of counsel for the LIA which were made to Hamblen J. It is not necessary to set all of that out in detail. There is no doubt that there was a prospect that Hamblen J. would be asked to determine whether in principle there was a need for the Confidentiality Club. That would have involved an assessment of the question whether there was a risk to life, limb and property and if so whether the scheme of the Confidentiality Club was necessary to protect life, limb and property, notwithstanding the effect it would have on the LIA’s preparation for trial.[11]However, when the matter was argued before Hamblen J. it was clear that the LIA was not asking the court to consider whether there was in principle a need for the Confidentiality Club. Thus the final paragraph of the LIA’s written submissions entitled “Conclusion” said in terms at paragraph 132 that the question of whether a confidentiality regime is necessary at all should be reserved to a further hearing. When Mr. Girolami opened the matter before Hamblen J. he said that the first issue to be determined was whether there is any need for a confidentiality club at all. Hamblen J. remarked that as he understood the matter the LIA was not seeking determination of that point because they were content for it to continue on terms. It seems clear to me that Hamblen J. had in mind the final paragraph of the LIA’s written submissions. Although Mr. Girolami then made clear that it was the Fifth Defendant’s wish to have the matter of principle determined, Hamblen J. did not do so. Rather, he determined two discrete matters, namely, whether four of the Alphabet Individuals should be covered by the Confidentiality Club and whether Mr. Baruni should be admitted to the Confidentiality Club; see paragraphs 1, 3 12-17, 43-44 and 82 of Hamblen J.’s judgment. Hamblen J. acknowledged that the application of the Confidentiality Club to other Alphabet Individuals other than the four whose case he had determined was something which might be challenged in the future. Thus at paragraph 44 he said that “the LIA does not presently dispute [the suggested risk to individuals] in relation to the relevant individuals other than D, L, N and R. (emphasis added)”[12]I accept that the section of the judgment beginning at paragraph 36 is headed “The need for a Confidentiality Club” but it was necessary for Hamblen J. to have regard to the evidence as to risk in order to determine the two discrete matters on which he ruled. I also accept that in circumstances where Hamblen J. decided that two individuals, L and N, should be covered by the Confidentiality Club it can be argued that such decision necessarily implies an acceptance by Hamblen J. that there was a risk profile which demonstrated a need for the Confidentiality Club and engaged the court’s obligation to protect life, limb and property. This is consistent with Hamblen J. having “received and considered” what Mr. Girolami described as “hundreds of pages of evidence, written submissions and oral submissions.”[13]However, in circumstances where Hamblen J. expressed his understanding that he was not being asked to determine the need for the Club in principle and described the issues he was determining in much more limited terms I do not consider that it can fairly be said that it is not open to the LIA to challenge the need for a Confidentiality Club, absent a change in circumstances. Hamblen J’.s order expressly provided at paragraph 19 for a liberty to apply. This liberty of course extended to any application necessary to clarify the working out of the order but in circumstances where the LIA had expressly reserved the question of whether a Confidentiality Club was required at all and where Hamblen J. in response ruled on the two matters in respect of which the LIA had requested him to rule, the liberty to apply can fairly and properly be understood as extending to the matters reserved for a later hearing.[14]In any event Mr. Masefield QC, on behalf of the LIA, has submitted that there has been a material change of circumstances. The first suggested change concerned conditions in Libya. I shall consider that below after reviewing the evidence on risk. The second suggested change is that the litigation has now reached the stage where the LIA’s solicitors need to seek evidence in Libya concerning the alleged fraud, bribery and intimidation and they are inhibited in doing so by the Confidentiality Club. That was not the position in February 2015. In one sense this is a change but it can hardly have taken anybody by surprise. However, whether or not it is to be regarded as a material change the LIA made no submissions before Hamblen J. as to whether, assuming that there was a relevant risk, the Confidentiality Club was a reasonable and proportionate method of protecting the Alphabet Individuals from that risk. In circumstances where they made clear that that question was in effect reserved for a later hearing and where Hamblen J. ruled on the two discrete matters on which he heard argument the LIA cannot, in my judgment, be prevented from asking the court now to consider that question. Would disclosure of the names of the Alphabet Individuals give rise to a risk to life, limb orproperty?[15]Mr. Masefield addressed me at length as to the appropriate principles to be applied both pursuant to Articles 2 and 3 of the ECHR which protect the right to life and freedom from torture (and Article 1 of the First Protocol which provides for the protection of property) and at common law. The same submissions were made to Hamblen J. and his summary of the relevant principles is not challenged by Mr. Masefield. I shall therefore take the relevant principles from that summary which I shall only expand where necessary to take account of a particular point stressed by Mr. Masefield.[16]Hamblen J. held (at paragraphs 20 and 21 of his judgment) that the person seeking the imposition of a Confidentiality Club bore the burden of persuading the court to depart from the principle that each party should be entitled to unrestricted access to inspect the other parties’ disclosure. Hamblen J. further held (at paragraphs 25 and 26) that where departure from that principle was required to protect against a risk to life so as to comply with the obligation of the UK to take reasonable steps to avoid a risk to life under Article 2 of the Convention there must be shown a “real and immediate risk” to life. The risk must be “objectively verified” and an immediate risk is one which is “present and continuing”. It may be added that a real risk is one which is “a substantial or significant risk and not a remote or fanciful one”; see Rabone v Pennine Care NHS Trust [2010] 2 AC 72 at paragraph 38 per Lord Dyson. Hamblen J. said (at paragraph 29 of his judgment) that the same “real risk” test applied to the state’s obligation in relation to Article 3 to protect against torture or other inhuman or degrading treatment.[17]In addition to the above principles Mr. Masefield submitted that the threshold to engage Articles 2 and 3 was “high” and “stringent”; see Re Officer L [2007] 1 WLR 2135 at paragraph 20 per Lord Carswell and Van Colle v Chief Constable of Hertfordshire [2009] 1 AC 225 at paragraph 115 per Lord Brown. It was accepted by Mr. Masefield that this did not mean that a high level of risk had to be established but that cogent evidence was required to meet the required test. A 20% chance that something may happen is a real risk because it is substantial and not fanciful; see the approach of Simon J. in Rabone where such a risk was described as “low to moderate (but nevertheless significant)” quoted by Lord Dyson at paragraph 35.[18]Where there is already a pre-existing risk to life and limb the court adopts a two stage analysis asking, first, whether disclosure of the protected information gives rise to a materially increased risk to life and, second, if it does whether this reaches the required threshold of a real and immediate threat to life; see In Re Officer L at paragraphs 24, 25 and 29 per Lord Carswell.[19]If that threshold is met so as to engage the State’s operational duty the court must consider the extent of that duty in the particular case. Although the duty provided by Articles 2 and 3 is absolute in the sense that it is unqualified, the State’s operational duty is not to take all steps which will avoid the risk to life or limb but to take “appropriate steps” so that an “impossible or disproportionate burden” is not imposed on the State; see Osman v UK (1998) 29 EHRR 245 at paragraphs 115 and 116. The standard is based upon “reasonableness”; see In re Officer L at paragraph 21 per Lord Carswell. Thus, as Hamblen J. observed at paragraph 34 of his judgment “the imposition of a confidentiality club and, if so, its terms generally involves a balancing exercise”.[20]However, where it is judged that the step reasonably necessary to protect a person from a real risk to life and limb is one which limits access to a party’s disclosure to the members of a Confidentiality Club the necessity for such an order will not be outweighed by other balancing considerations (such as impediments it creates to a party’s ability to prepare his case for trial). That is because the State’s duty to protect against such risk is absolute in the sense of being unqualified; see paragraph 35 of Hamblen J’.s judgment.[21]There was one submission which was made to me but not to Hamblen J., namely, that Articles 2 and 3 apply only to persons within the jurisdiction. Persons in Libya are not within the jurisdiction and so, it was said, are not protected by Articles 2 and 3 of the ECHR. This submission is based upon Article 1 of the ECHR which provides as follows:
“The high contracting parties shall secure to everyone within their jurisdiction the rights and freedoms defined in section I of this Convention.”
[22]In Al-Skeini v UK (2011) 53 EHRR 589 the European Court of Human Rights interpreted Article 1 in this way:131. A state’s jurisdictional competence under art.1 is primarily territorial. Jurisdiction is presumed to be exercised normally throughout the state’s territory. Conversely, acts of the contracting states performed, or producing effects, outside their territories can constitute an exercise of jurisdiction within the meaning of article 1 only in exceptional cases.132. To date, the court in its case law has recognised a number of exceptional circumstances capable of giving rise to the exercise of jurisdiction by a contracting state outside its own territorial boundaries.[23]The Court, at paragraphs 133-142, identified those exceptional circumstances. They are “state agent authority and control” (for example by diplomatic or consular officials), effective control over an area (for example as a result of military action) and “Convention legal space” (where the territory of one convention state is occupied by the armed forces of another; the Convention applies so as to ensure that there is no “vacuum of protection” within the “Convention legal space”). It is common ground that none of those exceptions applies in this case.[24]In Smith v Ministry of Defence [2014] AC 52 at paragraph 30 Lord Hope said that Article 1 should not be construed as reaching any further than the existing Strasbourg jurisprudence clearly shows it to reach. He described that as “the guiding principle” for a national court.[25]Mr. Girolami submitted that when the English court exercises its jurisdiction on a person out of the jurisdiction (as it is did with regard to the Fifth Defendant who resides in Dubai) that circumstance should be recognised as a fourth exception to the territorial reach of Article 1. In the light of Lord Hope’s observation I do not consider that it is open to a first instance judge to fashion a fourth exception, notwithstanding the attraction of Mr. Girolami’s submission. I consider that I should follow Lord Hope’s guiding principle. It follows that I cannot recognise the suggested fourth exception because it is not recognised by the existing Strasbourg jurisprudence.[26]However, the relevance of this point in the present case is obscure because it is common ground that the common law’s protection of the fairness of the court’s proceedings extends to ensuring that those proceedings do not risk life and limb whether within the jurisdiction or without. Mr. Girolami was content, at least in his oral submissions, to rely upon the common law rather than upon Articles 2 and 3 of the ECHR and neither he nor Mr. Masefield (nor any other counsel) suggested that the test at common law was any different from that under Articles 2 and 3 save that, as noted by Hamblen J. at paragraph 32 of his judgment, subjective fears of a risk to life and limb may be taken into account at common law even in the absence of objective verification. In the present case, however, no party suggested that that difference was relevant. The debate in the present case was whether the evidence established that unlimited disclosure of the identity of the Alphabet Individuals gave rise to a real and immediate risk to life and limb. To that evidence it is now necessary to turn.

The effect of disclosure

[27]The case of the Fifth Defendant is that those mentioned in his disclosure as having received sums from him are at risk to life, limb or property. The case is supported by several expert reports of Mr. Walker-Cousins MBE who is a Middle East political- security specialist who has experience of NGO, military, security, commercial and diplomatic work in Iraq, Afghanistan, the West Bank, Saudi Arabia and Libya where he was head of the British Embassy’s Office in Benghazi. The case of Person B is also supported by his own evidence of his own and his family’s experience in Libya.[28]The first two reports of Mr. Walker-Cousins were before Hamblen J. when he was considering whether four of the Alphabet Individuals ought to be protected by the Confidentiality Club. At that time there was no expert evidence in opposition to that of Mr. Walker-Cousins. Hamblen J.’s findings are therefore a useful starting point. He summarised the evidence of Mr. Walker-Cousins in these terms. “Those perceived as associated with the former Gaddafi regime or identified as recipients of misappropriated Libyan state funds are particular targets for murder or other violence and mistreatment” (see paragraph 37 of his judgment). Hamblen J. noted that the financial records which have been disclosed and have given rise to the suggested need for the Confidentiality Club “identify individual third parties who receive payments or the benefits of payments by [the Fifth Defendant] which on the LIA’s case represent payments of the proceeds of the Leinada payments- ie payments by an alleged Gaddafi associate and “representative” of misappropriated state funds” (see paragraph 42). Hamblen J. recorded the submission of the Fifth Defendant that “such individuals will be put at risk or increased risk if their identity is publicised or leaked, particularly given the use of social media in Libya” (see paragraph 43). The judge held (in paragraph 47) that there was no real and immediate risk to the life and limb of individuals D and R or their family because they were not resident in Libya, they had no family members there and there was no evidence that they were likely to travel to Libya in the foreseeable future. But with regard to individuals L and N who resided in Libya with their families such a risk was made out because they fitted the “risk profile” which Mr. Walker-Cousins had identified (see paragraph 50). On my understanding of the judgment that “risk profile” was that referred to in paragraphs 42 and 43 of the judgment, namely, individuals who receive payments or the benefits of payments by the Fifth Defendant which on the LIA’s case represent payments of the proceeds of the Leinada payments- ie payments by an alleged Gaddafi associate and “representative” of misappropriated state funds.[29]There was a dispute between the parties as to whether the risk profile was restricted to those who had received sums from the Fifth Defendant, such sums being proceeds of the Leinada payments, or whether the risk profile extended to those who had received payments from the Fifth Defendant whether or not they were identified as being the proceeds of the Leinada payments. My understanding of the evidence of Mr. Walker- Cousins upon which Hamblen J. based his findings was that the risk profile covered those who had received from someone associated with the Gaddafi regime funds misappropriated from the Libyan state. It is of course the case of the LIA that the funds distributed by the Fifth Defendant were the proceeds of the Leinada payments but I do not understand Hamblen J.’s mention of the LIA’s case in that regard to have been intended to limit the risk profile. Such a limit would not make sense. The Fifth Defendant is a person who, it is alleged, received funds misappropriated from the Libyan state. The risk profile as found by Hamblen J. extends to those who are reported as being in receipt of sums from the Fifth Defendant. If the interest of the militia in Libya in a person who has received a substantial sum from the Fifth Defendant is stimulated by reports of such receipt (because they are likely to have been misappropriated from the state in circumstances where they have been provided by the Fifth Defendant) I doubt that the militia will be particularly concerned with the precise source of such monies.[30]The risk is of course dependent upon the militia learning of the identity of the individuals who have received the misappropriated funds. The suggestion is that that may happen “by general publicity, or by a private leak of information, and whether deliberately or inadvertently” (see paragraph 16 of Ms. Garbett’s third witness statement quoted by Hamblen J. at paragraph 36 of his judgment). Mr. Walker- Cousins considered that this might happen “through unregulated, subjective or inaccurate social media comment or internet reporting based upon biased comment” (see paragraphs 68-71 of his report quoted by Hamblen J. at paragraph 40 of his judgment). There was, I think, little debate before me as to who would leak the information in question to social media in Libya. The legal and other professionals acting for the LIA would obviously not do so. The risk appears to me to be that Libyans approached by the LIA’s solicitors or on their behalf might do so (see what the Fifth Defendant said about the risk of Mr. Baruni disclosing confidential information, paragraphs 67 and 71-72 of Hamblen J.’s judgment). This sort of point is said to be no more than “speculation” by Mr. Masefield (see paragraphs 113-114 of his Written Submissions). However, it is not presently known who the LIA’s solicitors wish to approach in order to seek evidence and to whom they wish to have the freedom to disclose the information presently kept within the Confidentiality Club. They merely refer to “potential factual witnesses in Libya” (see paragraph 90 of Mr. Masefield’s Written Submissions). The matters they wish to enquire about are wide-ranging (see paragraph 91 of Mr. Masefield’s Written Submissions). It seems to me possible that those they wish to approach are people who were relatively high in the management of the LIA. It may be that such persons can be relied upon not to disclose confidential material but I simply do not know and in circumstances where there is a dispute as to who controls the LIA it would be unwise to guess. In these circumstances I do not consider that I can determine this application other than on the basis that there is a risk that unless special steps are taken to keep the information in question confidential there is a risk that it might reach the ears of the militia in Libya. That is indeed the assumption which underlies the Confidentiality Club which the Fifth Defendant supports and the RIR which the LIA supports.[31]Mr. Walker-Cousins prepared a third report dated 12 January 2016 which was to “provide an update to the Court on how the situation in Libya has changed.” Between paragraphs 5 and 12 he summarised the political developments in Libya and between paragraphs 13 and 16 he commented upon changes in the control of the LIA and other agencies in Tripoli. He then considered risks and threats. He said in paragraph 17 that “the risks identified in his previous reports will have, at best, certainly remained the same, but most likely will have increased…...” In paragraph 18 he noted that “organised crime has continued to flourish with a significant growth in human trafficking ……kidnappings and extortion from notable families and businessmen in Tripoli.” In paragraph 20 he said that the civil war in Libya and the existence of competing chairmen at Libya’s financial institutions are now intimately linked and the risks relating to revenge, retribution and politically motivated attacks have only increased.”[32]The next section of Mr. Walker-Cousins’ report is entitled “Opinion of the Current Case” from which I infer that the previous sections merely set the scene and were not intended to comment on the specific risks to the Alphabet Individuals. He expressed a number of opinions which would appear to support the Fifth Defendant’s case. Thus he said: “[The Fifth Defendant] his family and associates ………….could also be considered specific targets given the high-profile nature of this case, the sizable sums of money no doubt involved and the increasingly political nature of the proceedings concerning control over the national institutions, including ……..the LIA.” (paragraph 22) “….given the continuing deterioration in Libya’s security situation, in Tripoli and Benghazi in particular, and in light of the increasingly tight financial situation across the country, the threat to high-profile business individuals and their families ….will have been increased.” (paragraph 23) “If someone is a recipient of tainted funds and their name and location was to be publicised, or fall into the wrong hands, then it is likely they would become the target of criminal activity.” (paragraph 26) “ ….public allegations of association with [the Fifth Defendant], even where those allegations may only imply the receipt of tainted funds will likely be widely disseminated and much commented on in the local press and social media. This will therefore increase that risk to an individual living in Libya, or to their family and assets in Libya. Similar risks would also apply to an individual who is publically associated with [the Fifth Defendant], through having sold an asset to him or who received a charitable payment from him, or if this information was passed unofficially to the GNC/Dawn militia alliance currently controlling Tripoli and the LIA.” (paragraph 27)

….will have been increased.” (paragraph 23)

[33]When this application was issued the LIA did not support it by evidence from a comparable expert. But in reply to Mr. Walker-Cousins’ third report the LIA adduced in evidence a report from Mr. Peter Cole who worked in risk consultancy specialising in risks in insurance markets in emerging markets and in particular in the Middle East. From 2011 he has focussed on revolutionary and post-revolutionary Libya and has acted as a consultant. From 2013-2015 he was the lead editor of a book on the Libyan revolution. He has travelled to Libya extensively. He has met many Libyans from across the social and political spectrum.[34]Mr. Cole accepts that Libya is a dangerous place but considers that since early 2015 the risks have changed significantly.[35]Between 2011 and mid-2012 certain categories of individuals closely associated with the Gaddafi regime known as azlam were vulnerable to persecution or reprisals (for example those who held senior security positions in the Gaddafi regime, those who enforced the regime’s rule by violence and those who enforced and disseminated the regime’s ideology). During this period there were only a few instances of individuals being targeted who were rumoured to have had links with corruption under the Gaddafi regime. He considered that corrupt association with the regime was by itself not a basis for being targeted. There was, however, a substantial amount of looting and criminal conduct. He expressed the opinion that: “There is no known case of any arrest merely on the basis of past association with Gaddafi’s regime or family, or claims to have profited financially from those associations (including from corruption).” (paragraph 27)[36]By mid-2012 the identification and pursuit of azlam had been completed. But there remained violence. His opinion is that the primary reason for such violence was criminal conduct and politically motivated violence against those who continue to be involved in politics. He said: “The possibility of a risk to individuals who were not azlam, but who were simply involved in past corruption under the Gaddafi regime or who were associated with the regime or state institutions in other ways ………..certainly ceased after 2011- 2012. Indeed, no example of the targeting of such individuals has been provided in the material I have received relating to this case.” (paragraph 29)[37]He accepted that there had been two campaigns which targeted azlam and other individuals between 2012 and 2015. One, an assassination campaign in Benghazi, was motivated by a desire to take revenge against those in the security apparatus involved in anti-Islamic operations conducted by the Gaddafi regime in the 1990s and 2000s. “Nonetheless, the mere fact of association with the Gaddafi regime, or past receipt of financial benefits due to associations with the former regime, was not a motivating factor in the assassinations at any stage of the campaign.” (paragraph 32)[38]The other involved a pursuit of azlam in western Libya as well as others thought to be involved in ongoing corruption. The latter were businessmen or politicians associated with the post-revolutionary government and not with the Gaddafi regime.[39]Neither campaign targeted: “individuals merely because of their association with the Gaddafi regime, nor for corrupt activities supposedly carried out under that regime.” (paragraph 39)[40]Mr. Cole considered that the present risk (in January 2016) was politically motivated violence related solely to current political events in Libya and endemic crime. The latter was generally opportunistic based on the perceived possibility of extracting wealth from individuals who are perceived to be wealthy or are in the wrong place at the wrong time. Mr. Cole considered that it was highly unlikely that a Libyan of significant wealth would have managed to keep his wealth secret.[41]Mr. Cole then considered the risks to individuals associated with the Fifth Defendant. He did not consider there were any. He noted that although information concerning his position and dealings had been available since 2011 the Fifth Defendant has not been a marked man. He expressed the opinion that the mere fact of association with the Gaddafi regime or family is not a reason for pursuit of an individual in Libya in 2016. Also, the fact that someone is thought to have financially benefited from their links to the regime would not be a reason for that individual being subjected to any particular threat. He was unaware of any example of a person since 2012 being targeted on the basis that they benefitted from corrupt dealings with the former regime.[42]With regard to those with valuable assets Mr. Cole did not consider that disclosure of information that they had received money from the Fifth Defendant would materially increase the risks to them. Their wealth would already be known and the source of the money would not matter. It was highly unlikely that those who were the beneficiary of charitable payments would be made a target.[43]Mr. Walker-Cousins’ responded to the report of Mr. Cole with his fourth report. He agreed with much of Mr. Cole’s evidence regarding “the current situation” but considered that azlam was a red herring and he disagreed as to whether publication of personal details of individuals associated with the Fifth Defendant would increase the risks to them. He stated that he remained of the view that his description of the risks was accurate and that there had not been a significant overall decrease in those risks. “Any further release into the public arena of information concerning those associated with [the Fifth Defendant] through the receipt of potentially tainted funds would substantially increase the risk of their exposure to threats of extortion and intimidation motivated by the financial concerns of criminal elements (such that there is a high risk) and/or as part and parcel of the wider wrangling over the leadership and control of the LIA.” (paragraph 6)[44]Mr. Walker-Cousins said that the focus on azlam failed to engage with the nature of the principal threat which he had identified facing those associated with the Fifth Defendant (through potentially tainted payments) namely extortion and intimidation by those seeking recovery of funds or just payment/theft under threat of violence. He said the motivation is initially financial but there was “a secondary but equally disturbing risk….of targets of criminals becoming pawns in a wider political scenario as militias seek to extend their control and influence.”[45]He agreed that reprisal attacks largely came to an end in 2012 but he said this was because of the number of refugees in Tunisia who sought refuge from the violence in Libya. He considered that if a person associated with the Gaddafi regime was brought to the attention of the militia they would be just as much at risk as before.[46]He noted Mr. Cole’s statement that there was no known case of an arrest on the basis of past association with the Gaddafi regime. Mr. Walker-Cousins said there were hundreds and he cited one.[47]With regard to the risk to the wealthy he said that it was:
“patently clear that the release of new or further personal details or facts into the public domain of individuals associated with [the Fifth Defendant], including by the receipt of tainted funds, would, given the high profile nature of this case, manifestly increase the risk of their being targeted.”
[48]Whilst there is much common ground between the two experts there is a clear dispute on the matter at issue on this application, namely, whether there is a risk to life and limb of those identified as having received money which had been misappropriated from the Libyan state from someone such as the Fifth Defendant who was associated with the Gaddafi regime. Mr. Walker-Cousins considers, on the basis of his knowledge of modern day Libya that there is such a risk. It stems from financially motivated, but politically linked, militias. He accepts that attacks on those associated with the Gaddafi regime have declined since 2012 but says that is largely because of the large numbers who have fled Libya. He considers that if a person comes to the attention of such militias as having received money from a person associated with the Gaddafi regime, such as the Fifth Defendant, such a person would be at risk of intimidation, home invasion or kidnap. By contrast, Mr. Cole considers that risks to those linked to the Gaddafi regime have ceased and instead attacks are motivated by current political disputes. Wealthy people are at risk but because they are already known publication of their receipt of money from the Fifth Defendant would not expose them to any greater risk than they already face.[49]Mr. Masefield submitted that given the lack of examples in Mr. Walker-Cousins’ reports the risk to which he speaks cannot be objectively assessed. I am unable to accept that submission. Mr. Walker-Cousins’ opinion is based upon his knowledge of modern day Libya which he has set out at length. His opinion is derived from his observations of modern day Libya.[50]Mr. Masefield also submitted that the fact that members of the Fifth Defendant’s family have lived in Libya without being attacked is the best evidence that the risk expressed by Mr. Walker-Cousins is neither real nor immediate. This submission was also made to Hamblen J.; see paragraph 45(1) of his judgment. I agree that this factor gives support to Mr. Cole’s opinion. But in the absence of detailed evidence concerning the way of life of the Fifth Defendant’s family in Libya I am unable to accept that Mr. Walker-Cousins’ suggested risk is neither real nor immediate, though it does suggest that the risk is low, rather than high.[51]Mr. Cole’s opinion is based upon the apparent cessation of attacks on those associated with the Gaddafi regime since 2012. However, Mr. Walker-Cousins’ explanation for that, namely, the flight of hundreds of thousands of Libyans to Tunisia appears to me to be credible. Mr. Cole’s opinion that wealthy Libyans are already known and so would not be at any further risk (from the endemic, opportunistic crime which he accepts is present in Libya) if it were reported on social media in Libya that a named Libyan had received a significant sum of money from the Fifth Defendant appears to me, with respect to Mr. Cole, to be unduly complacent. Lawless and violent militias (attracted by “the perceived possibility of extracting wealth from individuals who are perceived to be wealthy”) might well it seems to me, having regard to the evidence in this case, be stirred into action by such reports.[52]The conclusion I have reached is that those within the risk profile described by Mr. Walker-Cousins, namely, persons in Libya who are reported as having received money, or at any rate what he describes as “sizeable” sums, from a source associated with the Gaddafi regime, are still at risk in 2016 from criminal and politically linked militias in search of financial gain. The risk is probably less than it was in the aftermath of the civil war given the time which has elapsed since then and the other political issues which have developed as noted by Mr. Cole but I consider the risk to be real and immediate, albeit low.[53]Mr. Masefield had submitted, based upon the evidence of Mr. Cole, that there had been a material change of circumstances in Libya since the hearing before Hamblen J. in February 2015. Whilst there have been changes or developments in the situation I am not persuaded that there has been a material change in circumstances since February 2015. There was then a real and immediate risk to those within the risk profile, and there remains such a risk.[54]The next question is whether the Alphabet Individuals fall within the risk profile identified by Mr. Walker-Cousins. Mr. Masefield made certain general points about this between paragraphs 80 and 85 of his Written Submissions. However, it is only possible to make an assessment as to whether the Alphabet Individuals fall within the risk profile by knowing something about their characteristics, the amount of money they have received and whether or not it has been spent. What is known about them has been summarised in two confidential schedules prepared by the solicitors to the LIA and the Fifth Defendant. I have considered the information in those schedules and my conclusions (for reasons which are set out in a Confidential Annex to this judgment) are as follows: i) Of the first tranche of Alphabet Individuals the necessary real and immediate risk has been made out only in respect of A, B and U, in addition to L and N whom Hamblen J. held were within the risk profile. (Although I was provided with information about L and N I did not consider it appropriate to review Hamblen J’.s findings.) ii) Of the second tranche of Alphabet Individuals the necessary real and immediate risk has been made out only in respect of X, Z, AB, AE, AF, AH, AJ and AI. iii) In addition AC, AD, AG, AK, AL, Company X and properties A-L should be kept confidential so as to prevent the identification of Person B.

What are the reasonable and proportionate steps required to protect the Alphabet Individuals?

[55]The essential difference between the Confidentiality Club favoured by the Fifth Defendant and Person B and the RIR favoured by the LIA was described in this way by Mr. Hunter QC, counsel for Person B. “That’s the difference in a nutshell between the Confidentiality Club and the RIR, because the Confidentiality Club has at its heart vetting for trustworthiness of those who may be permitted to have the confidential information; and the RIR does not. The definition of “third party” in the RIR, paragraph 2.3, is effectively anyone.”[56]This is a forensically attractive way of describing the difference but it is a little unfair because it suggests that under the RIR there is no attempt to protect the confidentiality of the information in question. Mr. Hunter had in mind that the parties can apply for a person to become a member of the Confidentiality Club and if the person is judged to be a person likely to respect the confidence of the Confidentiality Club the parties will agree to his becoming a member. In the event of a dispute the court can resolve the dispute as Hamblen J. did with regard to Mr. Baruni. However, when he said that under the RIR anyone could have access to the confidential information that was not strictly correct because only persons who were willing to undertake to keep the information confidential and to submit to the jurisdiction of this court could be given access to the information.[57]The important question is whether that undertaking and an agreement to submit to the jurisdiction of this court is adequate protection for those at risk. The LIA relied upon Hamblen J’.s “starting point” that it should be assumed that parties to confidentiality rings will comply with their undertakings; see paragraph 68 of his judgment. It is however only the starting point and without knowing who in Libya the LIA wishes to approach it is not known whether the LIA would only approach persons like Mr. Baruni in respect of whom Hamblen J. held that it was very much in his interests to observe his undertaking (see paragraph 70 of his judgment).[58]If the person who gives the undertaking and agrees to submit to the jurisdiction of this court is from time to time within the jurisdiction or has assets within the jurisdiction the RIR may well give protection to those at risk. If those conditions do not apply then all will depend upon the willingness of the person to honour his undertaking and respect the decisions of this court. Obviously many people who give such an undertaking and agree to submit to the jurisdiction of this court will honour their undertaking and their agreement to submit. But some may not.[59]Thus the difficulty with the RIR is that, although the LIA’s solicitors will discharge their duties properly and in accordance with their own duties to use the confidential information only for the purposes of the case and not for any other purpose, they may nevertheless obtain the necessary undertaking and submission from persons who, unknown to the solicitors, may not honour their undertaking. Furthermore, the Fifth Defendant and Person B will be unaware of who is approached by those acting for the LIA and therefore will not be able to form a view as to whether the persons approached will be likely to honour their undertaking. It may be that there is only a low order risk of this occurring because those likely to be approached for evidence in this case may well be or have been responsible officials in the LIA who would not wish to “leak” information which is required to be kept confidential in order to protect the lives of fellow Libyans. However, I do not feel able to say that the possibility of such a leak occurring can confidently be excluded.[60]Perhaps recognising that the RIR was open to this objection Mr. Masefield suggested in the course of his reply a modification to the RIR which was set out in writing following the hearing. The modified RIR divided Third Persons into two categories, those who are neither Libyan nationals nor resident in Libya and those who are Libyan nationals or resident in Libya (“Libyan Third Persons”). It was suggested that the confidential information could be disclosed to third persons in the first group in accordance with the first version of the RIR but that a different procedure would apply to Libyan Third Persons. For them there should be a “negative resolution procedure” whereby: i) The LIA should first inform the other parties of the name of the Libyan Third Party with a “short description of their identity”. ii) The other parties would then have 7 days to object to the LIA disclosing the confidential information by setting out the basis on which the provision of confidential information to that person will materially increase the risk to life and limb with supporting evidence. The LIA would provide short written submissions with supporting evidence. The court would then rule on the objection.[61]This modified proposal has not been accepted by the Fifth Defendant or by Person B.[62]The concern of the LAI which prompted this application was that the LAI wished to make enquiries of “(in particular) potential factual witnesses in Libya.” Such potential witnesses are likely to be Libyan nationals though I suppose it is possible that some may not be. The difference between the Confidentiality Club and the modified RIR appears to be a difference as to the burden of proof. Under the Confidentiality Club, in the absence of agreement between the parties, the burden would be on the party wishing to admit a new member to the club to persuade the court that it was appropriate to do so. Under the “negative resolution procedure” in the modified RIR the burden would appear to be on the person objecting to the LIA disclosing confidential information to the named person to persuade the court that the LIA should not disclose confidential information to that person.[63]The reason for imposing a limit on the principle that each party is entitled to unrestricted access to and use of another party’s disclosure for the purposes of preparing a case is that such unrestricted access and use poses a real and immediate risk to the life and limb of certain of the Alphabet Individuals. It is clear that the burden of establishing such a real and immediate risk to life and limb lies upon the person seeking to impose such limit; see paragraph 21 of Hamblen J’.s judgment. The Fifth Defendant has established that there is such a risk, albeit a low order risk, to those within the “risk profile”. Consistent with the principle identified by Hamblen J. the burden lies upon the Fifth Defendant to persuade the court that the Alphabet Individuals are within that risk profile. It also seems to me to be consistent with that principle that if the LIA wishes to admit a person to the Confidentiality Club in order to question him about the confidential information and the Fifth Defendant or Person B opposes that wish and thereby wishes to limit the LIA’s ability to prepare its case, the burden should be on the Fifth Defendant and Person B to persuade the court that the person should not be admitted.[64]The question therefore arises whether the Confidentiality Club order should be set aside and replaced by the modified RIR or whether the Confidentiality Club order should be amended so as to provide a procedure for resolution of disputes as to the introduction of new members to be resolved in the manner contemplated by the modified RIR.[65]In answering this question I have taken into account the other criticisms of the Confidentiality Club and in particular the criticism that the regime is one-sided and favours the Fifth Defendant and Person B (see paragraphs 102 and 105-107 of Mr. Masefield’s Written Submissions). For example, the Fifth Defendant can gather evidence unfettered by the Confidentiality Club. The RIR, as modified, seeks to make the playing field more level. So would an appropriate amendment to the Confidentiality Club.[66]Mr. Girolami said that under the RIR there would be no provision for the secure storage transmission or handling of confidential material. That is correct because, instead of the elaborate mechanisms in the Confidentiality Club for ensuring secure storage and use of the confidential information, the RIR only requires that written documents be marked “Confidential and Restricted Information.” (After the hearing it was suggested by Mr. Masefield that in addition no unredacted versions of documents containing restricted information would be provided to any Third Person and no Third Person would be permitted to take copies.) This less rigid regime has no doubt been suggested because it is the case of the LIA that the Confidentiality Club “raises immense practical difficulties, creates an inevitable risk of contravention, and occasions very significant compliance costs” (see paragraph 107 of Mr. Masefield’s Written Submissions). In considering this matter I have taken into account, first, that the number of the Alphabet Individuals who need protection is now seen to be much smaller than the original figure put forward, second, that where there is a real and immediate risk to life and limb it is proportionate that very careful steps are taken to ensure the confidentiality of the material in question and, third, the technical requirements of the secure systems under the Confidentiality Club order have no doubt been devised and acted upon for some time. I have concluded that it is appropriate to retain the provisions in the Confidentiality Club order for the secure storage, transmission and handling of confidential material.[67]Having done my best to reflect on the many points canvassed I consider that the Confidentiality Club order should be retained but amended so as to incorporate the “negative resolution procedure” in relation to persons to whom the LIA wish to divulge confidential information. Paragraph 6 of the Confidentiality Club order already prohibits disclosure to persons who are not Relevant Persons “without the consent of the Disclosing Party”. The negative resolution procedure could be added to this paragraph. It should apply to all non-Relevant Persons, not just to Libyan non- Relevant Persons. Also, unless the LIA provides evidence at the time it informs the Fifth Defendant or Person B of its intention to approach a named individual, the Fifth Defendant and Person B should have an opportunity to comment on that evidence if it is only produced by the LIA after receiving an objection.[68]I accept that the Confidentiality Club order, amended in the way I have suggested, may inhibit, to some extent, the LIA’s ability to prepare its case. But the protection it affords to the Alphabet Individuals who are at risk is the minimum necessary to protect them. The amendment to the order seeks to make the playing field as level as possible consistent with the need to protect the Alphabet Individuals. The order as amended is a reasonable and proportionate method of protecting them.[69]SocGen also objected to the Confidentiality Club because it restricted its ability to inform the management of the bank of the alleged role of Person B and to prepare its defence. However, it was clear from the submissions of counsel for the Fifth Defendant and Person B that it was not envisaged that there was any risk of a “leak” of confidential information by SocGen witnesses. Accordingly, it was not anticipated that, if SocGen identified the names of the bank’s management to whom they wished to disclose the alleged role of Person B or the names of witnesses to whom they wished to ask questions about the confidential information, there would be any objection.[70]SocGen did not wish to identify the names of their witnesses (which are privileged, see China National Petroleum Corp v Fenwick Elliot [2002] EWHC 60 (Ch)). However, that privilege has to be waived at some stage in the course of preparation for trial and in order for the case to be properly managed; see The Law of Privilege 2nd ed by B. Thanki at paragraph 3.29 and fn 65. In the interests of managing the risk to the Alphabet Individuals it may be necessary for the identity of a proposed witness to be disclosed. However, since neither the Fifth Defendant nor Person B anticipate any objection to the solicitors for SocGen disclosing the confidential information to the bank’s officers or employees who may have relevant evidence I would expect that, pursuant to the duty of the Fifth Defendant and Person B to cooperate with SocGen in enabling this matter to get to trial, a generic description of the proposed witnesses (which makes it clear that they are bank officers or employees) would suffice and be acceptable to the Fifth Defendant and Person B.[71]I request the parties to draw up a further, revised, order to give effect to this judgment.

Cited in 3 later judgments