Bank Mellat v HM Treasury [2018] EWHC 2568 (Comm)

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[2018] EWHC 2568 (Comm)

IN THE HIGH COURT OF JUSTICE

Venue Rolls Building, Fetter Lane

Date Wednesday, 19 September 2018

London EC4A 1NL

Before

MRS JUSTICE COCKERILL

B E T W E E N:

Between

BANK MELLATClaimant

HER MAJESTY’S TREASURYDefendant

__________

MR M MCLAREN QC and MR N VINEALL QC and MS ROGERS (instructed by Zaiwalla & Co LLP) appeared for Claimant.

MR D FOXTON QC and MR N COX and MR J BLAKE (instructed by the Government Legal Department) appeared for Defendant.

__________

J U D G M E N T

Introduction

[1]There are four applications which are before me over these two days. I am going to deal with the first two of the applications at the moment. That is the Bank’s application in relation to its proposed sampling approach to disclosure and HMT’s application for an order requiring the Bank to provide unredacted versions of documents in its disclosure.

[2]I shall deal briefly with the background first as it is to some extent relevant to both applications.

[3]This matter concerns a claim for damages under the Human Rights Act which arises out of certain orders for financial restrictions, the Financial Restrictions Iran Order 2009, which was made by HMT on 9 October 2009 under Schedule 7 to the Counter Terrorism Act. It came into force in October 2009 and expired in 2010. Subject to any exemption by licence made under paragraph 17 of Schedule 7 to the Counter Terrorism Act, the order precluded any credit or financial institution that was a UK person or acting in the course of business carried on by it in the UK from entering into or continuing to participate in any transaction or business relationship with inter alia the Bank or any of its branches. In the Bank’s words, the effect of the regulation was to shut the Bank out from access to the UK financial sector.

[4]On 20 November 2009 the Bank applied under s.63 of the Counter Terrorism Act and CPR 79 to have the direction set aside and to recover damages under the Human Rights Act. That claim was dismissed initially by Mitting J and the subsequent appeal to the Court of Appeal was also dismissed; but in June 2013 the Supreme Court held by a majority that the order was substantively unlawful in that it was not justified to impose a prohibition solely on the Bank and the manner in which it was made was unlawful because the Bank was not notified of HMT’s intention to make the order and given a chance to make representations. It was said to be irrational in its incidence and disproportionate to any contribution which it could rationally be said to make to its objective. The Supreme Court remitted the damages claim to the Administrative Court and following a recommendation by Collins J it was transferred to the Commercial Court.

[5]The proceedings since then have been highly contentious with preliminary issues, appeals and closed material hearings. As a result of these highly contentious proceedings, the trial date has been adjourned three times. The trial is now due to take place in June 2019. Both parties have been adamant before me that this date must be met. Both of course criticise the other for their conduct of the litigation so far. The Bank says that HMT has recently perpetrated a considerable volte face and it also complains of HMT’s disclosure. HMT criticises the vagueness of the case for damages, a case which in total is in excess of US $4 billion. They say that even now, over four years after it was pleaded, certain of the heads of loss are yet to be quantified and others are estimates. Generally, they say that the claim is thinly particularised.

[6]It is relevant in the context of the issues which arise also to note that the losses in the proceedings are not limited to those said to have been suffered by reason of the 2009 order. The Bank also claims losses said to continue through until 2019 not just in relation to the 2009 order but also caused by two subsequent orders in 2011 and 2012 which are referred to as the “Follow-on Measures” and sanctions and financial restrictions imposed on the Bank in other jurisdictions which are referred as “the Copycat Measures”. It is said that HMT proposed and/or lobbied for and/or supported or facilitated those measures.

[7]The Bank’s claim is not limited to direct losses. It claims losses in connection with three subsidiaries, Persia International Bank (“PIB”), a company incorporated in the UK in which the Bank owned 60 per cent of the shares, Far East Export Bank, (“FEE”), which is 100 per cent owned by the Bank and is incorporated in Malaysia and Europäisch-Iranische Handelsbank AG (“EIH”), a German company, in which the Bank claims to hold a 26.3 per cent shareholding.

[8]Looking a little further at the history of the proceedings, there are obviously a lot of issues as to what the particular claims are and how they emerge but in relation to the Human Rights Act damages’ claim, a crucial point is that on 26 July 2016, Flaux J ordered the Bank to serve a schedule of actual transactions that the Bank contends were impacted by any of the 2009 order, the Copycat Measures and/or the Follow-On Measures. That document, known as the Schedule of Affected Transactions which was served in February 2017, listed almost two and a half thousand transactions.

[9]At the same hearing, I should note, the question of sampling was live. While the judge made no order in respect of sampling, permitting the question to be explored, he expressed a degree of scepticism as to its likely workability. This was followed up on 3 August 2017 when Males J ordered the provision of transactional documentation in respect of a sample of 10% of the transactions. At the hearing which gave rise to this order he indicated that disclosure should in principle be provided in relation to all the allegedly affected transactions “unless some fair and representative sampling method can be provided”.

[10]By a later order, 26 April 2018, Males J ordered the Bank to serve a revised Schedule of Affected Transactions giving particulars of a number of identified matters in relation to each transaction including the quantum of loss claimed, the principal value and currency of the transaction and the financial restrictions which are said to have affected it.

[11]That schedule falls into three sections; Part A covers the transactions which have been disclosed by way of sample and that is fully particularised; Part B is less particularised but fairly particularised and that deals with some other transactions; Part C, which is the largest section of the schedule of affected transactions, contains very little in the way of particularisation - so far as I could see when I looked at it - and HMT says it is not compliant with the orders made. However, no application in relation to the Schedule of Affected Transactions is in front of me today.

[12]A number of interesting legal issues arise, including questions as to causation, whether the interference in the Bank’s enjoyment and control of its possessions has been caused by the 2009 order, the extent to which it can prove its loss, whether an award of damages is necessary to afford just satisfaction to the Bank and, if so, in what sum. In this respect it is relevant to note that there has been a recent amendment to the defence in April 2018 to plead that by reason of the Bank’s own conduct and/or its ownership and/or control by the Government of Iran no order for damages is appropriate. Alternatively, there should be a significant reduction in any damages awarded.

[13]Finally, by way of background, there are ongoing proceedings in the Administrative Court in relation to two subsequent orders made by the Treasury, the 2011 and 2012 orders (the Follow-On Measures). It is said that those are matters for which HMT is likewise liable. The Bank has applied for consolidation of the 2011 and 2012 proceedings with the present action and that issue has been referred to Popplewell J for consideration. There is some overlap between those proceedings but the question of consolidation will obviously require consideration in the light of the impending trial date and the adjournments which have occurred thus far.

The Sampling Application

[14]The first application which I have to consider is the Bank’s application in relation to sampling. In relation to that, the Bank seeks an order that “the claimant is not required to search for and disclose all transactional documentation.” That is an order which it seeks because it says it has complied with the directions in effect in the action and it disclosed documents on a so-called end to end basis relating to a randomly selected sample of ten per cent of the affected transactions in the Schedule of Affected Transactions. It says in fact it has gone further than it needs to, disclosing complete transaction files for almost all transactions on which penalties were incurred and that it is preparing additional bank guarantee transaction files for disclosure.

[15]The Bank seeks this order in circumstances where it is concerned that it may be said that it should have done more by way of disclosure and, indeed, in replying to this application, that is indeed what HMT say. So, the Bank says that though there are circumstances where HMT is not seeking an order for full and joint disclosure in front of me, it will be helpful to it to have the indication from the court that it seeks in its order. It says that the order will not prevent HMT from making submissions at trial in relation to the sample disclosure approach and legitimate criticisms of that. It says it won’t stop HMT making any submissions as to failure to evidence or demonstrate its losses. It says that this application which it makes is not seeking a blessing or an exoneration as HMT have said.

[16]What the Bank says is that it has done a great deal of work to do disclosure in this case to date. In relation to the ten per cent sample, locating those documents took many months. The documents had to be translated and once translated it needed two months and about £55,000 worth of costs to review and check for privilege. There is no realistic prospect, as the parties agree, that the remaining 90 per cent of relevant transaction files could be identified, translated and disclosed in advance of the trial next June and still less that the experts could read and digest their content or produce meaningful analyses. They say that those files would add little to the evidential picture because they say that the disclosure is unnecessary because the Bank’s primary claim is for all consequential loss; the business it would have conducted but for the unlawful order. It is not a claim based on existing transactions, so that is not the essence of what it claims.

[17]So far as the detail is relevant, it says it is to valuing the Bank’s claim if HMT’s existing transactions defence is to succeed, so if the Bank’s primary claim fails. But it says that disclosure of transaction files is unnecessary even then because it is possible to extrapolate an answer by reference to the sample. It is on that basis that they made the application for the sampling approach some years ago. The Bank says that the disclosure is, therefore, only contingently relevant and that even if there was an existing transaction restriction, it is for the Bank to prove its claim and if it is wrong about extrapolation, that will be the Bank’s loss and HMT’s gain. Therefore, it says there is really nothing wrong with the sampling approach and there is nothing for the Bank to complain of in relation to the disclosure which has been done to date. The Bank says that the context is very important here. This is a disclosure exercise which has already taken more than three years. I have had explained to me, I should say, the details of what has been done.

[18]Essentially, the Bank says that it does not want to be ordered to give more disclosure. It does not want to be in a position where there is any doubt as to whether it should give more disclosure. Admittedly, this is a “belt and braces” application but it does not seek to tie HMT’s hands as to what the Bank is able to demonstrate and the Bank says that it makes no issue about the fact that it will be open to the Bank to say that more could and should have been disclosed at trial.

[19]As regards the suggestion which has been advanced on behalf of HMT at the hearing that there should be an order that there has been no compliance with the disclosure obligations, the Bank says that this is misconceived. The standard disclosure obligation has not been in effect since Flaux J’s order in 2016 and prior to that it was only in existence against the backdrop of a defence which was found to be a bad one and it is far-fetched to say that the ten per cent disclosure obligation carries with it a shadow obligation to disclose 100 per cent. So far as the suggestion that any disclosure obligation is breached, it says that that would not be right because the obligation is to give a reasonable search and in the light of the number of documents, the complexity of proceedings, et cetera, they would not be in breach and it is also submitted that the suggestion that I make no order is not satisfactory because there is an issue and the suggested order which is sought is the right line.

[20]In relation to sampling, HMT says that one needs to bear in mind that the question of causation has four limbs effectively in relation to(i) the 2009 order,

(ii) the Follow-on Measures,

(iii) the Copycat Measures and

(iv) potentially the whole atmosphere, that is loss of business due to unspecific factors just arising out of the situation. It says that the Bank is asking to order that the disclosure given now in relation to individual transactions on a sample basis is adequate and that that is effectively seeking a blessing on a state of affairs which it has engineered and that that order should not be made. Instead, the court should either direct that the sampling approach is not justified or that no order should be made.

[21]So far as the main issue is concerned, HMT says that the sampling approach was predicated on the misconceived approach to causation. In effect, it says that the Bank’s approach is over-broad, based on a simple before and after approach: before the making of the order its profits were X, after they were Y and the loss is the difference. It says that the Bank’s loss cannot be assessed by so simplistic an approach, not least given the issues as to the various potential impacts on causation, so the Bank must necessarily look at the transactions to see if it was a loss for which an order for just satisfaction is in principle appropriate and if causation has been satisfied. It says that this is the only correct approach because of the potential causation issues in relation to the other measures and the transactions carried out by the Bank.

[22]HMT says that this is fundamentally a case where standard disclosure was ordered and that what has happened since does not derogate from that. Sampling arose in the context of a dispute over specific disclosure on documents relevant to transactions affected. That led to a specific disclosure application in 2016 which was resisted by the Bank not on the grounds that disclosure was not relevant but on grounds of practicability and the order which was made by Flaux J was one which was done in the face of some doubt on his part as to whether sampling was workable but he was prepared to allow a sampling process to be explored between the expert accountants and see how that went. HMT says that there was no order limited to a sampling obligation as such. At best there was some scepticism and there was an expectation that there would be a report back with the risk being on the Bank’s head.

[23]Again, it points to the fact that following the service of the schedule, sampling was discussed and the experts said that the sampling approach would not seem to be appropriate in the context of a Schedule of Affected Transactions, that in the light of that conclusion, HMT requested disclosure of all documents and the sample issue arose again leading to the hearing before Males J where the Bank was ordered to disclose transactional disclosure but it submitted that the judge did not sanction that approach. He held that in principle disclosure should be provided in relation to all the allegedly affected transactions unless some fair and representative sampling method could be provided. So, it says again in the approach of Males J there was a considerable degree of scepticism.

[24]Where the matters stand now is that that meeting of the experts has not taken place until March 2018. The note of the meeting has not been brought forward until June 2018 and HMT says that if the clock had stopped in March there would have been much more in that report for the Bank because BDO continued to be fed material. He points to the fact that in relation to penalty, this has now been accepted that sampling is not appropriate. In relation to bank guarantees the experts have agreed that sampling is not appropriate and so HMT says: how can it be said that no further disclosure is needed? It is plain that sampling is not enough and that should be reflected in the order which the court makes.

[25]In relation to letters of credit it draws my attention to the fact that BDO has considered that the sampling approach would allow the experts to extrapolate losses but Deloitte’s view is to the contrary and it submits on its face not unreasonable but, in any event, the question as to the adequacy of sampling is fairly, it said, in issue. HMT submits that BDO’s view was itself contingent on further identification of material which has not been done. But, in any event, even on the Bank’s case, HMT submits this material will be relevant and the fact that there is not enough to perform a final calculation does not mean that it is not instructive regarding relevance.

[26]In the light of all of this, HMT says that sampling is not appropriate in relation to penalties and bank guarantees and it is plainly inappropriate to indicate that sampling is sanctioned in relation to those transactions.

[27]In relation to letters of credit, it says that it is not appropriate to give that sanction either in the light of the history and so HMT asks the court not to grant the order which the Bank seeks in respect of any of the types of disclosure because the starting point must be that standard disclosure requires full disclosure of all relevant materials, that the sample was not a sufficiently representative sample or that is certainly in issue. It submits that it would not have been disproportionate to have full disclosure given that the claim is vast and, even if it were the case that disclosure for all documents would have cost one million pounds, that would not be disproportionate and the difficulties in providing disclosure have been caused at least in part by the Bank’s decision to bring its disclosure process to the end at a time when disclosure was plainly not complete.

[28]It asks me to refuse the order sought by the Bank and, on the contrary, to find that the Bank has not complied with its standard disclosure obligations. It says that it is important that the parties go into the trial with their eyes open as to whether the approach adopted by the Bank to disclosure of the transaction documents does or does not comply with its disclosure obligations. It says that the trial judge will have enough to deal with without adding issues which both parties are ready to argue at this hearing.

[29]If I am not prepared to go that far, HMT asks that no order should be made. It submits that on the material before the court it is clear that the full set of transaction documents is disclosable but, on any view, there is sufficient material relating to the inadequacy of sampling to make it inappropriate for the court to give the order which the Bank seeks.

Sampling: conclusions

[30]I have had to cover this issue at some length because of the detailed and thorough submissions which have been made to me on this point. The question is essentially whether and to what extent I endorse or critique the Bank’s performance as to disclosure. The Bank seeks an order which makes, it seems to me, no sense unless it is regarded as an insurance policy against some sort of criticism at trial. HMT seeks as its primary case that the court should direct that the sampling position is not justified. I am not attracted by either of these submissions.

[31]So far as the Bank is concerned, I am not prepared to make an order which serves no practical purpose in the context of trial preparation. The current order says what it says. The Bank had done what it has done. That is in the past. It is common ground that no application is made by HMT for an order that the Bank provide disclosure of all transactional documents. It is common ground that disclosure of all transactional documents at this stage would derail the trial date. It follows that the order sought would be akin to granting a declaration which serves no useful purpose.

[32]The real purpose of the order sought is, despite Mr Vineall’s protestations, to implicitly rubber stamp the appropriateness of the sampling exercise and thereby provide court sanctioned answers for the Bank when criticism is made of the Bank's approach to disclosure at trial. Firstly, HMT will it seems likely say that the case on loss is not proved and, secondly, HMT it will submit that there are criticisms to be made of the Bank’s approach to disclosure, possibly as to the suggestion of sampling but certainly as to the execution of the disclosure ordered.

[33]I am not prepared to tie the trial judge’s hands in that way. It is not entirely clear in what way those criticisms will arise and it would seem undesirable to anticipate them. I do not consider that there is any good or even any real reason for doing so. Any order which I make would be likely to give rise to further argument. As such, it is not consistent with the overriding objective.

[34]As for HMT’s position, they have had the chance to bring an answering application and they have not done so. However, they ask the court, nonetheless, to make a direction that the sampling approach is not justified or, as it is put elsewhere and was really the centre of oral submissions, that the Bank has not complied with its disclosure obligations.

[35]I am not prepared to do this either. It seems to me that, like the order sought by the Bank, it serves no useful purpose in the context of preparation for trial. Also, like the Bank’s application, such an order would simply give rise to arguments about what it meant. Does it mean that it has proved not to be adequate for the purpose of enabling experts to evaluate quantum or was the sampling approach never justified or appropriate at all? Or, as was more the case pursued in oral submissions, is it actually to be said that actual orders, in particular the initial order for standard disclosure were not complied with? It is not a useful exercise to go through and unpick the various disclosure exercises and previous orders and work out exactly what was and what should have been done in the absence of a point which actually resonates at trial.

[36]In relation to both parties’ positions neither is asking for an order properly so called: ie. requiring anyone to do anything. I do not see any real utility to what is sought and I fear, were I to accede to the submissions without any real case on utility, I would be setting a dangerous precedent. We would see applications to the court simply on the basis that they might protect parties from criticism at trial as to their disclosure performance. That would be highly undesirable and inefficient.

[37]I will, therefore, take the middle course and make no order, leaving any order in respect of this issue (though again I query what order would be appropriate) to the trial judge. However, in the light of the full submissions which I have had, I will make the following observations which are intended to assist (though they may or may not do so). They are obviously not intended to tie the hands of the trial judge who will be seeing the matter in the full light of the issues as they play out at trial.

[38]The observations which I make are simply these; so far as concerns the letter of the sampling order having been complied with (which was a focus of Mr Vineall's argument), it may be the case that its requirements have indeed been complied with. That is not, however, the order which the claimant seeks which goes to whether it was necessary to search for and disclose all transactional documents. That is a question which does not arise at this point.

[39]As to the adequacy of the sampling approach, as regards penalties, the necessity to disclose all documents from all transactions (and not simply sample documents) does, however, seem to have been agreed. The position is less clear as regards guarantee documents. I note that the experts are ad idem that sampling does not work - which would seem to suggest that full transactional documents should be provided; but it is not clear on the submissions before me whether this does in fact mean that full transactional documentation will be disclosed or whether it may be suggested that there is a middle route. There is obviously an uncertainty there which would play against any order. The adequacy of sampling as regards letters of credit is plainly in issue.

[40]I would add that I share the scepticism which was expressed by Flaux J as to the appropriateness of a sampling exercise of the breadth advocated. Of course, in so doing I have the advantage of it becoming clear that in two respects sampling could not produce the material which the experts required and submissions as to the issues which arise in relation to extrapolation in relation to the final area, letters of credit. I would add that having looked at the transcripts of the hearings, I do not understand Flaux J or Males J to have given any overriding endorsement of the sampling approach or that they were saying that they considered it was an appropriate approach, or being conducted in substitution for standard disclosure. I accept the submissions made on behalf of HMT that the orders and the transcript taken together appear to reflect a pragmatic approach in line with the overriding objective. Their intention was to see if a lesser exercise could work at a more reasonable cost before ordering full disclosure. It appears to have been within the judges' contemplation that full disclosure would be ordered otherwise.

[41]It seems that what has happened here is essentially a practical failure. A procedure which was designed as a test to see if full disclosure could be short-circuited has not ended up coming to a conclusion at an appropriate time. It has not ended up being reviewed and evaluated in time for further specific orders to be made. What criticisms are to be made of either side in relation to that I am not prepared to say but, as I have indicated, given that it is accepted that there is no time for full disclosure to be made and no application has been made now or earlier for that full disclosure or at an earlier stage to short-circuit the sampling exercise, the outcome is that the practical solution which was hoped to be successful has not ultimately run as the court intended. The consequences of that to what may be said as regards the Bank’s disclosure obligations must be a matter for debate at trial. It is plainly not sensible to make the order and the matter must lie where it is for now.

The Redactions application

[42]That then brings me to the more substantial application before me which is the redactions application, which is HMT’s application. This arises out of redactions which have been made to a number of the documents in the disclosure removing the names of customers and, in some cases, counterparties; though it is said that that was a mistake. The application in relation to this matter was issued on 4 April 2018 asking the court to direct that the Bank should not be entitled to withhold inspection of these documents and inspection should be provided subject to a confidentiality ring.

[43]In terms of the history, there were a number of preliminary debates in relation to the question of redaction but the issue came properly into focus at the CMC before Flaux J (as he then was) in July 2016. In his order he said:

“Insofar as the claimant contends that it has a right or duty to withhold inspection of any document or any part of any document, it shall state that it has such right or duty in supplemental disclosure statements and list and specify the grounds upon which it claims that right or duty. The defendant has liberty to apply in the event that there is any dispute as to the claimant’s entitlement to withhold inspection.”

[44]It appears that the Bank subsequently sought multiple extensions of time in relation to that supplemental disclosure statement which was finally served on 29 September 2017 containing the following statement:

“The Bank asserts that it is a right or duty under Iranian law and/or Korean law and/or Turkish law to redact information relating to their customers when giving inspection to HM Treasury. Such right or duty is being asserted based on the expert reports in Iranian, Korean and Turkish law served with this disclosure statement.”

Indeed, the disclosure statement was accompanied by expert evidence asserting obligations of confidentiality under those legal systems.

[45]There was then some correspondence which was not fruitful and so HMT issued the application, as I have said, in April of this year. They have been criticised for the timing of that and accept that it is not very prompt but say that it is slightly more prompt than the supplemental disclosure statement was, to the extent that either point is relevant.

[46]It earlier appeared that this issue might be short-circuited by reference to the question of ciphering; however, at the time of the hearing the question of ciphering was not one which was consented to; though the opposition was much muted if there was a cipher, which was anonymous. But it was a route which was not primarily acceptable to HMT. So, the position is that HMT would like the documents to be produced in an unredacted form and subject to a confidentiality ring but ciphered only if that is not possible.

[47]The relevant legal principles were not very much in issue though I will highlight a few points which were in issue. It is agreed that obligations of confidentiality arising under some other legal system do not provide an automatic entitlement on a party litigating in this forum to withhold documents from disclosure and it is a matter for the court’s discretion whether production should be ordered.

[48]My attention was drawn to two relevant passages and the first is one from Secretary of State for Health v Servier Laboratories

[2014] 1 WLR 4383

at 117 of Beatson LJ:

“Whether or not compliance with the orders of the English court in the cases before us is illegal under French law, the English court has jurisdiction to make them as part of the ordinary process of disclosure in civil proceedings because such matters are governed by English law as the lex fori. In the exercise of its jurisdiction, it is legitimate for the court to take account of the real risk of prosecution. On the information available to Henderson and Roth JJ when they made their orders, it cannot be said that their exercise of discretion was flawed in law. First, there is no evidence of any prosecutions under the French Blocking Statute in the years since 1968 when it was enacted, apart from that in Christopher X. That was a case in which, as Henderson J stated, the facts were exceptional, involving as they did the use of deception by a French lawyer without the protection of a court order.”

[49]The second is one in Morris v Banque Arab Internationale d’Investissement SA [2000] CP Rep 61 at 71 per Neuberger J:

“Further, in connection with litigation of this sort, involving a substantial sum of money, alleged wrongdoing and in the context of a massive and notorious international financial scandal, I would echo, with paraphrasing, an observation of Toulson J in the Surzur case to which I have referred. It would, I think, be highly unusual if the French criminal authorities were to prosecute a party to an action such as this in England, in circumstances where he was required to comply with an order of the court for production of documents for the purposes of that action. The enforcement of law such as the Blocking Statute in a case such as this would not correspond with generally accepted notions of comity.”

[50]HMT relied on those passages in support of the proposition that where a foreign statute makes a disclosure criminal, that does not automatically relieve a party from its obligations of disclosure and that it is relevant to the court’s discretion how real any risk of prosecution in the foreign state is found to be.

[51]Ultimately, however, it was agreed between the parties that the question is a discretionary one. The issue between the parties principally is to what extent the fact that risk is invoked by the claimant affects the principle and to what extent the interest of the litigant’s trumps those of the party claiming that it is not legitimate to comply.

[52]The main points which are relied on by HMT as showing that it is important that the redactions are taken out are essentially these. It says that it is relevant to the understanding of whether the 2009 Order directly impacted specific transactions and as to whether there are other reasons why the transactions might not have have completed such as insolvency or administration of the customer. The fact that the customer was directly subject to relevant measure, for example, sanctions against petrol industry companies and the impact of measures taken in other jurisdictions. It says that internal correspondence to which my attention has been drawn suggests that these are real factors. It also says that it is relevant to an identification of whether the transaction either did complete or could have been so completed had a licence been applied for.

[53]HMT says it is relevant to an assessment of whether the transaction could have been or was completed by some other route involving jurisdictions which were not subject to the order or the Copycat Measures, so retaining the business and profit for the Bank with the result that it suffered no loss. That is effectively about the ability to work around the order and in this regard, I was pointed to certain documents showing the Bank’s internal planning for alternative routes to keep business through, for example, other connections or prioritising valued clients or through secondment of personnel. So on that basis HMT says that this is plainly not a speculative point.

[54]It says that it the redactions issue is relevant to distinguishing also between the transactions impacted by the 2009 order and those impacted by the Copycat Measures; the location of the clients will tell which measures are relevant and that that information is not presently available at least in relation to the majority of the transactions even by the schedule.

[55]It also says that the Bank's claim, which centres heavily on lost profit under transactions and lost business, knowledge of the company, the customers who were party to the transactions is essential to look at the actual profits and losses; but even more so to see evidence of whether the customer is a repeat customer and whether business was lost afterwards which would be important to the question of consequential loss.

[56]It also says that some of the transactions in respect of a claim advanced could have been linked to attempts to evade legitimate sanctions, that is part of the new case which has recently been added, and it is HMT’s case that that will means that sums which related to that transaction will not be recoverable.

[57]HMT points to the fact that Deloittes, who are HMT’s experts, say that this information is important and say that it is significant that there is no answering letter from BDO. It also points me to the statement of Flaux J at the CMC in 2016 who said, “I can think of a multitude of reasons why you would want specific identities of customers of the Bank.”

[58]In relation to Iranian law and risks in relation to Iranian law, Mr Foxton rightly took this section somewhat carefully in the absence of countervailing evidence but he urged caution saying that there are respects in which Dr Kakhi’s evidence may be not entirely satisfactory but pointing principally to the absence from the report of any evidence of any Bank employee being sanctioned, prosecuted or subject to some form of administrative penalty for producing material pursuant to a court order in proceedings to which the Bank was a party. He submitted that there is even less evidence of such consequences if disclosure is ordered on the basis of a confidentiality club. It was said that it would be surprising if a case of that description had not surfaced because the Bank is hardly a stranger to litigation in this jurisdiction.

[59]HMT also points to the role of the Government of Iran. The exact role of the Government of Iran in the Bank is in issue, but it is on any view a shareholder in the Bank and it therefore has an economic or political interest in the successful pursuit of these proceedings. HMT says that it is unlikely in those circumstances that if the Bank was required to disclose customer information on very controlled terms in pursuit of the claim, any consequence would be visited on the Bank. It accepts that the evidence says that the law has been applied extra-territorially and again urges me to be cautious and says that this would mean that PIB, though a company incorporated here, was subject to Iranian law and that the court should not come to this conclusion lightly. It also pointed me to some material in relation to earlier Administrative Court proceedings where the Bank had, it would appear, given client information without any of the concerns which are now expressed coming to the fore.

[60]Finally, they reminded me that when this matter was before Flaux J at the obviously very important CMC he said in his judgment:

“The Bank needs to think very carefully about whether effect of the order, which will be made as a consequence of today, is that it can disclose the names of its customers because if there is going to be a further issue about an inability to disclose the names of customers because of Iranian banking law, in relation to which I would be very surprised if it were the law in Iran that the English court having made an order of proceedings to which the Bank is the claimant, that the Bank was committing a criminal offence in Iran by complying with the order of the English court.”

[61]In relation to Korean law, there is a certain amount of dispute between the two experts and I am urged to prefer the evidence of Mr Park who says that if a confidentiality club is adopted, the realistic possibility of the Bank facing significant criminal/administrative penalties or significant civil liability would be low. He also says that although it is difficult to be certain because of the absence of precedent, Korean courts have a tendency to display deference to foreign courts and a Korean court would be reluctant to find that a violation of Korean laws had occurred where the foreign court ordered the production of information. On that basis, I am invited to accept Mr Park’s evidence and prefer it to that of Mr Seong on the basis that Mr Park refers to examples which show that acting for good reason is likely to weigh heavily.

[62]In relation to Turkish law, there is a certain amount of common ground. It is accepted that the court cannot safely conclude on the material before it that no serious consequences would flow from the disclosure of documents relating to the Bank’s three Turkish branches which did not redact customer information. HMT accepts that there is a risk but it says that it was open to the Bank to seek documents under The Hague Convention or the BMAA, but the Bank has made no efforts to do so, so the failure to do so falls to it. The risk of prosecution is therefore not made out and I should lean heavily in favour of disclosure.

[63]In relation to practical objections which are made, it is said that there are no practical objections which could possibly stand in the way of making an order for disclosure. If the Bank has stood down its document review team and decommissioned its disclosure platform, that is its fault. Timing is no answer because, HMT says, the Bank has had plenty of time. Given the size of the claim, the objections as regards costs ring hollow; for example, £600,000 for ciphering can hardly be said to be too much in the context of a US $4 billion claim.

[64]The Bank then points me to the principles on making confidentiality club orders, in particular the judgment of Hamblen J (as he then was) in Libyan Investment Authority v Société Générale SA

[2015] EWHC 550

at paragraphs 20 to 32 and summarises the principles about this which Hamblen J set out:(i) The starting point is that each party should be allowed unrestricted access to inspect the other parties’ disclosure subject to the implied undertaking that the disclosure will not be used for a collateral purpose.

(ii) It is for the person seeking the imposition of a confidentiality club to justify any departure from the norm.

(iii) Any restriction imposed should go no further than is necessary for the protection of the right in question.

(iv) The imposition of a confidentiality club and, if so, its terms, generally involves a balancing exercise. Factors relevant to the exercise of the court’s discretion are (i) the court’s assessment of the degree and severity of the identified risk; (ii) the inherent desirability of including at least one duly appointed representative of each party within a confidentiality club; (iii) the importance of the confidential information to the issues in the case; (iv) the nature of the confidential information and whether it needs to be considered by people with access to technical or expert knowledge; and

(v) practical considerations, such as the degree of disruption that will be caused if only part of a legal team is entitled to review, discuss and act upon the confidential information.

[65]The Bank answers this application by saying that the redactions order should not be made. It notes that what we are looking at here is an application which concerns specific customer information and it says that I should not accept any submissions that what is being looked at is counterparty information, so it is a narrow point.

[66]In relation to the principles, as I have indicated, there is a lot of common ground. It is accepted that it is a question of discretion and that there is no automatic entitlement to withhold from inspection but that unlawfulness can be taken into account. The real essence of the difference was that the Bank says it would not be right to say that it makes a difference, that it is the party who is the claimant who makes the claim to redact. The question is a balancing exercise which is performed the same whichever party is making the application. It says that Servier should not be elevated too far. While illegality does not automatically relieve the obligation of disclosure it equally does not automatically mean that there must be disclosure. It says that if one followed the Servier approach in this case, which the Bank says arises on very different facts it would mean that in effect there was no discretion left and that the Servier cases are at the opposite end of the spectrum from the present case. It focuses very much on the risks to the Bank as taking the case into a different category and that is the next section to which I will turn.

[67]Eloquent submissions were made to me that I should bear in mind that we are not simply talking about the Bank as a slightly abstract entity. We are talking about real people and that on the face of the reports from Dr Kakhi, what I am being asked to do is to compel the Bank to disclose the identity of customers which would mean to compel it to commit criminal offences; principally in Iran but also in Korea and Turkey. It is said that certainly as regards Iran on the uncontested expert evidence the use of a confidentiality ring or ciphering system would make no difference and might even be an aggravating feature and that I should take seriously that the likely penalties would be very severe.

[68]I have been pointed to portions of Dr Kakhi’s evidence in which he says that individual employees and officers would face imprisonment. He uses the words “very real risk”, “probable” and he talks of the “likelihood” of losing the licence. It is said that these considerations apply also to the overseas branches and the subsidiaries as well as to those involved in the operations in Tehran because of the extraterritorial effect of legislation and that they apply just as much to ciphering if the master list is not done on an anonymous basis. It is said that although an Iranian court could in theory approve the disclosure, that is not a remotely realistic prospect. The evidence is clear that it would be highly unlikely to do so.

[69]The point was also forcefully made that the evidence of Dr Kakhi was effectively uncontested. HMT has been unable to procure an expert of its own and did not challenge Dr Kakhi’s evidence. It was, therefore, said that I should take Dr Kakhi’s evidence as being entirely unchallengeable and that I should pay close regard to it and follow it in all the respects submitted on behalf of the Bank. It says that the evidence of Dr Kakhi is supported by the Bank’s own experience, in particular in negotiating with the CBI and Iranian security services in relation to the transfer of data outside Iran to facilitate the disclosure review which has already been undertaken. In this regard I was pointed to the evidence of Ms Reddy in relation to the difficulties which were encountered and it was said that there is no prospect of the Bank being granted permission to disclose unredacted customer data to a foreign government whether at the direction of the English court or not.

[70]The Bank says that all of this is backed up by HMT’s own experience in being unable to find an expert who was willing to give evidence and they cited to me the concerns that offices in Iran would be closed down, phones would be tapped, concerns that business interests would be adversely affected and fears for personal safety and safety of their family.

[71]On any view, it was said, the evidence is that the fear is genuine, that there are real and serious risks and that in effect under Iranian law the Bank would be unable to comply with an order for re-redaction and it was submitted that I should think very carefully about making any order which essentially means that the Bank could not comply with the order.

[72]I have been pointed also to other examples of detention suffered by people in Iran as again emphasising the risk to individuals and it has been highlighted to me that it is not fair to criticise the Bank for not being able to come up with examples of parallel cases because there is effectively no database in the Iranian system which would harbour that information and so it is effectively impossible to do that. So the Bank says that I must proceed on the basis that there is a serious risk of criminal penalties.

[73]There are also a couple of other points which I should mention; the Bank took issue with the repeated references to the Government holding and pointed out that that is just a 17 per cent shareholding. The Government is, it says, just one shareholder who falls to be treated in the same way as other shareholders and the problems with the disclosure platform give the lie, the Bank says, to the idea of the Government as a soft touch.

[74]So far as the evidence of the 2010 proceedings in which disclosure was made without redactions, it was said that that is a very different situation. The name of the person in question was in the public domain, the evidence was very limited and it was totally different to knowledge of actual customers which would be a large number of customers and involve lots of detail. So far as the Turkish and Korean evidence is concerned, it is said that that is less important because of the extraterritoriality point to which I have already alluded but so far as that goes it is said that in Turkey there is a criminal offence in the absence of specific permission. The likely penalties are severe. So far as it is said the Bank should have sought a letter of request, there was no real prospect of success because it was not trial evidence but it was effectively fishing; but an application could be made if ordered. So far as Korea is concerned, it is common ground that it is a criminal offence, that there is no exception for a confidentiality club or ciphering. The risk is lower in Korea than in the other jurisdictions but it is said that that is still not immaterial, so even setting aside the question of territoriality, I should proceed on the basis that there is a real risk as regards both.

[75]In relation to the question of prejudice, the Bank says that the real questions are whether the prejudice caused to HMT by a redaction is so serious and so insurmountable that the court should in its discretion countenance an order requiring the Bank and its officers to risk criminal prosecution and the loss of the Bank’s operating licence in Iran and, if not, whether the value of a further anonymous cipher outweighs the costs and inconvenience entailed. They say that the answer to (a), whether the prejudice is so serious and so insurmountable, is plainly no. In essence, they say that this is not a case where the redaction of names of individual customers can be said to significantly interfere with HMT’s ability to conduct the litigation. The concerns which have been expressed by Deloitte are either overstated, surmountable by other means or technically correct but on any realistic view are highly unlikely to be material and do not come close to justifying an order with the consequences for the Bank of the magnitude Dr Kakhi describes.

[76]It says again that I should bear in mind that even taking the concerns at face value we are talking about concerns which relate to an alternative case and this goes back to “that’s the Bank’s lookout” point. If the court were persuaded to differ from Flaux J and consider only transactional loss and were not prepared to extrapolate, the only person who was hurt, they say, is the Bank.

[77]I was then taken very carefully by Mr McLaren through a detailed schedule setting out the various issues which were said to justify a risk of prejudice to HMT. I will not go through those in detail but they cover things such as the ease of search and disclosure, counterparty information, linked transactions, mitigation, alternative means, mitigation with licensing, assessing causation, customer specific issues, just satisfaction, checking and a couple of minor points such as inconsistent redactions. Having been through all of these individually, it is effectively said that either these can be dealt with by some other means and in particular that a number of them could be dealt with by means of the anonymous cipher; or they are de minimis. So, in effect it is said that such issues as there are, are either not substantial or can be realistically resolved. Thus, it is said that customer names might assist Deloitte to identify linked transactions but there are other ways of doing that, for example, by unique transaction numbers.

[78]The one area where there was really an acknowledgement that there was some meat to the point, was in relation to whether the customer entered administration in the relevant period or might otherwise have abandoned a letter of credit, so customer specific issues. That was said to be a very tiny part of the matters which were in issue and the significance was very limited. The lateness of the application was also prayed in aid. Ultimately it was said that any real substance which might be got from this application could easily be met by giving the anonymous cipher.

Redactions - conclusions

[79]Turning to my views in relation to this very thoroughly argued application, I will start with the law. As I have indicated, ultimately the parties were not very much apart. I need therefore only deal with the points which divided them and may impact on the exercise of what both agreed was a discretion. To the extent that it was suggested, I did not accept that there was any difference of principle as to how the discretion operates by reason of who is seeking to have it operate in their favour. Again, to the extent that it was suggested, I did not accept that there is exactly the same presumption in favour of disclosure in such a case as this (where disclosure of confidential information is said to be contrary to a foreign law) as there is where the issue as regards the information which is simply “business confidential” information.

[80]The question of disclosure of confidential information which gives rise to actual breach of laws in another jurisdiction is a different question to simple confidentiality. As Lord Nicholls observed in Brannigan v Davidson

[1997] AC 238

, albeit in a slightly different of context against self-incrimination, there is an instinctive recoil from using a coercive power to compel a person to convict himself out of his own mouth. However, as he also observed in that case, that instinct cannot be allowed to encroach unacceptably on the domestic country’s own legitimate interest in the conduct of its own judicial proceedings. It is not the case that a case of compulsion resulting in a breach of foreign law will “override the domestic court’s ability to conduct its proceedings in accordance with its own procedures and law.”

[81]So much is clear from cases such as Servier. I do, however, also accept that Servier and the other French blocking statute cases do not provide a simple answer. The cases under that statute fall into a particular category because of the evidence which has emerged over the years as to the practical non-existence of the risk of any sanction arising from it.

[82]The reality is that each case needs to be evaluated on its own facts and the utility of the information sought and the prejudice caused by its absence weighed against the evidence as to the actual risk caused to the party subject to the order.

[83]In this context I also cannot accept that there is a rigid rule such as that put forward by the Bank that I need to be satisfied that the prejudice caused by the redactions is “so serious and so insurmountable”. Were I to accept Dr Kakhi’s evidence as to risk in full, that might be approximately where the line falls to be drawn; but the formulation of the question assumes an answer as to the evaluation of the evidence and the evidence requires to be evaluated first.

[84]So, turning then to what is the position in Iran and elsewhere as to risk, the first point with which I need to deal is the extent to which it is appropriate for me to evaluate the evidence and whether I should simply take it at face value. I consider that it is not just appropriate but it is imperative for me to evaluate the evidence put forward on behalf of the Bank even though HMT was not able to put forward evidence on its own behalf. The starting point is that the Bank is a litigant before this court who is bringing an extremely large claim and which is seeking the court’s sanction to provide less than full disclosure by reason of redactions. While there is no difference of principle in how the discretion operates, in practical terms the burden is effectively on it to put forward evidence justifying that departure (just as it would be incumbent on it to take steps to avoid the need for redaction). It is then necessary for the court to evaluate that evidence as, for example, it would be if this were a security for costs claim and the issue were stifling. I should not just take the fact that evidence has been put forward as answering the matter, I must read that evidence and consider it and consider what it tells me, particularly as to risk.

[85]I accept Dr Kakhi’s expertise which was not in issue. I also accept the evidence indicates that there would be a breach of the law in Iran in providing the documents unredacted. The real question is as to the risks of sanction. In this area, while I see and I have read a few times now what Dr Kakhi says, which is that there are such risks from breach which he describes as even “real” and “probable” and “likely”, I am not entirely happy with his evidence. In particular it seems to me that there is a failure to address head on the critical question; that is, what is the risk of sanction in the face of the breach being as a result of compliance with an order of a competent court elsewhere?

[86]Despite Mr McLaren’s submissions, I do not read the report’s allusion to deliberate/knowing wrongdoing as engaging with that question. It engages rather with the question of compliance voluntarily. That appears to be the basis on which the questions as to confidentiality in ciphering were posed to him for the purposes of preparing his second report (where this language appears). He was not asked and he does not appear to be telling me what the situation would be if the court imposed a confidentiality ring. Similarly, in his earlier report where there is a section where he is dealing with the question of the impact of this court’s order, it seems to me that he is not dealing with it in relation to the question of risk of sanction in the face of compliance with a court order, but only in relation to the question of enforcement.

[87]The question of risk is a question which is plainly in play on the authorities. I would have expected it to be actively and specifically engaged with on that basis. Still more so would I have expected that to be done in the light of Flaux J’s clear indication in the July 2016 CMC. It is, it seems to me, still more surprising in that(i) Dr Kakhi does say that legal compulsion provides an excuse and

(ii) that question of legal compulsion providing an excuse (when it is an order of the Iranian court) provides the very obvious jumping off point for engaging with the concept of what qualifies as legal compulsion. And yet he does not do so. He does deal, as I noted earlier, with the effect of the English court’s order; but there he does so only as regards the separate question of enforcement, without dealing at all with the question of the Iranian Courts’ attitude to complying with such an order. Nor does he specifically deal with the question of legal compulsion and comity. The result is that in performing the weighing exercise I lack evidence on this key point from the Bank.

[88]I would add that the inference which I draw reading Dr Kakhi's evidence, particularly given that it is conceded that compulsion may be taken into account, is that the answer to the question of risk, if grappled with head on, is not one which is entirely coherent with the answers of “real risk” and “probability” which he has given in relation to voluntary disclosure.

[89]There are other respects in which I am not entirely happy with the evidence of Dr Kakhi. His evidence does appear to me to have shifted between his two reports in that new bases for claiming illegality have been adopted and brought to the fore and this shift has not been explained.

[90]As to the other materials adduced as to risk, I am also not persuaded that I can or should extrapolate from the extraneous material to infer such a real risk were I to make the order sought. I reiterate that this is a question which falls to the Bank to engage with and I do not see the situations relied on by the Bank as analogous; for example, the fact that HMT could not get an expert to voluntarily give evidence against the interests of the Bank in which on any analysis the Iranian Government has a substantial shareholding(a) does not say anything about the risks to those effectively compelled by legal process and

(b) is an “apples and oranges” comparison when one considers that in the one case, one is looking at a person assisting resistance to a claim brought by the Bank (in which the Government will, therefore, have a financial interest) and, in the other, one is considering the Bank or a person within the Bank who are both doing their best to prosecute the same claim in the indirect interests of the Government.

[91]The examples of the detentions reported in the press to which Mr McLaren likewise referred me are simply not valid comparisons at all. Again there is a fundamental mismatch between a person who is at odds with Government policy and a person who is effectively compelled to breach a law while furthering the Bank’s (and the Government’s) financial interests.

[92]On the contrary, it seems to me fair to conclude that the position of the Iranian Government vis a vis the Bank does suggest that it would be well placed to offer support in any legal challenge and that, given that non-compliance with the order could only harm the chances of success of the Bank in this important claim which it brings, the Government support would be likely to render the chances of sanction very much less than they would be even in a normal case of compelled production.

[93]This also appears to be supported by the admittedly slight indications which one can take from the 2010 proceedings. I accept that this was some time ago and that the scale of disclosure and its circumstances were different. However, the question of disclosure pursuant to a court order does not seem to have engaged the arguments which have been deployed before me at all; with issues of practicality being the real issues. There is no suggestion that the disclosure in that case was given with the permission of the customer or the order of the Iranian court, so the question should, logically, have arisen. As I say, I do not lean heavily on this but I do rely on it as a supportive indication to the conclusions which I otherwise reach.

[94]I therefore conclude that the evidence demonstrates the production would be a breach of Iranian law but the factors which I have considered indicate that the risk of prosecution and sanction are not as serious as Dr Kakhi’s indications in relation to what might be called a voluntary disclosure. I do not accept that Dr Kakhi’s evidence, which does on reading appear to address voluntary production, should be read as extending without nuance to the facts of this case. I conclude that there is no real evidence evaluating any risk as a result of complying with the order. I do, however, accept his evidence as to extraterritoriality.

[95]As regards risks elsewhere, I do not consider that the Korean evidence indicates any real risk of serious sanction. I find the evidence of Mr Park persuasive. Mr Seong’s evidence again lacks the particularity I would expect on the critical issue of risk and fails to cite any examples in support of his somewhat more cautious view. The position as regards Turkey is different in that both parties seem to agree that even in the face of an order from the court, the production of client information would be regarded as a breach. Save as regards Turkey, there seem to be no steps which could have been taken which would materially improve the position.

[96]As regards Turkey, the evidence is conflicting. I am not persuaded that the material which is sought would not offend against the Article 23 rights (certainly if it is interpreted as the UK’s is) and I am accordingly minded accepting Mr Karaduman’s evidence that a Hague Convention request would have been fruitless. As regards the BMAA, I am not persuaded that this would have been permissible and, given the evidence on risk, I am not, despite the fact that the burden is on the Bank to pursue other routes of accessing the documents (see Morris v Banque Arab et Internationale d'Investissement SA [2000] CP Rep 65 at paragraphs 75 to 82), minded to say that the risk should be placed on the Bank.

[97]What, then, is the position as to the need for the documents in an unredacted form? For all that I am not impressed by the evidence on risk, I should make clear that I would not be prepared to make an order for disclosure of unredacted documents unless I were persuaded that the material contained in the redactions had a relevance. However, I do consider that there is at least a very real prospect that this material will be not just relevant but may have a probative influence on some issues.

[98]I do not propose to go through all the heads of argument, not least because the process of oral argument served to highlight very clearly that for each party there were points which they really preferred to stay clear of. But in particular, while not emulating Flaux J and being able to think of a “multitude of reasons” off the top of my head, I can, even looking at the question fairly critically, see the following.

[99]Firstly, factors such as reasons for a transaction not completing may well be customer related. Insolvency is a prime example. This point was effectively conceded by the Bank although it was said to be likely to be de minimis. I do not accept that it can be called de minimis in its overall effect given the relative paucity of information in play and the avowed need to extrapolate anything which increases the information. Thus, anything which is available on an admittedly relevant point which goes to the approach to the sample should not be lightly regarded. Similar issues arise as regards ascertaining which transactions were affected by which measures: original, Follow-on or Copycat, although to a lesser extent as these are in part dealt with by existing date and location information, at least in the main body of the sample.

[100]As regards alternative routes or replacement transactions, these will be client specific. The Bank also accepted a relevance here, but argued that it was overstated. I am not persuaded by this. There is here real evidence in the disclosure to date which leads to a strong inference that measures were indeed taken by the Bank to arrange alternative means either at a macro level, or in a more tailored way to specific valued customers.

[101]Although it is suggested that there may be routes round this (and indeed the earlier issue) by reference to a specific transaction number (“UTN”), or ciphering that appears to be a dubious assumption against the kinds of alternative routes which have been demonstrated. I accept Mr Foxton’s point, made in the context of ciphering but also applicable to UTNs, that information can be missed if fields are redacted; for example, if there is just a small change in the name, or the UTN, a link will be missed, whereas if full information is there this kind of issue will generally be spotted. Again, in the context of a case where extrapolation is sought from a sample such issues assume perhaps greater significance than would otherwise be the case.

[102]Thirdly, whether a client was a long-term customer will be relevant to show how much business was lost. That there are such distinctions to be drawn is, in my view, also indicated by the existing disclosure material, in particular the evidence as to ways and means for valued customers.

[103]So relevance of the material is there on numerous fronts. I accept that primarily this material relates to the alternative case but that is not an answer. The alternative case is a real alternative. It is not the situation that it is a case which is not pursued by the Bank at all; it is avowedly its fall-back position. As to the “bank's lookout” argument, it is undesirable to create a risk of arguments having to depend on burden of proof if that is avoidable. Further aside from proof of individual losses, such materials may go to the wider points. They may well impact on arguments as to the feasibility of extrapolation from a sample. Further this evidence is in my judgment also relevant, though I accept not a primary point in this context, going to the credibility of aspects of the primary case on quantum. So, there may well be aspects of this material which extend their relevance beyond proof of the alternative case and into the feasibility both of the primary case and the approach to the secondary case. Again, in this context too, I see real problems with the argument that the material can be adequately assessed absent full disclosure and that anonymous ciphering or UTNs could enable a full picture to be seen.

[104]As for the point that no links have been made so far, I do not regard this as a powerful point. The entire complaint is that this information is needed to do make such links meaningfully.

[105]So far as concerns practical objections, I am quite satisfied that none of the practical objections relied on can stand in the way of ordering disclosure. This is a huge claim. Disclosure is key in a case such as this. The Bank is represented by experienced solicitors. London and indeed the wider world offers many contractors who can assist with disclosure exercises in one way or another. The timescales and the amounts mentioned hardly seem out of keeping for such a claim. As for the suggestion that ciphering would not be useful because of timing, I doubt that. There will on any analysis be a month between the delivery of the information and witness statements in which the information could be used. Much can be done in such a period.

[106]When I balance these various factors, the one against the other, I am satisfied that the appropriate answer is that an order along the lines sought by HMT should be made.

[107]As to that order, I have been troubled as to whether any form of confidentiality club should be ordered at all since that is contrary to the default position and the Bank does not itself seek a confidentiality club. However, I note HMT’s own willingness to contemplate this. Thus, in the light of the indication which was given on behalf of the Bank in the course of oral argument, and in the interests of those whose details might otherwise come into the open, as well as in the interests of offering as much respect as possible to the legal position in the foreign jurisdictions - because I am aware and I should make plain that I do understand their concern for confidentiality of material such as this - I am prepared to order a confidentiality club. There should be limitation to named individuals and provision of a list of those authorised, the usual kinds of measures which should be taken to ensure that a confidentiality club does not get out of hand.

[108]So far as ciphering is concerned, I am prepared to order the use of ciphers though it seems to me that it may be a matter that the parties may wish to discuss as to whether, given the confidentiality club and given the points which the Bank has raised as to the time and cost involved in ciphering, that is something they want to pursue. However, it does seem to me that the ciphering generally may well be a good idea with a view to ensuring that there is a possibility to protect client identities during trial.

[109]So far as Iran and Korea is concerned, in the light of the relative absence of evidence of real risk and considering the points made above as to the problems of an anonymous cipher, any ciphering would not be anonymous but would be with a master list available. Given the greater risk demonstrated for Turkey, however, I would order that despite the problems which this may create the ciphering should be separate and without a master list.

[110]I hope that covers everything. (After a short time)

[111]Thank you very much. Well, despite Mr McLaren’s very careful and, I have to say, very impressive “on the hoof” application for permission to appeal, I am not going to grant permission. This is a case where it is fundamentally an exercise of the discretion. It is a careful balancing exercise and multifactorial taking into account the different elements involved. It is the kind of case in which, as Mr McLaren very fairly acknowledged, the Court of Appeal tends to be unwilling to disturb the judge who has heard the applications and conclusion unless there is some major mis-step. None such is suggested here.

[112]In those circumstances, I do not consider that I would regard it as a case where this has a real prospect of success on appeal. I do not think that anything changes by reason of the fact that it is, one might say, valuable to have Court of Appeal guidance on the issue. That is not really a “prospect of success” issue. That is a “some other compelling reason” issue.

[113]So far as “some other compelling reason” for permission to be granted is concerned, the fact that this is a big case, with massive litigation, with the single issue of principle as to whether the case is different from Servier, none of that seems to me to be some other good reason when ex hypothesi I have decided that there is no real prospect of success.

[114]Similarly, to an extent, the point as to “it would be valuable to have Court of Appeal guidance” on an issue: if I have already decided that there is no real prospect of success we are back into the classic question of “what is some other compelling reason”? One can see where there have been authorities which are at odds as to what the correct approach is, one might, nonetheless, say some other compelling reason exists. But that is not the case here - it is simply an absence of authority which is prayed in aid. Certainly, in circumstances where we are repeatedly seeing dicta from the Court of Appeal saying that they want to avoid the proliferation of authorities explaining how a discretion is to be exercised, I would certainly not be prepared to tell the Court of Appeal that I think that there is some other compelling reason for them to hear it. That must be a matter for you to ask them. (After a short time)

[115]As I understand it, the issue in relation to Schedule F is that the Bank does not want to be asked to provide a formal reconciliation to the Nth degree. It is anticipated that BDO will be producing documents which are to some extent reconciliations in relation to the matters which are set out on p.2 of the Government Legal Department’s email of 30 August 2018 – and stop me if ‘m wrong, anybody. They will --- they are agreeing to provide all material relied on by them in relation to the reconciliation of systems reports generally and that should be done. Part of that will be providing the documents which pertain to those particular items including materials as to the nominal ledger codes or those items. 116. ___________ CERTIFICATE Opus 2 International Ltd. hereby certifies that the above is an accurate and complete record of the proceedings or part thereof. Transcribed by Opus 2 International Ltd. (Incorporating Beverley F. Nunnery & Co.) Official Court Reporters and Audio Transcribers 5 New Street Square, London EC4A 3BFTel: 020 7831 5627 Fax: 020 7831 7737 civil@opus2.digital This transcript has been approved by the Judge