LIBYAN INVESTMENT AUTHORITY (incorporated under the laws of the State of Libya) v (1) SOCIETE GENERALE S.A. (2) SGA SOCIETE GENERALE ACCEPTANCE N.V. (3) SG OPTION EUROPE (4) CODEIS SECURITIES S.A. [2020] EWHC 3659 (Comm)

IN THE HIGH COURT OF JUSTICE
BUSINESS & PROPERTY COURT OF ENGLAND & WALES
COMMERCIAL COURT (QBD)
[2020] EWHC 3659 (Comm)Case No Case No. CL-2014-000144Venue Rolls Building, Fetter Lane, London, EC4A 1NL
Between
LIBYAN INVESTMENT AUTHORITY (incorporated under the laws of the State of Libya)Claimant/Applicant(1) SOCIETE GENERALE S.A. (2) SGA SOCIETE GENERALE ACCEPTANCE N.V. (3) SG OPTION EUROPE (4) CODEIS SECURITIES S.A.Defendants/Respondents
Before
Mr Justice CalverMR R. MASEFIELD QC and MR M. MCGHEE (instructed by Enyo Law LLP) appeared on behalf of the Claimant/Applicant.THE DEFENDANTS/RESPONDENTS did not attend and were unrepresented.Date 18 December 2020
[1](via Microsoft Teams) MR JUSTICE CALVER: This is the hearing of the application of the claimant ("the LIA") to lift the restriction against collateral use in respect of 30 documents that the first to fourth defendants ("the SocGen defendants") previously disclosed in these proceedings ("the SocGen proceedings"). The LIA seeks the court's permission pursuant to CPR 31.22 for it to use those 30 documents for certain purposes in its separate claim which it has issued against Credit Suisse International & Others, claim number CL-2019-000691 ("the Credit Suisse proceedings").[2]The SocGen defendants and Mr Chamie, being the parties who disclosed the documents and/or to whom the documents belong, have been given notice of the LIA's application. Both of them have formally confirmed that they have no objection to the application, although they also indicated that the LIA should seek an order that the collateral use hearing, namely this hearing, be held in private and if the court was unwilling to grant such an order the LIA should seek an order under CPR 31.22.2 to the effect that 31.22.1(a) should not apply to any relevant document referred to at the hearing which would, in effect, reinforce the terms of an order granted by Eder J at an earlier stage in the proceedings.

(a) reads:

"A party to whom a document has been disclosed may use the document only for the purpose of the proceedings in which it is disclosed, except where (a) the document has been read to or by the court or referred to at a hearing which has been held in public…"
[3]At the outset of the hearing, I indicated to Mr Masefield QC, representing the LIA, that what I intended to do, until I indicated whether I was willing to allow the use of these documents, was to make an order under CPR 31.22.2 to the effect that 31.22.1(a) should not apply to any relevant document referred to at this hearing up until the moment when I decided that the documents could be used. Having decided that they can be used, I now accordingly give this judgment in public.[4]The other parties to the SocGen proceedings, Mr Giahmi and Leinada, have not been served with the application. That is because they did not disclose any of the documents which are the subject of the application and nor, so far, at least, as the LIA is aware, do any of the documents belong to them. It follows that they are not beneficiaries of the restriction against collateral use, which is contained in CPR 31.22 and, accordingly, have no standing in respect of the present application.[5]Furthermore, as I understand it, Mr Giahmi has already entered into a consent order dated 26 September 2018 with the LIA, whereby both parties agreed that they might use documents disclosed by both parties in the SocGen proceedings for future proceedings, including the Credit Suisse proceedings. Be that as it may, Mr Giahmi's legal representatives have, nonetheless, attended this hearing today, but purely in an observing capacity.[6]The background to the applications is as follows. In March 2014, the LIA commenced the SocGen proceedings arising out of the sale to the LIA of certain financial derivative instruments made towards the end of the Gaddafi regime. By its claim, the LIA allege that the SocGen defendants put into effect a fraudulent and corrupt scheme with Mr Giahmi and Leinada, being Mr Giahmi's company, for which the SocGen defendants paid Mr Giahmi, it is said, over US $58 million. The LIA's case was that Mr Giahmi, who had close links, it is said, to the Gaddafi Family and regime and, in particular, Mr Saif Al-Islam Gaddafi, used these links to secure the appointment of certain individuals to important positions within the LIA, including Mr Zarti its deputy chairman and Mr Gheriani, its head of alternative investments. Mr Giahmi was then in a position, it is said, to manipulate those individuals through a mixture of bribery and intimidation, and through them to influence the LIA to enter into various investment transactions.[7]The LIA say that Mr Giahmi's modus operandi was that he would form a close relationship with certain individuals at the financial institutions and, in the case of SocGen, this was a Mr Jebali. Mr Giahmi would then seek to persuade that individual that if they wished to do business in Libya with the LIA that they would then need to enter into an exclusive and confidential introducing broker agreement with Mr Giahmi and pay him an introduction fee for his services, which would typically be between 2 and 3 per cent of the value of the investment. It is said that Mr Giahmi would then bring his improper influence to bear on the LIA to cause the LIA to purchase products from the financial institutions.[8]The financial institutions were required to make regulatory disclosure of third party fees, such as those paid to Mr Giahmi and his companies. Mr Giahmi's involvement was, therefore, disclosed to the LIA, but in opaque language in the product term sheets provided by the financial institutions, with language used such as "Leinada has collaborated with the SocGen defendants in providing this investment solution and is remunerated for its services". It is said by the LIA that, save for those LIA officers who were corrupted or intimidated by Mr Giahmi, the true nature of the involvement of Mr Giahmi was thereby kept a secret from the LIA.[9]In July 2015, pursuant to the terms of the order of Flaux J, the court appointed receivers and managers over certain of the LIA's property pursuant to an application made by the then rival chairman of the LIA. The property included the ongoing claims against Goldman Sachs International and those against the SocGen defendants and others. The LIA continued to pursue the SocGen proceedings through its receivers and managers. The SocGen defendants ultimately settled the SocGen proceedings and, as part of the settlement in those proceedings, a very substantial cash payment was made by the SocGen defendants to the LIA, amongst other things.[10]In 2017, following the settlement of the SocGen proceedings, the court gave the receivers and managers permission to investigate and pursue claims against certain other financial institutions, including JP Morgan and Credit Suisse as part of a separate receivership. In 2018, a Dr Mahmoud issued an application to determine the authority dispute between those parties, claiming to be the chairman of the LIA and discharged the receiverships. In March 2020, the English court concluded that he was the rightful chairman of the LIA. An application to discharge the receivership is listed to be heard, as I understand it, today, and given this court's judgment that Dr Mahmoud is the LIA's chairman it is likely that his application will succeed and the receivership be discharged. But even if that is the case, it is not likely that this will have any immediate impact on this application or the Credit Suisse proceedings. The Credit Suisse proceedings were, themselves, commenced in November 2019.[11]By its claim, the LIA alleges that Credit Suisse, who is the first defendant, GPAM, the second defendant and FIMP, the third defendant who is formally known as Duet Mena, were party to a fraudulent and corrupt scheme with Mr Giahmi and Lands Company pursuant to which Mr Giahmi, via Lands Company or some other vehicle that he owns and controls, was paid US $12 million in respect of two transactions that the LIA executed with Credit Suisse. The LIA says that it suspects a similar scheme was in place to that which it alleged against the SocGen defendants. However, the two transactions that are the subject of the Credit Suisse proceedings are materially different from those in the SocGen proceedings and the JP Morgan proceedings. Significantly, and unlike the transactions in the other proceedings, the Credit Suisse transactions make no reference whatsoever to Mr Giahmi or any of his companies on the face of the term sheets.[12]In the first transaction, the original notes, the term sheets states that:
"Credit Suisse hereby informs that GPAM has collaborated with Credit Suisse in providing this investment solution and is remunerated for its services."
On the LIA's entry into the original notes, Credit Suisse paid a one-off fee or an up front fee of US $6 million to GPAM. The LIA says that, unbeknown to it, the following day GPAM paid the same sum to Lands Company as an introducing fee in the same amount, retaining nothing, it is said, for itself.[13]In the second transaction, the restructured notes, the term sheet said that:
"Credit Suisse hereby informs that Duet Asset Management has collaborated with Credit Suisse in providing this investment solution and is remunerated for its services."
On the LIA's entry into the restructured notes, Credit Suisse, it is said, paid a one-off fee or up front fee of US $6 million to Duet Mena and the LIA's case is that it is to be inferred that Duet Mena paid the same sum to another offshore Giahmi entity, again, retaining nothing for itself.[14]All of the defendants in the Credit Suisse proceedings have now been served and all have issued applications against the LIA, seeking either to strike out or obtain summary judgment on the LIA's claims or to challenge jurisdiction by seeking to set aside the LIA's permission to serve out and extend the claim form's validity. There appears to be an overlap in the issues on those applications.[15]In what is necessarily a very broad summary, there are currently four main issues in those applications. Firstly, GPAM and Duet Mena argue that they were not enriched by any payment from the LIA to them but, rather, only received a one-off payment made to them by Credit Suisse after Credit Suisse had received the LIA's subscription to the original and restructured notes as part of an independent hedging transaction that was put in place by Credit Suisse and paid to them from a different Credit Suisse account. GPAM and Duet Mena argue that their enrichment was not at the expense of the LIA such that claims against them for money had and received and/or knowing receipt must fail. This is what is termed the "enrichment" or, rather, perhaps, the non-enrichment argument. Secondly, the defendants all argue that limitation has expired and that with reasonable diligence the LIA could have discovered the facts necessary to plead its case prior to 11 or 12 November 2013, that is the limitation argument. Thirdly, Duet Mena argues that the LIA's extension of time within which to serve the claim form should be set aside for the LIA's failure to give full and frank disclosure, that is the extension argument, as it is called. Fourthly, Duet Mena argues that neither it nor any other entity in the Duet Group, in fact, paid Mr Giahmi or any of Mr Giahmi's companies in connection with the restructured notes. That is what I will call the Duet Mena argument.[16]By this application, the LIA seeks permission to use certain documents which were disclosed by the SocGen defendants in the SocGen proceedings. They are contained in a confidential appendix, which I have read, and the LIA does so in order to put before the court hearing the defendants' applications in the Credit Suisse proceedings certain documents from the SocGen defendants disclosure which the LIA considers to be of significant probative value in respect of the enrichment argument, the limitation argument and the Duet Mena argument and without which, it is said, the LIA cannot fairly defend those applications. It seeks to rely on 30 discrete documents which it says is only a fraction of the 65,743 documents disclosed by the SocGen defendants. It also only seeks permission to use them on the defendants' applications in the Credit Suisse proceedings and, of course, in respect of any appeals that may arise out of those applications.[17]So far as the relevant legal test is concerned on this application, the law is clear. In Tchenguiz v The Serious Fraud Office [2014] EWCA Civ 1409 at para.65-66, Jackson LJ set out the relevant principles. In particular, the general principles which emerge from the authorities Jackson LJ said are clear and, in particular, they are these:
"i) The collateral purpose rule now contained in CPR 31.22 exists for sound and long established policy reasons. The court will only grant permission under rule 31.22 (1) (b) if there are special circumstances which constitute a cogent reason for permitting collateral use… iii) There is a strong public interest in facilitating the just resolution of civil litigation. Whether that public interest warrants releasing a party from the collateral purpose rule depends upon the particular circumstances of the case. Those circumstances require careful examination. There are decisions going both ways in the authorities… v) It is for the first instance judge to weigh up the conflicting public interests. The Court of Appeal will only intervene if the judge erred in law or failed to take proper account of the conflicting interests in play…"
In other words, it is a balancing exercise which is fact sensitive. But, most importantly, the court must have firm regard to the public interest in the just resolution of disputes.[18]The test has also recently been considered in Gilani v Saddiq [2018] EWHC 3084 (Ch) . His Honour

Judge David Cook, in his judgment, explained the test as follows:

"The discretion is thus a general one, to be exercised in the interests of justice in all the circumstances of the case, having particular regard to the fact that documents are disclosed under compulsion and are prima facie to be kept confidential and used only for the purpose of the proceedings so that some good reason has to be shown for permitting any other use, but this does not mean that the grant of permission is rare or exceptional if a proper purpose is shown, and use in other proceedings such as criminal proceedings brought in the public interest may be such a purpose. The court must be satisfied there is no injustice to the party compelled to give disclosure."
[19]In summary, I agree with the summary of the legal principles contained in para.35 of Mr Masefield's skeleton argument, where he makes these three points. Firstly, the burden is on the LIA to justify its proposed use of the specific documents in respect of which it seeks permission. Secondly, the LIA must give cogent and persuasive reasons or good reasons why the proposed use should be permitted. Thirdly, each application is highly fact sensitive. The court must weight the public interest in ensuring that there is no injustice done to the disclosing provided who provided the documents initially under compulsion with the public interest in facilitating the just resolution of civil litigation. So, that, it seems to me, is an accurate summary of the law.[20]Turning to the facts of this case, I consider that there is plainly good reason and, indeed, cogent and persuasive reasons, for the proposed collateral use of the disclosed documents. Firstly, should the defendants' applications in the Credit Suisse proceedings be successful, then the claimant's claim may be struck out or they may have summary judgment ordered against them. The serious consequences of being unable to resist the applications is, obviously, an important factor which I must take into account in balancing the interests of justice. Secondly, the documents are, in my judgment, undoubtedly relevant to the defendants' applications and allegations in the Credit Suisse proceedings.[21]I was taken through the documents carefully by reference to their relevance by Mr Masefield QC and there are four broad categories of document as follows and their relevance is broadly as follows. Firstly, there are 11 documents in Category 1 which are said to disclose a close, longstanding and improper relationship between Mr Giahmi and individuals at each of Credit Suisse, GPAM and Duet Mena. These individuals would, on the LIA's case, have taken steps to conceal Mr Giahmi's involvement from the LIA and others just as Mr Jebali, within SocGen, sought to conceal Mr Giahmi's involvement when asked questions by the LIA. It follows that these documents are relevant to the limitation argument and the issue of what the LIA could, with reasonable diligence, have discovered from each of Credit Suisse, GPAM and Duet Mena about Mr Giahmi's involvement if it had made enquiries of them. I do not intend to go through every document in that category, other than to make a general point as to their relevance and I am satisfied, as I say, having been taken through them carefully by Mr Masefield, that they are undoubtedly relevant to that issue.[22]Second, there are six documents in Category 2 concerning Mr Giahmi's ability to influence both individuals at the LIA, like Mr Layas, the chairman of the LIA, and individuals within financial institutions, like Mr Jebali within SocGen and the relevant individuals at Credit Suisse, GPAM and Duet Mena in order to conceal his involvement from the LIA, including, it is said by the LIA, by getting them to close down investigations by Mr Baruni and Mr Rais in 2010 which might otherwise have revealed his engagement in certain trades. Again, these documents, it seems to me, are relevant, to put it no higher, to the limitation argument and the question of whether the LIA could, with reasonable diligence, have discovered the fraud prior to the limitation cut-off date of 12 November 2013 where Mr Giahmi held influence over the LIA personnel.[23]Thirdly, there are 11 documents in Category 3 concerning an introducing agreement between NADA Limited, one of Mr Giahmi's companies, and a redacted entity. It is suspect by the LIA that the redacted entity was in the same group of companies as Duet Mena and that the agreement related to the restructured notes which are the subject of the Credit Suisse proceedings. If that is right, then that would contradict the Duet argument advanced by Duet Mena in the Credit Suisse proceedings that no payment was made to Mr Giahmi or an entity controlled by him by any entity within the Duet Group in relation to the restructured notes. The claimants say that contrary to what Duet now say they did enter into an improper relationship with NADA in respect of the restructured notes, NADA being associated, it is said, with Mr Giahmi. Those documents, it seems to me, also have relevance to the arguments advanced in the Credit Suisse proceedings.[24]Fourth, and finally, there are two documents in Category 4 that are said to demonstrate Mr Giahmi's propensity to interpose third party financial institutions like GPAM and Duet Mena between himself and the financial institution selling derivative instruments to the LIA (here Credit Suisse) in order further to conceal his involvement in the transaction from the LIA. That financial institution's up front fee, it is said, would then be passed on to Mr Giahmi. These documents may, therefore, also go towards rebutting the enrichment argument and the suggestion by GPAM and Duet Mena that there was no connection between the two payments, such that no claim lies against them for money had and received or in knowing receipt.[25]I emphasise, in relation to all four categories of documents, I reach no conclusions whatsoever, obviously, as to whether or not these documents establish any of the matters alleged by the claimant. I simply observe that they are undoubtedly, at least, relevant to the issues which arise on the Credit Suisse applications.[26]Coming back to the reasons for allowing this application, the third reason for allowing it is that there does not appear to be any prejudice or injustice in the use of these documents. The claimant only seeks disclosure of 30 documents which they say are important in showing serious issues to be tried on the Credit Suisse applications. The documents were all disclosed by the SocGen defendants and belong to them, save for the documents relating to the Category 3 documents which belong to Mr Chamie. Those parties, as I have said, by their legal representatives have confirmed that they have no objection to the relief sought and do not intend to attend or be represented at the LIA's application. The LIA and the SocGen defendants have agreed a form of order which, it is said, meet the SocGen defendants' concerns and it is that form of order which I will come to which the LIA seeks by this application.[27]So far as Mr Chamie is concerned, he had previously suggested that he was unable to consent to the application on the basis that some of the documents were provided on a confidential basis. However, following receipt of the LIA's application, Mr Chamie has confirmed directly, I am told (because his legal representatives are no longer instructed by him) that he has no objection to the LIA's application. However, he remains of the view that he cannot simply consent out of a concern that he might then be liable for breach of confidentiality.[28]The LIA seek the removal of redactions, in particular, in relation to the Category 3 documents, which have been applied by the SocGen defendants to some of the documents. Both the SocGen defendants and Mr Chamie have once again confirmed that they have no objection to the redactions being removed, although again Mr Chamie has indicated that he requires a court order because of his concerns as to confidentiality.[29]On 3 December 2020, the LIA asked the SocGen defendants to identify who instructed that the redactions were to be applied to the documents and for what reason. On 15 December 2020, the SocGen defendants' legal representatives responded and they referred the LIA to an explanation for the redactions which had been given back in 2017. That 2017 letter provides that the redactions were applied in respect of matters which were irrelevant to the SocGen proceedings, though that in doing so the SocGen defendants also had regard to duties of confidentiality owed by Mr Chamie, or his company, to Mr Giahmi and the fact that some of the items redacted "may be confidential to Mr Giahmi", although it was acknowledged the SocGen defendants could not take any definite position in that respect.[30]It follows that the redactions do not appear to have been imposed at the request of Mr Giahmi and, indeed, Mr Masefield has confirmed that, so far as the LIA is aware, Mr Giahmi has never sought to suggest that the redacted information is confidential to him. Indeed, I agree with Mr Masefield that it is difficult to see, in looking at the Category 3 documents, how the redactions relate to information which could be said to be confidential to Mr Giahmi in any sensible respect and in any legitimate sense.[31]Moreover, there is fourthly Mr Masefield's submission that the disclosure is, in any event, proportionate and necessary to the fair resolution of the proceedings. However, as Mr Masefield also says, if at all, this is a dispute for another day, but I do consider I should include a liberty to apply provision so that if Mr Giahmi wishes to assert confidentiality over the redacted elements of these documents, he has liberty to apply to reimpose the redactions within a relatively short period of time if he can maintain a legitimate case to that effect.[32]So, in the circumstances, I do order that the redactions are lifted, subject to that liberty to apply provision, so that the unredacted documents may be disclosed to the LIA and used by the LIA in answer to the defendants' applications. So, in all the circumstances, I grant the LIA permission to use the 30 disclosed documents in the defendants' applications, to include any appeal or appeals in relation to the same.[33]So far as the costs of this application are concerned, I am told that it has been agreed between the claimant and the first to fourth defendants that the claimant shall pay the reasonable costs of the application and then the liberty to apply provision will need to be added and, I think, a reasonable period is to give Mr Giahmi 28 days in which to make any such applications, should he think fit, subject to hearing Mr Masefield on that point. Transcribed by Opus 2 International Limited Official Court Reporters and Audio Transcribers 5 New Street Square, London, EC4A 3BF Tel: 020 7831 5627 Fax: 020 7831 7737 civil@opus2.digital

Cited in 1 later judgment