The claimants, Mr Oleg Deripaska and his company, Filatona Trading Limited, sought a Norwich Pharmacal Order (“NPO”) against the respondent, well known law firm Quinn Emanuel Urquhart & Sullivan.
The respondent acted for Vladimir Chernukhin and his company Navigator Equities Ltd (“the Chernukhin Parties”), who were involved in arbitration proceedings against the claimants.
The claimants sought disclosure from the respondent of the identity of a consultancy firm (“the Consultancy Firm”) which was used to obtain a Russian language report (referred to as the “Glavstroy Report”) suspected of being a forgery. The consultancy procured the suspected forged report and were thus the middleman to the wrongdoer.
The respondent submitted that the information sought would be contained within communications which were for the dominant purpose of seeking and/or obtaining evidence and/or information to be used in connection with actual or contemplated adversarial litigation between the claimant’s and the Chernukhin Parties. As such, the respondent argued that this information sought would be covered by litigation privilege.
The judgment of Mr Justice Calver is an extremely useful guide to the Norwich Pharmacal jurisdiction and the extent which legal profession privilege (“LPP”) might bar such relief.
The facts and history of the litigation
The dispute between the claimants and the Chernukhin Parties arose from a joint venture formed in the early 2000s. This culminated in a shareholder’s agreement being signed in 2005 by the claimants, the Chernukhin Parties and others. The joint venture broke down and in 2010 Mr Oleg Deripaska took control. In 2015, Mr Vladimir Chernukhin commenced arbitration proceedings against the claimants. This led to a vast amount of litigation between the parties.
A key issue in the arbitration concerned the true ultimate beneficial owner of Navigator Equities Ltd. The arbitration proceedings were lengthy and tumultuous to say the least. They firstly involved three arbitral awards:
- The First Award on 16 November 2016, in which the arbitral tribunal found in favour of Mr Chernukhin and rejected the false case put forward by the claimants.
- The Second Award, issued in July 2017, in which the arbitral tribunal found that the claimants’ conduct was unfairly prejudicial and ordered them to buy out the Chernukhin Parties. The price payable to the Chernukhin Parties was assessed as US$95,181,285 (“the buyout award”).
- The Third Award made on 18 January 2018 was in respect of interest and costs.
The claimants challenged the Second and Third Awards in the High Court, relying on various grounds under ss. 67 and 68 of the Arbitration Act 1996.[1] The challenges were dismissed by Teare J on 7 February 2019.[2]
In doing so, Teare J found that the evidence of core witnesses, including Mr Oleg Deripaska and Mr Vladimir Chernukhin, was unreliable and in some cases dishonest. Mr Vladimir Chernukhin was found to have dishonestly advanced a false case that his ownership of Navigator Equities Ltd was demonstrated by the terms of a 2004 declaration of trust, when in fact his name had been added to an otherwise blank declaration in 2015, after he commenced the arbitration.
These proceedings were then followed by Mr Oleg Deripaska commencing a private prosecution of Mr Vladimir Chernukhin, for perverting the course of justice. This was discontinued by the Crown Prosecution Service on the basis that there was no public interest in bringing the prosecution (a decision which was upheld upon Judicial Review to the Administrative Court). The Chernukhin parties also separately sought a freezing order against Mr Oleg Deripaska which was resolved through provision of undertakings, which the Chernukhin Parties then sought to commit Mr Oleg Deripaska for breaching. These were stayed as an abuse of process and after a Court of Appeal decision, were retried and still dismissed. The appeal of this finding was also dismissed (as was permission to appeal to the Supreme Court).
In 2018, the Chernukhin Parties then issued proceedings against the claimants under s.68 of the Arbitration Act 1996 (“the s.68 proceedings”) and sought to set aside the buyout award in lieu of a higher award. The grounds of this application were that the buyout award was vitiated by fraud committed by the claimants for suppressing the Glavstroy Report.
The Glavstroy Report was obtained by the respondents from the Consultancy Firm. The Chernukhin Parties alleged that the Glavstroy Report should have been produced in the arbitration and if this had occurred then the tribunal would have ordered the claimants to pay
US$395 million for the Chernukhin Parties’ interest in the joint venture. The Chernukhin Parties sought to deploy the Glavstroy Report to secure a further arbitration hearing and a further US$300 million award against the claimants. The claimants say the Glavstroy Report is a forgery and, upon the facts put forward in a witness statement by them, the concern was a very real one.
On 10 June 2020 Andrew Baker J struck out the Chernukhin Parties’ committal application in relation to Mr Oleg Deripaska’s alleged breaches of the undertakings. The s. 68 proceedings against the claimants remained.
On 3 September 2021 the claimants issued a Part 8 Claim for Norwich Pharmacal relief to obtain the identity of the Consultancy Firm from whom the Glavstroy Report was obtained.
The Norwich Pharmacal Jurisdiction
The case restated the principles which allow a claimant to obtain information to seek redress for a wrongdoing; that is, Norwich Pharmacal relief. The jurisdiction to do so was first set out in 1974 by the House of Lords in Norwich Pharmacal Co v Customs and Excise Comrs [1974] AC 133.
Calver J provides a useful summary of the criteria for an Norwich Pharmacal Order (NPO) at paragraph 43:
“The requirements for Norwich Pharmacal relief are now well-established, and were summarised by Saini J in Collier v Bennett [2020] 4 WLR 116 at [35]:
- There must be a good arguable case that a form of legally recognised wrong has been committed against the applicant them by a person (the “Arguable Wrong Condition”).
- The respondent to the application must be mixed up in, so as to have facilitated, the wrongdoing (“the Mixed Up In Condition”).
- The respondent to the application must be able, or likely to be able, to provide the information or documents necessary to enable the ultimate wrongdoer to be pursued (“the Possession Condition”).
- Requiring disclosure must be an appropriate and proportionate response in all the circumstances of the case, bearing in mind the exceptional but flexible nature of the jurisdiction (“the Overall Justice Condition”).”
These conditions he found had been satisfied. It is of note that the judge preferred the line of cases that made clear that a NPO could be granted in respect of a criminal wrong and not merely a civil wrong:
“[47]. It seems clear now, therefore, that Lord Woolf’s obiter view in Ashworth Hospital Authority v MGN Limited [2002] 1 WLR 2033 at [53] (“If the law has developed so as to enable, in the appropriate circumstances, the wrongdoer to be identified if he has committed a civil wrong I can find no justification for not requiring the wrongdoer to be identified if he has committed a criminal wrong”) prevails over the obiter view of Sedley LJ in Financial Times Ltd v Interbrew SA [2002] EWCA Civ 274 at [28] to the contrary.”
This is important because the application was put on the basis that the redress sought need not necessarily be a civil claim against the wrongdoer, but criminal:
“[76]. There is also a good arguable case that a crime or criminal contempt has been committed in this case by reason of the forgery; and that the Deripaska Parties wish to seek relief not via a civil claim but by way of disciplinary redress against the wrongdoer in so far as they are a “mole” within the Deripaska Parties’ organisation. I agree with Mr. Grant KC that it is unlikely that the Glavstroy Report could have been produced without the involvement and assistance of someone from within Mr. Deripaska’s organisation. The source of the wrongdoing may very well still be in situ. In the circumstances, I am satisfied that there is a good arguable case that a form of legally recognised wrong has been committed against the Deripaska Parties in this case.”
In finding that the conditions in which to obtain a Norwich Pharmacal Order were satisfied, the judge turned to the issue of whether the information sought was protected by LPP.
Legal Professional Privilege
The respondents sought to rely on the issue of LPP to defeat the NPO application. They argued that the information sought was privileged and, accordingly, the Norwich Pharmacal Order could not be made. Calver J restated some important principles in relation to LPP. At paragraph 90 he said of the argument put forward by the respondents:
“I do not agree. The starting point is that litigation and legal advice privilege is concerned with communications, and not merely facts or information. The privilege means that the content of the communications is protected from disclosure, as is secondary evidence which would tend to reveal the content of such communications: see Three Rivers (No 6) [2005] 1 AC 610 per Lord Carswell…”
In the Three Rivers Lord Carswell stated that:
- At [85]: “Determining the bounds of privilege involves finding the proper point of balance between two opposing imperatives, making the maximum relevant material available to the court of trial and avoiding unfairness to individuals by revealing confidential communications between their lawyers and themselves…”
- [102] … communications between the parties or their solicitors and third parties for the purpose of obtaining information or advice in connection with existing or contemplated litigation are privileged, but only when the following conditions are satisfied: (a) litigation must be in progress or in contemplation; (b) the communications must have been made for the sole or dominant purpose of conducting that litigation; (c) the litigation must be adversarial, not investigative or inquisitorial.”
In Loreley Financial v Credit Suisse Securities (Europe) Ltd [2023] 1 WLR 1425, Males LJ said at paragraph 38:
“I conclude, therefore, that in order to determine whether litigation privilege extends to the identity of the persons communicating with a solicitor in relation to litigation, it is necessary to consider whether disclosure of that identity would inhibit candid discussion between the lawyer and the client (or the person communicating on behalf of the client). If so, the identity of such persons should be privileged. But if not, to extend privilege to the identity of such persons is unnecessary and may deprive the court of relevant evidence needed in order to arrive at a just determination of litigation.”
Thus, upon considering this line of authority, Calver J concluded at paragraphs 93 and 94:
“[93] The provision of the identity of the Consultancy and of the persons who procured the Glavstroy Report will reveal nothing about the content of any privileged communications, nor will it reveal anything about the litigation strategy of the Chernukhin Parties, not least because the Chernukhin Parties have themselves already deployed the contents of the Glavstroy Report in the section 68 proceedings.
[94] It follows that this is not a case of waiver of privilege leading to the loss of the privilege; rather, the identity of the Consultancy and those who procured the report is not privileged information at all.”
This case is a reminder than LPP covers communications, or information or documents that would betray the content of privileged communications. LPP does not cover mere information or documents that are not, themselves, privileged communications or which do not betray the content of such communications.
It also serves as a warning that the information and documents that law firms hold, may not necessary be exempt from disclosure if the law firm, even inadvertently, becomes mixed up in wrongdoing – whether civil, criminal, a contempt of court or merely ‘disciplinary’ – committed by, or on behalf of a client.
Costs
Costs were dealt with separately in [2024] EWHC 2751 (Comm) (“the costs judgment”).
The general principle is that costs incurred should be recovered from the wrongdoer rather than from an innocent party.[3] The starting point on an application for Norwich Pharmacal relief is that the applicant should normally be ordered to pay the costs of the party ordered to give disclosure, including the costs of the application (as reiterated at paragraph 8 of the costs judgment).
The claimants complained that the respondent treated this case as full-blown adversarial litigation “defended with signal vigour” and that the respondent “resisted the application on every conceivable basis and acted unreasonably in their conduct of the matter so as to cause the Claimants to incur significant unnecessary expense.”
Calver J found that it was reasonable in all the circumstances for the respondent to resist disclosure in principle but that it was only fair that the claimants should not have to pay a proportion of the respondent’s costs which reflects the unnecessary increase caused by their failure to engage with the claimants’ forgery allegations. He thus ordered a 30% reduction in the respondent’s costs of resisting the application with the remainder to be assessed on a standard basis.
Mai Holdom – November 2024.
[1] S.67 of the Arbitration allows a party to arbitral proceedings to challenge any award of the arbitral tribunal as to its substantive jurisdiction; and s.68 of the Arbitration Act allows a party to to arbitral proceedings to challenge an award on the ground of serious irregularity affecting the tribunal, the proceedings or the award.
[2] [2019] EWHC 173 (Comm);upheld by the Court of Appeal in [2020] 1 CLC 285.
[3]Totalise Plc v The Motley Fool Limited and Interactive Investor Limited [2001] EWCA Civ 1897,
