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Cite as: [1999] WLR 1154, [1999] ILPr 179, [1999] 1 WLR 1154, [1998] EWCA Civ 817, [1998] CLC 1225, [1998] 4 All ER 439

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IN THE SUPREME COURT OF JUDICATURE No QBENF 98/0133/1

IN THE COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM ORDER OF MR JUSTICE POPPLEWELL

Royal Courts of Justice

Strand

London WC2

Tuesday, 12th May 1998

B e f o r e:

THE VICE-CHANCELLOR

(Sir Richard Scott)

LORD JUSTICE AULD

LORD JUSTICE SCHIEMANN

FIRST AMERICAN CORPORATION and Others

Plaintiff/Appellant

- v -

SHEIK ZAYED BIN SULTAN AL-NAHYAN et al

Defendants/Respondents

CLARK M CLIFFORD et al

Plaintiff and Counterclaim Defendant

- v -

FIRST AMERICAN CORPORATION et al

Defendants and Counterclaim Plaintiff

(Handed down judgment

Smith Bernal Reporting Limited, 180 Fleet Street,

London EC4A 2HD

Tel: 0171 831 3183

Official Shorthand Writers to the Court)

MR STANLEY BURNTON QC and MR STEPHEN RUBIN (Instructed by Messrs Jones, Day, Reavis & Pogue of London) appeared on behalf of the Appellant

MR PETER GOLDSMITH QC and MR JOHN NICHOLLS (Instructed by Herbert Smith of London) appeared on behalf of the Respondent

J U D G M E N T

(As Approved by the Court )

(Crown Copyright)

THE VICE-CHANCELLOR:

This is an appeal from the judgment given on 16 December 1997 and the Order dated 12 January 1998 made by Popplewell J. The judge dismissed an application by First American Corporation and First American Bankshares Inc. for an order giving effect to Letters of Request which had been issued by the U.S. Court for the District of Columbia. The Letters sought to have three intended witnesses orally examined and to have one of the three ordered also to produce documents in aid of civil actions proceeding in the US District Court.

One of the Letters of Request, issued in respect of Mr Cowan, was issued on 1 August 1997. This was the Letter of Request that sought also the production of documents. The other two, issued in respect of Mr Chapman and Mr Hoult, were issued on 3 September 1997. Each of the three witnesses is, or was, a partner in Price Waterhouse UK and each of them was from 1986 until 1991 engaged in work relating to audits of the accounts of BCCI Overseas and other BCCI companies. The purpose of the Letters of Request was the obtaining of evidence for use in the civil actions in the U.S. The judge came to the conclusion that the attempt to obtain evidence via the Letters of Request was a fishing exercise that the courts of this country ought not to support. He refused, therefore, to give effect to the Letters. The applicants have appealed to this Court. In course of the progress of the application, from its institution through to the hearing of this appeal, significant changes in the scope of the application have taken place. First, the application for an order against Mr Cowan for the production of documents has been dropped. This happened in the course of the hearing before Popplewell J. Second, the application for oral evidence to be taken from Mr Hoult has been dropped. This happened shortly before the commencement of the hearing of this appeal. Third, the application for oral evidence to be taken from Mr Cowan and Mr Chapman has been substantially limited by the deletion of a number of paragraphs from the original Schedule of Requested Testimony. This took place in the course of the hearing before Popplewell J. And, fourth, the applicants, in the course of the hearing of the appeal, proposed that the order they seek for the examination of Mr Cowan and Mr Chapman should include certain provisions regulating the conduct of the examination and, in one important respect, limiting the type of questions that can be put. I will refer later in more detail to these proposals.

The result of these changes is that the order sought from this Court on appeal is significantly different from that which was sought from Popplewell J. Nonetheless, the points of principle on which the intended witnesses based their successful opposition in the Court below are essentially the same as those on which they have resisted the appeal before us.

I must endeavour to describe the U.S. litigation in aid of which these Letters of Request were issued by the U.S. District Court. There are two associated actions. In one action First American Corp. and First American Bankshares Inc. are the plaintiffs. There are, or were, some thirty defendants, two of whom are Mr Clifford and Mr Altman. Both of them had been directors of First American. Both had also been legal counsel to First American. What is alleged is, in brief summary, that BCCI, in contravention of U.S. regulatory statutes, conspired to obtain control of First American by acquiring control, through nominees, of First American’s holding company, Credit and Commerce American Holdings NV (CCAH). Paragraph 1 of the Complaint describes the action as follows:-

“1. This is an action brought by First American for injury arising from multiple illegal acts committed by Defendants in conducting the affairs of BCCI. These acts included, but were not limited to, Defendants’ scheme to fraudulently acquire and illegally maintain ownership of First American with funds provided by BCCI/ICIC by Defendant Zayed and other Abu Dhabi entities and individuals under Defendant Zayed’s control and by depositors and creditors of BCCI. This scheme was carried out in violation of (1) the Racketeer Influenced and Corrupt Organisations Act, 18 U.S.C. para 1962(b), (c) and (d); (2) the Defendants’ fiduciary obligations to First American; and (3) the common law of fraud and negligence”.

The alleged “scheme” was that BCCI (or ICIC) would fund the acquisition by nominees of CCAH shares. This funding would be represented in the books of BCCI as being loans to the respective shareholders. But in reality these apparent loans were not loans at all and the individuals who held the shares acquired with these ´loans’ were not borrowers but nominees holding the shares on behalf of BCCI (or ICIC). So it is alleged. It appears to be common ground that very substantial funds indeed were provided by BCCI or ICIC for acquisition of CCAH shares and that the Defendants, including Mr Clifford and Mr Altman, had become CCAH shareholders through the use of these funds. What is in issue, therefore, is whether these funds were genuine loans to the shareholders or whether the shareholders were merely nominees holding the shares for BCCI/ICIC. Paragraphs 76 and 77 of the Complaint plead as follows:-

“76. In conspiracy with BCCI, Defendants created the false impression that the CCAH shareholders constituting the Abu Dhabi Emirates and Adham Groups of Defendants were wealthy Arab investors, prominent businessmen and independent investors in and owners of CCAH and its First American subsidiaries. These individuals and entities made, and acquiesced in, false and fraudulent representations, omissions and promises to United States banking regulators, to First American and others regarding the ownership and control of First American’s parent, CCAH. These misrepresentations continued until at least July 5, 1991, when BCCI was closed down by bank regulatory authorities world-wide and indictments began to issue for the conduct complained of herein.

77. Ownership of CCAH, the purported ultimate parent holding company of First American, was illegally acquired and illegally maintained with funds provided by BCCI/ICIC and the Ruling Family of Abu Dhabi under secret agreements that gave BCCI/ICIC illegal ownership of First American”.

The alleged illegal acquisition of CCAH shares commenced in 1982 and continued through to 1986. The funds provided by BCCI/ICIC appeared in the BCCI or ICIC accounts as loans. First American are concerned to establish whether, or to what extent, these apparent loans were treated as loans would normally be treated. e.g. Was interest ever paid? If not, was any action taken to remedy the non-payment of interest? Was there ever any enquiry as to the creditworthiness of any of the apparent borrowers? If not why not? Was any reserve ever created to take account of any likely inability of a borrower to repay his apparent loan? The action, it need hardly be said, is a highly complex one in which the issues raised require a careful perusal of BCCI and ICIC documents from at least as far back as 1980.

In the second action Mr Clifford and Mr Altman are the plaintiffs. They seek an indemnity from First American for fees and costs incurred in defending criminal and civil proceedings in the U.S. arising out of their involvement, as directors or legal counsel, in the affairs of First American.

The main action has, we are told, been settled against all defendants bar six. Two of the six are Mr Clifford and Mr Altman. It appears that First American propose to prepare and serve an amended Complaint confining the pleaded issues to those which affect the remaining defendants. Whether or to what extent issues raised by the present Complaint will be dropped from the amended Complaint remains to be seen. It may be that the amended Complaint will, on the one hand, drop some of the existing allegations but, on the other hand, include new allegations and raise new issues arising out of the discovery process that has been taking place in the United States.

As I have said, the involvement of Price Waterhouse UK in the affairs of BCCI dates from 1986 when the firm assumed a supervisory role in respect of the BCCI audits. Price Waterhouse UK is not, as yet, a defendant or otherwise a party to any civil proceedings brought by First American. Nor are any of its partners. Whether or not that will remain the position is uncertain. On 19 August 1997 First American obtained a subpoena from the U.S. District Court of New York directed to Price Waterhouse. The subpoena ordered Price Waterhouse to produce a number of documents. Price Waterhouse U.S. filed objections to the subpoena. First American responded with a Petition to compel Price Waterhouse to comply with the subpoena and supported its Petition with a Memorandum dated 29 September 1997. The Memorandum sets out First American’s contentions as to the nature of Price Waterhouse’s involvement in the matters sued on in the action:-

“As auditor, Price Waterhouse reviewed most of the fraudulent CCAH loans from their creation in 1982 until 1986, and all of the CCAH loans from 1987 until BCCI was closed in 1991. Price Waterhouse knew that the loans were characterised by widespread evidence of fraud, yet it never took effective steps to end BCCI’s illegal acts in the United States”. (p.3).

and

“To conceal its illegal ownership of CCAH, BCCI characterised its investment in CCAH as ´loans’ to the nominee shareholders, with CCAH shares pledged as security. These nominee shareholders entered into parallel agreements with BCCI that generally excused them from paying any interest or principal on the ´loans’, held them harmless for any personal liability on the ´loans’ and denied them the benefit of any increase in the value of the CCAH shares ...

Price Waterhouse was well aware of these ´loans’ to the nominee shareholders, and the evidence of fraud associated with the ´loans’. For example, Price Waterhouse repeatedly acknowledged that the CCAH ´borrowers’ failed to pay interest. Price Waterhouse knew that BCCI nonetheless treated this unpaid interest as ´income’ which deceptively inflated BCCI’s profits and caused the purported loan balances to increase significantly each year. As a result, the CCAH ´loans’ grew rapidly: in ´1987, they amounted to $453 million; by 1989 they had ballooned to $834 million.

Price Waterhouse knew (or deliberately ignored the fact) that BCCI owned CCAH and Price Waterhouse knew that such a relationship was illegal under US law”. (pp. 6 to 7).

These allegations as to Price Waterhouse’s knowing involvement in the loan scheme whereby BCCI’s alleged ownership of CCAH was acquired are, in my judgment, highly relevant to the question as to what action the courts of this country should take in response to the Letters of Request. This is not a case in which the Letters of Request merely seek an opportunity to examine third party witnesses with relevant knowledge of the facts in issue in the action. They seek an opportunity to examine third parties who are alleged to have been knowing participants in the dishonest conduct on which the action is based.

To each of the Letters of Request there is exhibited a ´Schedule of Requested Testimony’. As I have said, a number of the paragraphs of the Schedule have been deleted or amended. The scope of the proposed questioning has been thereby reduced but nonetheless remains very wide. The Schedule, in its present amended form, is annexed to this judgment.

The intended witnesses must, if an order giving effect to these Letters is made, prepare themselves to answer questions on the topics raised by each of the paragraphs of the amended Schedule. Consider, for example, paragraph 3 of the Schedule. Are they really expected to be prepared to answer questions on “The losses BCCI’s Central Treasury Division incurred from the early 1980’s through 1986 ...”? The width of paragraph 17 of the amended Schedule, too, is remarkable. The judge described the paragraph, with justification, as “enormously wide ranging”.

We have been supplied by Mr Burnton QC, counsel for First American on this appeal, with a document containing examples of questions that might be asked under paragraphs 11, 12 and 13 of the amended Schedule. There are fifty-seven exemplar questions in the document. These questions do, of course, have much more specificity than the paragraphs of the Schedule but they demonstrate the extent of the preparatory work that the intended witnesses would have to undertake in order to prepare for the examination. I will return to the Schedule and the nature of the questioning permissible thereunder after a review of the law and of the authorities that must guide our approach on this appeal.

The power of the court to order the taking of evidence in aid of litigation in a foreign country is statutory. It is governed by the Evidence (Proceedings in Other Jurisdictions) Act 1975 which gave effect (so far as was thought consistent with public policy) to the Hague Convention on the Taking of Evidence Abroad in Civil or Commercial Matters.

Section 1 of the 1975 Act sets out conditions to be satisfied if the court is to have the powers conferred by the Act. There is no question but that in the present case the conditions are satisfied. Sub-sections (1) and (2) of section 2 confer the requisite powers on the court. The powers are discretionary. The court has power “to make such provision for obtaining evidence ... as may appear to the court to be appropriate” and “any such order may require a person ... to take such steps as to the court may consider appropriate” (section 1). But sub-sections (3) and (4) of section 2 impose important limitations on the exercise of those discretionary powers:-

“(3) An order under this section shall not require any particular steps to be taken unless they are steps which can be required to be taken by way of obtaining evidence for the purpose of civil proceedings in the court making the order (whether or not proceedings of the same description as those to which the application for the order relates) ...

(4) An order under this section shall not require a person -

(a) to state what documents relevant to the proceedings to which the application for the order relates are or have been in his possession, custody or power, or

(b) to produce any documents other than particular documents specified in the order as being documents appearing to the court making the order to be, or to be likely to be, in the possession, custody or power”.

It is clear enough that sub-section (4) is directed against “fishing” applications for documents. The sub-section does not apply to oral testimony. Such jurisdictional limitations as are imposed on the court’s power to order oral testimony to be taken must be spelled out of sub-section (3). The question whether and to what extent, sub-section (3) bars ´fishing’ applications for oral testimony is one of some importance in the present case and one on which the state of the authorities does not seem to me to be very satisfactory.

The question was addressed in in re State of Norway’s Application [1987] 1 QB 433. The case concerned taxation proceedings in Norway. One of the issues in the case was whether the Norwegian taxpayer was the person in control of a trust which owned the shares in a certain company. Letters rogatory issued by the Norwegian Court requested the oral examination of two witnesses in the United Kingdom. Each was a person with a relationship to the trust or to the company that justified the expectation that he could give relevant evidence on the issue in question. The Court of Appeal, reversing McNeill J., held that the request amounted to an impermissible fishing expedition and should not be accepted. On the fishing point, Kerr L.J. said this:-

“... although ´fishing’ has become a term of art for the purposes of many of our procedural rules dealing with applications for particulars of pleadings, interrogatories and discovery, illustrations of the concept are more easily recognised than defined. It arises in cases where what is sought is not evidence as such, but information which may lead to a line of inquiry which would disclose evidence. It is the search for material in the hope of being able to raise allegations of fact, as opposed to the elicitation of evidence to support allegations of fact, which have been raised bona fide with adequate particularisation. In the present context fishing may occur in two ways. First, the ´evidence may be sought for a preliminary purpose, such as the process of pre-trial discovery in the United States. The fact that this is clearly impermissible for the purposes of the Act of 1975 is established in the Westinghouse case [1987] AC 547 , and was equally so held by this court in relation to the Foreign Tribunals Evidence Act 1856 in Radio Corporation of America -v- Ranland Corporation [1956] 1 QB 618. This is irrelevant in the present context, since the evidence is required for the trial itself. But fishing is, in my view, also relevant in another sense in the present context, as McNeill J. rightly indicated. It is perhaps best described as a roving inquiry, by means of the examination and cross-examination of witnesses, which is not designed to establish by means of their evidence allegations of fact which have been raised bona fide with adequate particulars, but to obtain information which may lead to obtaining evidence in general support of a party’s case”. (pp. 482/3).

Kerr L.J., after giving an example of what would be a permissible and what would be an impermissible question, went on:-

“The scope of the present request is so wide that I am left in no doubt that it goes far beyond the elicitation of evidence and contains a great deal of impermissible fishing”. (p. 483).

Glidewell L.J. agreed that:-

“... the scope of the ´matters or questions’ about which the state in the present application is seeking ´information and evidence’ is so wide that the questions intended to be asked will inevitably include a substantial number which will elicit information which may lead to a line of inquiry rather than evidence in the proceedings themselves. Since such questions would be ´fishing’ they would be unacceptable, and it follows that the court should not order the witnesses to give evidence upon the request as at present framed”. (p. 491).

Ralph Gibson L.J. disagreed. His approach was to apply to the question whether the letters of request were too widely framed the test that the courts in this country apply to the question whether a subpoena to give oral evidence should be set aside. He agreed that a witness ought not to be required to comply with a letter of request if it appeared to the court “that the request is irrelevant, or fishing, or speculative, or oppressive: per Lord Denning M.R. in Senior -v- Holdsworth [1976] QB 23 ...”

and continued:-

“That is the test which the court will apply in deciding to set aside a subpoena so as to excuse a witness from being required to give evidence at all. It has been held that the fact that the witness is clearly able to give relevant evidence and that nothing more is sought from him is not decisive: the subpoena may be set aside if, on balancing the value of the evidence to the applicant against the burden upon the witness, and the degree of intrusiveness of the proposed questioning and all the other circumstances, it seems to the court that the request is oppressive”. (p. 496).

Ralph Gibson L.J. went on to express the opinion that “the witnesses can probably give evidence relevant to the factual issues in the case pending in Norway” and that “the request is not so wide that the court should reject the application”. (p. 499).

Following the Court of Appeal setback, the Norwegian Court issued a second letter of request in which specific questions that it was intended should be asked were set out. So the objection that the request was too wide could no longer be taken. There was, however, another point of objection, not relevant to the present case, which the Court of Appeal accepted. In the course of his judgment Woolf L.J. referred to the “fishing” objection that had been taken to Norway’s first letter of request and said this:-

“I have difficulty in applying the concept of fishing to a request that a witness should be required to give oral evidence. It is in English proceedings commonly used on applications for interrogatories and it may be said that there is little distinction between oral cross-examination and written cross-examination and the administering of interrogatories. However, interrogatories are in my view part of the process of discovery and as far as giving of evidence (albeit prior to the trial) is concerned, different considerations could apply ... But subject to the question of privilege, what I would expect normally to concern the court when considering whether effect should be given to a request, is whether the request is confined to seeking to obtain evidence which will be relevant to the proceedings in the foreign court. If it is, then normally that will be the end of the matter. Under the 1975 Act the court does, however, have a general discretion and if there are special circumstances making it appropriate that the examination is confined the court can take the appropriate action ... If the examination of the witness is sought as part of the process of discovery, then different considerations would apply and the principle of fishing could, when appropriate, be invoked. Here, therefore I would regard Ralph Gibson L.J. as indicating the correct approach rather than the majority on the first appeal who, as I understand their judgments, would extend principles which I would regard as applicable to discovery to evidence required for the hearing itself”. (See [1990] 1 AC pp. 181/182).

I am in respectful and complete agreement with the opinion expressed by Woolf L.J. in the passage I have cited. If oral evidence is being sought for the purpose of use at trial and if there is good reason to believe that the intended witness has knowledge of matters in issue at the trial so as to be likely to be able to give evidence relevant to those issues, I do not understand how an application to have the intended witness orally examined can be described as “fishing”. It cannot be necessary that it be known in advance what answers to the questions the witness can give. Nor can it be necessary that the answers will be determinative of one or other of the issues in the action. Section 2(2) of the 1975 Act bars the court from making an order for oral testimony to be taken pursuant to a letter of request unless the order is of a type that could have been made for the purpose of obtaining oral testimony for domestic litigation. In the case of a witness who there is reason to believe has relevant evidence to give, a subpoena served on the witness in order to obtain his evidence for trial could not be set aside on the ground that it was ´fishing’. In a comparable case, a court would not be deprived by section 2(2) of power to accede to a letter of request. The question whether, as a matter of discretion, the court would be prepared to make an order pursuant to the letter of request, and if so what order, would be another matter. But there would be no jurisdictional reason why the court should not make the order sought.

In my opinion, the disagreement between Ralph Gibson L.J. and the majority in re Norway’s Application was not really one of principle. The majority were not, in my view, taking a jurisdictional point. Their view of the “fishing” character of the request was based upon its width and led them to conclude that it would not be right to accede to the letter of request, not that they lacked power to do so. I regard the case as authority for the proposition that, as a matter of discretion, a request for oral testimony should not be acceded to if the intention were to obtain information rather than to obtain evidence for use at the trial. It is not, in my opinion, authority for any broader proposition. Moreover, it is not always possible to draw a sharp distinction between, on the one hand, questions “designed to establish allegations of fact” and, on the other hand, questions designed to extract “information which may lead to obtaining evidence in support of a party’s case”. (See [1987] 1 QB at p. 482, per Kerr L.J.). There may be some questions which are obviously one or obviously the other. But a number of questions may, potentially, lead either to an answer which is probative of an allegation of fact or to an answer which prompts a further line of inquiry without being probative, or to both. In framing questions to ask a witness from whom no proof has been taken, the questioner can be expected to ask a number of preliminary questions in order to feel his way in. This is not fishing. It is a normal technique of examination. A topic for legitimate questioning may have merely background significance. I repeat that, in my opinion, if there is sufficient ground for believing that an intended witness may have relevant evidence to give on topics which are relevant to the issues in the action, a letter of request seeking an order for the oral examination of the witness on those topics cannot be denied on the ground of fishing.

Both the two Court of Appeal decisions in In re Norway’s Application were appealed to the House of Lords. [1990] AC 723. The first decision was affirmed and the second reversed. Lord Goff, with whose speech the other members of the House agreed, left expressly unresolved the conflict of opinion between Kerr L.J. and Glidewell L.J. on the one hand, and Ralph Gibson L.J and Woolf L.J. on the other (see p. 810).

The judgments of Kerr L.J. and Glidewell L.J. in re Norway’s Application (No. 1) constitute the ratio of the case and are binding on us. Ralph Gibson L.J. was a dissentient in the case and Woolf L.J.’s comments in re Norway’s Application (No. 2) were obiter. The principle for which the former judgments stand as authority does not, however, go further than to require that a letter of request, if it is to be acceded to by an English court, must be intended to obtain relevant evidence for use at the trial. The intention underlying a letter of request may often, of course, be inferred from its contents and it was the width of the contents of the original Norwegian letter of request that led the majority in the Court of Appeal to categorise the underlying intention as fishing.

The question as to what evidence would and what evidence would not be relevant to an issue in the foreign action is primarily a matter for the foreign court. The House of Lords so held in in re Asbestos Insurance [1985] A.C. 331. Lord Fraser said:-

“It would be quite inappropriate, even if it were possible for this House or any English court to determine in advance the matters relevant to the issues before the Californian courts on which each of these witnesses is in a position to give evidence”. (p. 339).

In my opinion, therefore, an English court must look at the issue of the relevance of the requested testimony, if it is raised, in broad terms, leaving to the foreign court, in all but the clearest cases, the decision as to whether particular answers, or answers on particular topics, would constitute relevant admissible evidence.

In summary, in considering the Letters of Request in this case the court should, in my opinion, ask, first, whether the intended witnesses can reasonably be expected to have relevant evidence to give on the topics mentioned in the amended Schedule of Requested Testimony and, second, whether the intention underlying the formulation of those topics is an intention to obtain evidence for use at the trial or is some other investigatory, and therefore impermissible intention.

These are not, however, the only considerations. There are two others of importance. First, it is important that the courts of this country should, if they can properly do so, accede to letters of request issued by foreign courts seeking evidence for use in foreign litigation. This seems to me particularly to be so where the litigation arises out of a fraud practised on an international scale. In the Memorandum in support of First American’s Petition, to which I have already referred, it is asserted that “BCCI was the largest bank fraud in world history”. It is difficult to quarrel with that assertion, notwithstanding its hyperbole. The bank fraud that was BCCI crossed national boundaries and had widespread international ramifications and consequences. A civil action in any part of the world based upon an aspect of that fraud will be an action in respect of which there are likely to be individuals in many different countries who are potential witnesses with relevant evidence to give.

The difficulties of collecting the relevant evidence so that it can be presented to the court that will be trying the action are likely to be very formidable. It is, in my judgment, in the interests of all countries who conduct their affairs in accordance with the rule of law to provide such proper assistance as they can in order to try and ensure that the international complexities attending actions such as that in aid of which these Letters of Request have been issued do not prevent a just result being reached. It is trite to say that to deal with international fraud international co-operation is needed. This applies, in my view, not only to Governments and police forces but also to courts.

The second matter of importance is that in deciding what response to make to a Letter of Request, the court should bear in mind the need to protect intended witnesses from an oppressive request. There is a balance to be struck in each case between the legitimate requirements of the foreign court and the burden that those requirements may place on the intended witness. I agree with Ralph Gibson L.J. that the balance is much the same as that which has to be struck if an application is made to set aside a subpoena. As Lord Denning MR said in Senior -v- Holdsworth [1976] QB at p. 35, a case in which a subpoena requiring the production of documents had been served:-

“If the judge considers that the request is irrelevant, or fishing, or speculative or oppressive, he should refuse it”.

In the present case, Popplewell J., after reviewing the relevant authorities, expressed the following view.

“I come firmly to the view based on all the authorities to which my attention has been drawn, that fishing is not confined to discovery but is a ground for refusing a letter of request for oral examination of a witness. ´Fishing’ has two bases of which the width of the request is one part. Uncertainty is a discrete objection”.

The problem I have with this formulation is that “fishing” is not a term of art so far as oral testimony is concerned. In relation to oral testimony I do not think an objection of “fishing” has substance except in a case in which the conclusion can be reached, whether from the terms of the request or from other sources, that the intention underlying the request is not one of obtaining evidence for use at trial. The width of a request may indicate the absence of that intention. But, equally, the width of a request may be an inevitable consequence of the complexities of the issues and of the witness’s involvement in them.

In the present case each of the Letters of Request contains an express statement as to the purpose for which the examination of the witness is sought. For example, the request for the examination of Mr Cowan states, under the heading “Purpose of the Evidence or Judicial Act sought”, that:-

“Sworn testimony of Mr Cowan pursuant to a Letter of Request is admissible evidence and will be offered at trial”.

Such a statement does not, I would accept, conclude the issue of intention. If other material justifies the inference that the intention is mainly of an investigatory character, I think the request would have to be refused. But it is a fair starting point that a judge of the foreign court has stated that the purpose of the examination is to obtain from the witness evidence that will be offered at trial.

Submissions were made, both below and before us, based upon the nature of U.S. pre-trial discovery and the fact that the issue of these Letters of Request forms part of U.S. pre-trial discovery procedures. That that is so is an inevitable consequence of the Federal Rules of Civil Procedure. Rule 26 enables parties to obtain pre-trial discovery by, inter alia, “depositions upon oral examinations”, (see Rule 26(a)). Rule 26(b)(1) enables discovery to be obtained:-

“.... regarding any matter, not privileged, which is relevant to the subject matter involved in the pending action”.

and states that:-

“It is not ground for objection that the information sought will be inadmissible at the trial if the information sought appears reasonably calculated to lead to the discovery of admissible evidence”.

It is clear, therefore, that, under the U.S. Rules, the questioning of the intended witnesses can cover both the eliciting of admissible evidence and an investigatory search for information leading to a train of inquiry. The latter type of questioning would not be permitted in this country, save in a Norwich Pharmacal [1974] AC 133 type of action. Section 2(2) of the 1975 Act would, in my judgment, bar that type of questioning in an examination pursuant to a letter of request.

In the present case, however, notwithstanding the width of some of the paragraphs of the Schedule of Requested Testimony, I do not see any reason to doubt that questions put to the witness on the specified topics would, in general, be questions intended to elicit evidence for use at trial. First American will be inviting the US Court to draw inferences, on a balance of probabilities, as to the true nature of the relationship between the nominal CCAH shareholders and BCCI. Evidence as to the manner in which the “loans” were dealt with or regarded by BCCI managers will be highly material. The Price Waterhouse members who worked on the BCCI audit may have had relevant conversations with BCCI managers. They may have asked relevant questions of the managers regarding these ´loans’, the likelihood of their repayment, the payment or non-payment of interest thereon, and so on. Questioning of the intended witnesses on such matters as these could not, in my opinion, be described as attempts to obtain information leading to a train of inquiry. The questioning would be an attempt to obtain evidence for use at the trial. Whether or to what extent the attempt succeeds will depend upon what the witnesses can say. First American cannot be expected to know what that will be until the questions have been asked and answered.

In so far as Popplewell J. dismissed First American’s application on the ground that it constituted ´fishing’ I disagree. Notwithstanding their width, each of the paragraphs of the Schedule describes a topic with some relevance to the issues in the case. And in respect of each topic the intended witnesses can, in my opinion, reasonably be expected to have some relevant evidence to give.

However, I must now consider whether the width of the topics renders the Letters of Request oppressive. This, too, was a ground of objection to the Requests which the judge regarded as of considerable weight. In State of Minnesota -v- Philip Morris Inc (unreported) in which the Court of Appeal gave judgment on 30 July 1997. Lord Woolf M.R. held that:-

“... because of the need to hold the balance between the requesting court and the witnesses who are to be examined, if the Request is given effect, the court will not allow uncertain, vague or other objectionable Requests to be implemented. A witness is entitled to know within reasonable limits the matters about which he or she is to be examined” (p. 11 of the transcript).

Paragraph 3 of the amended Schedule refers to “The losses BCCI’s Central Treasury Division incurred from the early 1980’s through 1986 and the circumstances surrounding the subvention used to cover certain of such losses in 1986”. This, in my opinion, is much too wide. As I understand it, First American’s particular interest lies in the process whereby unpaid “interest” was added to the outstanding “loans” in order to improve the look of the BCCI accounts. That matter would certainly be relevant to the issues in the action. Thereapart it is not clear what the relevance of questions on this topic would be. Bearing in mind that the intended witnesses ’ involvement with BCCI began in 1986, the burden on them of preparing to answer unlimited questions on BCCI’s losses going back to 1980 appears to me both unnecessary and oppressive.

Paragraph 9 refers to “CCAH share transactions funded and/or orchestrated by BCCI or ICIC ...”. Bearing in mind that the share transactions in question took place between 1982 and 1988 and that the word “orchestrated” may cover just about anything, this, too seems to me so wide as to be oppressive.

Paragraph 6 of the amended Schedule refers to “BCCI’s banking relationship with Manuel Noriega”. The width of the topic is unconstrained by dates and there is no indication of the basis on which the banking relationship might be relevant to the issues in the action. The width of the paragraph, as it stands is, in my view, oppressive.

In addition to the excessive width of the paragraphs to which I have referred, the allegations of Price Waterhouse’s knowing complicity in the nominee shareholding arrangements must be taken into account. I have already referred to the passages in the Memorandum in support of the Petition in which these allegations are made. The judge referred in his judgment (p. 32) to the statement in one of Miss Wessel’s affidavits that “First American’s contentions relating to Price Waterhouse’s knowledge of BCCI’s fraud will be put to the intended witnesses at their depositions”. He (the judge) also recorded the position taken by Mr Hochhauser Q.C., counsel before him for First American:-

“[Mr Hochhauser] accepts that the pleading which now dates from 1993 does not allege that Price Waterhouse were aware of the fraud being perpetrated but it is open to the plaintiffs to make the allegation at the trial. He maintains that it is part of his case that Price Waterhouse were aware of the fraud did nothing about it and therefore were strictly a party to the fraud”.

Price Waterhouse deny these allegations.

First American have given no undertaking that they will not join Price Waterhouse in a civil action, whether the existing action or a new action, in an attempt to recover damages for Price Waterhouse’s alleged knowing complicity in the fraud. First American’s lawyers plainly believe that they already have material that justifies them in making public allegations to that effect. It is, it seems to me, inherently oppressive to hold over the head of two witnesses serious allegations of complicity in fraud and the real possibility of being joined as defendants in a civil action based on that alleged complicity, while at the same time requesting an opportunity for a wide examination of the two witnesses on the very topics that would be relevant in an action against them. For the reasons I have endeavoured to give, I would not refuse to give effect to these Letters of Request on the ground that the main purpose underlying them was not to obtain evidence for the existing action but was to obtain evidence for a contemplated action against Price Waterhouse. In in re Westinghouse Uranium Contract [1978] AC 547 Lord Wilberforce commented that “The fact, if it be so, that evidence so obtained may be used in other proceedings and indeed may be central in those proceedings is no reason for refusing to allow it to be requested” (p.611). I accept that, in general, that would be so. But allegations of fraud raise special considerations and so long as First American hold themselves free to use any information they may obtain from these two witnesses in a civil action for fraud in which the witnesses, or their firm, are defendants, the Requests are, in my judgment, oppressive.

Mr Burnton Q.C., counsel before us for First American, addressed the difficulty presented to his case by the allegations of Price Waterhouse’s complicity in the fraud by proposing that the order for the examination of Mr Cowan and Mr Chapman should include the following provisions:-

“1. The examination shall be limited to examination for the purpose of trial testimony only ...

....

5. No questions shall be asked on behalf of First American that seek an admission from the intended witnesses that:-

(a) they or Price Waterhouse knew before November 1990 that the apparent shareholders in CCAH and NBG were nominees for BCCI or ICIC;

(b) before November 1990 they or Price Waterhouse knew of any scheme to conceal the true beneficial ownership of shares in CCAH or NBG; or

This proposal does not, in my view, meet the problem. All it does is to rule out a direct question seeking an admission. It does not affect questions intended to elicit answers that build up a picture from which, subsequently, a court will be invited to infer the alleged guilty knowledge.

In my judgment First American must come off the fence. Let them, if they so wish, join Price Waterhouse as defendants in an action based on Price Waterhouse’s alleged complicity in the fraudulent conduct on which the present action is based. In that case, any Request to take evidence from these witnesses can be assessed in the light of the particular pleaded allegations made against them. And, I repeat, the allegations of knowing complicity in the fraud that have already been publicly made by First American preclude them, in my opinion, from protesting that they do not yet know enough to plead a case. Alternatively, let First American undertake that civil proceedings based on the alleged complicity will not be brought against Price Waterhouse or its partners. In that case the only problem about the Requests would, in my opinion, be relatively minor ones relating to the excessive width of some of the paragraphs of the Schedule. As to these, I do not doubt that First American and its lawyers could reformulate a request that, by limiting the excessive width of some of the paragraphs, would be one to which the courts of this country could properly give effect. For the reason I have given, we should, in my view, do so if we properly can. As matters stand, however, I agree with Popplewell J. that the requests are oppressive and ought not to be acceded to.

Moreover, Lord Fraser in in re Westinghouse Uranium Contract said that “... in judging the nature of the letters rogatory as a whole in the court must ... look at them in the unamended form in which they were received by the American Court” (pp 644/645). The limits of the extent to which the courts of this country can amend a request by a foreign court and give effect to the request as amended have probably already been exceeded.

I would dismiss this appeal.

LORD JUSTICE AULD:

I agree.

LORD JUSTICE SCHIEMANN:

I also agree.

Annex A

“1. ~~The audits conducted by Price Waterhouse for BCCI or International Credit and Investment Company (Overseas) Limited (“ICIC”), and any related entities for each of the following years: 1982-90.~~

2. Investigations, reviews or inquiries ~~number 1)~~ conducted by Price Waterhouse during the years 198 25 through 1991 into BCCI’s ~~deteriorating financial condition, its(other than the audits referred to in topic~~ relationship to Credit and Commerce American Holdings, N.V. (“CCAH”), and its relationship to ICIC.

3. The losses BCCI’s Central Treasury Division incurred from the early 1980s through 1986, and the circumstances surrounding the “subvention” used to cover certain of such losses in 1986.

~~4. BCCI’s termination of the accounting firm of Ernst & Whinney~~ .

~~5. Price Waterhouse’s assistance to BCCI and/or United States counsel for BCCI from 1988 to 1990 regarding BCCI’s compliance with world-wide money laundering laws and other banking regulations~~ .

~~6. BCCI’s banking relationship with Manuel Noriega~~ .

~~7. Loans by BCCI to defendant Ghaith R. Pharaon to purchase shares in National Bank of Georgia, Independence Bank, Attock Oil Company and/or Finance and Investment International Limited.~~

8. Studies or analyses conducted by Price Waterhouse on the valuation of CCAH shares, and communications with BCCI on that subject.

9. CCAH share transactions funded and/or orchestrated by BCCI or ICIC, including the following:-

a. the acquisition of CCAH shares by defendants Clifford and Altman in 1986, including the non-recourse loans from BCCI to Clifford and Altman to purchase the shares and the agreements to pledge those shares to BCCI;

b. the acquisition of CCAH of shares by defendants Clifford and Altman in connection with the CCAH share rights offering in August 1987, including the non-recourse loans from BCCI to Clifford and Altman to purchase the shares and the agreements to pledge those shares to BCCI;

c. the transfer of CCAH shares held by Clifford and Altman to defendant Mohammed Mahmoud Hammoud on or about March 31, 1988 and the source of funds provided to Clifford and Altman in connection with that transfer;

d. the CCAH transactions funded or orchestrated by BCCI or ICIC in connection with the tender offer for shares of Financial General Bankshares in March 1982, and the share rights offerings occurring in ~~August 1982, December 1983,~~ July 1986, August 1987 and July 1989; and

e. BCCI’s role in transfers of CCAH stock among CCAH record shareholders.

10. BCCI’s plans for a merger or other business combination of BCCI and First American.

11. The adequacy of documentation covering the loans made by BCCI to Record Shareholders of CCAH.

12. The relationship between BCCI and the Record Shareholders of CCAH, including the following:-

a. loans made by BCCI or ICIC to the Record Shareholders of CCAH;

b. the pledge of CCAH shares by Record Shareholders of CCAH to BCCI or ICIC;

c. side agreements between BCCI or ICIC and the Record Shareholders of CCAH;

d. agreements between BCCI and the Record Shareholders of CCAH that loans were non-recourse;

e. guarantees by BCCI or ICIC to cover principal and/or interest payments on loans to the Record Shareholders of CCAH to purchase CCAH shares; and

f. powers of attorney by Record Shareholders of CCAH authorizing ICIC, BCCI, defendant Abedi, defendant Naqvi, and/or other ICIC or BCCI representatives, to vote, sell or otherwise dispose of interests in CCAH shares.

13. Loan confirmation requests directed to the Record Shareholders or CCAH during the period 1982 to 1991 and the responses of the Record Shareholders of CCAH.

~~14. The investigation initiated in 1989 by the Office of the District Attorney for the Country of New York (“DANY”) into BCCI and its relationship with, inter alia , First American.~~

15. BCCI’s participation in CCAH’s purchase of the National Bank of Georgia from defendant Ghaith R. Pharaon.

16. Price Waterhouse’s involvement in, and response to, any investigation of BCCI initiated by the United States Senate Subcommittee on Terrorism, Narcotics and International Operations of the Committee on Foreign Relations from 1988 through 1991.

17. Meetings attended by, and other communications between, members or employees of Price Waterhouse, on the one hand, and United States counsel for BCCI, on the other, which occurred during the period from January 1986 to April 1991, concerning any of the subjects listed in the above paragraphs ~~1 to 16 and 18.~~

18. Meetings attended by, and other communications between, members or employees of Price Waterhouse, on the one hand, and BCCI or ICIC officers and directors, on the other, concerning any of the subjects listed in paragraphs 1 to 17.