England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
(HIS HONOUR JUDGE MACKIE QC)

		Royal Courts of Justice Strand London, WC2A 2LL
		Friday, 20th January 2006

1. LORD JUSTICE RIX: This is an application for permission to appeal brought by the claimant, Gus Consulting Gmbh, whom I will refer to as "CAIB". The judgment in question is that of His Honour Judge Mackie QC. CAIB are respondents to a claim brought in arbitration by a company, whom I will refer to as "DCL". DCL claim against CAIB in respect of an investment in shares in a Russian company, Gazprom, which has gone wrong. DCL claim in the arbitration that CAIB are the true principals to the contractual arrangements through which DCL invested in Gazprom. The investment involved complications in that under Russian law direct foreign investment in Gazprom is not permitted.
2. The transactions through which DCL made their investment in Gazprom were designed and intended to meet with this requirement of Russian law.
3. Although the direct contract partner of DCL was not CAIB, but an affiliate associate or subsidiary of CAIB, the broad contention of DCL in the arbitration is that the form of the transactions into which DCL entered were shams and that the principal was CAIB. Given the breadth of that allegation, the disclosure requested by DCL in the arbitration is broad.
4. The immediate problem which has given rise to Judge Mackie's judgment arises from the migration from another law firm of a litigating group which have the conduct of DCL's claim in the arbitration to an American law firm with international offices (amongst others) here in London and in Moscow called LeBouef, Lambe, Greene and Macrae ("LLGM"). LLGM were the former solicitors of CAIB and advised them in relation to transactions in Russian equities during the period in the late 1990s with which the DCL arbitration is itself concerned. CAIB are therefore concerned that DCL's litigating team are now embedded in LLGM. They therefore sought an injunction to prevent LLGM continuing with their retainer for DCL in the arbitration. It appears that LLGM accepted this retainer at a time when they omitted to discover, and thus to take into account, the fact that they had previously acted in the late 1990s for CAIB itself.
5. In his judgment, Judge Mackie considered the well-known cases of recent years dealing with this problem, in particular that of Bolkiah v KPMG [1999] 2 AC 222 (Comm) 957 in the House of Lords and Koch v Richards Butler [2002] 2 All ER in this court. At the end of his analysis of the law and the facts in this case, Judge Mackie described his ultimate conclusion in favour of dismissing CAIB's application as a near-run thing. He said at paragraph 59 that LLGM had "just" succeeded in showing that the risk of inadvertent disclosure of what he accepted was confidential information in the hands of LLGM had been shown to be on the theoretical side of the line. He also said at paragraph 60 that two considerations in particular had tipped the balance. His second consideration, to which he said at paragraph 62 that he had paid particular regard, was that in Koch Tuckey LJ at paragraph 53 had advocated a "robust view" as to how the line was to be sensibly drawn.
6. It is in these circumstances that the application is made. In CAIB's skeleton argument there are some submissions that the judge had erred as a matter of principle in the application of the principals of Bolkiah and Koch. Reliance was also placed on the fact that the decision was a near-run thing and that in conclusion the judge had also expressed disquiet about LLGM's acceptance of a retainer which involved them in litigating on behalf of claimants which were alleging wholesale fraud and dishonesty against former clients of theirs.
7. It seems to me that in these circumstances there is a real prospect of success and that this is a case that merits the attention of the full court. It was plainly a near-run thing and the judge was influenced by Tuckey LJ's comment about the need for a robust view. It might be said, however, that robustness is one thing on the facts of Koch, where the problem was simply that of the migration of a single lawyer from one firm to another in circumstances where that lawyer was to have no further contact with the litigation involved, and this case where there has been migration of a larger team into a firm many of whose existing personnel had had involvement in CAIB's relevant transactions during the relevant period in the late 1990s. Be that as it may, it seems to me that this case merits a further look by the full court and I would grant permission.
8. LORD JUSTICE MAY: I agree.
9. Tuckey LJ, in refusing permission to appeal on paper, wrote that the judge did not misdirect himself. I agree that the judge did not misdirect himself, but I am persuaded that it is properly arguable that he may have misapplied the law to which he had correctly referred. The only substantial question is whether LeBouef has taken sufficient precautions to ensure that there should be no inadvertent disclosure of confidential information. In holding that they had taken sufficient precautions, the judge had to rely on the acceptance of evidence sworn for the purpose by members of staff engaged on the relevant work. This was said by Lord Millett in Bolkiah to be insufficient.
10. As I understand it, there is no suggestion attacking the truth or good faith of the witnesses in question. There is, however, at least at first blush, an arguable case that the evidence in the circumstances should have led to the opposite conclusion. I emphasise that that is no more than the articulation of what I regard as a properly arguable case. It expresses no view one way or another as to whether the court who eventually hears this case would be likely to accept it or not.

(Permission granted; costs in the discretion of the court hearing the appeal; constitution should include at least one judge experienced in commercial matters; time estimate one day).