Jersey Unreported Judgments

Companies - application by the defendant - amended Order of Justice

[2021]JRC083

Royal Court

(Samedi)

23 March 2021

Before     :

Sir Michael Birt, Commissioner, sitting alone

 

Advocate W. A. F. Redgrave for the Plaintiffs.

Advocate D. Evans for the Defendant.

judgment

the COMMISSIONER:

Introduction

1.        This is an application by the Defendant pursuant to RCR 6/13 to strike out the Plaintiffs' claim in the Order of Justice dated 12^th April 2019, in whole or in part; alternatively, it seeks an order that the Plaintiffs be directed to file an amended Order of Justice addressing the alleged deficiencies in the current Order of Justice.

Background

2.        The factual background to the claim as alleged by the Plaintiffs is set out in detail at paragraphs 12 - 32 of the judgment of this Court rejecting the Defendant's application to stay the proceedings on the grounds of forum non conveniens published at MB and Services Limited and Golovina v United Company Rusal Plc [2020] JRC 034 ("the forum judgment"), to which reference can be made.

3.        For present purposes, I can summarise the factual background as follows, drawing on the forum judgment as necessary.  In doing so, I repeat what is said at paragraph 13 of the forum judgment, namely that the summary is based upon the facts as alleged in the Order of Justice.  Many of these are denied by the Defendant and it will of course be for determination at trial as to whether the facts alleged by the Plaintiffs are correct or not.  In particular, the Defendant asserts that it is merely a holding company and that, if there is any claim at all (which is denied) such claim lies against one or more of its subsidiaries, not against the Defendant itself.

4.        At the material time the Defendant was a public company incorporated in Jersey.  Its shares were listed on the Hong Kong and Moscow stock exchanges.  A Jersey company EN+ owned 50.1% of the shares in the Defendant.  EN+ was in turn owned as to approximately 70% by Mr Oleg Deripaska, who is a Russian citizen and was the founder of the Rusal Group.  Since the institution of these proceedings, the Defendant has been redomiciled and is now a Russian company rather than a Jersey company.  On 25^th September 2020, it was registered as an international public joint-stock company in the Russian Federation.

5.        The Defendant is the holding company for the Rusal Group ("Rusal") which consists of a number of subsidiaries in different jurisdictions.  Rusal is one of the largest aluminium producers in the world.  Its business includes producing aluminium in various countries, although mainly in Russia, by smelting alumina derived from bauxite mined in various parts of the world.  It is a very substantial company. 

6.        According to the Defendant, its business is simply to act as a holding company for the Rusal Group.  It does not itself trade by buying or selling materials or engaging in manufacturing.  All such activities are carried out by subsidiaries.  Although it was incorporated in Jersey at the material time, its headquarters were in Cyprus.  The management company of the Group at the relevant time was Rusal Global Management BV ("RGM"), a Dutch company.  That company employed most of the executive/management staff of the Rusal Group and in particular was the employer of a number of individuals mentioned in the Order of Justice.

7.        The Second Plaintiff was born in Uzbekistan when it was part of the USSR.  She is a Russian citizen but has also been a British citizen since 1997.  She has lived in the United States since 2001.  She is an inventor and entrepreneur and her career has been involved with creating bulk packaging solutions for the transportation industry.  She is the beneficial owner and sole director of the First Plaintiff, which was incorporated in England and Wales in 2011. 

8.        Between 2007 and October 2015, the Second Plaintiff carried on business in Russia through a Russian company which she owned called Ekologicheskie Upakovochnye Tekhnologii ("Ekopaktekh").  In October 2009, she was approached by Pervaya Gruzovaya Kompaniya ("PGK"), which is Russia's largest operator of railway freight wagons.  They requested her to develop a custom-made bulk packaging solution for the transportation of powdered chemical products, such as alumina, in open-top cars ("gondola wagons") on the Russian railway network. 

9.        The Defendant transports a significant amount of alumina from its refineries around the world by rail across Russia to various smelting plants.  This was traditionally done in closed hopper wagons.  If the alumina could be transported in gondola wagons, this would save the Defendant significant sums.  However, this would require a liner to keep out moisture and other atmospheric agents.

10.      Following the meeting with PGK in October 2009, the Second Plaintiff agreed to look into the issue of whether there was a way in which alumina could be transported in gondola wagons.  She thereafter invested considerable time and effort in research and development and ultimately designed a flexible, sealable, disposable liner from woven polyethylene, referred to as a gondola wagon liner ("GWL").  The first experimental GWL was installed in a gondola wagon in November 2009.

11.      In February 2010, following an introduction from PGK, she met with representatives of the Defendant to discuss the potential use of the GWL developed by the Second Plaintiff for loading alumina.  From July 2010, the Second Plaintiff and Ekopaktekh began direct cooperation with the Defendant on the development of the GWLs without the involvement of PGK.  The Second Plaintiff and Ekopaktekh developed the GWLs at their own expense.  The First Plaintiff was incorporated by the Second Plaintiff in May 2011, and was assigned the intellectual property rights in the design of the GWLs. 

12.      From May 2011 to December 2013, the First Plaintiff supplied approximately 6000 GWLs designed by the Second Plaintiff to a Russian transport operator called VLL Pacific Limited ("VLL"), which in turn had a contract with a Swiss incorporated subsidiary of the Defendant, RS International GmbH ("RSI").  The GWLs were supplied via Ekopaktekh as the First Plaintiff's agent in Russia.  Although the Defendant sent the Second Plaintiff a draft contract for the direct supply of GWLs, the Second Plaintiff opted to continue focussing on further development of the GWLs and supplying them to the Defendant via the existing contract between VLL and RSI.  However, all communications regarding further development of the GWL technology and its implementation continued directly with the Defendant.

13.      The GWLs were manufactured in China by a company which is referred to as TKP.  The principal of TKP was Mr John Chang.  In May 2011, the Second Plaintiff had provided TKP with a draft supply agreement concerning the manufacture and supply of the GWLs.  The agreement contained terms stipulating that the property in the design of the GWLs was that of the First Plaintiff and granted a limited licence to TKP to manufacture the GWLs solely for the purpose of supply to the First Plaintiff.  The draft contract contained a requirement that TKP and Mr Chang should keep all technical information and know-how relating to the GWLs secret and confidential, and only to use it for the purpose of the supply agreement.  The Plaintiffs allege that, whilst the agreement was never signed, it was the clear common understanding at all times of TKP, Mr Chang and the Plaintiffs that the relationship between them was on this basis.  Mr Chang confirmed by email to the Second Plaintiff on 16^th May 2011, that he would not provide confidential information to the Defendant.  The Plaintiffs allege that, as a result of the equitable relationship of confidence between the Plaintiffs and TKP and Mr Chang, TKP and Mr Chang owed the Plaintiffs a duty of confidence in respect of the design of the GWLs.

14.      In 2013, the Department of Transport and Logistics ("the DTL") at the Defendant invited the First Plaintiff to mass produce GWLs for loading at one of the Defendant's factories in Ukraine.  From August 2013, Ekopaktekh and the Second Plaintiff supplied various technical details and drawings of the GWLs to Mr Zykov of the DTL to assist in obtaining a Ukraine railway permit for transport of alumina in open topped wagons and to Mr Zykov and Mr Yatsenko, a manager at the Defendant's Nikolaev alumina factory in Ukraine, for the purpose of assisting with the development of additional loading equipment to implement the use of GWLs at the factory in Ukraine.  The Plaintiffs assert that these communications were confidential in their nature and their supply was subject to a common understanding that the information would only be used in connection with the proposed production of GWLs for loading at the Defendant's factory in Ukraine and not with a view to the Defendant using the information to procure the manufacture of GWLs for itself outside the arrangement with the Plaintiffs. 

15.      In October 2013, Russian Railways terminated access to a railway spur at Vanino, which was used for the installation of GWLs before the loading of alumina.  Efforts to restore access to the spur through discussions with representatives of the Defendant and with Russian Railways were unsuccessful.  The Second Plaintiff then approached Mr Deripaska by email dated 12 January 2014, seeking his assistance in resolving the issue of the railway spur.  Mr Deripaska responded positively and the spur was reopened within a month. 

16.      Following this, on 31^st January 2014, the Second Plaintiff emailed Mr Deripaska inviting the Defendant or EN+ to acquire ownership of the First Plaintiff from her.  As a result of this approach, the Second Plaintiff was invited to meet representatives and officers of the Defendant at the Defendant's Moscow office on 5 February 2014.  Further meetings took place on 7^th and 12^th February 2014.  Discussions took place concerning the possible acquisition of the First Plaintiff by the Defendant from the Second Plaintiff.  A working group was established, including the Second Plaintiff and Mr Zykov and others on behalf of the Defendant.  It was agreed that the working party would visit TKP in China.  The Second Plaintiff agreed to produce due diligence documentation including a business plan and an evaluation of the intellectual property. 

17.      However, in mid-February 2014, representatives of the Defendant travelled to visit TKP in China without informing the Second Plaintiff.  They met Mr Chang and proposed that TKP manufacture the GWLs for the Defendant directly rather than for the First Plaintiff.  They told TKP that if they did this the Defendant would increase its orders to 3000 GWLs per month by mid-2014, but that the Defendant would use another supplier if TKP refused this proposal. 

18.      The Second Plaintiff learned of the Defendant's visit to China in late February 2014.  She flew to China and confronted Mr Chang who confirmed that the Defendant had promised to order large quantities of GWLs from TKP.  The Second Plaintiff complained forcefully about this by email to Mr Deripaska on 2^nd March 2014, but he did not reply. 

19.      A meeting took place on 14^th March 2014, at the Defendant's office in Moscow.  The Second Plaintiff complained forcefully about the Defendant's visit to China behind her back to procure TKP to manufacture the GWLs for the Defendant, but was told that she was making too much money from the supply of GWLs. 

20.      The Order of Justice asserts that Rusal SUAL ("SUAL"), a subsidiary of the Defendant, subsequently purchased GWLs from TKP, with the first shipment reaching Russia on 1^st July 2014.  No orders for GWLs were placed with the First Plaintiff after October 2013. 

21.      From June 2014 onwards the Defendant, through its subsidiary SUAL, obtained GWLs from a different Chinese manufacturer, namely Shandong Anthente New Materials ("Shandong") in place of TKP.  Later in August 2014, the Defendant, through SUAL began obtaining supplies of GWLs from a Ukrainian company called Ariva Pak LLC ("Ariva Pak").

22.      Whilst these events were going on, the Second Plaintiff had filed applications for certain utility model patents in Russia.  The first was a patent for utility model 143408 which was filed on 11^th December 2013 and published on 20^th July 2014.  The second was utility model 143828, which was filed on 3^rd March 2014, and published on 27^th July 2014.  The applications were filed in the name of Ekopaktekh and the First Plaintiff, but Ekopaktekh assigned its rights to the First Plaintiff on 18^th August 2014.  A utility model is apparently a form of patent and such patents take effect upon publication.  Patents in similar terms to the Russian patents were subsequently obtained and published in Ukraine and China.

23.      The Order of Justice pleads at paragraph 64 that the Second Plaintiff obtained a report from technical experts in 2014, who confirmed that the GWLs being manufactured for the Defendant by Ariva Pak and Shandong were identical to her designs.

The Plaintiffs' claims

24.      The Order of Justice alleges two causes of action, namely (i) breach of confidence (also commonly referred to as "misuse of confidential information") and (ii) an unlawful means conspiracy to injure. 

25.      As to the claim for breach of confidence, the Plaintiffs contend that the know-how in relation to the GWLs was confidential information and that the Defendant has misused that confidential information in breach of confidence by obtaining GWLs from TKP, Shandong and Ariva Pak.  In relation to Shandong and Ariva Pak, it is pleaded that the Defendant supplied the confidential information to each of those manufacturers.  In relation to TKP, it is pleaded that the Defendant knew that the know-how held by TKP was confidential information and it acted in breach of confidence by commercially exploiting that confidential information for its own benefit by acquiring GWLs directly from TKP rather than through the First Plaintiff.

26.      The second head of claim is conspiracy to injure.  The conspirators are said to include the Defendant, Mr Deripaska, Mr Itskov, TKP, Mr Chang, Shandong, Ariva Pak, SUAL and Rusal Trans LLC ("Rusal Trans") and other named individuals.  It is said that these persons conspired to injure the Plaintiffs by cutting them out of the supply chain (i) by unlawful use of the confidential information and/or (ii) by infringing the patents held by the First Plaintiff.  The patents referred to are the two Russian patents mentioned earlier, together with the equivalent patents obtained in China and Ukraine based on the two Russian patents.  Key elements of the conspiracy are pleaded as including the visit to TKP in China to persuade TKP to produce the GWLs for the Defendant directly, cutting out the Plaintiffs, and the subsequent importation of GWLs from TKP, Shandong and Ariva Pak without the Defendant paying the Plaintiffs for the right to use their intellectual property or their patents.

27.      The Plaintiffs claim damages for the unlawful use of the Plaintiffs' confidential information.  They also claim an account of the profits made by the Defendant as a result of its conspiracy and/or breach of confidence.

Striking out

28.      Rule 6/13 of the Royal Court Rules 2004 is in the following terms:

"(1)   The Court may at any stage of the proceedings order to be struck out or amended any claim or pleading, or anything in any claim or pleading, on the grounds that:

(a)       it discloses no reasonable cause of action or defence, as the case may be;

(b)       it is scandalous, frivolous, or vexatious;

(c)       it may prejudice, embarrass, or delay the fair trial of the action; or

(d)       it is otherwise an abuse of the process of the Court,

and may make such consequential orders as the justice of the case may require.

(2)   No evidence shall be admissible on an application under paragraph (1)(a)."

29.      The principles to be applied by the Court when considering a strike out application are well established and were conveniently summarised by Beloff JA in Trant v AG [2007] JLR 231, at paragraphs 22 and 23 in the following terms:

"22.   The test on an application to strike out is well established.  It is only where it is plain and obvious that the claim cannot succeed that recourse should be had to the court's summary jurisdiction to strike out.  Particular caution is required in a developing field of law.  Provided that a pleading discloses some cause of action or raises some question fit to be decided by a judge, jurats or jury, the mere fact that a case is weak is not a ground for striking it out. ...

23.   On an application to strike out under sub-para (a) of r.6/13(1) (that there is no reasonable cause of action) evidence is not admissible.  The facts alleged in the Order of Justice must be taken as correct.  However, where an application is made under sub-para. (b) (scandalous, frivolous or vexatious), or sub-para. (d) (abuse of process), or where the application to strike out is made out under the inherent jurisdiction of the court, evidence is admissible and may be considered by the court..."

30.      It is also well established that if a pleading is defective in setting out or particularising a cause of action, the claim as a whole should not be struck out if the defect is capable of remedy by filing particulars or an amended pleading; see for example Papadimitriou v Quorum Management Limited [2004] JRC 142 at paras 15 and 36.

The Defendant's summons

31.      The Defendant's summons is brought both on the grounds that the Order of Justice discloses no reasonable cause of action and on the grounds contained in (b), (c) and (d) of Rule 6/13(1).  At paragraph 3 the summons applies, as an alternative to striking out, for an order that the Court direct the Plaintiffs to file and serve an amended Order of Justice addressing such matters as the Court considers appropriate.  As oral argument progressed it became increasingly clear that in reality, save for certain limited points, this was a case where, to the extent that the Court agreed with the Defendant's application, the remedy should be a direction for filing an amended pleading rather than striking out the claim.

The Defendant's arguments in outline

32.      In relation to the claim for breach of confidence, the Defendant submits that the Order of Justice is defective in the following respects:

(i)        It fails to identify which foreign law governs the cause of action and the principles of such law.

(ii)       It fails adequately to particularise the alleged confidential information.

(iii)      Any confidential information lost its confidentiality upon publication of the patents in July 2014, so that any claim in respect of breach of confidence after that date is bound to fail.

(iv)      There is no pleaded allegation that the Defendant owed the Plaintiffs any obligation of confidence, which is an essential element of any claim for breach of confidence. 

33.      In relation to the claim in conspiracy, it is alleged that the Order of Justice is defective as follows:

(i)        As in the breach of confidence claim, the pleading fails to identify the relevant foreign law and any principles of that law.

(ii)       Inadequate particulars of the alleged unlawful acts have been given.  In relation to the breach of confidence element of the conspiracy claim, the defects identified at (ii), (iii) and (iv) of the preceding paragraph are equally applicable.  In relation to the alleged infringement of the patents, certain aspects of the claim are bound to fail as the patents have been declared void and, in addition, inadequate particulars of the alleged acts of infringement of any valid patent have been pleaded.

(iii)      The claim in conspiracy is prescribed in respect of any unlawful acts carried out before 12^th April 2016, (being three years before the Order of Justice).  This would include all acts said to constitute a breach of confidence because no such acts could constitute a breach after 27^th July 2014 (being the date of publication of the second Russian patent).

34.      I shall consider the issues of foreign law in relation to both the breach of confidence claim and the conspiracy claim.  I shall then consider each of the remaining points listed above in turn.

Foreign law (in both causes of action)

35.      The breach of confidence claim is pleaded as a matter of Jersey law, i.e. there is no reference to any foreign law as being applicable or relevant.  The Defendant submits that, given that even on the Plaintiffs' version of events, there was no connection with Jersey other than the fact that the Defendant was incorporated here at the time, the claim must be governed by some other system of law.  The Defendant goes on to assert that the Plaintiffs must plead which system of law they say governs the claim and also plead the relevant principles of that law, so as to explain how their claim satisfies the requirements of that law.

36.      The claim in conspiracy is a claim in tort.  It is therefore subject to the requirement of double actionability.  This provides that an act done in a foreign country is actionable as a tort in Jersey only if it is both:

(i)        actionable as a tort according to Jersey law, or in other words is an act which, if done in Jersey, would be a tort; and

(ii)       actionable according to the law of the foreign country where it was done, the lex loci delicti.

Advocate Evans submits that the Plaintiffs must specify at this stage the lex loci delicti and set out the principles of that law so as to show that the requirement for double actionability is satisfied.

37.      RCR 6/8 provides as follows:

"(1)   Subject to the provisions of this Rule, every pleading must contain, and contain only, a statement in a summary form of the material facts on which the party pleading relies for that party's claim or defence, as the case may be, but not the evidence by which those facts are to be proved, and the statement must be as brief as the nature of the case admits."

38.      It is well established that foreign law is treated as a matter of fact; see Dicey, Morris and Collins, the Conflict of Laws (15^th Edition) at 9-001 and, so far as Jersey Law is concerned, In re Imacu Limited [1989] JLR 17 at 23.  Being a matter of fact, it must normally be pleaded so as to comply with Rule 6/8 quoted above.  Thus, Dicey goes on to say at 9-003:

"The general rule is that if a party wishes to rely on a foreign law he must plead it in the same way as any other fact."

39.      In the forum judgment, the Court reached the provisional conclusion that the breach of confidence claim was governed by Russian law.  It emphasised that a final decision would rest with the trial court.  The basis for the Court's provisional conclusion is set out at paragraphs 48 - 58 of the forum judgment.  In short, on the basis that a breach of confidence claim is to be categorised for conflict of law purposes as a restitutionary claim for unjust enrichment, the governing law of such a claim is the law of the country which has the closest and most real connection with the claim.  In some cases the place of enrichment will be of the greatest importance in ascertaining this, whereas in others it will be of little importance.  The Court went on to hold that, on the basis of the material then before it, Russia was likely to be the country which had the closest and most real connection with the claim and that Russian law would therefore be the governing law of the claim. 

40.      It would of course be open to any party to argue in due course that a claim for breach of confidence should be categorised as a claim in tort rather than as a claim to unjust enrichment (see the discussion at 36-058 of Dicey) and/or that the claim had its closest and most real connection with some jurisdiction other than Russia, whether Jersey or some other country.

41.      As to the claim in conspiracy, the Court held in the forum judgment that this was a claim in tort and therefore subject to the double actionability principle.  The Court went on to reach the provisional conclusion that Russian law was the lex loci delicti as Russia was the country where the majority of actions relied upon were likely to have occurred.

42.      The question which arises for my decision is whether the Plaintiffs should be directed to plead at this stage what they say is the governing law of the claims or whether this is something which can be left until after discovery.  Advocate Redgrave submits that, in a case such as this, the Plaintiffs cannot know all the facts until after discovery and it is only at that stage that they will know exactly which persons did what, and significantly, where they did it.  He submits that a directions hearing could be held after completion of discovery and at that stage the Plaintiffs could be directed to pin their colours to the mast by specifying which system of law governs the claim in breach of confidence and what is the lex loci delicti for the conspiracy claim.  He referred to the judgment of Michael Briggs QC in Derksen v Pillar [2002] All ER (d) (261) as support for the proposition that, in cases of conspiracy where a plaintiff is unlikely to know the full details of the conspiracy when instituting the proceedings, he should be given considerable latitude in the early stages of the proceedings.  Advocate Redgrave cited in particular paragraph 79 of the judgment as follows:

"79.   ........ for the reasons given by the Court of Appeal in the Kuwait Tanker case, I consider that summary judgment applications designed to confine a conspiracy claim within the bounds delineated by the availability of evidence available to claimants at a relatively early stage in proceedings is an inherently unsatisfactory basis for the exercise of the discretionary jurisdiction.  It seems to me that where a claimant seeks relief in relation to an alleged fraud committed by the defendants acting in concert, then provided that there is evidence disclosing a real prospect that each of them will be found to have acted both dishonestly and in concert with each other, in principle, the claimant should be given considerable latitude to ascertain by all the processes available and up to and including trial the full ambit of that conspiracy........."

43.      Each side relied on different cases in support of its submission.  Advocate Redgrave referred me to University of Glasgow v The Economist [1990] Lexis citation 2430; [1997] EMLR 495.  This was a case of defamation i.e. a tort.  It was therefore subject to the requirement of double actionability. 

44.      The context of the decision in that case was an application by the plaintiffs to amend their statement of claim alleging libel.  Originally, the pleadings had simply referred to publication of the offending article in England.  The plaintiffs wished also to claim in respect of publication in a number of other countries, which they listed in the schedule to the proposed amended statement of claim.  In this respect, the plaintiffs proposed simply to plead "the publication of the said words and symbols in the countries set out in the schedule hereto is and was actionable by the law of those countries".  The plaintiffs did not plead any details of the law in those countries and relied upon the presumption that the law of those countries was the same as English law.  The defendants objected and said that details of the relevant foreign law of each country had to be pleaded.

45.      The judge, Popplewell J, referred to a passage at page 1388 of the then current edition of Dicey which said:

"A distinct, though perhaps related, question is whether it is necessary for the plaintiffs to allege that the defendant's conduct was actionable under the lex loci delicti, i.e. that such an allegation is part of the plaintiff's case, or whether it is sufficient for the plaintiff to prove a cause of action in English law, it then being left to the defendant to plead and prove that his conduct was not actionable under the lex loci delicti, i.e. Rule 205(1)(b) is a defence which it is incumbent upon the defendant to raise.  If the first view is correct, it does not follow that the plaintiff has to plead and prove foreign law, for he can rely on the principle that in the absence of an averment as to the content of foreign law the court will apply English law.  On the other hand, if the second view is correct, the content of the foreign law is irrelevant unless and until the defendant pleads that his conduct was not actionable under the lex loci delicti and in support of that view seeks to rely on the foreign law."

46.      Having considered various authorities, Popplewell J said at the conclusion of his judgment:

"I turn back to the passage in Dicey, to which I have already referred, and refer to the two positions which it said may arise.  In my judgment the two views expressed in the passage do not in fact actually arise.  All the plaintiff has to do is say that the tort is actionable in another country.  He may if he so wishes, affirmatively set out what the law in that foreign country is in order to support that plea.  If he chooses so to do of course he must plead the facts and matters upon which he relies.  But he does not have to, because until and unless foreign law is shown by the defendant to be different by proper evidence, the court will presume that English law applies and will apply it."

The judge therefore held that the proposed amended pleading was in proper form and allowed the amendment.

47.      Advocate Evans, on the other hand, relied upon the decision of Ferris J in Mother Bertha Music Limited v Bourne Music Limited [1997] EMLR 457.  This was an action for breach of copyright in relation to a well-known song.  Although the plaintiffs' statement of claim had alleged that the defendant had infringed their copyright in the song by collecting royalties from outside the UK, no particulars had been given of the foreign infringements and in particular no details of foreign law had been pleaded.  At the trial, the plaintiffs had conceded that they could only ask the court to adjudicate upon alleged infringements of the UK copyright.  After judgment, they sought leave to withdraw that concession so as to contend that the defendant had also infringed their copyright in the contracting states of the Brussels and Lugano Conventions.  Ferris J described the normal position in relation to foreign law at 491 in the following terms:

"Issue (i) is really an issue as to the terms and effect of the relevant foreign law.  These are, so far as English law is concerned, matters of fact which require to be pleaded and to be proved by evidence.  Moreover, in respect of the law of copyright, one would expect to find significant differences between the laws of one country and those of another.  If, therefore, as the decision in Pearce v Ove Arup suggests, a claim can be brought against a defendant domiciled here in respect of the infringement of copyright in another Convention country, one would expect to find pleaded the relevant features of the law of copyright in that other country.  Without such a pleading there would, on the face of it, be a failure to plead part of the facts which represent an essential ingredient of the cause of action."

48.      The plaintiffs sought to escape from this difficulty by relying upon the rule that, in the absence of evidence of foreign law, the Court will apply English law to a case governed by foreign law and relied upon the decision in University of Glasgow.  The defendant, on the other hand, objected both on a narrow and on a broad basis.  The narrow basis was that the action for breach of copyright under United Kingdom law only provided a remedy in respect of acts done in the United Kingdom.  This was because of the terms of the relevant statute.  Thus an assumption that (say) French law of copyright was the same as English law would get the plaintiffs nowhere because the plaintiffs would be seeking to invoke English copyright law in respect of acts done in France, to which English law had no application under the statute. 

49.      The broader argument was to the effect that it would be wholly unrealistic and unfair to the defendant to allow the plaintiffs to proceed in this way, as it was manifest that the law of copyright in other countries would not be precisely the same as in the United Kingdom.

50.      The judge found in favour of the defendant on both the narrow basis and the broader argument.  For my purposes, the broader argument is the more relevant and in relation to this the judge said at 493:

"Secondly the pleading is embarrassing in that it does not disclose to [the defendant] the case which it has to meet.  This is particularly so in respect of the facts relating to infringement.  But I think it is also the case in respect of foreign law because, even if Mr Mill's narrower argument is discounted, it is simply not realistic to suppose that the plaintiffs intend to go to trial on the basis that the copyright law of every Convention country is the same as the law of England."

51.      The final relevant authority is the decision of the English Court of Appeal in Kuwait Oil Tanker Company v Al Bader [2000] EWCA Civ 160.  This was a complex case but the relevant claim for present purposes was a claim in conspiracy i.e. a claim in tort.  The rule of double actionability therefore applied.  The claim having succeeded at first instance, the appellant argued on appeal, amongst other matters, that the claim in conspiracy had not been properly pleaded because the statement of claim had not pleaded the details of the law of Kuwait, being the lex loci delicti.  The position of the judge at first instance was quoted at [181] of the Court of Appeal judgment in the following terms:

"Although the plaintiff must show at trial that the acts complained of give rise to civil liability as between himself and the defendant in the country where they were committed, and may if he chooses to do so, identify at the outset the relevant foreign law on which he relies, he is entitled to rely on the presumption that foreign law is the same as English law until the contrary is proved."

The judge then referred to the University of Glasgow case in support of this approach.

52.      Having reviewed the position, the Court of Appeal concluded as follows at [184]:

"184  Since English courts proceed on the basis of a presumption that foreign law is the same as English law unless the contrary is proved as a fact, it seems clear that, whether or not the claimant incorporates in his pleading an averment that the matters relied on are civilly actionable under the lex loci delicti, the burden in practice lies upon the defendant to plead and prove that his conduct was not actionable under the lex loci delicti.  That being so, the debate appears to be a somewhat arid one.  The context in which it is likely to give rise to controversy is at the interlocutory stages of an action involving a foreign element when the court is concerned to consider and give directions in relation to any issue of foreign law arising on the face of the pleadings and as to the form and extent of any expert evidence of foreign law sought to be adduced by the parties.  It seems to us that questions as to where the burden lies and its practical consequences for the progress of the action are best dealt with on a case by case basis rather than by the application of an inflexible rule.  So far as the instant case is concerned, by the time of trial, the issues of law were unambiguously pleaded on both sides with directions having been given in respect of the expert evidence to be called, and the judge was entirely right to deal with the matter as he did."

Having referred to this passage, Dicey states at 35 - 122: "On the basis of this observation, there may be room for either of the views which have been canvassed depending on the circumstances of the case"

53.      I would add that, since all of these judgments, the reference to a presumption that foreign law is the same as English law has been reformulated in Dicey so as to read that, in the absence of satisfactory evidence of foreign law, the Court will apply English law.  However, this reformulation does not affect the principles to be extracted from the above cases.

54.      Where a claim is in tort, with the result that the double actionability principle applies, I am persuaded that the approach in University of Glasgow, as implicitly approved in Kuwait Oil, is permissible.

55.      Where double actionability applies, the case is tried essentially under the law of the forum and the secondary question is whether liability also exists under the lex loci delicti.  As the Court of Appeal said in Kuwait Oil, the burden in practice lies upon the defendant to plead and prove that his conduct was not actionable under the lex loci delicti.  However, as Popplewell J said in the passage quoted above, a plaintiff does have to assert that the tort is actionable in the foreign country.  He must therefore specify the country where the relevant acts took place, i.e. the lex loci delicti.  Having specified that other country, the plaintiff can then either simply assert that the tort is actionable under the law of that other country or he may, if he so wishes, set out what the law of that foreign country is in order to support that assertion. 

56.      The Order of Justice does not comply with this requirement at present in relation to the claim in conspiracy.  There is no assertion as to which foreign law is the lex loci delicti.  In my judgment, the Plaintiffs must amend the Order of Justice in respect of the claim in conspiracy so as to comply with this requirement.  They must specify which foreign law they assert is the lex loci delicti and must either simply assert that the actions in question would render the defendant civilly liable under the lex loci delicti or go further and plead the facts and matters relied upon to justify that assertion.  There is an added complication in this case.  Although there will be a lex loci delicti of the conspiracy itself, the individual unlawful acts (so far as they relate to infringement of patents) all fall to be decided in accordance with the law of the country issuing the relevant patent.  It is well established that issues of infringement of a patent must be determined according to the law of the country in which the patent was issued. 

57.      It seems to me however, that the position is different in relation to the claim for breach of confidence.  Both University of Glasgow and Kuwait Oil were claims in tort, with the consequence that the double actionability principle applied.  The claim would therefore be tried under the law of the forum, with simply an additional requirement that actionability under the lex loci delicti also be established. 

58.      A claim for breach of confidence has not traditionally been categorised as a claim in tort so as to be subject to the double actionability principle; on the contrary, it is normally regarded as a claim akin to one for unjust enrichment with the consequence that the governing law of the claim is ascertained by determining the country with which the claim has its most substantial and real connection (see paras 48 - 58 of the forum judgment). 

59.      In those circumstances, it seems to me to be incumbent upon a plaintiff to plead what system of law he says is the governing law of the claim.  The purpose of pleadings was conveniently summarised by Page, Commissioner in Federal Republic of Brazil v Durant International Corporation, [2011] JLR Note 19.  The Note summarises the effect of the decision in the following terms:-

"The purpose of pleadings is to enable parties to know the case they have to meet, to identify the matter in real dispute at an early stage and thus to ensure as far as possible that the matter proceeds to trial in an orderly manner without unexpected disruptions.  All parties involved in civil litigation must facilitate the effective and expeditious progress of proceedings, at the interlocutory stage as well as a trial (in re Esteem Settlement 2000 JLR N41, applied; Sinel v Goldstein 2003 JLR N20 applied).  The days of trial by ambush in civil litigation are long gone.  A litigant in the Royal Court must set out his case in an open and straightforward manner and a defendant cannot limit his pleadings to mere denials and non-admissions.  In the exercise of its case management functions, the court will make such orders concerning pleadings as may be necessary to identify the real issues between the parties, if necessary of its own motion."

60.      In my judgment, it is not consistent with that objective for there to be uncertainty, in a case where most if not all of the relevant acts occurred outside the jurisdiction, as to what system of law is said by a plaintiff to govern the claim.  Nor is it consistent with 9-003 of Dicey as set out above at paragraph 38.

61.      In my judgment, this requires the Plaintiffs in this case to plead which system of law they say governs the claim in breach of confidence and to specify (concisely) the essential elements of the applicable foreign law and the facts and matters relied upon to show that, on their case, they fulfil the requirements of a successful claim under that law. 

62.      I have not forgotten Advocate Redgrave's submission that, because of the nature of the claim in this case, and the fact that many relevant matters may only emerge upon discovery, it is premature to direct the Plaintiffs to plead the relevant foreign law at this stage; it should be left until after discovery.  I do not accept that submission.  Much is already known and is referred to in the Order of Justice.  I think it is important, for the reasons set out in the Republic of Brazil case, that the Plaintiffs set out their stall with clarity.  It would of course always be open to the Plaintiffs to seek leave to amend their pleading in relation to the applicable foreign law should evidence emerge on discovery which suggests that some other law is applicable and I would expect the Court to have little difficulty in granting leave for such an amendment provided that it is brought promptly after the emergence of such evidence. 

63.      I should add further that in its skeleton argument the Defendant asserted that in the absence of specific pleading by the Plaintiffs as to the law under which the claims are made, the Order of Justice does not disclose a reasonable cause of action and should therefore be struck out in its entirety under Rule 6/13(1)(a).  I regard that as a hopeless submission.  This is clearly a case where any defect in the pleading falls within Rule 6/13(1)(c) and can be cured by amendment, which is the course that I propose to adopt.

Breach of confidence

(i)         Particularisation of the confidential information

64.      In Benest v Langlois [1993] JLR 117, this Court upheld the existence in Jersey law of a cause of action commonly known as 'breach of confidence' in circumstances where there is no contractual obligation of confidence.  As mentioned above, the cause of action is also often referred to as 'misuse of confidential information' - see The Racing Partnership Limited v Done Brothers (Cash Betting) Limited [2020] EWCA Civ 1300; [2021] FSR 2 per Arnold LJ at [1].  For my part, I agree with Arnold LJ that, particularly in a case such as the present, the latter expression better reflects the content of the cause of action and I shall use the expressions interchangeably in this judgment.  The Court in Benest endorsed the well established tripartite test under English law for such a cause of action as laid down by Megarry J in the leading case of Coco v A N Clark (Engineers) Limited [1968] FSR 415 at 419.

65.      That test establishes that, if a plaintiff is to succeed, he must show that:

(i)        the information relied upon as being confidential has the 'necessary quality of confidence';

(ii)       that information must have been imparted in circumstances importing an obligation of confidence; and

(iii)      there must be an unauthorised use of that information to the detriment of the party communicating it.

66.      The English courts have made it clear that, in relation to the first limb of the test, a plaintiff must identify with precision in his pleading the information which is said to be confidential.  Thus in  The Racing Partnership Limited (supra), Arnold LJ said at [49]:

"The starting point in any confidential information case is to identify with precision the information which is alleged to be confidential.  Experience shows that claimants are apt to make unfocused allegations of misuse of confidential information, and that when they are required precisely to identify the allegedly confidential information, it can turn out that the information is either not protectable or has not been misused.  Moreover, even if confidential information has been misused, it is necessary precisely to identify what has been misused when it comes to considering remedies for such misuse, such as an injunction."

67.      To like effect is the observation of Laddie J, in Ocular Sciences Limited v Aspect Vision Care Limited [1997] RPC 289 at 359 where the judge said this:

"The rules relating to the particularity of pleadings apply to breach of confidence actions as they apply to all other proceedings.  But it is well recognised that breach of confidence actions can be used to oppress and harass competitors and ex-employees.  The courts are therefore careful to ensure that the plaintiff gives full and proper particulars of all the confidential information on which he intends to rely in the proceedings.  If the plaintiff fails to do this, the court may infer that the purpose of the litigation is harassment rather than the protection of the plaintiff's rights and may strike out the action as an abuse of process.  Such a case was John Zink & Co Limited v Wilkinson [1973] RPC 717 in which the Court of Appeal ordered particulars before defence .........

The requirement of particularity may impose a heavy burden on the plaintiff.  In a case where the plaintiff has a large quantity of confidential information and much of it has been taken by the defendant, the obligation to identify all of it might involve a great deal of work and time.  ........  The normal approach of the court is that if a plaintiff wishes to seek relief against a defendant for misuse of confidential information, it is his duty to ensure that the defendant knows what information is in issue.  This is not only for the reasons set out by Edmund Davies LJ in John Zink but for at least two other reasons.  First, the plaintiff usually seeks an injunction to restrain the defendant from using its confidential information.  Unless the confidential information is properly identified, an injunction in such terms is of uncertain scope and may be difficult to enforce.  .........  Secondly, the defendant must know what he has to meet.  He may wish to show that the items of information relied on by the plaintiff are matters of public knowledge.  His ability to defend himself would be compromised if the plaintiff can rely on matters of which no proper warning was given.  It is for all these reasons that failure to give proper particulars may be a particularly damaging abuse of process."[Emphasis added]

68.      The Defendant submits that the Plaintiffs have not complied with these principles in the Order of Justice and the Defendant does not know the case which it has to meet because it is not clear what information is being said by the Plaintiffs to be confidential.  The Plaintiffs, on the other hand, submit that, when read as a whole, it is perfectly obvious that the confidential information is the know-how which went into the design of the GWLs by the Plaintiffs, which was subsequently used at the behest of the Defendant to manufacture GWLs which had exactly the same characteristics as those designed by the Plaintiffs.

69.      The key paragraphs of the Order of Justice are as follows:

"Confidential Information

72.      as a result of its commercial relationship with the Plaintiffs and Ekopaktekh during the period July 2010 - January 2014, the Defendant acquired the following confidential information by reason of its privileged and unique position with the ultimate use of the Plaintiffs' gondola wagon liner technology:

(a)       The specifics of the design and its continued improvements, through information shared in good faith by [the] Plaintiffs, such as drawings of the liners;

(b)       The specifics of the materials used for manufacturing the liners;

(c)       The specifics of the manufacturing processes relating to improving the liners;

(d)       Know-how related to optimization of the installation process of the liners;

(e)       Know-how related to optimisation of the loading process of the liners;

(f)        Know-how related to optimisation of the process of unloading alumina from the liners at the point of departure;

(g)       Know-how related to preventing the liners collecting atmospheric moisture before loading alumina; and

(h)       Information relating to the identity of the manufacturer of the liners, i.e. TKP.

73.      The information pleaded in paragraph 72 above, and the details of the actual design and manufacturing specifications of the gondola wagon liners, were at all relevant times confidential information, the property of the First and/or Second Plaintiff ("the Confidential Information").  The Confidential Information was and is commercially valuable.  [Emphasis added]

74.      The design and manufacturing specifications referred to in paragraph 73 above include technical information as to the composition and manufacture of the gondola wagon liners and loading frame, which;

(a)       was contained in specific technical information, including technical drawings, supplied to the Defendant by the Second Plaintiff and Mr Nesterenko in or after August 2013, as set out above in paragraphs 28 to 31 above; and

(b)       is identified within the following Russian patent applications, as particularised in Schedule 1 to this Order of Justice:

(i)        Utility Model Application No. 2013155103, patent No. 143408 of Russian Federation; and

(ii)       Utility Model Application No. 2014109130, patent No 143828 of Russian Federation. [Emphasis added]

75.      The First Plaintiff provided the said design and manufacturing specifications to TKP ....

76.      In consequence of the foregoing, TKP was at all material times under a duty of confidence to the Claimant (sic) not to make any other use of the information or any part of it.  TKP, the Defendant, Mr Deripaska and Mr Soloviev were aware of this duty.

77.      The Defendant misused the Confidential Information for its own benefit in the course of the conspiracy to injure the Plaintiffs and in breach of confidence."

70.      I have received detailed submissions from the Defendant as to the alleged deficiencies in these paragraphs and from Advocate Redgrave as to why, if there are any deficiencies at all, they do not exist to the extent suggested by the Defendant.  Advocate Redgrave also asked me to bear in mind that this was effectively an action featuring David and Goliath (my terminology, not his).  The Defendant is an enormous company whose interim consolidated accounts for the first six months of 2014 record revenue of US$4.7 bn and total equity of US$3.8 bn, whereas the Second Plaintiff is a single individual with limited resources, who is the sole beneficial owner of the First Plaintiff and is merely seeking justice in respect of what she says was the effective theft of her idea.  There was a risk that the Defendant was seeking merely to run up costs for the Plaintiffs so as to make it more difficult for them to proceed with the claim.

71.      I have borne in mind the background to the claim, but that cannot affect the duty of the Plaintiffs to provide adequate particulars of what they say is the Confidential Information.  I do not think it necessary to lengthen this judgment by going through the respective contentions in detail, but I have concluded that the essential thrust of the Defendant's submissions is correct, in that the Order of Justice does not at present comply with the level of particularity envisaged in the cases referred to above and that greater particularity is required if the Defendant is to know exactly the case which it has to meet.  I appreciate that some of the alleged deficiencies have been addressed by the Plaintiffs in their Reply, but I do not consider that that is the correct mode of pleading as it does not give the Defendant an opportunity to respond other than by way of Rejoinder, which is an unsatisfactory method of proceeding.  In any event, I agree with the Defendant that the information given in the Reply does not address all the deficiencies.

72.      I would summarise my concerns about the Order of Justice as follows.

73.      The term 'Confidential Information' in the Order of Justice is defined at paragraph 73 as being the information pleaded at paragraph 72 and the details of the actual 'design and manufacturing specifications' of the GWLs; in other words there are two categories of Confidential Information, namely the information pleaded at paragraph 72 and the 'design and manufacturing specifications'.  One therefore needs to consider whether both these categories of the Confidential Information are adequately specified.

74.      As to the 'design and manufacturing specifications', paragraph 74 says that these 'include' the information pleaded at (a) and (b) of that paragraph, namely:

(i)        information and drawings supplied to the Defendant as set out in paragraphs 28 - 31 of the Order of Justice; and

(ii)       the information within the two Russian utility model applications as particularised in Schedule 1 to the Order of Justice.

75.      I do not consider that this adequately specifies what is meant by the expression 'design and manufacturing specifications' for the following reasons:

(i)        The use of the word 'include' in paragraph 74 suggests that there is information falling within the definition of 'design and manufacturing specifications' other than that set out in (a) and (b) of paragraph 74, but gives no indication of what this might be.  It cannot be a reference to the information set out in paragraph 72 because paragraph 73 defines Confidential Information as being the information at paragraph 72 and the 'design and manufacturing specifications', i.e. the information described in paragraph 72 is separate from and additional to the 'design and manufacturing specifications'.  The pleading must therefore clarify whether there is said to be any confidential information included in the term 'design and manufacturing specifications' other than that set out in (a) and (b) of paragraph 74.  At present the natural reading of the pleading is that there is such information.

(ii)       I do not consider that paragraph 74(a) is sufficiently precise.  It refers back to paragraphs 28 - 31 but those paragraphs are not very specific.  Thus paragraph 28 refers simply to the supply of 'confidential technical information', paragraph 30 refers to a 'Technical Passport' and 'Certificate of Confirmation' and paragraph 31 refers to 'the latest detailed technical drawings'.  I agree with the Defendant that the Order of Justice must specify (by reference to reference numbers, dates of drawings, etc) exactly what was supplied and when; and whether everything which was supplied is said to be confidential or only some of it; if the latter, the relevant part needs to be specified.

(iii)      As to paragraph 74(b), it is not clear to me whether the Confidential Information is everything which was in the published patents or simply those parts particularised in Schedule 1.  As discussed above, each of the patents contains 25 'claims'.  The Plaintiffs must clarify whether each of the claims is said to be included in the term 'Confidential Information' or only some of them; if the latter, which ones.

(iv)      I accept that at paragraph 75 the Order of Justice pleads that the 'said design and manufacturing specifications' had been provided to TKP.  However it is not pleaded with precision exactly what was supplied to TKP and whether it is alleged that everything supplied to TKP forms part of the Confidential Information or only certain aspects.

76.      Whilst not accepting all of the Defendant's submissions, I accept that there needs to be greater precision in relation to most of the sub-paragraphs of paragraph 72. 

77.      There is, however, first a general point.  As I read paragraph 72, it seems to be referring only to information acquired by the Defendant directly from the Plaintiffs because of the opening words 'As a result of its commercial relationship with the Plaintiffs and Ekopaktekh during the period July 2010 - January 2014'.  It would appear therefore that it is not being alleged that the information at paragraph 72 was acquired by the Defendant from TKP.  This is consistent with paragraph 75, which refers only to the Plaintiffs having provided the 'design and manufacturing specifications' to TKP i.e. not the information in paragraph 72, which is separate from the 'design and manufacturing specifications'. 

78.      By reason of what is being pleaded at paragraph 73, 'the design and manufacturing specifications' are only part of the alleged Confidential Information and the information set out at paragraph 72 is also only part of the alleged Confidential Information.  It seems to me essential that the Plaintiffs plead with clarity exactly what Confidential Information is said to have been gained by the Defendant from TKP and what Confidential Information is said to have been supplied directly by the Plaintiffs to the Defendant by reason of communications with Mr Zykov and Mr Yatsenko as set out in paragraphs 30 and 31 of the Order of Justice.  This is because the basis of the alleged duty of confidentiality on the Defendant is different in each case.  In the case of TKP, it is a case of a third party acquiring confidential information confided initially by the Plaintiffs to another (TKP) whereas, in the case of the information supplied to Mr Zykov and Mr Yatsenko, the duty of confidence is said to arise because the information was supplied confidentially directly by the Plaintiffs to the Defendant.  The pleading therefore needs to make clear exactly what information was supplied under each of these headings.

79.      Turning to the detail of paragraph 72, (a) refers to "the specifics of the design and its continued improvements, through information shared in good faith by [the Plaintiffs], such as drawings of the liners".  The Plaintiffs need to specify what drawings, whether everything in the drawings is said to be Confidential Information or only some of it and if so, what aspects.  Details should also be given as to when and to whom such drawings were supplied and, if necessary, clarification about 'improvements'.  Furthermore, the use of the expression 'such as' suggests that the Plaintiffs supplied information other than in the form of drawings.  This needs to be specified with more precision so as to establish what the Plaintiffs supplied and what is said to be confidential.

80.      Paragraph 72(b) refers to "the specifics of the materials used for the manufacture of the liners".  Details need to be given as to the materials and what was said to be confidential. 

81.      Paragraph 72(c) refers to "the specifics of the manufacturing processes relating to improving the liners".  Again, details need to be given of the specific manufacturing processes referred to and whether all of them or some of them are said to have been confidential and if so, which.

82.      Paragraph 72(d) - (g) refer to various categories of "know-how".  The Order of Justice needs to clarify what the know-how is in respect of each category and whether all of it or some of it (and if so which part) is said to be confidential.

83.      I do not consider that any further details are required of paragraph 72(h) namely "information relating to the identity of the manufacturer of the liners, i.e. TKP".  The natural meaning of this is simply that they were aware of the identity of the manufacturer as being TKP and Advocate Redgrave confirmed in argument that was all the sub-paragraph was saying.

84.      In summary, I do not consider that the Order of Justice at present complies with the clear guidance given in the extracts from Ocular Sciences and Racing Partnership referred to above, and those redrafting the Order of Justice should do so having in mind the overarching requirement, as stated in those two cases, to identify with precision what is said to be the Confidential Information as defined in the Order of Justice. 

(iii)       Loss of confidentiality after publication of the patents

85.      It is well established that a claim for breach of confidence can only be brought in respect of information which is confidential.  Once information is in the public domain, it is no longer confidential; see for example AG v Guardian Newspapers Limited (No 2) 1 AC 109 per Lord Goff at 282.  The position is conveniently summarised in Gurry on Breach of Confidence (2^nd edition) at 5.14 in the following terms:

"The basic attribute which information must possess before it can be considered confidential is inaccessibility.  The information must not be common knowledge, i.e. in the public domain.  This attribute is fundamental to the action for breach of confidence. 

The test which is most often used by the courts to decide whether information is inaccessible involves an assessment of whether any special intellectual skill and labour would be necessary for a member of the public to reproduce it.  If the information can only be reproduced at the cost of time, labour, and effort, it will be considered confidential ..........

'......... what makes it confidential is the fact that the maker of the document has used his brain and thus produced a result which can only be produced by somebody who goes through the same process'."

86.      It is also well established that, if information is contained in a patent application, such information enters the public domain from the point of publication of the patent, at which point it is freely accessible by anyone and is therefore no longer confidential; see the decision of the House of Lords in O Mustad & Son v Dosen [1964] 1WLR 109 (Note).

87.      The Defendant submits that there can be no claim for misuse of confidential information in respect of any actions of the Defendant after (at the latest) 27^th July 2014, being the date upon which the second Russian patent was published.

88.      Advocate Redgrave does not dispute the general proposition that claims for breach of confidence cannot be brought after publication of a patent, but he submits that it is clearly established that there can be a continuing loss from a misuse of confidential information which occurred before publication of a patent.  It is known as the springboard principle; see Coco at 420 cited with approval by this Court in Benest at 147 and 154.  The principle acknowledges that a wrongdoer who has misused confidential information can get a head start on competitors to the extent of the time it would take someone to start from scratch once the information comes into the public domain.  In the context of this case, it would mean the time it would take from publication of the patent to be in a position to manufacture GWLs with the qualities set out in the patent.  He referred in support to the case of Terrapin Limited v Builders Supply (Hayes) Limited Company [1967] RPC 375.  I was also referred to Vestergaard Frandsen A/S v Vestnet Europe Limited [2009] EWHC 1456 Ch where this issue is considered, albeit in the context of an injunction rather than compensation or an accounting. 

89.      It was not entirely clear to me exactly what passages in the Order of Justice Advocate Evans was contending should be struck out on this basis.  But I do not think it would be right to strike out any of the Order of Justice on this ground at present.  It seems to me, as Advocate Redgrave submitted, that this is a matter of quantum.  The springboard principle seems to be reasonably well established and it would be a matter for a decision at trial as to whether the principle assists the Plaintiffs in this case and, if so, for how long after 27^th July 2014, it assists.  It does not seem to me right to require the Plaintiffs at this early stage to specify the date after 27^th July 2014, which they contend would be applicable.  If and when issues of quantum fall for consideration, the Court can no doubt give directions as necessary to clarify the issues. 

90.      Any claim for misuse of confidential information would of course continue after publication of the patents to the extent that any of the alleged Confidential Information was not included in the information published in the patent.  This is why it is necessary for the Plaintiffs to clarify whether that is the case, as discussed at paragraph 75 above.  When the Plaintiffs clarify in an Amended Order of Justice whether they are alleging that there is Confidential Information which goes beyond the information published in the patent applications, they may need to give consideration to whether the terms of paragraph 85 of the Order of Justice (which refers to the Plaintiffs continuing to suffer loss) need to be amended. 

(iv)       Pleading of Defendant's obligation of confidence

91.      As summarised at paragraph 65 above, the second requirement for a claim of breach of confidence is that the information has been disclosed in circumstances importing an obligation of confidence on the part of a defendant.  Megarry J elaborated on this aspect at page 6 of his judgment in Coco where he said:

"The second requirement is that the information must have been communicated in circumstances importing an obligation of confidence.  However secret and confidential the information, there can be no binding obligation of confidence if that information is blurted out in public or is communicated in other circumstances which negative any duty of holding it confidential....... It seems to me that if the circumstances are such that any reasonable man standing in the shoes of the recipient of the information would have realised that upon reasonable grounds the information was being given to him in confidence, then this should suffice to impose upon him the extra obligation of confidence.  In particular, where information of commercial or industrial value is given on a business-like basis and with some avowed common object in mind, such as a joint venture or the manufacture of articles by one party for the other, I would regard the recipient as carrying a heavy burden if he seeks to repel a contention that he was bound by an obligation of confidence....."

92.      Furthermore, as already mentioned, the obligation of confidence is not confined to the original recipient to whom the owner of the information confided the information in confidence.  The obligation also falls upon anyone who subsequently acquires that information from the original recipient in circumstances where he knows or has notice that the information is confidential.  Whether a person has notice is to be objectively assessed by reference to a reasonable person standing in the position of the recipient.  Thus in AG v Guardian Newspapers Ltd (supra) at 268, Lord Griffiths said:

"The duty of confidence is, as a general rule, also imposed on a third party who is in possession of information which he knows is subject to an obligation of confidence......  If this was not the law the right would be of little practical value; there would be no point in imposing a duty of confidence in respect of the secrets of the marital bed if newspapers were free to publish those secrets when betrayed to them by the unfaithful partner in the marriage.  When trade secrets are betrayed by a confident to a third party it is usually the third party who is to exploit the information and it is the activity of the third party that must be stopped in order to protect the owner of the trade secret."

See to like effect Lord Keith of Kinkel at 260 and Lord Goff at 281.

93.      The position is helpfully summarised in Clerk & Lindsell on Torts (23^rd edition) at 26-17 in the following terms:

"A third party to whom confidential information is relayed by a party under an obligation of confidence may also owe an obligation of confidence to the claimant not to use or disclose that information.  That is certainly the case where the third party is aware of the confidentiality attaching to the information, even if that awareness arises subsequently to the receipt of that information ....."

94.      Advocate Evans submits that the Order of Justice does not specifically plead a duty of confidence on the part of the Defendant or the facts and matters which the Plaintiffs say give rise to such a duty.  He points out that paragraphs 21 - 22 and 75 - 76 of the Order of Justice plead only a duty of confidentiality on the part of TKP.  Paragraph 76 pleads that the Defendant, Mr Deripaska and Mr Soloviev were aware of the TKP's duty of confidence but does not plead that they themselves thereby came under a duty of confidence.

95.      He accepts that at paragraphs 28 - 31 of the Order of Justice it is pleaded that the Plaintiffs supplied confidential technical information about the GWLs to the Defendant, but says that the facts relied upon in support of that assertion relate to the supply of information to Mr Zykov and Mr Yatsenko, neither of whom were employees of the Defendant.  There is no specific pleading that the Defendant thereby came under a duty of confidence and there is certainly no setting out of the facts and matters relied upon in support of the assertion that the supply of confidential information to these two individuals resulted in the Defendant coming under a duty of confidence in respect of that information.

96.      In response, Advocate Redgrave submitted that, when read as a whole, it was obvious that the Plaintiffs were asserting that the Defendant was under a duty of confidence both because it had received confidential information from TKP and because such information had been disclosed directly from the Plaintiffs to Mr Zykov and Mr Yatsenko in circumstances of confidence.  Thus the Reply pleaded at paragraph 17 "the Defendant's own obligation of confidence arose from the circumstances described in the Order of Justice."

97.      In my judgment, the current pleading is not adequate in this respect.  Where a duty is said to exist, it is necessary specifically to plead the existence of the duty and the facts and matters relied upon in support of the existence of the duty.  So for example, in an action for negligence, the pleading must state that the defendant owed the plaintiff a duty of care and must also set out the facts and matters relied upon as giving rise to the existence of that duty of care.  This requirement is, in my view, just as applicable in respect of a duty of confidence as it is for a duty of care. 

98.      I infer from the Order of Justice that the duty of confidence is said to arise in the two respects which I have described above.  Assuming that is correct, the Plaintiffs must plead with particularity that, upon acquiring any confidential information supplied to TKP, the Defendant itself came under a duty of confidence in relation to that information.  The pleading must state all facts and matters relied upon in support of that assertion and of the fact that the duty is said to be that of the Defendant as opposed to any other entity, such as any of its subsidiaries.  If the latter is the case, the pleading must state the ground upon which it is said that a duty of confidence owed by a subsidiary was also owed by the Defendant.

99.      Similarly, in relation to the direct supply of information from the Plaintiffs to Mr Zykov and Mr Yatsenko, the pleading must assert that this imposed a duty of confidence on the Defendant and also plead all facts and matters relied upon in support of that assertion.  In particular, the pleading must set out why it is said that supply to these two individuals fixed a duty of confidence on the Defendant. 

Conspiracy

100.   There are two species of the tort of conspiracy to injure, namely conspiracy to injure by lawful means (a lawful means conspiracy) and conspiracy to injure by unlawful means (an unlawful means conspiracy).  The difference between the two was explained by Nourse LJ in Kuwait Oil (supra) in the following terms at [108]:

"We shall treat them as different torts, although, as it seems to us, they are better regarded as species of the same tort.  It matters not.  For present purposes we would define them as follows:

·         A conspiracy to injure by lawful means is actionable where the claimant proves that he has suffered loss or damage as a result of action taken pursuant to a combination or agreement between the defendants and another person or persons to injure him, where the predominant purpose of the defendant is to injure the claimant. 

·         A conspiracy to injure by unlawful means is actionable where the claimant proves that he has suffered loss or damage as a result of unlawful action taken pursuant to a combination or agreement between the defendant and another person or persons to injure him by unlawful means, whether or not it is the predominant purpose of the defendant to do so."

101.   In CMC Holdings Limited v Forster [2017] JRC 014A, the Master held at paragraph 36 that the above elements of the tort of conspiracy must be pleaded.  I agree.  It is necessary in the case of an unlawful means conspiracy, as this is alleged to be, for a plaintiff to plead adequate particulars of the alleged unlawful means.  In this case, the unlawful means are (i) the misuse of confidential information and (ii) the infringement of patents. 

102.   With that brief introduction I turn to consider the points raised by the Defendant as listed at paragraph 33 above. 

(i)         Foreign law

103.   I have already dealt with this when dealing with the general topic of foreign law and need say no more of it.

(ii)        The unlawful acts

(a)        Breach of confidence

104.   The Defendant argues that its criticisms of inadequate particulars of the Confidential Information and other matters in relation to the breach of confidence claim are equally applicable to the Plaintiffs' reliance on misuse of confidential information as one of the 'unlawful acts' forming part of the alleged conspiracy.  I agree.  It follows that my decision in relation to the particulars of the breach of confidence claim is in principle equally applicable to breach of confidence as an unlawful act in relation to the conspiracy.  However, there will be nothing to prevent the Plaintiffs from simply referring back to the particulars given in respect of the breach of confidence claim when pleading what is necessary in relation to breach of confidence as an unlawful act in relation to the conspiracy. 

(b)        Infringement of patents

105.   Two matters arise under this heading.  In the first place, the Defendant relies upon the fact that some of the patents relied upon in the Order of Justice have been declared invalid with the consequence that they are to be treated as void.  It follows that there cannot have been any infringement of such patents. 

106.   I was informed that the present position in relation to the patents is as follows.  Utility model 143828, in Russia and utility model 98521 in Ukraine have been declared invalid and no further appeal is possible.  I agree therefore that any reliance on infringement of these two patents must be struck out.  It seems likely that utility model 99310 in the Ukraine may meet a similar fate.  There was apparently a hearing on 26^th January 2021 which the Plaintiffs chose not to attend, but unless and until that patent is declared invalid, with no further avenue of appeal, it can remain as part of the Order of Justice.  In relation to utility model 143408 in Russia, that has been declared invalid but I was informed that the Plaintiffs are pursuing a further appeal and accordingly it would not be right to strike out references to that patent unless and until there is no further avenue of appeal against the declaration of invalidity.  In relation to the two Chinese patents, there was apparently a hearing in relation to both patents on 1^st February 2021, but the outcome is awaited and in any event may be subject to appeal.

107.   In summary, references to Russian utility model 143828 and Ukraine utility model 98521 may be struck out, but references to the other patents in relation to the claim in conspiracy may remain at present.

108.   The second aspect in relation to alleged infringement of patent as one of the 'unlawful means' of the conspiracy concerns whether sufficient particulars of infringement have been given.

109.   The Order of Justice pleads at paragraph 90:

"The acts of infringement (and thus the unlawful acts for the purpose of the conspiracy pleaded in this action) committed by the Defendant and its co-conspirators in furtherance of the conspiracy are set out in Schedule 2 to this Order of Justice."

110.   Schedule 2 is in the following terms:

"Particulars of Infringement

The Defendant by itself or through its servants or agents, in combination with its fellow conspirators, infringed the patents identified in Schedule 1 in the following respects:

1.        The Russian patents

(a)       Manufacturing or causing to be manufactured gondola wagon liners identical or substantially identical to the items protected by the said patents.

           (b)        Applying or causing to be applied in that manufacture the utility model protected by the said patents.

The manufacture and application were done without the consent of the Plaintiffs as rightsholders and contrary to the Plaintiffs' exclusive rights as rightsholders."

There then follow identical paragraphs in relation to the Ukrainian patents (paragraph 2) and the Chinese patents (paragraph 3).

111.   Advocate Evans submitted that the Order of Justice does not comply with the requirements for pleading acts of infringement of a patent.  He referred me to Terrell on the Law of Patents (19^th edition) at the following paragraphs:

"Particulars of infringements

19-97  In an action for infringement, particulars of the alleged infringements must be provided and, by convention, the claimant often serves 'particulars of infringements' as a separate document.  Whilst this was provided for by the rules hitherto, it is no longer mandatory but remains common practice.  The 'particulars of infringements' should show which of the claims in the specification of the patent are alleged to be infringed and give at least one instance of each type of infringement alleged [Emphasis added] ......

Which claims infringed?

19-99   The Patents Court practice does not require the claimant to place a construction upon their patent in their particulars of infringement.  All they need do is indicate which claims of the patent they rely upon and by what act they consider the defendant to have infringed.  If these two points can be made clear without adducing specific instances, that will be sufficient.  There is no objection to a claimant stating that they rely on all the claims of their specification, and it is a matter of costs at the trial if this course has been taken unreasonably.  However, the opposite does not apply.  A claimant who does not specify a particular claim in their particulars of infringement would not be able to rely on at trial upon that claim." [Original emphasis]

112.   The practice in the Patents Court and the guidance offered by Terrell is of course not binding in this Court but the guidance offered there would seem to be a sensible starting point for consideration.

113.   Advocate Evans submitted that Schedule 2 was defective in the following respects:

(i)        It does not identify any specific gondola wagon liners that are alleged to have infringed any patent.  Schedule 2 merely refers to "gondola wagon liners" without identifying any particular type or model of GWL.  Paragraph 64 of the Order of Justice states:

"The Second Plaintiff obtained a report from technical experts in December 2014.  The report established that the gondola wagon liners being manufactured for the Defendant by Ariva Pak and Shandong were identical to her designs."

However, this paragraph also does not identify any particular gondola wagon liners. 

(ii)       Each patent sets out 25 'claims'.  In accordance with the passage from Terrell cited above, Schedule 2 should set out which of the claims of each patent are alleged to have been infringed.

(iii)      Schedule 2 does not identify specific identifiable infringing acts under the applicable laws of the territories in which the said acts were carried out.  Each paragraph of Schedule 2 is identical and takes no account of the fact that, for example, there is no allegation of any manufacturing activities in Russia, so that the 'manufacturing or causing to be manufactured' of GWLs cannot be a breach of the Russian patents.  That is because all patents are territorial in their extent. 

(iv)      Schedule 2 does not identify any individual entities that are said to have committed specific acts of infringement, nor does it plead the state of knowledge and/or intent of the Defendant in relation to any wrongful acts. 

114.   I do not accept all the criticisms made by the Defendant and one has to recall that these particulars are required in the context of a claim in conspiracy to injure by unlawful means rather than a direct action for infringement of patent.  Nevertheless, I agree that the Plaintiffs need to plead their case with more precision in order that the Defendant can be clear as to the case which it has to meet.  Greater precision must be achieved in respect of the following matters.

(i)        The Plaintiffs must specify in relation to each patent still relied upon which 'claims' of the patent are said to have been infringed.  If the allegation is that all the 'claims' have been infringed, the Plaintiffs must say so.

(ii)       The Plaintiffs must specify which model of gondola wagon liner they say has infringed each patent.  It would appear from paragraph 64 of the Order of Justice that the Plaintiffs have obtained a report from technical experts comparing gondola wagon liners manufactured by Shandong or Ariva Pak with the designs of the Plaintiffs.  It should therefore be possible to specify which model of gondola wagon liner manufactured by Shandong or Ariva Pak was examined or compared for this purpose.

(iii)      The Plaintiffs must plead more specific acts of infringement in relation to each patent to be relied upon.  They do not at present specify by whom any infringement was primarily carried out and over what period.  At present, the only acts of infringement alleged are 'manufacturing or causing to be manufactured' and identical wording is used in relation to all the patents.  Although one can draw inferences from the Order of Justice as a whole, Schedule 2 must be clearer.  Thus, in relation to, say, a Ukrainian patent, the manufacturing in breach is presumably that of Ariva Pak in Ukraine as patents are territorial in their cover. This must be specified together with the relevant dates or the period relied upon.  In short, the Plaintiffs should seek to comply with the guidance set out in Terrell, to which we have referred.

115.   It may be - I know not - that the Plaintiffs are not in a position to plead some specific details until discovery.  If that is the case, the Plaintiffs should make clear that further particulars may be given following discovery.  I accept the general point made by Michael Briggs QC in his judgment in Derksen in the passage quoted above to the effect that, by reason of the nature of a conspiracy, a plaintiff is unlikely to know every detail of the conspiracy when launching the action and that a certain latitude should be accorded to a plaintiff who may not have all the details of a conspiracy available to him in the early stages of the proceedings; but it is the duty of the Plaintiffs to plead the case with as much particularity as is available to them at present.

(iii)       Prescription

116.   It is common ground between the parties that a claim in conspiracy is a claim in tort and that the prescriptive period for tort under Jersey law (as the law of the forum) is three years from when the cause of action accrued.  In its written submissions, the Defendant contended that the conspiracy claim was prescribed in three respects:

(i)        Insofar as the unlawful act relied upon was breach of confidence, and to the extent that that breach of confidence related to information contained in the Russian patents, no obligation of confidence could continue after 27 July 2014, being the date of publication of the second Russian patent.  That was more than three years before the issue of the Order of Justice on 12 April 2019, and accordingly, any claim in conspiracy based upon breach of confidence was prescribed. 

(ii)       A conspiracy requires a combination or agreement between the conspirators but no such combination or agreement was pleaded as existing after 12 April 2016 (i.e. 3 years before the issue of the Order of Justice).  Accordingly any claim in conspiracy was prescribed.

(iii)      To the extent that any unlawful acts (whether breach of confidence or infringement of patent) were committed pursuant to any conspiracy, the Plaintiffs could not claim any relief in respect of any such acts taking place more than three years before the issue of the Order of Justice i.e. prior to 12 April 2016.

117.   During the hearing, the Defendant abandoned the submission at (b) above and accordingly I only need to consider the submissions at (a) and (c).

(a)        Conspiracy claim re breach of confidence after 27 July 2014

118.   The Defendant argues that information contained in the patents was no longer confidential as from the date of publication of the patents, which was 27^th July 2014, for the second Russian patent.  There cannot therefore, submits Advocate Evans, be any breach of confidence and therefore no unlawful act by reference to a breach of confidence after 27 July 2014.  As this was before 12 April 2016, this means that any claim in conspiracy, in so far as it relies on breach of confidence as the unlawful act, is prescribed.

119.   I have already touched upon this issue at paras 85 - 90 above, under the heading "loss of confidentiality after publication of the patents".  In my judgment, even on the assumption that the only Confidential Information relied upon is the information contained in the patents, the Plaintiffs can arguably rely upon misuse of that information for a period after publication of the patents, that period being the time that it would take someone to be in a position to manufacture GWLs to the design contained in the patents assuming no knowledge of the information prior to publication of the patents. 

120.   There is at present no evidence as to what such a period would be.  I cannot therefore rule that any suggestion that such period might extend beyond 12^th April 2016 is doomed to failure.  Accordingly, I am not willing to strike out the conspiracy claim in so far as the unlawful acts relied upon are occasions of misuse of confidential information after 27^th July 2014. 

121.   If the Confidential Information is wider than the information contained in the patents and thus includes information not published in the patents, then publication of the patents is irrelevant and no question of prescription can arise by reference to the date of publication in relation to that part of the Confidential Information.  That part of the Confidential Information would remain confidential even after publication of the patents.  That is why the Plaintiffs must clarify in an amended Order of Justice whether the Confidential Information is wider than the information disclosed in the patents and, if so, exactly what that part of the Confidential Information comprises.

122.   I therefore decline at this stage to strike out any part of the conspiracy claim in so far as it relies upon acts of misuse of confidential information as the relevant unlawful means.

(c)        Unlawful acts before 12 April 2016

123.   During the course of the hearing, Advocate Redgrave accepted this point.  He conceded that unlawful acts committed more than three years before the action was commenced (i.e. before 12 April 2016) are prescribed for the purposes of the claim in conspiracy.

124.   In order to clarify the issues for the trial court and in order that the Defendant knows exactly the case which it has to meet, the amended Order of Justice should make this clear.

Summary of conclusions

125.   Pursuant to my decision at paragraphs 106 and 107, I strike out such part of the Order of Justice as pleads infringement of Russian utility model 143828 and Ukrainian utility model 98521 as unlawful acts in relation to the conspiracy claim on the ground that the allegation of an infringement of these two patents is bound to fail.

126.   I accept that various other aspects of the Order of Justice as set out in the course of this judgment fall within sub-paragraph (c) of RCR 6/13.  However, I have no hesitation in concluding that it would be wholly disproportionate to strike out the claim or any part of it as a result of these deficiencies.  In my judgment, it has been perfectly obvious from the start that the remedy for the deficiencies was by way of amendment and/or provision of further information; indeed, this application could equally have been brought as an application for further information under RCR 6/15. 

127.   I therefore direct the Plaintiffs to file an amended Order of Justice.  The amended Order of Justice needs to address the following matters:

(i)        It must identify and plead details of the foreign law said to be applicable to the cause of action for breach of confidence in accordance with paragraph 61 of this judgment.

(ii)       It also needs to identify the lex loci delicti in relation to the claim in conspiracy and generally to deal with the issue of foreign law in connection with that claim in accordance with paragraph 56.

(iii)      It must clarify and specify exactly what is said to comprise "Confidential Information" in accordance with the guidance given at paragraphs 72 - 84.  In particular, the Order of Justice must make clear whether the Confidential Information is confined to the information set out in the various patent applications or whether it extends more widely so there is Confidential Information which is not to be found in the patent applications; if the latter, such Confidential Information needs to be clearly specified.

(iv)      I do not expect the Plaintiffs to supply a specific date upon which they can no longer claim for misuse of confidential information following publication of the information in the patents.  However, they need to plead the principles which would govern the ascertaining of such date, i.e. if I have understood the argument correctly, the fact of the head start which the Defendant obtained over a person starting from scratch following publication of the patents; see paragraph 88.

(v)       It must plead precisely how the Defendant was under an obligation of confidence in accordance with paragraphs 98 - 99.

(vi)      It must plead particulars of the misuse of confidential information as an unlawful act for the purposes of the conspiracy claim in accordance with paragraph 104.

(vii)     It must give better details of the alleged acts of infringement of the remaining patents in accordance with paragraphs 114 - 115.

(viii)    It must clarify that the Plaintiffs are not relying on unlawful acts committed before 12 April 2016 for the purposes of the claim in conspiracy.

(ix)      It must specify the basis upon which it is said that actions of subsidiaries or individuals can be attributed to the Defendant for the purposes of the claim (e.g. agency).

128.   I am minded to direct that the amended Order of Justice should be filed within 28 days of the formal issue of this judgment, although I am willing to hear the parties on that suggested timescale and on the time to be allowed for the Defendant to file an amended Answer.

Authorities

MB and Services Limited and Golovina v United Company Rusal Plc [2020] JRC 034

Royal Court Rules 2004. 

Trant v AG [2007] JLR 231. 

Papadimitriou v Quorum Management Limited [2004] JRC 142. 

Dicey, Morris and Collins, the Conflict of Laws (15^th Edition). 

In re Imacu Limited [1989] JLR 17. 

Derksen v Pillar [2002] All ER (d) (261). 

University of Glasgow v The Economist [1990] Lexis citation 2430; [1997] EMLR 495. 

Mother Bertha Music Limited v Bourne Music Limited [1997] EMLR 457. 

Kuwait Oil Tanker Company v Al Bader [2000] EWCA Civ 160. 

Federal Republic of Brazil v Durant International Corporation [2011] JLR Note 19. 

Benest v Langlois [1993] JLR 117

The Racing Partnership Limited v Done Brothers (Cash Betting) Limited [2020] EWCA Civ 1300. 

Coco v A N Clark (Engineers) Limited [1968] FSR 415 at 419. 

Ocular Sciences Limited v Aspect Vision Care Limited [1997] RPC 289. 

AG v Guardian Newspapers Limited (No 2) [1990] 1 AC 109

Gurry on Breach of Confidence (2nd edition). 

O Mustad & Son v Dosen [1964] 1WLR 109 (Note). 

Terrapin Limited v Builders Supply (Hayes) Limited Company [1967] RPC 375. 

Vestergaard Frandsen A/S v Vestnet Europe Limited [2009] EWHC 1456 Ch

Clerk & Lindsell on Torts (23rd edition). 

CMC Holdings Limited v Forster [2017] JRC 014A. 

Terrell on the Law of Patents (19th edition)