PRINCIPAL INVESTING FUND I Ltd, LONG VIEW II Ltd and GLOBAL FIXED INCOME FUNDS I Ltd; CREDIT SUISSE LONDON NOMINEES Ltd v PRINCIPAL INVESTING FUND I Ltd, LONG VIEW II Ltd and GLOBAL FIXED INCOME FUND I Ltd (first respondents) and FLOREAT PRINCIPAL INVESTMENT MANAGEMENT Ltd, LV II INVESTMENT MANAGEMENT Ltd and FLOREAT INVESTMENT MANAGEMENT Ltd (second respondents); (BLUE WATER Ltd and AMIDA GROUP HOLDINGS as non-party applicants)

• Jurisdiction: Cayman Islands
• Judge: (Kawaley, J.)
• Judgment Date: 26 January 2023
• Court: Grand Court (Cayman Islands)

IN THE MATTER OF PRINCIPAL INVESTING FUND I LIMITED, LONG VIEW II LIMITED and GLOBAL FIXED INCOME FUNDS I LIMITED

CREDIT SUISSE LONDON NOMINEES LIMITED

and

PRINCIPAL INVESTING FUND I LIMITED, LONG VIEW II LIMITED and GLOBAL FIXED INCOME FUND I LIMITED (first respondents) and FLOREAT PRINCIPAL INVESTMENT MANAGEMENT LIMITED, LV II INVESTMENT MANAGEMENT LIMITED and FLOREAT INVESTMENT MANAGEMENT LIMITED (second respondents)

(BLUE WATER LIMITED and AMIDA GROUP HOLDINGS as non-party applicants)

(Kawaley, J.)

Grand Court, Financial Services Division (Cayman Islands)

Civil Procedure — discovery — use of information obtained — implied undertaking not to use disclosed documents for purpose other than that stated in application — court may release petitioner from implied undertaking in special circumstances — application for release not granted in circumstances where documents sought to assist non-parties to pursue similar issues in foreign arbitration proceedings

Held, refusing the applications:

(1) The release application required the court to determine whether the discretion to release the petitioner from its implied undertaking not to use the fruits of discovery obtained in these proceedings should be exercised to enable the non-party applicants to deploy that material (most of which would likely enter the public domain in 3–4 months’ time) now in the LCIA proceedings. The implied undertaking was a common law rule, not a statutory one, but GCR O.24, r.22 acknowledged the existence of the rule. The court summarized the relevant principles as follows: (a) the implied undertaking served a public policy objective of encouraging litigants to comply with their discovery obligations by ensuring that documents disclosed could only automatically be deployed in the proceedings in which disclosure occurred; (b) applications to be released from the implied undertaking could only be granted in special circumstances; (c) whether it was appropriate to grant a release required a weighing of the competing factors in favour of and against permitting collateral use; (d) where the subsequent proceedings were between the same parties and concerned the same, similar or related claims, the case for granting a release was likely to be stronger because the new deployment of the documents did not entail a complete departure from the purpose for which they were initially disclosed; (e) no case was cited where the beneficiary of the proposed permission for collateral use was not a party to the proceedings in whichthe implied undertaking arose. However, there did not appear to be any established rule of law or practice precluding a non-party from deploying such information if the applicant obtained permission for this to occur; (f) no case was cited where the application for permission to use discovered material in other proceedings concerned foreign arbitration proceedings. However, there did not appear to be any established rule of law or practice precluding such collateral use if the party who stood to gain (the applicant) obtained permission for this to occur; (g) while the discretion to grant the release was ultimately an unfettered one, judicial experience in relation to its exercise spanned several decades. Where an application appeared to entail extending the scope of the release jurisdiction beyond its recognized parameters, the court should proceed with caution. There was likely in these circumstances to be a heightened risk that the court might unwittingly undermine the function of the implied undertaking by expanding the opportunities for obtaining a release too far; and (h) promoting the just determination of civil litigation was a broad policy consideration which might properly inform whether or not a release should be granted to some extent. However, the decided cases suggested that this policy factor was never deployed in a loose and liberal manner. This factor was likely to have greatest traction where the refusal of permission for collateral use would potentially undermine the applicant’s ability to obtain substantive justice through pursuing an additional claim (para. 11; para. 21).

(2) The release application would be refused. Although in formal terms the release application was being made by the petitioner, in substance the application was being made for the benefit of the non-party applicants. The key reasons relied upon by the petitioner related to the need to ensure that the LCIA proceedings were conducted in a fair, proportionate and orderly manner. The merits of the release application essentially turned on whether assisting the fair and proportionate conduct of foreign arbitration proceedings between parties who were not identical to those in the present proceedings was a valid ground for permitting the collateral use of material disclosed in proceedings before this court. The factors weighing in favour of granting the release sought in circumstances where the material sought would likely enter the public domain in four to five months’ time in any event predominantly revolved around facilitating the existing hearing timetable in the arbitration proceedings. An additional factor was reducing the risk of inconsistent findings on overlapping issues. This factor would carry greater weight if (i) the parties were identical, which they were not, and/or (ii) the arbitration proceedings might fairly be viewed as ancillary to the present proceedings, e.g. some form of enforcement of this court’s own judgment or orders. The high point of the non-party applicants’ case as regards the requirements of justice was the LCIA tribunal’s tentative view that it “may be that individual documents if revealed may contribute to a just result.” The factors weighing against the granting of the release prevailed. They were: (a) the purpose for which the release was sought, assisting non-parties to adjudicate similar legal and factual issues in foreign arbitration proceedings, was not closely connected to the purpose for whichdiscovery was given in the present proceedings; (b) the fact that common issues were being litigated in different proceedings by (mostly) different entities under common ownership was far from exceptional and was likely to be a common occurrence; (c) the policy underpinning the implied undertaking would potentially be weakened with no corresponding public policy benefit if the generic context of common ownership sufficed to justify the collateral use of material disclosed in one action to one party by another party in separate unrelated proceedings; and (d) while it might be desirable for the courts of one jurisdiction to assist the efficient conduct of foreign arbitral or judicial proceedings, there was no discernible existing common law rule to this effect. Any new developments in this direction were best left to Parliament or the Rules Committee, and lay beyond the competence of this court to incrementally develop judge-made law (paras. 25–30).

(3) The legal test for granting special leave to inspect a file in a winding-up matter under CWR O.26, r.4(3) was essentially common ground, namely that absent open justice considerations, inspection should only be permitted if there were strong grounds for thinking that it was necessary in the interests of justice to do so (para. 40).

(4) The inspection application would be refused. The court was not persuaded that there were strong grounds in the interests of justice for granting the application. The general desirability of avoiding the risk of inconsistent findings was untethered to any tangible negative impact on the findings which might be reached by this court. The only significant documents uniquely embraced by this application were the JPL reports. There was no suggestion that these documents could be directly applied as evidence before the tribunal so their significance (despite their obvious general relevance to the LCIA proceedings) was at best limited and at worst nebulous in the extreme. There were no open justice considerations supportive of the application at this stage although it was possible that the JPL reports would enter the public domain at the trial stage and become available at the arbitration hearing in any event. Bearing in mind the confidential nature of the JPL reports and the general function that such reports served, there was an enhanced need for the interests of justice considerations supportive of inspection to be clear and compelling. Finally, there was no recognized legal policy concept which justified providing general case management assistance to foreign arbitration proceedings. This court was neither being invited by the inspection application to enforce the parties’ contractual arbitration agreement nor to enforce an arbitral award. The non-party applicants had alternative potential remedies available to them in the LCIA proceedings, including adjusting the timetable of those proceedings to gain access to all material referred to herein at trial (paras. 43–45).

(5) The declaration application would be refused. The critical question was whether, as a matter of legal principle, the bare fact that the second respondents’ attorneys were given access to an entire suite of documents,including many not previously within their clients’ custody, possession or power, changed the status of those documents, express contrary agreement with non-party custodians notwithstanding. The evidence that HSF’s clients’ documents were held by various custodians together with documents over which prior to these proceedings the second respondents had no control was entirely credible on its face. In such a commercial context, with the onset of high-value commercial litigation, it was equally credible that the relevant commercial actors would have been advised of the implications of adopting the simplistic approach to discovery which the petitioner suspected had occurred. This was a bespoke, somewhat unusual but commercially efficient arrangement where the...