Al-Sabah v Maples & Calder

• Jurisdiction: Cayman Islands
• Judge: (Smellie, J.)
• Judgment Date: 15 August 1995
• Date: 15 August 1995
• Court: Grand Court (Cayman Islands)

Grand Court

(Smellie, J.)

B. AL-SABAH and M. AL-SABAH

and

MAPLES AND CALDER and SIX OTHERS

A. Beltrami and D.M. Murray for the plaintiffs;

Ms. C.J. Bridges and A.J. Jones for the first, second and third defendants;

H. St.J. Moses for the fourth, fifth, sixth and seventh defendants.

Cases cited:

(1) Bricheno v. Thorp(1821), Jac. 300; 37 E.R. 864.

(2) Pavel v. Sony Corp., English Court of Appeal, April 12th, 1995, C.A. Transcript 336, unreported.

(3) Rakusen v. Ellis, Munday & Clarke, [1912] 1 Ch. 831; [1911–13] All E.R. Rep. 813, considered.

(4) Solicitor, In re a(1987), 131 Sol. Jo. 1063, considered.

(5) Solicitors (firm), In re, [1992] Q.B. 959; [1992] 1 All E.R. 353, applied.

(6) Solicitors (firm), In re, [1995] 3 All E.R. 482, considered.

Attorneys-at-law-obligations towards client-conflict of interest-firm of attorneys to be prevented from acting for new client against former client if reasonable man would anticipate risk of disclosure of confidential information-information barrier designed to eliminate risk not viable for protracted period-may be acceptable for brief period in special circumstances

Attorneys-at-law-professional etiquette-rules of conduct-rules of International Bar Association offer no real guidance in Cayman Islands as merely general principles intended as model for more precise national rules

The plaintiffs sought an injunction to restrain the first defendant from continuing to represent the second and third defendants.

The second and third defendants were companies controlled or owned by the Kuwaiti Investment Office and were the plaintiffs in proceedings against Sheikh Fahad, its former chairman, in several jurisdictions. They alleged that he had defrauded the Kuwaiti Investment Office of a substantial sum of money while he was its chief executive, and in proceedings in England they had obtained a worldwide Mareva injunction and related discovery orders. It subsequently came to light that Sheikh Fahad was the settlor of a trust in the Cayman Islands of which the fourth defendant was trustee. The second and third defendants then brought a tracing action to recover the assets of that trust and obtained ex parte orders restraining those assets and requiring disclosure of them. A member of the first defendant firm advised the fourth defendant as to its responsibilities when the trust was transferred to the Cayman Islands and in so doing obtained information, some of it confidential, about the background to and assets of the trust. The first defendant was subsequently engaged to represent the second and third defendants in the tracing action. The plaintiffs, who were Sheikh Fahad”s wife and son and who were contingent beneficiaries of the trust, sought to challenge the ex parte orders but first sought an injunction to prevent the first defendant from acting for the second and third defendants. The attorney who had advised the fourth defendant was to be absent from the jurisdiction until after the date of the disclosure hearing at which the ex parte orders were to be challenged.

The plaintiffs submitted that the first defendant should not be permitted to represent the second and third defendants because (a) the modern English approach, namely that solicitors must not act for a new client against a former client, should be adopted in this jurisdiction; and (b) in any case, the first defendant could not give them an assurance, to which they were entitled, that there was absolutely no risk that confidential information obtained by the first defendant would be used against them.

The first defendant, in reply, submitted that it should be permitted to represent the second and third defendants, because (a) the modern English approach should not be adopted but rather each case should be considered on its merits to ascertain whether a breach of the duty of confidentiality was probable, since, inter alia, (i) there was a risk of interference with the free practice of the law, as the range of attorneys available to clients in the Cayman Islands was far more limited than in England, particularly in specialized fields; (ii) wrongful disclosure of confidential information was less likely to occur in the Cayman Islands since it was already a crime punishable by imprisonment under Cayman law; and (iii) in the absence of a local code of conduct, the rules of the International Bar Association, which merely stated that lawyers should maintain confidentiality regarding the affairs of former clients, should be followed; (b) no breach of the duty of confidentiality was possible until after the date of the disclosure hearing as the attorney who had advised the trustee was absent from the jurisdiction; and (c) in any case, it was able to erect an information barrier within the firm which would entail, inter alia, handing the attorney”s file on the trust over to the trustee, requiring an undertaking from him not to disclose information to the litigation department and requiring undertakings from that department not to try to obtain any information about the trust, which would effectively prevent any confidential information coming to the attention of its litigation department.

Held, granting the injunctions sought in part:

(1) When deciding whether a firm of attorneys should be restrained from acting for a new client against a former client, the circumstances and merits of each case should be considered by the court and the general principles applied should reflect the public policy considerations involved. In the Cayman Islands, the modern English approach-namely that a firm should be restrained from acting for a new client against a former client if a reasonable man would anticipate a risk that confidential information would be disclosed-was the correct one and it best achieved a balance between freedom of choice of legal representation and safeguarding the public”s confidence in the attorney-client relationship. In the present case, there was no risk of disclosure for the few days up to and including the disclosure hearing, as the attorney who had dealt with the trust would be out of the jurisdiction until after that date, appropriate undertakings as to confidentiality could be put in place, and it would be unfair to require the second and third defendants to find new representatives at such short notice. However, for the duration of the litigation after the disclosure

hearing, the information barrier proposed by the first defendant could not completely eliminate the risk of disclosure (and indeed such measures could only ever be effective in larger firms), and since there were no exceptional circumstances, e.g. that the second and third defendants were unable to obtain other suitable representation, the plaintiffs” application for an injunction would be granted and the injunction would take effect after the disclosure hearing (page 479, lines 20–26;page 479, line 42 – page 480, line 7; page 480, lines 25–27;page 483, line 38 – page 484, line 19; page 485, lines 3–7;page 486, lines 14–33;page 487, lines 9–13; lines 20–25).

(2) The fact that under Cayman law the disclosure of confidential information was a crime was not a relevant consideration, since the threat of punishment could in itself offer no complete assurance to a former client in these circumstances. Moreover, the rules of the International Bar Association could not offer real guidance since they were merely general expressions of principle intended to serve as a model for precise rules at a national level (page 482, lines 13–36;page 486, line 34 – page 487, line 3).

35	SMELLIE, J.: The plaintiffs seek an injunction to restrain the first
defendant, Maples & Calder (‘M&C’), from continuing to represent the
second and third defendants, Grupo Torras S.A. and Torras Hostench
London Ltd. (‘GT’ and ‘THL’). The first defendant is a firm of attorneys
which now represents GT and THL in Cause No. 271 of 1995. That is a
40	separate tracing action commenced in this jurisdiction and in which GT
and THL are the plaintiffs.
Background
Those proceedings are related to other proceedings presently under way
45	in England and in five other jurisdictions around the world, being brought

at the behest of the Kuwaiti Investment Authority through the Kuwaiti
Investment Office (the ‘KIO’) from its operational base in London,
England. The plaintiffs in them, GT and THL, are companies owned or
controlled by the KIO.
5	A central figure among the defendants in the global actions is Sheikh
Fahad Mohammed Al-Sabah (‘Sheikh Fahad’). He is a member of the
Kuwaiti Royal Family and former chairman of the KIO.
The present plaintiffs are not named as defendants in the global actions.
They have been joined in as defendants in Cause No. 271 of 1995,
10	pursuant to their own application. The first plaintiff is Sheikh Fahad”s
wife, the second plaintiff his son. They are named as contingent
beneficiaries to a trust which is domiciled in this jurisdiction, known as the
Comfort Trust. Sheikh Fahad is the grantor and settlor of the Comfort
Trust, as well as its sole primary beneficiary. The plaintiffs bring this
15	application in their capacity as contingent beneficiaries of the Comfort
Trust. No issue arises as to their locus standi to do so.
It is alleged by the KIO in the global actions that Sheikh Fahad, acting
in concert with others, defrauded it of very large sums of money by abuse
of his office during his tenure as the KIO”s chief executive. GT and THL
20	have shown a good arguable case in the English proceedings and have
there obtained a worldwide Mareva injunction and related discovery
orders. That good arguable case presented strong prima facie evidence that
Sheikh Fahad may have directly misappropriated to his own use $22.5m.
of the KIO”s money. Thus an aspect

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