The Confidential Information Disclosure Act, 2016
| Jurisdiction | Cayman Islands |
| Judge | Parker |
| Judgment Date | 08 March 2022 |
| Court | Grand Court (Cayman Islands) |
| Docket Number | CAUSE NO. FSD 118 OF 2021 (RPJ) |
The Hon. Justice Parker
CAUSE NO. FSD 118 OF 2021 (RPJ)
IN THE GRAND COURT OF THE CAYMAN ISLANDS
FINANCIAL SERVICES DIVISION
Sections 3 and 4 Confidential Information Disclosure Act (CIDA) — confidential information intended to be passed on to a party to foreign arbitral proceedings-Court's approach — jurisdiction-statutory interpretation-Cayman Bill of Rights — compatibility with CIDA-Data Protection Act section 25-discretion
Ms Rachael Reynolds QC, Ms Jennifer Fox, Mr Oliver Green and Mr Harry Clark of Ogier on behalf of the Plaintiff
Ms Clare Stanley QC, Mr Peter Tyers-Smith, and Mr Thomas Wright of Kobre & Kim on behalf of Port Link GP Ltd
Mr Alex Potts QC, Mr Jonathon Milne and Mr Spencer Vickers of Conyers on behalf of the State of Kuwait
Mr Alain Choo Choy QC, Mr Simon Dickson and Ms Ella van der Schans of Mourant on behalf of Maria Lazareva
This is the decision following a hearing of the ex parte Originating Summons dated 10 May 2021 issued by the Kuwait Ports Authority (the “KPA”). A number of interested persons have been served and given permission to appear and make submissions, as set out below. A hearing took place on 1–2 February 2022 following which written submissions were also filed with the Court's permission.
The KPA applies for an Order that it:
“is permitted to share the Confidential Information with the State of Kuwait for use in the arbitration proceedings brought by Maria Lazareva against the State of Kuwait under the 1976 UNCITRAL Arbitration Rules pursuant to the Agreement between the Russian Federation and the State of Kuwait for the Promotion and Reciprocal Protection of Investments under ICSID Case No. UNCT/19/1”.
The KPA applies pursuant to Section 4 of the Confidential Information Disclosure Act, 2016 (the “Act” or “CIDA”). The Confidential Information is constituted by the documentation disclosed by The Port Fund L.P. (the “Fund”) and Port Link GP Ltd (“Port Link”) as General Partner of the Fund to KPA (and other limited partners) pursuant to an Order of the Court filed on 28 August 2020 and a Consent Order filed on 3 November 2020 (the “Section 22 Orders”). By the Section 22 Orders, KPA was granted access to information regarding the state of business and financial condition of the Fund.
Between November 2020 and February 2021, the KPA apparently received approximately 1, 000 documents from Port Link and the Fund (the “Section 22 Documents”). The KPA has not reviewed the Section 22 Documents but its lawyers have.
In summary, the KPA applies for sanction by the Court to pass on a reduced amount of confidential material that it has obtained pursuant to Orders of this Court to the State of Kuwait for the purposes of potential use by the State of Kuwait in proceedings (an ICSID arbitration) to which the KPA is not a party. As such it seeks release from its obligations of confidentiality owed to other parties. This has given rise to a number of disputes and objections with which this decision deals.
The KPA is a state-owned entity although it is apparently authorised to act independently of the State of Kuwait (“Kuwait”). It can be characterised as an emanation of the State of Kuwait.
The KPA is a Limited Partner in the Fund, which is an exempted limited partnership registered in the Cayman Islands. Port Link is an exempted limited company also incorporated in the Cayman Islands and is the General Partner of the Fund.
The KPA and Port Link currently have and have had numerous disputes before this Court including the dispute which gave rise to the Section 22 Orders granting the KPA access to the Section 22 Documents.
Port Link and each of the Limited Partners in the Fund, including the KPA, are also parties to a restated and amended Limited Partnership Agreement in respect of the Fund dated 14 July 2008 (the “ LPA”) which is governed by Cayman Islands law.
The disclosure ordered pursuant to the Section 22 Orders, which related to the confidential affairs of the Fund, was made expressly subject to “ those conditions and/or restrictions contained in clause 7.3 of the Amended and Restated Limited Partnership Agreement dated 14 July 2008” (“Clause 7.3”).
Clause 7.3 expressly binds each of the Partners, including the KPA, who have access to Confidential Information, to keep it confidential and not to disclose it without the express consent (in the case of Confidential Information acquired from the Fund) of the Fund. Clause 7.3 also protects the confidentiality of confidential information provided by a Partner by requiring it to be kept confidential and not to be disclosed without the consent of that Partner.
Neither the Fund nor Port Link as the General Partner has been willing to consent to the disclosure of the Section 22 Documents by KPA to Kuwait.
For the purposes of the application, the KPA accepts that the Section 22 Documents are subject to confidentiality restrictions.
On 14 October 2020, the KPA and the Public Institution for Social Security (another Limited Partner in the Fund, also a Kuwaiti state owned entity authorised to act independently of the State of Kuwait) commenced proceedings against Port Link in respect of alleged large-scale fraud and misconduct involving the Fund (the “Proceedings”). The Proceedings are substantial and complex and have added a number of defendants.
In light of the disclosure of the Section 22 Documents, the claim in the Proceedings was amended on 12 February 2021 (Amended Statement of Claim (“ASOC”)), to include other parties connected with the Fund. The KPA says that the Section 22 Documents provide evidence of relevant fraud and misconduct. 1 Among other matters the ASOC alleges an unlawful means conspiracy between Port Link and other defendants. The claim was subsequently re-amended on 13 December 2021.
Kuwait is the defendant to arbitration proceedings brought against it in Kuwait by Maria (Marsha) Lazareva (“ML”) (the “Arbitration” or “Arbitration Proceedings”) 2. ML was a former director of Port Link between 8 March 2007 and 24 May 2018. ML claims against Kuwait under a bilateral treaty arrangement that she is entitled to substantial compensation as a result of the actions of Kuwait.
Although the existence of the Arbitration Proceedings is a matter of public record, the KPA is not a party to the Arbitration and is not privy to the details. Certain aspects of the Arbitration Proceedings are conducted in private and the hearing and award in those proceedings would remain confidential to the parties.
Following a number of requests (according to Mr Al Sabah 3) by Kuwait for the KPA to share the Section 22 Documents with Kuwait for use in its defence in the Arbitration Proceedings, Kuwait's legal department, the Department for Legal Advice and Legislation, on behalf of Kuwait, wrote to the KPA on 25 April 2021 formally to record Kuwait's request for disclosure of the Section 22 Documents.
As an emanation of the State and as a wholly-owned entity, the KPA is understandably inclined to comply, if it can, with the request. The KPA puts its case, aligned with Kuwait, on the basis that some of the Section 22 Documents are likely to be relevant to the Arbitration Proceedings, although it is not itself privy to the detail of the proceedings.
The KPA is also aligned with Kuwait's intention that the contents of those documents should be sought to be used in the Arbitration Proceedings, if the arbitral tribunal is willing to receive them, in the interests of justice and to avoid a potential miscarriage of justice.
The potential miscarriage of justice (expanded upon below) arises because Kuwait is concerned that the arbitral tribunal will not have had sight of material which is both relevant and likely to undermine ML's case 4.
In the matter of the Cayman Securities Clearing and Trading Ltd SEZC (unreported) 14 October 2014 the Court (Smellie CJ) held that:
“Section 4 of the law is intended to be a gateway for the release of confidential information, not primarily for the sake of any partisan interests, but in recognition of the public interest both local and abroad in the due administration of justice. It is a provision which deals only with the circumstances under which confidential information might be given in evidence. I am cognisant that its purpose is not intended to meet the discovery
obligations ofparties in litigation.’ (my emphasis)
In Safeguard 5 the matter was described in this way, comparing the evolution of the law:
‘The primary purpose of CIDL was to remove the criminal sanctions which pertained to the previous law if confidential information was disclosed, to allow for disclosure in an increased number of circumstances, and to dispel the misconception that the Cayman Islands was a jurisdiction which promoted secrecy.’
Section 3(2) of the Act provides a statutory defence to an action for breach of confidence.
It states that:
“A person who discloses confidential information on wrongdoing, or in relation to a serious threat to the life, health, safety of a person or in relation to a serious threat to the environment, shall have a defence to an action for breach of the duty of confidence, as long as the person acted in good faith and in the reasonable belief that the information was substantially true and disclosed evidence of wrongdoing, of a serious threat to the life, health, safety of a person or of a serious threat to the environment.” (my emphasis)
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