In Property Alliance Group Limited v The Royal Bank of Scotland  EWHC 321 (Ch), the claimant alleged that it was induced to enter into interest rate derivatives on the basis of the bank’s misrepresentations concerning the setting of LIBOR.
The bank was ordered to disclose internal reports and other documents in order to enable the parties and the court to decide which of the currencies relating to LIBOR should be the focus of the disclosure. The bank was subject to a Deferred Prosecution Agreement with the US Department of Justice which included an attachment indicating which libel rates were the subject of its investigation. That attachment would be disclosable under the proposed English order. The bank argued that it was required by its obligations to the Department of Justice to object to inspection of the attachment and that to allow inspection would put it at risk of being in criminal contempt of a US order.
The court considered that the document was potentially significant. Confidentiality is not a defence against an order for disclosure, although risk of overseas prosecution for contempt may be taken into account. However, the court considered that the risk of US action was low and that the disclosure might well be permitted by the US courts. To reduce the risk, the court provided further safeguards, ordering that neither party could refer to the document in open court without permission.
Paul Howcroft, Partner, Fladgate LLP (firstname.lastname@example.org)