In the context of High Court proceedings the claimant, an Iranian bank (the “Bank”), was seeking to prove losses suffered as a result of HMT’s implementation of the Financial Restrictions Iran Order 2009. To do so, the Bank had disclosed some 33,000 documents, around a third of which were said to contain confidential data. The production of this data was said to be prohibited under Iranian law.
The documents were first produced by the Bank in redacted form pursuant to CPR 31.19 (3) on the basis that they contained confidential information, disclosure of which could expose the bank to criminal prosecution. HMT sought production of the un-redacted documents, limited to members of a confidentiality club and in ciphered form, with a master list of cipher codes being available to members of this club and not for open court.
At first instance, the court ordered disclosure of the unredacted documents. In particular, having heard evidence from an expert in Iranian law as to the relevant criminal law, the judge was not satisfied that the risk of prosecution was as serious as the expert purported, and held that although there was a risk, conversely there was a very real prospect that the material contained in the redactions would not just be relevant “but may have a probative influence on some issues”. Conducting that balancing exercise, unredacted disclosure was ordered.
On appeal, the Court of Appeal considered: (1) the actual risk of prosecution faced by the Bank, (2) the importance of the production of documents in unredacted form; and (2) the discretionary balancing exercise for the Court: weighing risk against need. It was held that:
This decision provides a helpful re-statement of the principles governing situations where parties allege rights and/or duties to withhold inspection of documents to avoid contravening foreign criminal law. The Court will consider the actual risk of prosecution rather than the illegality of disclosure; and a risk of prosecution is not solely determinative as to whether an order will or will not be made.
  EWCA Civ 449 (CA)
 Found to be unlawful by the Supreme Court in Bank Mellat v HM Treasury (No.2)  UKSC 39