Emmerson International Corporation v Renova Holdings Ltd

• Jurisdiction: British Virgin Islands
• Judge: Ventose JA
• Judgment Date: 07 July 2023
• Judgment citation (vLex): [2023] ECSC J0707-4
• Docket Number: BVIHCMAP2019/0001
• Court: Court of Appeal (British Virgin Islands)

Between:

Emmerson International Corporation

Appellant/Applicant

and

Renova Holdings Limited

Respondent

Before:

The Hon. Mde. Vicki Ann Ellis Justice of Appeal

The Hon. Mr. Paul Webster Justice of Appeal [Ag.]

The Hon. Mr. Eddy Ventose Justice of Appeal [Ag.]

BVIHCMAP2019/0001

THE EASTERN CARIBBEAN SUPREME COURT

IN THE COURT OF APPEAL

Application for conditional leave to appeal to the Privy Council — Worldwide freezing order — Confidentiality club — Section 3 of the Virgin Islands (Appeals to the Privy Council) Order 1967 — Whether the question involved in the appeal is one that, by reason of its great general or public importance or otherwise, ought to be submitted to His Majesty in Council — Whether the Court of Appeal erred in law in holding that the decision whether to impose a confidentiality club is a discretionary case management decision — Whether the Court of Appeal erred in law in rejecting Emmerson's submissions that three threshold conditions must be met before the court may order a confidentiality club be imposed — Whether the Court of Appeal erred in law in not finding that even if the threshold conditions were met (and thus that the court were satisfied that the making of a confidentiality club order is necessary), considerable caution is nevertheless required where a confidentiality club is sought in respect of asset disclosure pursuant to a freezing order

Emmerson International Corporation (“Emmerson”) applied for and obtained before Wallbank J on 19 ^th November 2018 an ex parte worldwide freezing order against Renova Holdings Limited (“Renova”) (the “WFO”). The WFO required Renova, among other things, to disclose certain documents and information within 21 days of service of the WFO. Renova subsequently applied to discharge or vary the WFO and for an extension of time to comply with the disclosure requirements of the WFO. The variation of the WFO was sought by Renova to prevent it from disclosing what Renova considered to be confidential and commercially sensitive documents and information until the determination of Renova's application to discharge the WFO. Wallbank J in an order dated 12 ^th December 2018 extended the time for Renova to comply with the disclosure requirements of the WFO and imposed a confidentiality club in relation to any documents and information disclosed pursuant to the WFO. The confidentiality club order requires that, pending the determination of the application by Renova to discharge the WFO, any documents and information provided by Renova pursuant to the WFO was to be given only to legal practitioners of Emmerson who were admitted in the British Virgin Islands (“BVI”). Those legal practitioners were granted liberty to apply on notice to Renova for permission to share documents and or information with Emmerson.

Emmerson appealed the decision of Wallbank J to make the confidentiality club order. The Court of Appeal gave its written decision in a judgment handed down on 7 ^th February 2023 in which it dismissed all the grounds of appeal, including the main one that Wallbank J erred in concluding that it was appropriate to impose a confidentiality club in respect of the documents and information to be provided by Renova under the provisions of the WFO that could only be seen by Emmerson's BVI legal practitioners. The Court of Appeal held that the decision of Wallbank J to make the confidentiality club order was a discretionary case management decision that could not be said to be plainly wrong, taking into account all the factors considered by Wallbank J in the balancing exercise he conducted to do justice between the parties.

Being dissatisfied, Emmerson applied under section 3(2)(a) of the Virgin Islands (Appeals to the Privy Council) Order 1967 (the “1967 Order”) for conditional leave to appeal to His Majesty in Council against the decision of the Court of Appeal. The issues arising from Emmerson's application are: (i) Whether the Court of Appeal erred in law in holding that the decision whether to impose a confidentiality club is a discretionary case management decision, and in rejecting Emmerson's submissions that three threshold conditions must be met before the court may order a confidentiality club be imposed; (ii) Whether the Court of Appeal erred in law in not finding that even if the threshold conditions were met (and thus that the court were satisfied that the making of a confidentiality club order is necessary), considerable caution is nevertheless required where a confidentiality club is sought in respect of asset disclosure pursuant to a freezing order; and (iii) Whether the question involved in the appeal is one that, by reason of its great general or public importance or otherwise, ought to be submitted to His Majesty in Council.

Held: dismissing the notice of motion for conditional leave to appeal to His Majesty in Council with costs to the respondent to be assessed if not agreed within 21 days, that:

• 1. The imposition of a confidentiality club and, if so, its terms, generally involves a balancing exercise and the following factors are relevant to the exercise of the court's discretion: (1) the court's assessment of the degree and severity of the identified risk and the threat posed by the inclusion or exclusion of particular individuals within the confidentiality club; (2) the inherent desirability of including at least one duly appointed representative of each party within a confidentiality club; (3) the importance of the confidential information to the issues in the case; (4) the nature of the confidential information and whether it needs to be considered by people with access to technical or expert knowledge; and (5) practical considerations, such as the degree of disruption that will be caused if only part of a legal team is entitled to review, discuss and act upon the confidential information. A party seeking an order for a confidentiality club must provide reasons to the court to exercise its discretion in their favour; merely stating that the information is confidential or sensitive is insufficient.

  The Libyan Investment Authority (incorporated under the laws of the State of Libya) v Societe Generale SA & Others [2015] EWHC 550 considered; Porton Capital Technology Funds & 3 Ors v 3M UK Holdings Ltd (2010) [2010] EWHC 114 (Comm) considered.

• 2. The decisions relating to confidentiality club orders do not establish any ‘three threshold requirements’ that must be satisfied before the court can exercise its discretion to make a confidentiality club order. What they show is that the basis for such orders is the court's inherent jurisdiction to regulate its own procedure in the interests of justice and that the court in granting a confidentiality club order will seek to do justice between the parties considering their rights and needs. That is the only overarching principle that can be distilled from these decisions. The matters which counsel for Emmerson has termed ‘threshold requirements’, namely that: (i) the applicant must establish the existence of information that is so sensitive that it cannot be satisfactorily protected in any other way; (ii) the applicant must show that the protections arising under the Civil Procedure Rules, 2000 or any express undertakings provide insufficient protection so that there is, despite these measures, a real risk of irreparable harm; and (iii) the applicant must also prove the strict necessity of each aspect of the additional and exceptional protection sought, are not prerequisites for the exercise by the court of its broad discretion to make a confidentiality club order. They are simply three (3) of the many factors or considerations that the court may have regard to in exercising that broad discretion.

  The Libyan Investment Authority (incorporated under the laws of the State of Libya) v Societe Generale SA & Others [2015] EWHC 550 considered; Porton Capital Technology Funds & 3 Ors v 3M UK Holdings Ltd (2010) [2010] EWHC 114 (Comm) considered; Bank of America N.A v. Pacific Andes Enterprises (BVI) Limited et al BVIHC(COM) 2016/0132, BVIHC(COM) 2016/0133 & BVIHC(COM) 2016/0134 (delivered 1st December 2016, unreported) considered. Roussel Uclaf v Imperial Chemical Industries plc [1990] RPC 45 considered. Infederation Ltd v Google Inc and other companies [2020] EWHC 657 (Ch) considered; One Plus Technology (Shenzhen) Co., Ltd and other companies v Mitsubishi Electric Corp and another company [2020] EWCA Civ 1562 considered; Al-Rawi and others v Security Service (JUSTICE and others intervening) [2011] UKSC 34; [2011] 3 WLR 388 considered; JSC Commercial Bank Privatbank v Kolomoisky and others [2021] EWHC 1910 (Ch) considered.

• 3. The confidentiality club order under consideration is a quintessential case management decision of Wallbank J in managing the disclosure requirements made pursuant to the WFO to balance the interests of Emmerson in having the fullest possible access to relevant documents and information against the interests of Renova in preserving their confidential commercial information until the final determination of the application to discharge the WFO. Moreover, even if counsel for Emmerson was correct that the establishment of the confidentiality club was not discretionary case management decision of Wallbank J, what cannot be disputed was that it was a discretionary decision of Wallbank J. Consequently, the decision of Wallbank J to establish the confidentiality club was certainly of the type of which an appellate court will not interfere with unless Wallbank J took into account irrelevant considerations, or failed to take into account the relevant considerations or that he erred in principle or that he was plainly wrong.

  Canary Riverside Estate Management Ltd and others v Coates (Circus Apartments Ltd intervening) [2021] EWHC 1505 (Ch) considered; Dufour v Helenair Corporation Limited (1996) 52 WIR 188 followed.

• 4. The...