Introduction
The recent decision in Alesayi v Bank Audi SAL1, provides welcome clarification as to the correct test to be applied in respect of specific disclosure applications made in the context of a jurisdiction challenge.
Typically, orders for specific disclosure require litigants to (i) disclose documents or classes of documents specified in the order; (ii) carry out a search to the extent specified in the order; and/or (iii) disclose any documents located as a result of that search.
Background
The underlying claim relates to the failure by Bank Audi SAL (the "Bank") to transfer funds belonging to its client, Mr Alesayi, out of Lebanon to a separate account in Switzerland during the Lebanese banking crisis.
Following a jurisdiction challenge mounted by the Bank, Mr Alesayi applied for specific disclosure on the basis that he could not fully plead his case on jurisdiction without it. The Bank opposed the application, submitting that ordering disclosure on a jurisdiction challenge was exceptional and, in this case, unjustified.
The first instance decision
At first instance,2 Master McCloud partially granted Mr Alesayi's application, ordering specific disclosure of a total of 16 sub-classes of documents by the Bank and holding amongst other things that:
- Whilst specific disclosure was not the norm in jurisdiction disputes, and was in that sense exceptional, it should be ordered where necessary to do justice between the parties, albeit it should be limited to what is proportionate; and
- This was a classic case of "information asymmetry" whereby the jurisdiction issue concerned matters within the Bank's knowledge alone, or where the Bank held the best evidence of the contractual terms applicable between the parties.
The Court applied the two-stage test adopted in Rome v Punjab National Bank3 ("Rome") and held that specific disclosure should be ordered on the basis that (i) Mr Alesayi had a prima facie partially evidenced case for jurisdiction based on publicly available information, and (ii) disclosure was reasonably necessary to determine jurisdiction justly.
The Court endorsed the dicta from Rome to the effect that disclosure will only be ordered in a jurisdiction application "very rarely, and will require the clearest possible demonstration from the party seeking discovery that it is necessary for the fair disposal of the application", and that it would be "most undesirable, and productive of extra delay and unnecessary expense, if applications for discovery were to become a common feature [of jurisdiction applications]."
The basis for the appeal
The Bank subsequently appealed the decision on the basis that amongst other things the Court at first instance had erred in applying the two-stage test, and the correct test was the test of "exceptional circumstances" or "exceptionality". In this regard, the Bank relied on the Supreme Court's decision in Lungowe v Vedanta Resources Plc4 ("Vedanta"), in which Lord Briggs mentioned that in the context of a jurisdiction challenge, disclosure would typically only be granted in exceptional circumstances and would be limited. The Bank also submitted that the Court at first instance had failed to take into account certain relevant factors in exercising its discretion to make the disclosure orders in the first place.
The appeal holding
The Court disagreed with the Bank as to the applicable test in these circumstances, holding that (i) the two-stage test, which has been consistently applied in previous caselaw, does apply in the context of jurisdiction challenges and (ii) there is no special doctrine of exceptionality. Rather, "exceptional circumstances" or "exceptionality" amount to descriptors of the prevalence of qualifying factual circumstances within the population group of claims that in fact meet the two-stage test. The Court also noted that Vedanta concerned the application of article 4 of Parliament and Council Regulation (EU) No 1215/2012 which was strikingly different to the issue at hand, and did not even involve an application for a disclosure order.
Ultimately, and after noting (i) the risks of appellate overreach, and (ii) the importance of retaining tight focus on the nature of the issue the intended disclosure goes to, the Court upheld the Bank's appeal against several of the disclosure orders, including on the basis that the Court at first instance had placed undue emphasis on the "information asymmetry" factor. In the Court's view, whilst information asymmetry was a relevant consideration, it should not obscure the need for proportionality in disclosure and the need to avoid a "mini-trial".
The Court considered the disclosure ultimately mandated to be administratively manageable and proportionate in extent, and was satisfied that the disclosure orders, as refined, would not hamstring or prejudice Mr Alesayi in meeting the Bank's jurisdiction challenge, and would thus enable the Court to deal with the case justly and to give effect to the overriding objective in doing so.
Practical takeaways
Litigants facing jurisdiction challenges will appreciate this judicial clarification from the Court. They should consider the strategic benefits of bringing a specific disclosure application if it appears that the two-stage test can be satisfied, and in particular if it appears that they are otherwise likely to be prejudiced by information asymmetry. They should, however, bear the need for proportionality in mind and seek to limit the scope of any specific disclosure request insofar as possible.
