Court of Appeal upholds document production order despite risk of foreign prosecution

18 March, 2019

Judgment was handed down on Friday 15 March 2019 in Bank Mellat v Her Majesty’s Treasury [2019] EWCA Civ 449. Lord Justices Gross, Peter Jackson and Coulson, sitting in the Court of Appeal, dismissed the appeal in favour of the Respondents (HMT), and upheld the decision of Mrs Justice Cockerill dated 19 September 2019, requiring the Appellants (the Bank) to produce unredacted versions of documents (subject to confidentiality provisions including ciphering with a master list) in circumstances where the Bank claimed this would expose them to the risk of criminal prosecution in Iran.

The litigation is vast and complex. The trial is fixed for June 2019. The Bank claims damages/compensation under the Human Rights Act 1998 for losses allegedly sustained as a result of the Financial Restrictions (Iran) Order 2009, made by HMT in October 2009. That Order was held to be unlawful by a majority of the Supreme Court in 2013: Bank Mellat v HM Treasury [2013] UKSC 38. In addition, the Bank is challenging the lawfulness of further orders made by HMT in 2011 and 2012.

The Court of Appeal, in ordering that unredacted documents be produced, held that although an order for production will not lightly be made where compliance would entail a party to English litigation breaching its own (foreign) criminal law, the Court is not precluded from making such an order. A balancing exercise must be undertaken, weighing in the scales the actual risk of prosecution and the importance of the documents in question to the fair disposal of the English proceedings. The Court concluded that Mrs Justice Cockerill was entitled, in the exercise of her discretion and on the basis of the evidence before her, to find that the risk of prosecution was not as serious as the Bank contended – not least because of the Government of Iran’s substantial shareholding in the Bank – and that production of the unredacted documents was required for the fair disposal of the issues at the trial. Accordingly, it was held, her exercise of discretion would not be challenged. Lord Justice Gross, who gave the judgment of the Court, further found that, had it been necessary for the discretion to be exercised afresh, he would have exercised it in the same manner as the Judge.

This decision demonstrates the balancing act required by the judiciary when faced with an assertion by an overseas litigant that compliance with English procedural law renders it in difficulties with its authorities at home. As the Court of Appeal observed, the need for production of the relevant documents ‘intends and entails no disrespect for the relevant principles of Iranian law’ but that the ‘Court’s ability to conduct its proceedings in accordance with its own law and procedures should not be overridden by foreign law.

David Foxton QC, Philippa Hopkins QC and Helen Morton, instructed by the Government Legal Department, appeared for the Respondents (HMT) in the Court of Appeal.