Associate Genevieve Douglas discusses disclosure and jurisdiction disputes in Thomson Reuters Regulatory Intelligence

Associate Genevieve Douglas explores the recent case of Alesayi v Bank Audi SAL 2024 and what it tells us about the willingness of the courts to make disclosure orders before jurisdiction is established.

Genevieve’s article was published in Thomson Reuters Regulatory Intelligence, 11 September 2024, and can be found here.

Introduction

As a general rule, English courts are reluctant to order disclosure in the context of a jurisdiction challenge unless genuinely “exceptional circumstances” are present: Lungowe v Vedanta Resources Plc [2020] AC 1045 [43] citing Rome v Punjab National Bank [1989] 2 All ER 136 [141] per Hirst J and Vava v Anglo American South Africa Ltd [2013] Bus LR D48; [2012] 2 CLC 684.  

However, in the recent decision of Alesayi v Bank Audi SAL 2024 EWHC 1975 KB, the High Court made orders for disclosure under CPR 31.12 (specific disclosure) and 31.14 (documents referred to in statements of case and witness evidence) against a defendant bank to determine a jurisdiction challenge.

In this case, Master McCloud held that “significant information asymmetry” between the parties justified the use of the court’s coercive powers to order disclosure before the court’s jurisdiction to hear the underlying claim was established.

This article examines the evidential threshold disclosure applicants must meet at the interlocutory stage of proceedings to satisfy the English court that disclosure is “necessary and proportionate” to determine a jurisdiction dispute.

Background

The Claimant is a wealthy Saudi customer of the Defendant Lebanese bank, who’s underlying claim is for a mandatory order that the bank transfer more than £23.8 million to accounts in Switzerland. The bank refused to do so due to the impact of the Lebanese liquidity crisis.

The bank argued that an exclusive jurisdiction clause in favour of the courts in Lebanon contained in its contract with the Claimant precluded the High Court’s jurisdiction and denied that it had carried out business or commercial activities in the UK. The Claimant relied on publicly available information to challenge the latter assertion and made an application for disclosure against the bank, seeking documents to evidence whether the bank had in fact directed commercial or professional activities to the UK.

In challenging the bank’s assertion, the Claimant’s position was that it could not provide a full response to the jurisdiction challenge until the bank disclosed various documents that the Claimant believed would establish jurisdiction in England and Wales. The Claimant argued that disclosure was therefore necessary to determine the jurisdiction dispute on the basis the bank possessed evidence showing it had engaged in or directed commercial activities in the UK.

In response, the bank contended that disclosure was neither necessary nor proportionate in the circumstances, especially since the Claimant had already developed and argued its jurisdictional case without it. The bank further argued that the requested disclosure did not fall within the relevant jurisdictional “gateway” and, if granted, would place it at a disadvantage. The bank contended that if it was required to undertake a time-consuming and costly disclosure process, the Claimant should be subjected to the same obligation, particularly regarding whether the Claimant was genuinely domiciled in the UK.

Case

The key issue before the court was whether it required more information to resolve the jurisdictional dispute.

The Claimant relied on publicly available documents that suggested the bank had a commercial presence in the UK, including: sworn testimony from employees of the bank’s group; the bank’s 2015 Annual Report; a report from a private investigator; a decision of the Registrar of the UK Intellectual Property Office in trade mark proceedings in 2001; and even references to a “London Desk” in social media accounts of bank employees.

The Claimant’s main argument was that the bank had engaged in or directed commercial activities toward the UK by (i) forming a partnership with the investment firm Crossbridge Capital in the mid-2010s; and (ii) establishing a “London Desk” to offer banking services to its UK-based clients.

Whilst neither of these activities related to the Claimant’s contract with the bank, nor to the substantive issue of the transfer out of his funds, Master McCloud deemed it necessary and proportionate for the bank to disclose materials relevant to its presence in the UK that were “well within the bank’s knowledge alone”.

Master McCloud acknowledged that the court’s power to order disclosure in interlocutory proceedings should be exercised sparingly and only for documents that are demonstrated to be necessary for the just disposal of the application (Vendanta [43], Rome [429]), but ultimately, rejected the bank’s general submission that any disclosure should be refused. Master McCloud held that it would be unjust to require a Claimant in a highly asymmetric evidential position to proceed without a level playing field.

Master McCloud concluded that the evidence “pointed to the possibility” that the bank had done business in the UK and the only way the court could properly resolve the question of jurisdiction was by having the complete picture turned over by the bank.

Decision

The court held that disclosure under CPR 31.12 and 31.14 was necessary to determine whether the bank had met the ‘Activities Requirement’ under s.15E(1)(c) of the Civil Jurisdiction and Judgments Act 1982 (“CJJA”) and thus whether the court had jurisdiction to hear the claim under CJJA s.15B(2).

The thrust of Master McCloud’s judgment was the need to ensure a “level playing field” given the “information asymmetry” at play between the parties. In essence, she concluded that the bank, at relatively cheap cost, could prove it never did business in the UK, whilst the Claimant only had access to limited information which nonetheless pointed to the possibility that the bank had in fact met the ‘Activities Requirement’ under CJJA s.15E(1)(c).

Take-aways

The court deemed disclosure to be necessary for the fair resolution of the jurisdiction application, given:

• The “highly asymmetric evidential position” between the parties;
• The relatively low cost of disclosure compared to the value of the claim; and,
• The fact that the material intended for disclosure was likely to be highly conclusive to the jurisdiction issue.

Whilst this is a first instance decision, it confirms that the English courts will be reluctant – but not constrained – in exercising their coercive powers before jurisdiction is established.

Key considerations in jurisdictional disclosure applications include equality of arms, the cost of disclosure relative to the claim’s value, and proportionality. A relatively “light touch” approach will therefore be taken to the evidence in such applications.

Update (28 February 2025)

The Defendant appealed Master McCloud’s disclosure orders, which required the bank to disclose documents relevant to determining whether the bank had directed activities toward England and Wales.

In a hearing before Mr Justice Dexter Dias on 27-29 January 2025, the Defendant argued:

• the correct test for disclosure in jurisdiction challenges was “exceptional circumstances” or “exceptionality”, not the two-stage test from Rome v Punjab National Bank [1989] 2 All ER 136; and,
• Master McCloud incorrectly exercised her discretion in making the orders.

In a judgment dated 28 February 2025, the High Court partly allowed and partly dismissed the appeal.

As to the correct legal test, Mr Justice Dexter Dias confirmed that the two-stage test from Rome is the correct legal test for disclosure in jurisdiction challenges (1 – is there a prima facie case on jurisdiction; 2 – is disclosure necessary for the just disposal of the jurisdiction application) not exceptionality.

However, the court upheld appeals against several of the disclosure orders granted by Master McCloud at first instance, concluding that while “information asymmetry was a relevant factor… it should not obscure the need for proper restraint, parsimony and proportionality in disclosure” [171].

The court held that Master McCloud had placed “undue emphasis” on the “level playing field” and “information asymmetry” criteria, finding that: “The “equal footing” factor in the overriding objective is “not unqualified”… it must be given effect while dealing with matters at proportionate cost in light of the “complexity of the issues”” (CPR Part 1).

The appellate court’s judgment tempers the first instance court’s decision: disclosure in jurisdiction challenges should be restricted and is generally expected to occur only in exceptional circumstances.

The judgment is available here.