Case No: 2005/734
Neutral Citation Number: [2005] EWHC 2527 (Comm)
N THE HIGH COURT OF JUSTICE
QUEEN’S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice
Strand
London WC2A 2LL

Friday, 21st October 2005

BEFORE:

HIS HONOUR JUDGE MACKIE QC

- - - - - - - - - - - - - - - - - - - - -

BETWEEN:

GUS CONSULTING GMBH
Claimant

-v-

LEBOEUF LAMB GREENE & MACRAE

Defendant
- - - - - - - - - - - - - - - - - - - - -
Tape Transcript of Smith Bernal Wordwave Limited
183 Clarence Street  Kingston-Upon-Thames  Surrey KT1 1QT
Tel No: 020 8974 7300  Fax No: 020 8974 7301
(Official Shorthand Writers to the Court)
- - - - - - - - - - - - - - - - - - - - -
MR A LYDIARD QC appeared 
on behalf of the Claimant.
MR M HOYLE appeared on behalf of the Defendant.

- - - - - - - - - - - - - - - - - - - - -

J U D G M E N T
J U D G M E N T

1.	JUDGE MACKIE QC:  This is the substantive hearing of an application by the claimant, Gus Consulting GMBH (who I will call, as the parties have, “CAIB”) against the defendant solicitors Leboeuf Lamb Greene & Macrae (“Leboeuf”).  CAIB seeks an injunction under section 44 of the Arbitration Act 1996 to prevent Leboeuf from representing a client, DCL, the claimant in an LCIA arbitration.  The respondents in the arbitration are CAIB and a series of companies within the same group for whom Leboeuf once acted.  CAIB is or was part of Credit Anstalt, the well-known bank.  The claim is based on potential breach of confidence, not conflict of interest.

2.	An application was made on 7th September.  It was expedited on 15th September and heard by me last Friday.  I had intended to give judgment on Tuesday after receiving some further submissions from counsel by close of business on Monday.  For reasons of counsel’s convenience, I am giving judgment only today.  To an extent this is a judgment on the hoof, in that I am responding to further information I have received from the two parties and to the answers to some questions I have asked Mr Hoyle this morning.

3.	The court received a number of witness statements, to which I shall refer in the course of this judgment.  The parties accepted that there was no need for cross-examination because it was common ground that the witnesses on both sides were giving truthful and accurate testimony.

Background

4.	CAIB was represented by Leboeuf in a series of transactions in the 1990s  which have been put in issue, at least to some extent, in the arbitration. There is no conflict of interest that English law recognises as CAIB is no longer a client of Leboeuf.  CAIB claims, however, that without an injunction there is a risk that its confidential information will be disclosed or misused.

5.	The arbitration process began with a request for arbitration back in May 2002.  There has been pleading, disclosure, at least one interim award and several interlocutory disputes.  DCL, the claimants in that arbitration, were represented by Debevoise & Plimpton.  CAIB, one of the respondents in that arbitration, are represented, both today and in the arbitration, by Speechly Bircham.

6.	In July 2005 Mr Marriott QC, Miss Ruff and other colleagues left Debevoise & Plimpton and moved to Leboeuf.  DCL at that point decided to change its representation and move with Mr Marriott and his colleagues from Debevoise & Plimpton to Leboeuf.   After being notified of the change CAIB objected, and did so promptly.

7.	The relevant principles in this class of case are not in dispute, and they are helpfully summarised by Clarke LJ in Koch v Richards Butler [2002] EWCA Civ 1280 in paragraph 24 of his judgment, which I will read out:

“It was, and is, common ground that the relevant principles in this class of case may be stated as follows: 

(1) The court's jurisdiction to intervene is founded on the right of the former client to the protection of his confidential information. 

(2) The only duty to the former client which survives the termination of the client relationship is a continuing duty to preserve the confidentiality of information imparted during its subsistence. 

(3) The duty to preserve confidentiality is unqualified. It is a duty to keep the information confidential, not merely to take all reasonable steps to do so. 

(4) The former client cannot be protected completely from accidental or inadvertent disclosure, but he is entitled to prevent his former solicitor from exposing him to any avoidable risk. This includes the increased risk of the use of the information to his prejudice arising from the acceptance of instructions to act for another client with an adverse interest in a matter to which the information may be relevant. 

(5) The former client must establish that the defendant solicitors possess confidential information which is or might be relevant to the matter and to the disclosure of which he has not consented. 

(6) The burden then passes to the defendant solicitors to show that there is no risk of disclosure. The court should intervene unless it is satisfied that there is no risk of disclosure. The risk must be a real one, and not merely fanciful or theoretical, but it need not be substantial. 

(7) It is wrong in principle to conduct a balancing exercise. If the former client establishes the facts in (5) above, the former client is entitled to an injunction unless the defendant solicitors show that there is no risk of disclosure. 

(8) In considering whether the solicitors have shown that there is no risk of disclosure, the starting point must be that, unless special measures are taken, information moves within a firm. However, that is only the starting point. The Prince Jefri case does not establish a rule of law that special measures have to be taken to prevent the information passing within a firm… On the other hand, the courts should restrain the solicitors from acting unless satisfied on the basis of clear and convincing evidence that all effective measures have been taken to ensure that no disclosure will occur… This is a heavy burden.”

	He adds:

“It is to my mind important to emphasise that each case turns on its own facts.”

8.	So the two principal questions I have to ask are, first, has the former client, CAIB, established that Leboeuf possessed confidential information which is or might be relevant to the matter and to the disclosure or use of which he has not consented.  Secondly, have the solicitors shown that there is no risk of disclosure – “risk” in the sense of real, not necessarily substantial, but not theoretical – that exists.  Those two questions are of course shorthand, and I have regard throughout to Clarke LJ’s summary and the cases behind that summary to which counsel took me during the hearing.

Does Leboeuf possess relevant confidential information?

9.	The answer to the first question depends on a comparison of the issues in the arbitration and what confidential information Leboeuf are likely to have from the work that it did for CAIB.   I therefore start with the arbitration.

10.	There could be no better place to look for a summary of the issues in the arbitration than the interim award of the late Lord Alexander QC, who very unfortunately had to resign as sole arbitrator.  In the introduction he says this:

“1. This arbitration arises out of a number of agreements relating to restricted Russian securities which the claimant…(‘DCL’) entered into in 1997.  It relates, in particular, to two agreements: an investment agreement which was entered into on 20 May 1997 and an assignment agreement which was entered into on 3 June 1997.  

2. The agreements were part of a scheme (the ‘Scheme’) set up at the instigation of the First Respondent…(‘CAIB’). The Scheme was operated through CAIB’s affiliates.  It is alleged by DCL that the Russian authorities have declared the Scheme to be illegal and that they have confiscated all the shares held under the Scheme on behalf of DCL and a number of other investors.

3. By its request for arbitration dated 10 May 2002, DCL makes a claim against a number of parties for losses it has incurred as a result of the illegality of the Scheme.  DCL has not only claimed against those parties whom on the face of the documents it appears were the contracting parties.  They have also claimed against CAIB.  It is DCL’s case that the Scheme was, in reality, CAIB’s scheme and in all the circumstances CAIB were principals to the agreements entered into by CAIB’s affiliates and subsidiaries with DCL.

4. By its response dated 16 May 2002 CAIB allege that it did not have any contractual relationship with DCL and accordingly in all the circumstances there is no arbitration agreement between DCL and CAIB.”

11.	It is necessary to say a little bit more about the claims in that arbitration.

12.	As I say, it arises out of an investment by DCL in 1997 in shares in Gazprom, the Russian company.  Another CAIB company, CISEG, would enter into an investment with a foreign investor who would fund the acquisition of the shares. The shares would be held by a Russian entity, ZAO, subject to a forward contract to deliver them to CISEG in the event that legal restrictions on foreign ownership were lifted. The benefit of the forward contract was assigned to the investor.

13.	In May 1997 a Russian Equities Investment Agreement (“REIA”) was concluded, which is expressed to be between DCL and CISEG.  In May 1999, however, the bulk of the Gazprom shares were appropriated by a Mr Arkipov, the General Director of ZAO Financial Partners, who wrongfully procured re-registration (it is alleged) of a total of 108 million Gazprom shares.  It has not been possible to recover the shares from those who now hold them.

14.	Although the REIA (the investment agreement) is expressed to be between DCL and CISEG, DCL claims that CAIB is liable for alleged breaches of it and is also liable in respect of alleged fiduciary duties, duties of care and other obligations.  DCL claims that CAIB sought to trade on its name and reputation and used its name to conduct its investment banking business in Russia, but sought to do this through affiliates in whose names contracts would be concluded.  DCL says the principal was CAIB.  As part of doing that, DCL argues that CAIB’s business in Russia was conducted through the agency of the affiliates or, alternatively, that the use of the affiliates provided a mere façade through which CAIB acted.  DCL therefore contends that the REIA, though apparently an agreement with CISEG, was in fact concluded by CISEG as agent for CAIB.  There are also other claims.  CAIB disputes all those allegations and, in addition, submits that the arbitrator has no jurisdiction over it.   This summary of the arbitration is taken from passages in Mr Lydiard’s helpful skeleton argument.  No date has been fixed for a substantive hearing of the case.

15.	CAIB places emphasis on the nature and extent of the disclosure sought during the course of the arbitration, which was placed, as a result of Lord Alexander’s indisposition, initially for procedural matters and now for all matters, in the hands of Mr Crookenden QC as arbitrator.  

16.	The claimants, DCL, sought very extensive disclosure from the respondents in the arbitration.  The categories included the following:

“Documents sufficient to describe the structure of the CAIB Group including the interrelationship of the respondents in the period 1996 to 2003.  

All powers of attorney issued in relation to the activities of any of the respondents in the period 1996 to 2003 and all documents made in relation to those powers.

All documents evidencing communication between Holme Roberts or any other legal counsel [which would include Leboeuf] and any director, trustee or administrator relating to the management of the affairs of any of the 2nd to 6th respondents.

All documents relating to instructions communicated by any of the respondents, CAIB, Russia Management Board, or any other management or supervisory body of the first respondent.”

17.	There is, amongst other things, a 90-page table setting out the position on disclosure as it existed at one interlocutory point in the arbitration.

18.	In addition to the content it is pertinent to bear in mind the temperature of the proceedings. I refer to some of the correspondence between Debevoise & Plimpton on the one hand and Speechly Bircham on the other.  

19.	Thus, on 3rd October 2003, we see a letter from Debevoise & Plimpton addressed to their opponents in which they say:

“…that, to put it bluntly, CAIB is less than frank with various tribunals as to the precise nature of its role in Russia with respect to the setting up and operation of its investment business.” 

20.	It is clear that allegations were being made against CAIB in a number of proceedings which are extremely serious, including allegations of wholesale fraud and dishonesty.  There are grounds for believing that CAIB was less than frank in its dealings with the tribunal and its provision of appropriate evidence.

21.	 There are references in the later correspondence to the absurdly narrow view which CAIB is said to be taking to the sham of its corporate organisation, and to similar discreditable conduct.  

22.	In addition to those broad lines of attack, the correspondence also focuses on a dispute known as “Avisma”, not directly in issue in the arbitration between CAIB and another investor, which led to another arbitration. Claims against CAIB failed but those against CISEG succeeded. There were attempts to enforce against CISEG in Jersey, which led to disclosure upon which Debevoise & Plimpton relied.

23.	Debevoise & Plimpton wrote to Lord Alexander on 1st March 2004 with reference to those enforcement proceedings.  They sought to persuade the arbitrator to reconsider a decision.  Of course this and all the other correspondence must be read in its context, but some of the things they say are these:

“…we are now able to set out evidence showing that Creditanstalt Investment Bank AG’s objection to jurisdiction is an attempt to hide its true role in the matters complained of.  Had it admitted its true role, there would have been absolutely  no need for the preliminary hearing. 

We have made numerous attempts in correspondence to invite the First Respondent to stop the charade...”

	There is reference to suggestions by CAIB being demonstrably dishonest, and to the need for disclosure of materials on transactions which it appears involved at least some work on behalf of Leboeuf.  In the conclusion to that letter there is reference to the respondents’ “continuing denial of the principal/agent relationship being utterly unconvincing and being downright false so far as the two respondents are concerned”.

24.	Against the breadth and temperature of those allegations, what relevant work did Leboeuf do for CAIB?  For perfectly understandable reasons, neither side has sought to produce the underlying materials recording the advice given.  It seems perfectly clear that, between 1996 and 1999, which includes the period which is the subject of the arbitration, Leboeuf was one of three firms retained by CAIB for Russian work.  Leboeuf’s Washington, Moscow and London offices were involved. There were a substantial number of individuals (as one might expect) engaged in providing those professional services, who are helpfully summarised in a document produced by Mr Kendall, the solicitor from Speechly Bircham, who has produced evidence on the claimant’s behalf.   Bills totalling some half a million dollars have been identified, and there may well have been other work not yet recorded as being attributable to Leboeuf.  

25.	The claimants place reliance on some of the work which Leboeuf clearly did. They did work on forms of agreements for the Avisma transaction (which is the transaction which led to the Jersey matter), and they also gave some preliminary advice briefly in respect of that dispute. They were engaged in the formation of subsidiaries and affiliates through which CAIB’s activities were conducted. They were also involved in preparing powers of attorney, guarantees and other materials pursued by DCL in disclosure.    

26.	CAIB argue that it is self-evident that in the course of takings instructions Leboeuf would have obtained confidential information about the surrounding matters centrally relevant to the parent and subsidiary relationship and hence to issues relevant in the arbitration.  That seems to me plainly right.  Leboeuf seek to play down to a degree the extent of what they did, in one case, for example, saying they only supplied a standard form precedent. That seems to me to be an observation that is wide of the mark and unattractive. One would expect the files of Leboeuf to contain a substantial amount of surrounding and confidential information, for example as to the rationale for particular transactions.  Without understanding the nature of the commercial enterprise it is difficult to see how they could perform professional services to the high standard which a firm with Leboeuf’s reputation is used to giving.

27.	It is clear that DCL seek disclosure of a substantial number of documents relating to a significant number of transactions in which Leboeuf acted.  

28.	For Leboeuf it is argued that these matters are all now some years old, some taking place as long as nine years ago.  It is suggested that there is no evidence to show specific relevant confidential information that might assist DCL, and it is suggested that disputes about corporate identity, responsibility and other matters relevant to piercing the corporate veil have already been aired in the arbitration pleadings, the hearing so far, and the correspondence. They submit that significantly they have also been aired in public in the US.  I reject that argument.   There was also a suggestion that some of the claims being put forward by DCL in the arbitration were not perhaps central to the dispute, but CAIB must live with the consequences of the claims it makes in the arbitration.  Furthermore, what may now have been disclosed or made public is not the privileged and other material produced and generated from the interaction of solicitor and client which is at the heart of the concerns expressed by CAIB.  

29.	So the claimant, it seems to me, has clearly shown that Leboeuf have confidential material at the heart of the corporate veil claims and have so satisfied the first requirement.   

30.	Mr Hoyle’s best point, but more relevant to the second question, is that, in contrast to some of the cases where, for example, a lawyer moves from one firm fighting one side of a case to the other side, Leboeuf were here engaged in transactions carried out some years ago.  The dispute is different from, for example, Mr Marriott and his colleagues moving from Speechly Bircham to Leboeuf.

Have the solicitors shown that there is no risk of disclosure?  Risk is used in the sense of real and not necessarily substantial, but not theoretical or fanciful either.

31.	I first set out the position within Leboeuf’s London office.  Those who joined Leboeuf from Debevoise & Plimpton  with Mr Marriott are Miss Ruff, who joined as a partner, Miss Cox, Mr Gal, Mr Francis and Mr Geuther.  The last three are no longer involved in the arbitration and will not be working on it further, but they have had some past involvement.  Leboeuf is of course a very large firm, but in London it appears to have 20 partners and some 47 other lawyers; in Moscow it has 5 partners and 28 lawyers.  Five of the 20 London partners are litigation partners, and Mr Marriott QC and perhaps now Miss Ruff are one or two of these.  Two of those litigation partners, Mr Sharp (who is also the London managing partner) and Mr Waldron, worked for CAIB to some extent, as did Mr Irving, a senior associate who is in the same position but is about to leave.  Apart from the substantial number of people working in Moscow and in other jurisdictions, there are also two other partners in London, Mr Richmond and Mr Zimler.  Mr Richmond is a corporate partner, Mr Zimler works both in London and in Moscow.  He is, as I understand it, also the managing partner in Moscow.

32.	All the members of the Leboeuf London office work in the same building, and of course one takes it for granted that solicitors work closely together.

33.	What measures have been taken to deal with the risk of disclosure or misuse?  By a fax of 27th July which, for reasons that seem to me immaterial, either did not reach or was not addressed promptly by Leboeuf, Speechly Bircham wrote, having been informed of the change of representation, in courteous terms, drawing attention to the existence of what they saw as a potential conflict of interest.  On 1st August Leboeuf replied saying, amongst other thing:

“We are at present looking into the alleged conflict of interest, and shall revert to you shortly. In the meantime and for the avoidance of doubt, please would you confirm which of your clients you allege we have previously acted for.”

34.	Speechly Bircham responded that Leboeuf had acted for CAIB and for CISEG.  Leboeuf replied on 4th August:

“You allege that Leboeuf has previously acted for CAIB and CISEG, and that there is a conflict of interest. We confirm that Leboeuf has previously acted for CAIB, however, it has not previously acted for CISEG.”

	Leboeuf refer to the termination of the fiduciary relationship with the end of the client relationship.

35.	Speechly Bircham then wrote on 5th August:

“You confirm you have previously acted for CAIB, but deny having acted for CISEG. Our clients have provided us with a number of your invoices addressed to CISEG and in which CISEG is identified as your client.”

	They go on to address the issues, adding this observation, with which one can feel sympathy:

“The impossibility of your position is demonstrated by the fact that our clients will wish to assert legal advice privilege over certain correspondence of which your client is seeking disclosure and yet which is already in the possession of your firm.”  

36.	On 9th August there was a substantive reply from Mr Greenwood of Leboeuf, the partner charged by the managing partner Mr Sharp with looking into this matter.  He says this:

“Plainly, a mistake was made in this office with respect to the conflict search and we have caused another search to be made which has shown the matters on which Leboeuf, Lamb, Greene & Macrae represented CAIB, CISEG and CAG were closed in July 2002.

So far as the representation of DCL-KF Corporation is concerned, as you know, Mr Marriott was retained while a partner in Debevoise & Plimpton...”

	They then deal with the arbitration and go on to say that Ms Ruff, who had been working with Mr Marriott on this arbitration, also joined the London office, as on 5th July did Miss Joanna Cox.   There is then reference to the two other associates, Mr Gal and Mr Geuther:

“…both of whom had worked at various times on [the matter]…whilst employees of Debevoise & Plimpton…  Neither Mr Geuther nor Mr Gal has been involved with the DCL matter for several months; and it is not intended that they should work on it now.  

Before Mr Marriott joined the firm…he enquired of [Leboeuf] whether any conflict of interest would exist were DCL to ask him to continue to represent them.  He was informed, erroneously as it now appears, that there was no conflict of interest or issues as to confidentiality. Accordingly, Mr Marriott had no idea at all and neither had Ms Cox or Miss Ruff that Leboeuf had in fact represented your clients.  

It follows that [they] had no idea that there were documents in [Leboeuf’s] possession…  It follows that none of those documents have been seen by [them]...  Moreover, a search made of the records reveals that no one within [Leboeuf] has accessed these files since 1 July 2005 whether electronically or in hard copy.  

There has been no breach of confidentiality and there is no risk of any breach of confidentiality.”

Mr Marriott and his colleagues being unaware of these matters.

37.	It is right to say that Mr Marriott and his colleagues took care to seek to identify in advance whether or not there was any risk of conflict of interest, and no criticism attaches personally to any of them.  Further correspondence led to this application.

38.	Those responsible for the matter at Leboeuf, having identified the failure in the conflict system – what had happened was that the conflict search had included present clients and adverse parties but not former clients – then sought to deal with the matter by erecting on the evening of 5th August, about a month after Mr Marriott’s team had joined, what they describe as an “ethical wall”, sometimes less attractively described as a “Chinese wall”. The wall initially prevented Mr Marriott and his team from having access to any relevant files, and later in September this was extended to all employees.  Mr Wilkinson, the partner at Leboeuf by then dealing with the matter, who has produced two witness statements in this case, checked the system and found it wanting in one respect, but that was rectified.  Criticism is made of the fact that that flaw existed, but it seems to me to be some measure of the care with which Mr Wilkinson was addressing the issue that he took the trouble to check and identify the error and put that right.

39.	CAIB say that this false start was not reassuring.  I agree, but in the real world of professional practice it is a not untypical example of lawyers failing to identify a conflict of interest and then responding rather slowly until the problem is identified.

40.	Further light on what was going on at Leboeuf is shed by the witness statement evidence.  I have witness statements from Mr Marriott, Miss Ruff and the other members of their team, all in substantially similar terms.  Mr Marriott records the sequence of events by which he came to join Leboeuf and says:

“…neither I nor any of my team knew that CAIB was a former client of LLGM until Messrs Speechly Bircham brought it to our attention…  None of us had any idea that there were any documents produced for CAIB in LLGM’s possession, still less any that allegedly relate in any way to the matter at issue in the LCIA Arbitration. 

It follows that neither I nor any of my colleagues who joined me…would have had any reason to enquire after any documents or to request any enquiries to be made… I simply did not know the documents existed.”

41.	 “I do not accept He then goes on to refer to the steps which he took to raise further enquiries with the conflicts department at Leboeuf in New York.  He describes how a team was asked to take precautions with immediate effect.  He was informed by Mr De Carmine, an executive director (who has also produced a witness statement) that, as at 5th August, an ethical wall had been put in place, the effect of which was that neither he nor his colleagues working in the arbitration could have access to the hard copy documents from former clients, which will have been archived, nor to any documents held electronically, and he goes on to give further details about that.  He says there has been no breach of confidentiality and submits in fact that there is no risk of that.  There are substantially similar witness statements from what in some of the cases are described as the potential disclosees.  What then of the potential disclosers?

42.	I have witness statements from a number of those concerned.  Mr Wilkinson, the partner by this stage dealing with the matter, describes the conflict procedures which exist within Leboeuf, and explains how the conflict error came about.  He describes the erection of an ethical wall, which is part of a policy that has been established at Leboeuf, he understands, for many years, and has certainly been there since before 1987.  The procedure is set out in an exhibited e-mail of 7th July.  The three main steps are that the wall provides for software to prevent access to any electronic documents relating to restricted matters.  A matter number is used in archive management software to prevent given lawyers from being able to retrieve any files.  As a further precaution, those files are physically stamped as being restricted.  He then goes on to describe the other work done internally to draw attention to the importance of such confidential material not coming to the attention of anybody, particularly those in the team working on that arbitration.

43.	The statements, which it is common ground are accepted to be true, and the supporting material make it clear that Leboeuf have a conscientious and sophisticated ethical wall system, as one would expect from a firm of their standing.  It is also clear that what I will call the Marriott team, all of whom have sworn witness statements, would not seek access to any of that material, but that, if they did, they would not get it.  

44.	There is a need to have regard to what it is that those particularly in the London office would have available should they be minded to disclose, or, as the case is realistically put at its highest, inadvertently let slip in some way confidential information belonging to CAIB.  I have witness statements from Mr Zimler and from Mr Richmond, the corporate partner.  Mr Richmond’s witness statement is in substantially similar terms so far as the transactions he was concerned with as that of Mr Zimler.  Mr Zimler says that the firm began to work for Credit Anstalt in the mid nineties.  They advised on several share purchase or share sale transactions involving foreign clients.  He was the responsible partner for most Credit Anstalt matters because a Mr Grant had introduced them to Credit Anstalt and he had supervised the work performed by the Moscow lawyers.  He says that he recalls various names of CAIB companies.  He says he does not recall the overall structural relationship of those entities to the parent.  He says he does not recall “if we had access to this information or if our files would contain it.  Generally we worked on discrete assignments from time to time.  We were not general counsel to Credit Anstalt and I believe they worked with other law firms here, including Perry Roberts, Owen and Chadbourne Park”.  Some emphasis is placed on the fact that Leboeuf, unlike those other firms, are not parties to litigation in the United States relating to those events.  

45.	Mr Zimler then deals with Avisma and other matters, all substantially on the basis that he has no present reliable recall of the matters with which he had been entrusted during those years.

46.	In the interests of keeping this judgment tolerably short, I am not going to quote further from those witness statements, other than to refer to Mr Sharp, who is a litigation partner, as I said earlier.  He says that he recalls, but only in the most general terms, that his firm acted for Credit Anstalt in the late 1990s.  He says that Mr Zimler introduced Credit Anstalt to them and that he was being asked to become involved in what was potentially a large commercial dispute.  He says that he recalled the seasonal timing.  He said he had to make urgent decisions regarding resources, because he had received instructions on other matters at the time.  He said that a few weeks into the New Year he took a call from an executive at Credit Anstalt, who apologetically explained that he had been required to transfer the case to another firm for a relationship reason.  He says as regards the Avisma dispute that he remembers very little and the matters set out by Mr Kendall prompt no further recollection.  He suggests that his lack of recollection is due to the fact that he was instructed only for some two and a half weeks and apparently did not get to grips with the matter.  He also says that he has no recollection at all of what his firm did in relation to other matters identified in Mr Kendall’s witness statements.

47.	 The case for Leboeuf, who have the burden of establishing the absence of risk (in the terms I identified earlier) places emphasis on the existence and extent of the ethical wall and the unquestioned integrity both of those engaged on the case and also of those who had received potentially confidential information.  Leboeuf stresses that these matters happened a long time ago; not that that makes them unimportant because they are of course directly relevant to the timescale of the arbitration, but because of the effect on memory.  Mr Hoyle says that the material is not the stuff of gossip (borrowing an observation from Timothy Walker J), and points to what he submits is the absence of any risk in the real world that confidential information will be disclosed.

48.	Mr Andrew Lydiard QC, for CAIB, says that the provisions that have been made are inadequate.  There is no formal restraint on the Marriott team or on others.  In particular he focuses on the fact that there is a concession in the letter of 24th August from Leboeuf that it would be impracticable to place formal restraints because of the need to conduct the firm’s business in a comparatively small firm.  He focuses on the lack of physical separation between the disclosers and the disclosees and points out, correctly, that this was a consideration to which the court attached importance in the case of Koch, to which I have referred, and also in the decision of Halewood v Addleshaw Booth. He says that there is a continuing risk of disclosure, notwithstanding what is proposed, and he emphasises that the starting point needs to be, as was emphasised in Bolkiah, the fact that, by its very nature, information moves within a firm.  He emphasises the risk of inadvertent disclosure and says that it is not his job to identify in practical terms how an inadvertent leak of information might happen, and he relies upon the observations of Laddie J in Young v Robson Rhodes to this effect:

Mr. Malek's suggestion that Mr. Pollock must give examples of instances where a harmful inadvertent leak of information could take place. Not only do the plaintiffs not know how many PKF personnel are to have been involved in one way or another… 

	He then identifies a series of unknowns, but adds:

“Furthermore, even if all these factors were known to the plaintiffs, it would still be unrealistic to ask Mr. Pollock to describe an example of a damaging and inadvertent leak. It is impossible to tell in advance how mistakes might be made. The approach to be adopted by the court is to ensure that even if there are mistakes, no additional risk of damage is inflicted on the former client. Such damaging mistakes can occur when potential disclosers and disclosees are in regular and working contact with one another. The fact that there are fewer potential disclosers here than in the Prince Jefri case may alter the scale of the risk, but does not mean that it is fanciful.”

49.	He points out that in Bolkiah an injunction was granted even though KPMG had engaged different people, different servers, and ensured that the work was done in a secure office in a different building, and re-emphasises Lord Millett’s observations about that.  He submits that, although KPMG was a much larger organisation, the same problems feature in this case – a relatively small group of people working in the same London office and having contact with Moscow, with a number of people working in the same litigation department as professional colleagues.

50.	He says that, apart from the ethical wall, Leboeuf’s case rests essentially on evidence sworn for that purpose by members of staff engaged on the relevant work, and there is a need to bear in mind the risk of inadvertent disclosure.

51.	He also drew the court’s attention to some observations of Neuberger J (as he then was) in Halewood, to which I have made reference, in which the judge said this:

“There is the evidence from Mr Robinson himself that he retains no confidential information, and would not pass on any which may come to mind in the future. I have already indicated my view on that point, and that while his honesty is not to be doubted, he may recall and information may pass the risk exists, and the risk is more than theoretical, but not by a great margin. Further, his evidence has to some small extent been called into question…”
	
52.	That latter consideration is not present here, but the judge also approves an observation in another case by Lightman J: 

“Common sense requires recognition that not all confidential information acquired by a solicitor will remain in the mind of the solicitor or be susceptible of being triggered as a recollection after the lapse of a period of time.”

53.	Mr Lydiard also points to the differences between the case of Koch, where only one individual was at risk, and this case.  Here what has passed across is not just one lawyer but in a sense a databank and a number of lawyers in the immediate vicinity of the potential disclosees. 

54.	At the end of the argument I postponed judgment for a few days, as I wanted to be clear quite what further protection was being offered.  Mr Hoyle, on behalf of Leboeuf, had indicated in argument that his clients were prepared to give undertakings if those which had been offered in the correspondence were felt to be insufficient.  Having identified the need for clarity in this area, I asked for each side to tell me what, if any, undertakings would be offered and might be acceptable.

55.	What has happened is that I have received from Leboeuf an offer of undertakings, which Mr Hoyle has now made clear are undertakings offered to the court, that:

(1) Leboeuf will issue an instruction to partners and staff formerly involved in CAIB’s work that they are not to discuss that work with any member of the arbitration team or amongst themselves.  Evidence has already been given by the persons concerned that they have not and will not discuss the restricted matter with the arbitration team.  

(2) Within seven days of today’s date, Leboeuf will cause changes to be made to its working arrangements so that the arbitration team will not occupy office space on the same floor as those who had previously worked for CAIB and are still with the firm: Mr Sharp, Mr Waldron, Mr Greenwood, Mr Zimler and Mr Richmond; the last two of whom are already physically separate from the arbitration team.  

56.	Mr Lydiard’s response to that is to draw attention to the previous undertaking, which was:

“We have not imposed any formal restraint in respect of discussions…either within our London office or elsewhere as this would be impractical for the conduct of the firm’s business.  However, we can confirm that Mr Marriott’s Team have not had any discussions regarding the content of the work done by any relevant lawyer…or staff member within our firm, and they undertake not to do so.   Relevant lawyers and staff members in the firm have been briefed about this situation, and similarly undertake not to discuss our representation of CAIB et al with Mr Marriott and his team.”

57.	He goes on to suggest that the first undertaking offered does not add anything to what has previously been offered.  He submits that the effect of the second undertaking will be to have minimal impact on the risk of disclosure.  He says that Leboeuf do not propose to introduce any organisational separation between the two teams.  The Marriott team will remain part of the litigation department, of which those who advised CAIB are members.  He then goes on to set out the other reasons why his clients see that arrangement as unsatisfactory.

58.	As has repeatedly been said, each case turns on its own facts.  This is not a balancing exercise, and comparison of the facts of this case with those of others is not helpful.  Some cases have greater numbers of potential disclosers, others fewer.  It is not helpful to navigate one’s way through simply by extrapolating from the facts of a whole series of cases.

59.	In my judgment, provided formal undertakings can be put into place in terms acceptable to the court following further submissions from counsel, Leboeuf will just have succeeded in showing that the risk is on the theoretical side of the line.  The obligation and the burden on Leboeuf is of course a heavy one, but the ethical wall is as adequate as any. The absence of a wall at the outset, if one accepts, as everybody does, the truth of the witness statements, did not result in the arbitration team learning anything at all about CAIB.  There are three people working closely with Mr Marriott and his colleagues who had information at some point from CAIB.  Memories can be revived, and I accept the force of what Mr Lydiard says in relation to careless talk based on the authorities to which he referred me.  There are inevitably accidental disclosures occurring in unforeseeable ways in any law firm. But the work here was done some years ago.  It is transactional work, not likely to rush to the front of the mind in the same way as what litigators would see as the rather more exciting matters with which they deal.  The absence of physical separation is a concern, so far as inadvertent disclosure is concerned, which can be allayed by undertakings in appropriate terms.  But, above all, where one has the testimony of these lawyers as to how they are going to conduct themselves and the ethical walls, and weighs that up against the risk of careless talk, it seems to me that the solicitors will, after giving undertakings to the court which they know to be enforceable by contempt proceedings, keep confidential whatever they can remember. 

60.	Two considerations, it seems to me, tip the balance. The first is that this is a situation involving information relating largely to transactional matters conducted some years ago with the exception of the brief Avisma involvement.   As I have said, this is distinct in terms of risk of disclosure from the situation which arises when someone with current knowledge of a piece of litigation switches to the other side.

61.	The second consideration is this.  The Court of Appeal in the case of Koch gave guidance, and I have referred to the judgment of Clarke LJ (as he then was).   That guidance included the judgments of Tuckey LJ and Ward LJ.  Ward LJ placed emphasis on the particular importance of justice being seen to be done, something I bear in mind in requiring undertakings to be given to the court.  Tuckey LJ said this at paragraph 53:

“Since the decision in Prince Jefri Bolkiah v KPMG there have been a number of cases in which circumstances such as these have had to be considered by the courts. Lord Justice Clarke has referred to some of them. In these days of professional and client mobility it is of course important that client confidentiality should be preserved. Each case must depend upon its own facts. But I think there is a danger inherent in the intensity of the adversarial process of courts being persuaded that a risk exists when, if one stands back a little, that risk is no more than fanciful or theoretical. I advocate a robust view with this in mind, so as to ensure that the line is sensibly drawn.”

62.	I have paid particular regard to what Tuckey LJ says in reaching the decision to which I have come. In view of the evidence put forward, I am conscious that, if I reached any other conclusion, it would be coloured by my reservations about the appropriateness of Leboeuf’s decision to act rather than by any considered application of the law of breach of confidence. The court in this case is concerned with application of the law of breach of confidence and not with expressing views about wider considerations.  Leboeuf decided that they were free to act against former clients of the firm, even though the dispute involves a consideration of work they themselves did for those clients in the late 1990s and an attack on the honesty and integrity of their former clients in those very transactions.  In reaching its conclusions the court is not approving or validating Leboeuf’s decision to assume and pursue the conduct of this case.

63.	I will therefore refuse injunctions, for the reasons that I have given, provided that I am satisfied with the detail of the undertakings offered to the court by Leboeuf.  I invite submissions from counsel accordingly.