"Of course, there is a risk that courts in the United States may decline jurisdiction in the proceedings already commenced by the plaintiffs. But I do not know how great is the risk. Until such time as indeed courts in the United States have struck out the proceedings, I think one should act on the basis that there are pending actions for the purposes of which the documents and information in question may be relevant. Moreover, even on the question of want of jurisdiction, I am convinced that evidence tending to show the whereabouts of the assets and how they have been moved might well assist courts in the United States to decide whether they should be seized with the main actions.
The second defendant may be labouring under an illusion that his application in London for an anti-suit injunction would assist him on the narrow issue before me in this summons. An anti-suit injunction, if granted, would enjoin all antagonists from resolving their disputes in any forum non conveniens. However, this court does not even pretend that it is the natural forum to try the plaintiffs’ substantive causes. I have already approved an order by consent that prevents the parties from proceeding further in Hong Kong on the main causes of action. All the steps taken by this court in this case so far are designed to aid the processes of the natural forum, wherever it may be. In my view, it is highly unlikely that an anti-suit injunction would restrict the plaintiffs’ right to seek interlocutory, ancillary or consequential relief in Hong Kong
Accordingly, I gave leave to the plaintiffs to use the relevant documents and information for the purposes of specified proceedings in the United States Bankruptcy Court and the United States District Court."
Of course we have no idea what details were provided to the Judge in Hong Kong on those submissions and it may be that he had different or better information than we have today. But the plaintiffs here require a relaxation of the implied undertaking not to use the documents for a collateral purpose nor to use the discovery of the American action in part for its amendment.
What is the meaning of "collateral"? Gee says that the "decided cases on whether or not leave should granted are simply illustrations of the application of the same general principle that the court will not release or modify the implied undertaking given on discovery save in special circumstances and where the release or modification will not occasion injustice to the person giving discovery."
The fifth and sixth defendants rely on the affidavit of Patrick C. Dunican, Jnr. In his affidavit Mr. Dunican states the following:
"An order staying the US action was entered by the Hon. Tina L. Brozman, Chief United States Bankruptcy Judge for the Southern District of New York, on January 22, 1999, for the reasons set forth in the Court’s opinion filed on December 15, 1998. The Court granted the motion for a stay of the US action on the basis of the Fifth Amendment to the United States Constitution, which stay was to expire on April 15, 1999. A copy of the Court’s Order is annexed hereto as Exhibit A."
We are not at all certain but it is possible that that date (April 15, 1999) which was provided by the District Judge in the judgment to which we have referred may have something to do with that particular date and it may well be that discovery has not been granted in the United States because the pleading of the Fifth Amendment stays the question of discovery.
Mr. Dunican goes on to say this:
"As a result of the Court’s Order to date, there has been no substantive discovery conducted in the US action.
By way of letter dated March 4, 1999, from Assistant United States Attorney, Richard F. Albert, to the Hon. Allen G. Schwartz, the United States Attorney’s Office for the Southern District of New York advised the Court that the investigation into certain facts underlying the US action "had now been terminated without the filing of any criminal charges". A copy of the letter is attached as Exhibit B.
Based upon this representation to the Court and relying on the representation made by the US Attorney’s Office, the above-named defendants have consented to the lifting of the stay imposed by the Order of the Bankruptcy Court dated January 22, 1999. An Order lifting the stay is to be filed with the Court.
On Tuesday, March 16, 1999, I appeared on behalf of the above-named defendants before the Hon. Allen G. Schwartz to request permission to file a motion for a Protective Order staying all discovery in the US proceedings pending a determination of the motion filed by the above-named defendants to dismiss the US action on the grounds of improper forum and forum non conveniens. At that time, the Court permitted the above-named defendants to file their motion by Monday, March 22, 1999. The plaintiffs have until Monday, March 29, 1999, to oppose the motion. After the above-named defendants’ reply, the Court will consider the application.
In the application, the above-named defendants will seek a stay of all discovery in the US action based upon United States Supreme Court precedent in Piper Aircraft -v- Reyno 454 US 235, 267, 102 S.Ct. 252 (1981). In that case, the Court explained that "requiring extensive investigation prior to a hearing on the forum non conveniens motion would defeat the purpose of the motion."
At the conference before Judge Schwartz on March 16, 1999, plaintiffs requested to serve limited discovery with respect to the issue of whether the New York Court has personal jurisdiction over the above-named defendants (none of which are residents of New York). The Court permitted the plaintiffs to serve the limited discovery on this issue only but stated that the Court would decide the motion for a Protective Order before a response to the discovery would be required. A copy of the limited discovery with respect to personal jurisdiction served by plaintiffs is attached hereto as Exhibit C."
We set that out because we are not at all certain even now that we fully understand the procedures of the New York Court. We can see that if the defendants have pleaded the Fifth Amendment that might lead to refusal to allow discovery. Advocate Lewis goes on to say that if discovery is stayed in the United States then no discovery should be made from this jurisdiction. Mr. Lewis drew our attention to the tests provided in Crest Homes Plc. -v- Marks [1987] 1 AC 829 where at 859 Lord Oliver of Aylmerton said this:
"My Lords, although I have, for my part, found the appellants’ arguments less than convincing, they can and do fairly say that it is not for them to advance reasons why the implied undertaking should not be released but rather for the respondents to demonstrate cogent and persuasive reasons why it should be released. To that I now turn. Mr. Henderson, on behalf of the respondents, whilst accepting the importance, as a matter of general policy, of preserving the integrity of undertakings given to the court as the price of discovery, submits that there is an equally important countervailing consideration of public policy that orders of the court should be obeyed. I accept that, but if what was in issue here was the revelation of a civil contempt in some wholly unrelated proceeding I would not for my part consider that the importance of ensuring obedience to the court’s orders outweighed that of ensuring the continued observance of an undertaking given to the court by the party obtaining discovery. Your Lordships have been referred to a number of reported cases in which application has been made for the use of documents obtained under Anton Piller orders or on general discovery for the purpose of proceedings other than those in which the order was made. I do not, for my part, think that it would be helpful to review these authorities for they are no more than examples and they illustrate no general principle beyond this, that the court will not release or modify the implied undertaking given on discovery save in special circumstances and where the release or modification will not occasion injustice to the person giving discovery."
Mr. Lewis argues that the plaintiffs want to use the information obtained here to find out further information in the United States which they have been prevented from doing by reason of the stay on discovery there. He also at one point questioned whether Abacus had any particular locus standi in this action because, he said, they are merely ancillary to the orders obtained against the fifth and sixth defendants and have no real interest in the matter. If the fifth and sixth defendants could order Abacus to release documentation then the Court should base itself on the same principle.
We cannot see that this is a matter involving prejudice. If the United States Court finds in due time that the High Court of England and Wales has jurisdiction over this matter and not the United States Court, on the basis of some documentation which implies that the proper law is there, then on the basis that the United States is forum non conveniens what possible prejudice can be suffered by the defendants? The material obtained could not be used in a further jurisdiction such as England and Wales without the leave of this Court. The proceedings in Jersey, in our view, are to police the Mareva injunction and in effect to trace assets and we are satisfied that this is a proper case to give leave to allow the documentation to be sent to America for the purposes expressed in the summons, that is:
"(b)for the purpose of proceedings in the United States Bankruptcy Court and the United States District Court entitled Armco Inc., et al -v- North Atlantic Insurance Co Ltd., et al,
98-8931-A (TLB) (U.S.B.C; S.D.N.Y.)
Civ. 6804 (AGS) (U.S.D.C; S.D.N.Y.)".
With the learned Judge in Hong Kong we need perhaps to refer to the relevant passage in Bankers Trust -v- Shapira [1980] 1 WLR 1274 where at 1275 the headnote reads as follows:
"Held, allowing the appeal and granting the order sought against the D bank, that though the court would not lightly use its powers to order disclosure of full information touching the confidential relationship of banker and customer, such an order was justified even at the early interlocutory stages of an action where plaintiffs sought to trace funds which in equity belonged to them and of which there was strong evidence that they had been fraudulently deprived and delay might result in the dissipation of the funds before the action came to trial; and that in the new and developing jurisdiction where neutral and innocent persons were under a duty to assist plaintiffs who were the victims of wrongdoing, the court would not hesitate to make strong orders to ascertain the whereabouts and prevent the disposal of such property; but that the plaintiffs should be correspondingly bound to undertake that such information be used only for the purposes of the action to trace the funds and not for any other purpose."
We believe it is in the interests of justice that we should allow the implied undertakings to be relaxed for the purposes stated because it seems to us important in the terms of the action, as it has been explained to us, not only in this hearing but in earlier hearings, that the location of the funds should be made available as soon as is convenient to the Courts in America because the Courts in America will not only have to deal with the main action if they decide to do so, but that information will surely be useful to the Court if it does in fact come to decide, in a judgment on forum non conveniens, as to whether or not the New York Court has jurisdiction to hear the action. Therefore we allow the summons as set out by the plaintiffs.
You shall have your costs of and incidental to the summons.
Authorities.
Guinness -v- Market Acquisition Consultants Ltd & Ors (1987-88) JLR 104.
Dory -v- Wolf [1990] 1 FSR 266.
Omar -v- Omar [1995] 1 WLR 1428.
Crest Homes Plc -v- Marks [1987] 1 AC 829.
Gee on Mareva Injunctions (4 th Ed’n): Chapter 19: p.384.
Bankers Trust -v- Shapira [1987] 1 WLR 1274.
Armco Inc & Ors -v- NPV Ltd & Donohue (Hong Kong Special Administrative Region, Court of First Instance, action no. 13168 of 1998).