Widening the net: non-party disclosure and the increased willingness of the English court to permit service out

11 August 2022

If a third party holds documents that would be relevant to a court case, litigants can apply for an order requiring disclosure by that non-party under s.34 Senior Courts Act 1981 (SCA) and CPR 31.17. If the non-party is not in England and Wales, permission will be needed to serve the application out of the jurisdiction.

Traditionally, it has been very difficult to obtain such permission and the court has tended to avoid making disclosure orders against foreign non-parties. However, in Gorbachev v Guriev and others [2022] EWHC 1907 the court found that there is an available gateway to seek such permission to serve out. Furthermore, where the documents sought are themselves in England, the court would be inclined to exercise its discretion to grant such permission. Although the default procedure for service of such an application would be to use the letters of request regime, this will not always be the appropriate regime and service out may be granted by the court. In line with recent developments, the English court is becoming bolder in permitting service out on non-parties and this decision increases the options for parties seeking documents from third parties.

An English law firm held documents of which the Claimants sought disclosure. The law firm had stated that the documents were held on behalf of defendant trustees based in Cyprus (the Trustees), so in April 2022 the Claimant sought and obtained an order giving it permission to serve its non-party disclosure application on the Trustees in Cyprus. The instant case was a subsequent unsuccessful application by the Trustees to set aside that order.

The case raised the question whether an application under s.34 SCA and CPR 31.17 falls within PD 6B para 3.1 (20) (Gateway 20) such that permission to serve out might be available. If yes, there would then be the second question of whether the court should exercise its discretion to permit such service out.

Gateway 20 is available where “a claim is made under an enactment which allows proceedings to be brought and those proceedings are not covered by any of the other grounds referred to in this paragraph”. Applying the Court of Appeal’s judgment in Orexim Trading Ltd v Mahavir Port and Terminal Private Ltd [2018] EWCA Civ 1660 (Orexim), the only relevant limitation on the scope of Gateway 20 is that the enactment used must allow proceedings to be brought against parties outside the jurisdiction.

Orexim is a highly significant recent authority on Gateway 20. The Court of Appeal had commented that Gateway 20 should be given a “neutral” construction, such that there is no presumption against permission to serve out. This was deemed appropriate in a globalised and digitised world, where it is no longer right to think of exercising extra-territorial jurisdiction as “exorbitant”. This comment is reflective of the changing judicial attitude to service out and is consistent with the recent addition of new gateways to PD 6B that we commented on here. The Court of Appeal in Orexim specifically stated that the English court is now “less cautious than before in contemplating service out of the jurisdiction”.

In Gorbachev the judge found that Gateway 20 was available for the non-party disclosure application as s.34 SCA is an enactment which allows proceedings to be brought against overseas parties and the application for disclosure was a “claim” within the relevant meaning from CPR 6.2. It was appropriate in the circumstances then to exercise the court’s discretion to grant permission to serve out. The Trustees’ set aside application was therefore dismissed in a decision which will be welcomed by those seeking disclosure for foreign non-parties.

This decision sits in contrast to that of Cockerill J made earlier this year in Nix v Emerdata Ltd [2022] EWHC 718 (Comm) (Nix). In Nix, the judge found that Gateway 20 was not available for a non-party disclosure application and so the court did not have jurisdiction to permit service out of a similar disclosure request to a New York law firm. Nix also addressed the hypothetical second question, finding that the court should not exercise its discretion if it did have it, because the correct route would be the letters of request regime.

Addressing this inconsistency, in Gorbachev the court found good reason not to follow Nix and to prefer another judgment specifically considering the interaction between Gateway 20 and disclosure applications under the SCA, this being ED&F Man Capital Markets LLP v Obex Securities LLC [2017] EWHC 2965 (Ch) (Obex). In Obex, it was found that Gateway 20 was available for an application under s.33 SCA (whereby a party can seek pre-action disclosure). There was no good reason to treat s.33 and s.34 SCA differently such that only one could be served out of the jurisdiction. Nothing in s.34 SCA expressly or impliedly limits its scope such that an application under it can only be brought against a party in the jurisdiction of England and Wales. It was also considered a key difference that in Nix the judge had not had the benefit of hearing submissions on Orexim.

Concerning the court’s discretion, in this case the non-party law firm and the documents sought were in England. This was a relevant distinguishing factor meaning that the court should exercise its discretion in this case even though it would not have done so in Nix. Moreover, if the letter of request route were used in this case, the substantive trial would be over before any disclosure in response would be received.

When taken together with the substantial changes to CPR 6B which will expand the gateways to include Norwich Pharmacal and Bankers Trust orders, it is clear that the court is becoming more willing to find ways to grant orders for service out on non-parties. These developments will assist users of the English court in the increasingly international world in which commercial litigation is conducted.

The English court is becoming bolder in permitting service out on non-parties and this decision increases the options for parties seeking documents from third parties