In the recent judgment of In The Matter of the Kuwait Ports Authority (FSD 118 of 2021, unreported, 8 March 2022, Parker J), the Cayman Grand Court considered the scope of its jurisdiction under the Confidential Information Disclosure Act, 2016 (the “CIDA”) to permit the disclosure of certain confidential documents to a related third party for use in foreign arbitral proceedings.
The court permitted the disclosure of confidential documents obtained by the Kuwait Ports Authority (“KPA”), in its capacity as a limited partner in The Port Fund L.P. (“TPF”), to the State of Kuwait (“Kuwait”), of which KPA is an emanation. KPA is a party to various proceedings before the Grand Court in connection with its investment in TPF and Kuwait is the defendant to an ICSID arbitration concerning TPF brought by Maria (Marsha) Lazareva (the “Arbitration”), a former director of the general partner of TPF (“Port Link”). Kuwait had requested the documents from KPA with a view to deploying them in the Arbitration.
The judgment confirms that the Grand Court will take a broad approach to the exercise of its discretion under the CIDA to further what it considers to be the interests of justice.
While the CIDA has been the subject of several reported judgments in the Cayman Islands since its enactment in 2016, its application has largely been procedural and uncontroversial. However, this decision provides helpful guidance as to the circumstances in which the court will permit the disclosure of confidential information to third parties.
Relevant provisions of CIDA
Section 3(1) of the CIDA prescribes the situations in which the disclosure of confidential information belonging to another will not constitute an actionable breach of the duty of confidence. Section 3(2) provides a defence to otherwise actionable breaches of confidence if the person disclosing the information acted in good faith and in the reasonable belief both that the information was substantially true and that (among other circumstances) it disclosed evidence of wrongdoing.
Section 4(2) gives the court jurisdiction to permit the disclosure of confidential information where a person intends to or is required to “give evidence in, or in connection with, any proceeding” and the evidence consists of or contains confidential information. Section 4(2) is intended to provide a gateway for the release of confidential information to promote the public interest in the administration of justice (in both Cayman and abroad).
KPA is a Kuwaiti state-owned entity, and a limited partner in TPF. KPA obtained a significant number of documents from Port Link by exercise of its statutory rights under section 22 of the Exempted Limited Partnerships Act (which provides limited partners a statutory right to information regarding the condition of the partnership). Those documents were relied upon by KPA to commence proceedings in the Cayman Islands against Port Link and, subsequently, other related defendants. Kuwait requested certain of those documents from KPA with a view to Kuwait deploying them in the Arbitration. KPA applied to the court under section 4 of the CIDA for permission to release the confidential documents to Kuwait. The application was supported by Kuwait and opposed by Port Link and Ms Lazareva (all of whom were separately represented).
Why is this case relevant?
This case was novel in that the applicant, KPA, was not itself the entity intending to give evidence, nor is it even a party to the Arbitration. Rather, as Parker J observed, KPA “is not under any legal obligation or compulsion to share the documents with Kuwait. It has been requested to share them by [Kuwait], understandably wishes to comply if it can lawfully do so, and intends to share them for the purposes of section 4 CIDA”.
Port Link and Ms Lazareva objected to KPA producing the confidential documents to Kuwait for several reasons, including that:
- On a proper construction of section 4(2), KPA is not a person who intends to “give evidence in or in connection with any proceeding” and therefore lacks standing under that provision. To “give in evidence” is defined as “to make a statement, produce a document by way of discovery, answer an interrogatory or testify”, whereas KPA simply intended to pass confidential information to Kuwait for Kuwait’s use in the Arbitration, without KPA giving any statement, providing discovery or testifying in any proceeding.
- Kuwait owed no duty of confidence to TPF or its limited partners, whose individual rights to enforce the duty of confidence should be respected by the court. It was contended that the disclosure order sought could expose TPF to indemnity claims by Ms Lazareva, which would, in turn, affect the limited partners.
- KPA has no legitimate partisan interest of its own to protect in seeking to disclose the documents to Kuwait.
- The section 3(2) gateway for disclosure is not engaged because the constituent elements of the cause of action do not include wrongdoing.
- In the exercise of its discretion under section 4(2), the court should refuse to permit disclosure because:
- KPA is under no duty or compulsion to provide the documents to Kuwait; it merely wishes to assist its parent, Kuwait, and will suffer no real or substantial prejudice it is does not.
- There were alternative means for Kuwait to seek disclosure of the confidential documents (in particular, by way of a cross-border request for judicial assistance) of which Kuwait could have availed itself at any time during the three year Arbitration. Kuwait instead waited until months after the final hearing in the Arbitration, and while the award is reserved, before seeking the documents.
- The arbitral tribunal had previously ordered, over a year earlier, that Kuwait’s arguments regarding the potential relevance of the confidential documents were insufficient to justify the postponement of the final hearing of the Arbitration, and indicated that it was disinclined to admit further documents absent compelling reasons. Accordingly, the disclosure was unlikely to serve any useful purpose in the Arbitration.
In granting the relief sought by KPA, Parker J held that section 4(2) “provides an in-built discretionary filter for the Court to balance competing rights and interests in the exercise of its discretion” and is to be construed broadly.
The court rejected the submission that if KPA was intending simply to share the confidential documents with Kuwait it could not avail itself of section 4(2) because it was not “giving evidence”. This, Parker J said, would lead to an “anomalous outcome” which cannot have been the legislative intention. Parker J held that it would not be appropriate to constrain the meaning of the words in section 4(2) so as to limit their application only to those parties who themselves intend to “give evidence”, or to only doing so in the Cayman Islands; the relevant foreign proceedings may establish different routes by which evidence can be received than those under the Grand Court Rules, and the words “or in connection with” imply a wide variety of circumstances in which evidence can be provided (-). Parker J further held that the definitions in section 4(1) should not be read so at to define exhaustively the particular types of evidential material that may be provided.
The court found that, having been asked by Kuwait to disclose the confidential documents, KPA had a legitimate interest in allowing the duties of confidence it owed to be set aside and to facilitating the administration of justice. Parker J held that, if the confidential materials were not provided, Kuwait and KPA would suffer prejudice, although he did not clarify how KPA, as distinct from Kuwait, would be prejudiced in circumstances where it is not a party to the Arbitration.
In relation to the court’s discretion, Parker J observed that (i) disclosure might avoid the possibility of inconsistent outcomes between the Arbitration and Cayman litigation involving KPA (despite none of the parties to the Arbitration and litigation being parties to the other), and (ii) even though the arbitral tribunal was disinclined to admit further documents, the court’s jurisdiction was not affected by whether Kuwait actually proves able to use the documents in the Arbitration and the option should be kept open. The court also did not regard it as significant that Kuwait failed to seek documents within the Arbitration itself or via alternative means; KPA had not acted so unreasonably in failing to pursue other avenues that the court’s discretion should not be exercised.
The court held further that section 3(2) of the CIDA was engaged, and that KPA was permitted to disclose “confidential information on wrongdoing” to Kuwait because it satisfied the threshold requirements of (i) acting in good faith and (ii) reasonably believing that the information is substantially true and discloses evidence of wrongdoing.
The court took a broad, arguably generous, approach to the interpretation of section 4 in this case. The definition of “give in evidence” in section 4(1) is prescriptive, without any clear language to suggest it is intended to be non-exhaustive, as Parker J found. Despite the prescriptive definition, Parker J held that the section was intended to cover a “wide variety of circumstances where evidence can be provided”. Further, the court accepted KPA’s argument that it could provide a written statement exhibiting the relevant documents in order to fall within the parameters of the “give in evidence” definition. This is despite that definition including the words “produce a document by way of discovery”, which on its natural reading is narrower than simply producing a document voluntarily.
Similarly, the words “or in connection with”, as they appear in section 4(2), were interpreted broadly as applying not only to the “proceeding” but also the defined term “give in evidence”.
It cannot be the case that every third party will have a legitimate interest in the administration of justice (being the justice of other litigants) which warrants it being authorised by the court to provide confidential information that would otherwise constitute a breach of a duty of confidence. Rather, it appears that KPA’s legitimate interest in this case only arose because of the relationship between it and Kuwait, which suggests the relationship between the party holding the confidential information and the litigant seeking access to it will be relevant not only to the court’s discretion but also to whether jurisdiction exists under section 4. It follows that outcomes may vary depending upon the nature of the relationship between the intended disclosing and receiving parties.
The application in this case arose in novel and fact-specific circumstances, however the judgment may open the door to further applications by parties wishing to disclose confidential documents and information to third parties, whether related or otherwise, for their use in legal proceedings in which the disclosing party is not involved.
Campbells represents three defendants in the Cayman litigation referred to above to which KPA is a party. The information provided above is of a general nature only; specific legal advice should be sought concerning your circumstances.