Court of Appeal rejects the French Blocking Statute: the French must disclose!

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Summary: The Court of Appeal has handed down a judgment preventing French parties to English litigation from relying on the so-called “French Blocking Statute” to resist disclosure and provision of information in English legal proceedings.The Court of Appeal held that the English courts have full jurisdiction to apply their procedural rules to parties in proceedings before them, and therefore have a discretion to make directions in respect of foreign parties even where that might cause the parties to breach a foreign criminal law.

Introduction

On 22 October 2013, the Court of Appeal handed down a judgment preventing French parties to English litigation from relying on the so-called “French Blocking Statute” to avoid their obligations to provide information and disclosure in English legal proceedings. The judgment was given in two appeals together: National Grid Electricity Transmission Plc v Alstom & Areva; Secretary of State for Health v Servier.

The Statute purports to prohibit any French party from disclosing commercial information in foreign litigation.  It was introduced some 45 years ago, ostensibly to protect French citizens and corporations from the perceived excesses of the discovery processes in US claims. The statute carries criminal sanctions of up to 6 months imprisonment or a fine.  However, the fact that the issue has never been addressed before a higher court suggests that  French parties litigating before the English courts choose not to invoke the Statute. This might be seen as indicative of how unlikely it is that the French authorities will in fact seek prosecution.

The Two Appeals: National Grid and Servier

By coincidence, both the orders on appeal in this judgment were made by the High Court in competition damages actions.  National Grid’s case is a follow-on damages action against a number of defendants arising out of a cartel finding by the European Commission.  The Servier case concerns an alleged anti-competitive agreement not to challenge a patent that was subsequently found to be invalid.  In the former case the French defendants resisted compliance with an order for specific disclosure through reliance on the French Blocking Statute; in the latter case, the defendant relied on the same statute to resist responding to an application request for further information.

In both of these sets of proceedings the High Court ordered the defendants to provide the documents/information in question, and were not persuaded that the existence of the French Blocking Statute provided a good reason for non-compliance.  In the National Grid case, Mr Justice Roth stated that it was “virtually inconceivable” that the French companies would face prosecution for co-operating with the English court and providing disclosure.

The issues before the Court of Appeal

Both cases were heard together before the Court of Appeal.  There were two issues under consideration:

1.   Was there a real risk of prosecution in France such that the High Court had exercised its discretion wrongly in ordering the French Defendants to provide information and disclosure?

Lord Justices Rimer, Beatson and Laws were unanimous in their conclusions.  In the leading judgment, Lord Justice Rimer found emphatically that the exercise of discretion by the High Court judges was “unimpeachable”.  There was no evidence of any prosecutions in France under the French Blocking Statute, barring one highly exceptional case involving the use of deception by a French lawyer without the protection of a court order (Christopher X).

2.   Was the English court prevented from making a direct order against the French Defendants because such evidence could only be obtained through a protracted “court-to-court” procedure set out in Council Regulation (EC) No 1206/2001 of 28 May 2001 (the “Evidence Regulation”)?

Lord Justice Rimer “unhesitatingly” rejected the appellants’ submissions that use of the Evidence Regulation was mandatory.  Despite the fact that the orders made might expose parties to a risk of prosecution in France, the English court was still entitled to make them, although it had a discretion as to whether to do so in the particular circumstances.

Lord Justice Rimer agreed with the High Court’s conclusion in that use of the Evidence Regulation would be likely to be “slow, cumbersome and inadequate”, and that a direct order for disclosure was “plainly the more appropriate course” (para 104), despite the theoretical risk of prosecution to which it exposed the French defendants.

BLP Opinion

As a result of the Court of Appeal judgment, French parties to English civil litigation cannot successfully invoke the Blocking Statute as a basis to avoid the provision of disclosure and information in that litigation.  If you submit to the jurisdiction of the English court, you must play by the rules.

The Court of Appeal refused permission to appeal to the Supreme Court.  However, the appellants appealed directly to the Supreme Court on 6 November 2013, and have asked that the matter be considered on an expedited basis.  The legal communities on both sides of la Manche watch this space with interest.

A version of this article was published in the November/December 2013 edition of The Commercial Litigation Journal at page 11.

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