Disclosure Pilot Scheme: meaning of “control” over third party documents
22 September 2021
In proceedings subject to the Disclosure Pilot Scheme, a third party’s willingness to cooperate in the provision of potentially relevant documents did not amount to a party’s “control” over those documents. Even if a party does have “control” over third party documents, a court will be hard pressed to circumvent the normal disclosure process:Unicredit Bank AG v Euronav NV  EWHC 1753 (Comm)
Unicredit financed the purchase of fuel oil by Gulf, which was shipped by a vessel owned by Euronav. Unicredit claims that Euronav discharged the cargo without its authorisation.
Euronav applied to the court for an order that Unicredit and Euronav sign a letter of consent to Gulf providing documents before disclosure was due to take place. Euronav argued this application was necessary because Gulf had indicated it would provide the documents if both parties consented. Euronav also said that the restructuring of Gulf meant there was a risk that any subsequent insolvency might make the documents more difficult to obtain.
The Disclosure Pilot Scheme under Practice Direction 51U of the Civil Procedure Rules (PD 51U) applied.
Just and convenient
The court first considered whether it was “just and convenient” to exercise its discretion to require Unicredit to consent to early disclosure.
The court emphasised that, for the purpose of disclosure under PD 51U, documents should be responsive to “only those key issues in dispute, which the parties consider will need to be determined by the court with some reference to contemporaneous documents” (ie Issues for Disclosure), the purpose being to isolate the issues in dispute, limit the scope of disclosure to those issues, and reduce the amount of documents, time and costs associated with disclosure.
In order for it to be “just and convenient” to grant Euronav’s application and bypass the disclosure process under PD 51U, the court held that: (i) Gulf’s documents must be relevant to the Issues for Disclosure; and (ii) it must be desirable for Gulf’s documents to be provided at this stage of the proceedings (ie prior to disclosure).
The court held that the relevance requirement had not been satisfied for the following reasons:
- The categories of documents sought by Euronav were incredibly broad. In circumstances where the Issues for Disclosure have not been agreed between the parties, it would be pre-emptive for the court to grant an order requiring the provision of documents which are potentially irrelevant to the issues in the dispute.
- Under PD 51U, Euronav was not entitled to Extended Disclosure and, in particular, to Model D or Model E disclosure (ie the most extensive search-based disclosure models). Moreover, where Model D or Model E does apply, it only captures “documents which are likely to support or adversely affect” the disclosing party’s claim or defence. The court therefore considered the extensive nature of Euronav’s disclosure request to be inconsistent with the requirements under PD 51U, particularly in circumstances where the issues were yet to be agreed between the parties.
The court held that it was not desirable for the documents to be provided at this early stage.
While the court acknowledged the risk that Gulf’s restructuring might result in documents being unavailable in the future, the court did not believe there to be sufficient evidence to justify that this was a real risk.
Defining “control” of documents
The court also considered whether Gulf’s documents would be disclosed as part of the normal disclosure process under PD 51U. The court examined whether Unicredit had ‘control’ over Gulf’s documents for the purposes of PD 51U.
Under PD 51U, ‘control’ is defined as follows:
“‘Control’ in the context of disclosure includes documents: (a) which are or were in a party’s physical possession; (b) in respect of which a party has or has had a right to possession; or (c) in respect of which a party has or has had a right to inspect or take copies”.
Euronav submitted that Gulf’s documents were in the ‘control’ of Unicredit because: (i) there was an arrangement or understanding that Unicredit could access the documents with Gulf’s consent; and/or (ii) Unicredit was entitled to the documents pursuant to the financing agreements entered into between Unicredit and Gulf.
On (i), Euronav submitted, relying on Schlumberger Holdings Limited v Electromagnetic Geoservices AS  EWHC 56 (Pat), that where there is evidence that a ‘general consent’ has been given by a third party to search for documents which are disclosable in litigation, such an arrangement or understanding exists. The court, after considering the factual evidence, held that Gulf’s willingness to cooperate did not equate to its consent to Unicredit freely accessing documents sought by Euronav (distinguishing Schlumberger as being very different).
On (ii), the court held that some, but not all, of Gulf’s documents might be caught by the relevant provisions of the financing agreements. However, it could not be said that the broad range of documents requested by Euronav were within the ‘control’ of Unicredit.
The court concluded that, where the claimant has ‘control’ over some or all documents held by a third party, they will be subject to the normal disclosure process. If the claimant does not have ‘control’ over some of the third party documents sought, there is no good reason why the court should circumvent the rules on third party disclosure orders. The application ‘cut across’ the entire scheme of the Practice Direction.
This case concerned a litigant keen to get early access to documents held by a third party. The ruling shows the court being unwilling to deviate from disclosure rules where, as here, there was insufficient evidence that the other litigant had ‘control’ over the documents, the request was very broad and there was insufficient risk of the third party becoming insolvent.
The ruling also emphasises that a third party’s willingness to cooperate does not necessarily mean that a litigant has ‘control’ of all relevant documents held by that party for the purposes of English court disclosure rules.
Now in its third year, this case highlights some of the key aspirations for the Disclosure Pilot Scheme which, as the court put it, is intended to create a “new, proportionate culture of disclosure and to strike a better balance between wider disclosure, where appropriate, and the aim of reducing the amount of unnecessary document disclosure”. To this end, parties should not make broad disclosure requests, but should instead tailor requests to only capture documents responsive to the Issues for Disclosure.