Games, candles, judicial advice and “ants in action”: the difficulties of disclosure in business and human rights litigation

It is not very often that an interlocutory decision about disclosure, IT servers and email search terms is required reading for those interested in business and human rights litigation. But a recent judgment by Foskett J makes interesting reading. Thank you to Gordon Exall for highlighting it.

The case is Vilca & 21 others v (1) Xstrata Limited and (2) Compania Minera Antapaccay S.A. (formerly Xstrata Tintaya S.A.). The background facts will be known to many. But briefly, 22 claimants seek damages following the violent suppression of protests at a copper mine in Peru in 2012. The two defendant companies were part of Xstrata – the mining group, since taken over by Glencore Plc. The Peruvian National Police are alleged to have been the primary perpetrators of the violence – in which a number of people died and others sustained very serious injuries. It is claimed that the defendant companies are liable on the basis that they incited, procured or facilitated the violence and breached a duty of care owed to the protestors. The allegations are denied. The case was listed for a 15-day trial starting in mid-June 2016. But the disclosure issues are such that Foskett J ordered that the case will not be ready by then, perhaps not even by October.

Tintaya mine, Peru (Credit: Golda Fuentes under Creative Commons)

The disclosure dispute centres around potential evidence going to the defendants’ knowledge of / involvement with the Peruvian police and other security personnel. English law requires parties to litigation to disclose documents within their control which: they rely upon; adversely affect their own case, another party’s case; or which support another party’s case. Reasonable searches must be conducted for such documents and Civil Procedure Rule 31.7 summarises factors relevant to deciding what constitutes a reasonable search. Factors include the number of documents involved, the nature and complexity of the proceedings, the ease and expense of retrieval and the significance of any document likely to be found. The defendant companies argued that the claimants’ extensive requests for searches and disclosure went way beyond what was necessary or proportionate.

The disclosure obligation in English litigation is onerous and often expensive. Therefore, disagreements as to the extent of the obligation are not uncommon. What makes Foskett J’s judgment required reading, however, is his approach to the defendants’ disclosure obligations and some of the comments that he made. Despite disclaimers that his decision is primarily addressed to the particular parties and [because of fact-specific IT issues] “should not be cited in any other case,” the judge made comments on matters of general principle of potentially wider application.

The judge rejected the defendants’ argument that their anticipated costs of the litigation (£5.2 million) were so disproportionate to the value of the claims ($250k on the defendants’ view of Peruvian law) that a more limited approach should be adopted to searching for relevant documents.[1] The judge held that, although a trial is not a public inquiry, lives were lost and this weighs heavily when deciding the appropriate extent of searches for documents – irrespective of the quantification of damages. The judge also held that, even if it is relevant to compare the defendants’ costs with potential damages, the defendants should not obtain a windfall from having chosen expensive “Rolls Royce” lawyers. Rather, the relevant comparator is “recoverable costs”. Pursuant to Civil Procedure Rule 44.3, when assessing costs an English court will disallow the recovery of costs from a losing party if the court doubts whether the costs were reasonable or proportionate. The judge did not not make further comments as to the likely recoverability of the defendants’ costs in the event that they do go on to win. But in a striking passage of potentially broader application, the judge cautioned against too simplistic a comparison of defendants’ estimated costs with claimants’ damages. He stressed that:

Unless that approach is adopted the engagement of expensive lawyers by a multinational company facing a claim by a group of those alleging injury or damage at a modest level will invariably result in the suggestion that ‘the game is not worth the candle’ and disproportion will become a self-fulfilling prophecy.[2]

Parties must show their cards in English litigation (Soldiers playing cards by candlelight by Peter Wtewael)

The judge also noted that the defendants had signed up to the Voluntary Principles on Security and Human Rights. These are a set of principles agreed in 2000 which are designed to guide companies in maintaining the safety and security of their operations in the extractive and energy sectors. The judge said that, when approaching disclosure, “something more than lip-service to those principles is demanded.”

Of further interest, the judge emphasised the defendants’ (and indeed the entire Glencore group’s) reputational concerns as relevant to the appropriate searches and disclosures that should be made. He warned the defendants against taking too narrow approach, in particular in relation to their arguments about corporate structures meaning that the two defendant companies did not have control over documents held by other companies in the group.  The judge raised the spectre that too narrow an approach to disclosure could lead to adverse inferences being drawn against the defendants at trial.

Foskett J stated that, although a “no stone unturned” approach to disclosure cannot be justified, the accommodation of the claimants’ requests “may play better in the reputational stakes than a perceived narrow and unforthcoming approach.”

In a creative piece of judicial case management, the judge directed that his judgment be shown to senior persons in Glencore Plc in order that they might intervene with their group companies, having appreciated that:

Irrespective of any legal arguments, there may be a reputational issue if there is a perception that it is taking technical points to defeat an otherwise legitimate request for assistance in this litigation.

The judge continued that Glencore Plc has “at least a moral responsibility to cooperate in the litigation” and suggested that they would be “ill-advised to give the appearance of being reluctant to cooperate”. The judge thereby sidestepped a ruling on the debate as to whether the defendants had control over some of the documents sought by the claimants.

Some observations on the judge’s approach

The judge’s emphasis on recoverable costs and the issues at stake as being relevant to the appropriate searches and disclosure seems sensible. This decision therefore highlights the onerous nature of the disclosure obligation in litigation before English courts. If disputes arise in future business and human rights litigation over the proper extent of the searches and disclosures to be made by corporate defendants, claimants might be expected to point to Foskett J’s finding that the game is worth the candle.

While this post does not venture into the minutiae of the particular disclosure disagreements in this case, Foskett J’s decision highlights the sometimes uncomfortable results of English disclosure obligations. The judgment mentions that a disclosure by the defendants shortly before the hearing had unearthed documents referring to “hormigas en accion” – which translates as “ants in action”. This phrase was apparently used by some within the defendants to refer to protestors. The judge noted its derogatory sound. One wonders whether this discovery influenced the judge’s approach to the disclosure issues in dispute – he granted a number (albeit not all) of the claimants’ requests and advised the entire Glencore group to cooperate with other requests. It remains to be seen whether further documents emerge and the impact of any such documents on the overall merits.

Perhaps the most striking aspect of this decision, however, was the judge’s reliance on the Voluntary Principles and/or reputational concerns as directing the particular defendants’ (indeed Glencore Plc’s) disclosure obligations. Arguably, this seems unfair. If such an approach is adopted in other cases, it could generate uncertainty as to the nature of the disclosure obligation owed by defendants (and indeed companies in the same group but who are not parties to the litigation). While disputes over the scope of searches and disclosure are common, to suggest that the legal obligation is expanded by such considerations seems quite novel.

[1] The judgment notes a dispute over the proper quantification of damages: the claimants say that their claims are worth more than £5.2 million, even applying Peruvian law. (Under the “Rome II Regulation” on the Law Applicable to Non-Contractual Obligations (No 864/2007), the quantum of damages is now treated as a question of substance rather than procedure, meaning that it is now treated as a question of the applicable law.)

[2] According to one explanation, the saying that a “game is not worth the candle” began as a translation of a phrase used by French essayist Michel de Montaigne in 1580, and alludes to risky gambling by candlelight, which involved the expense of illumination. See here.