AQR Capital Management, LLC & Ors. v The London Metal Exchange & Anor.

Norwich Pharmacal relief is exceptional and cannot be used for wide-ranging disclosure or evidence-gathering. An applicant must show a good arguable case of a legally recognised wrong, including the essential elements of the proposed cause of action. Where statutory immunity makes bad faith essential, bad faith must itself be shown to the required standard.

The information sought must be necessary to enable proceedings against the ultimate wrongdoer, and disclosure must be appropriate and proportionate in all the circumstances. These requirements are especially demanding where relief is sought against an intended defendant and the order would require that party to provide extensive documents or evidence about the prospective claim.

The claimants, investment firms affected by the suspension and cancellation of nickel trades on the London Metal Exchange, sought disclosure and information concerning the defendants’ decision-making. They relied on the Norwich Pharmacal jurisdiction and Civil Procedure Rules 1998, CPR 31.16, in anticipation of possible private law claims including negligence and economic torts.

The claimants were out of time to bring judicial review proceedings concerning the decisions. The defendants contended that any private law claim was barred by the statutory immunity in Financial Services and Markets Act 2000, section 291, unless bad faith could be established. The central questions were whether the conditions for Norwich Pharmacal relief or pre-action disclosure were met.

1. The claim and application were dismissed. The Norwich Pharmacal jurisdiction and CPR 31.16 were considered together because both sought broad pre-action disclosure from the intended defendants.

2. The court adopted the four-condition framework identified in Collier v Bennett: a good arguable case of a legally recognised wrong; involvement in or facilitation of that wrongdoing; possession or likely possession of necessary information; and an appropriate and proportionate response in the overall interests of justice.

3. The arguable wrong condition concerns the wrong relevant to the intended causes of action. It cannot be satisfied by showing some unspecified public law wrongdoing where the proposed proceedings are private law claims. Since section 291 of the Financial Services and Markets Act 2000 conferred immunity unless the defendants acted in bad faith, bad faith was an essential element of any viable private law claim. The claimants’ evidence, including press speculation, alleged conflicts and criticism of the explanations given, did not establish a good arguable case of bad faith.

4. Even on the assumption that the arguable wrong condition was satisfied, the possession or necessity condition failed. The claimants had sought extensive disclosure and early witness evidence rather than a discrete piece of information necessary to identify or pursue an ultimate wrongdoer. The existence of judicial review proceedings brought by other affected parties was a relevant consideration, although not decisive.

5. The application also failed the overall justice condition. The requested order was exceptionally broad and intrusive, was sought against the intended defendants themselves, and created a real risk of procedural unfairness. The relief was neither necessary in the interests of justice nor an appropriate and proportionate response.

6. The CPR 31.16 application also failed. The proposed disclosure would not fairly dispose of anticipated proceedings, assist resolution without proceedings or save costs, and was in any event inappropriate as a matter of discretion.

First-instance decision. The judgment records separate judicial review proceedings brought by other investment funds, but no appeal from an earlier decision in the present litigation.