IPJSC United Compant Rusal v Whiteleave Holdings Limited & Ors

For disclosure purposes, a company director may have legal control of documents held by the company where the director has an enforceable right to possess, inspect or copy them. A director may also have practical control of documents held by subsidiaries where an existing arrangement or understanding makes access available, assessed by the scope, type and quality of the consent.

Foreign confidentiality rules do not automatically prevent an English disclosure order. The court should assess the real risk of foreign sanctions, available safeguards such as consent, redaction and confidentiality orders, and the importance of the documents to the fair disposal of the proceedings. An order may be made in principle even though particular documents may later fall outside the director’s control.

This was the third case management conference in proceedings brought by Rusal against Whiteleave, Mr Potanin and others concerning alleged breaches of a framework agreement regulating relations between shareholders in Norilsk Nickel. The principal issue remaining for determination was whether Mr Potanin, as chief executive officer of Norilsk Nickel, had legal or practical control for disclosure purposes over documents held by Norilsk Nickel and eleven named subsidiaries.

The issue required consideration of English disclosure law, the relevant rights and duties of a Russian public joint stock company’s chief executive officer, Russian confidentiality restrictions, the risk of foreign liability, and the reasonableness and proportionality of the proposed order.

1. Disclosure order granted. The court held that Mr Potanin had legal control of documents belonging to Norilsk Nickel and practical control of documents held by the eleven named subsidiaries. The order was appropriate under PD 57AD and the overriding objective. It was not third-party disclosure by the back door.
2. Under English law, control includes physical possession, a right to possession, or a right to inspect or take copies. Legal control requires an enforceable right broad enough to permit disclosure in the relevant proceedings. Practical control requires an existing arrangement or understanding falling short of contract. The court must examine the scope of consent, how access is obtained, and whether the consent is sufficiently unrestricted for disclosure purposes.
3. The expression “free and unfettered access” concerns the quality of consent. It does not require unrestricted searching by the disclosing party, nor does it prevent control being limited to specified documents or categories. Dependence on the third party to locate and provide copies is not necessarily inconsistent with practical control.
4. The burden was on Rusal to establish control, but the court could decide the issue on the balance of the evidence and did not require proof that every document was controlled before making an order. Particular documents could later fall outside Mr Potanin’s control if disclosure was contrary to the company’s interests or prohibited by Russian law.
5. Under Russian law, the chief executive officer of a public joint stock company has a legal right to access company documents, subject to acting reasonably, in good faith and in the company’s interests. There was no additional rule restricting access solely to documents required for day-to-day management, and no general rule preventing a chief executive from using company documents to defend personal claims. Whether access and disclosure were in the company’s interests was fact-sensitive.
6. The Russian confidentiality rules did not establish a real practical risk of civil or criminal liability sufficient to defeat the order. Consent, redaction and disclosure for court proceedings were potential safeguards. The court preferred the view that the court-proceedings exception could extend to foreign proceedings, although it was unnecessary to decide the issue finally.
7. It was sufficient to order a reasonable search of Norilsk Nickel and the eleven named subsidiaries. The proposed catch-all category of other subsidiaries was disproportionate and was refused. The final order was to be tailored to allow for documents outside Mr Potanin’s control and to require evidence confirming the steps taken in the search.