Mercuria Energy Trading SA v Baltic Exchange Information Services Limited

A confidentiality ring derogates from the ordinary expectation that a party can inspect disclosed material, subject to the implied undertaking against collateral use. Excluding a person who would ordinarily expect access must therefore be justified and kept as limited as fairness permits.

The court should be slow to second-guess a party’s request to admit a representative, but bare assertion is insufficient. The assessment includes the risk and threat posed by inclusion, the need for party representation, the importance and technical nature of the information, and disruption to the legal team. Current market-sensitive information may create a real risk of subconscious competitive influence even without deliberate misuse. Exclusion can be fair where lawyers, in-house counsel and experts can conduct the litigation and obtain evidence without substantial disruption.

Mercuria claimed that Baltic had breached statutory and/or contractual duties in continuing to publish the TD3C benchmark freight rate during hostilities affecting the route. It sought declaratory relief requiring the rate to be restated, withdrawn or retrospectively suspended. An expedited trial was to follow.

At a case management conference, the court made a confidentiality ring order. Mercuria renewed its application to admit Larry Johnson, its global head of marine business, and Ojas Joshi, its head of freight analysis, to the ring. The issue was whether their access was necessary for fair participation and, if so, whether that benefit outweighed the risk to the Baltic’s market-sensitive confidential information.

The application was dismissed.

1. Starting point. The court adopted the approach confirmed in Libyan Investment Authority v Societe Generale SA [2015] EWHC 550 (QB) at [20]. Each party should ordinarily have unrestricted access to inspect the other party’s disclosure, subject to the implied undertaking against collateral use. Excluding a person who would ordinarily expect access must be justified as part of keeping the derogation from openness as limited as fairness permits.
2. Applicable factors. The relevant considerations were the risk and threat posed by admitting particular individuals; the desirability of an appointed representative for each party; the importance of the information; whether it was technical and required specialist knowledge; and disruption caused by excluding part of the legal team. The court also endorsed the observation in Anan Kasei Co v Neo Chemicals [2020] EWHC 2503 (Pat) at [16] that a court should be slow to second-guess a party’s request, while retaining scrutiny and treating fairness as the touchstone.
3. Application. There was no need for Johnson or Joshi to provide Mercuria’s appointed representation within the ring. Although the information was centrally relevant, it was not technical in a way requiring their expertise. Mercuria’s legal team, in-house counsel and expert witnesses could understand it and identify the evidence required for trial. Their exclusion would cause no substantial disruption, although lawyers within the ring would need to take care when proofing either individual as a factual witness.
4. Confidentiality risk. The information could give a market participant a competitive advantage and could not sensibly be unlearned. The absence of any evidence of deliberate misuse did not remove the real risk that Johnson’s or Joshi’s senior strategic roles would be influenced materially but subconsciously by knowledge unavailable to competitors.
5. Balance and result. The importance of the information and the starting point favouring openness were acknowledged. Nevertheless, the exclusion was amply justified and fair. The application to admit Johnson and Joshi to the confidentiality ring was dismissed.

not stated in the judgment.