High Court rejects non-party litigation privilege claim

Moulder J: The rationale “does not extend to a non-party”.

An attempt to claim litigation privilege by global mining and commodities giant Glencore, in a case where it was not the party to proceedings, has been rejected by the High Court.

Mrs Justice Moulder said there was no authority for the proposition that “a person controlling litigation can assert litigation privilege against a party which it is controlling and who is the party to the proceedings”.

Moulder J said she accepted the claimant’s argument that it was “an established principle that litigation privilege can only arise in favour of a person who is a party to the litigation in question”.

She went on: “This rationale does not extend to a non-party. Accordingly, I find that any right to assert litigation privilege arising out of the Peruvian proceedings is that of the claimants as a party to those proceedings and it is not open to the defendants to assert such privilege against them.”

The High Court heard in Minera Las Bambas SA and another v Glencore Queensland and others [2018] EWHC 286 (Comm) that in 2014 the claimants purchased the defendants Xstrata Peru, which at that time indirectly owned the Las Bambas mining project.

After the sale purchase agreement (SPA) closed, the Peruvian tax authorities began an investigation, leading to a tax assessment under which the first claimant’s liability was increased.

Minera Las Bambas responded by launching proceedings against the tax authority in the Peruvian Tax Court. Under the SPA, Glencore took control over one of the two aspects of the Peruvian proceedings, though “the defendants have only ever acted in the name of the first claimant”.

Moulder J said the English proceedings centred on interpretation of the SPA and subsequent deed of indemnity, and whether the defendants were obliged to indemnify the claimants in respect of the VAT liabilities that were the subject of the Peruvian proceedings.

The claimants, seeking an order for inspection of 25 documents, applied to the High Court under CPR 31.19(5) for a determination as to whether the defendants were entitled to rely on litigation privilege.

Standard disclosure took place in April 2017, and last month City law firm Linklaters, acting for Glencore, confirmed that there were “only 25 documents in relation to which the defendants were seeking to assert litigation privilege”.

She said that even if it was “open to the defendants as a matter of principle to assert litigation privilege where it controls litigation of a party”, they had not established that the privilege could be maintained where the control was “not over a party to these proceedings and in relation to documents created for use in these proceedings but in relation to documents created in relation to other proceedings to which the defendants are not a party”.

Mrs Justice Moulder gave judgement in favour of the claimants.



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