Spies and FX dealers – they can be made to talk


Introduction


Two cases in which the writer was involved in the English Courts dealt with the English Court’s power to compel witnesses to give evidence for use in US proceedings.


In each of the two cases, US courts had issued letters of request. A letter of request is a request from the foreign, in this case US, court, for the English court to assist it by ordering a witness to give evidence in England, since the witness cannot be compelled to travel to the US to give evidence at trial by a subpoena or any other means.


The proposed witness in the second case sought to use some of the findings in the first case in argument to resist having to give evidence. He failed.


Gubarev v Buzzfeed – Christopher Steele


The first case is Aleksej Gubarev and others v. Christopher Steele [2018] EWHC 512 (QB).


Christopher Steele is an ex-MI6 agent, who wrote the infamous Trump Dossier. Buzzfeed published the whole dossier, which was, in fact a series of intelligence reports. As well as a report on alleged happenings in a hotel room in Moscow, the very last report was the subject of defamation proceedings in the United States against Buzzfeed. The Plaintiffs in that action also sued Mr Steele in proceedings in England.


The case referred to in this article concerns the procedure to compel Mr Steele to give evidence in England for usein the US proceedings.


In an appeal by the Defendants, who sought to widen the order initially made by the Senior Master, Jay Jset out the chronology of the application,


21. On 10th August 2017 Mr Steele filed a non-party motion of intervention in the Florida proceedings objecting to the issue of the Letter of Request. Multiple grounds were relied on, including the co-existence of libel proceedings in this jurisdiction. Many of these have now fallen away. On 15th August Judge Ungaro refused Mr Steele’s motion, stating that she “presumed” that the Senior Master would limit the scopeofthe Request pursuant to domestic law, if so advised.

22. On 4th November 2017 the US Plaintiffs issued a without notice application in this Division for an order that Mr Steele’s evidence be taken for use in the Florida proceedings in accordance with the Letter of Request. On 9th November the Senior Master made an order on the basis sought, directed to the same 14 topics.

23.By email dated 22nd November 2017 Mr Loble on behalf of the US Plaintiffs proposed to Mr Steele’s representatives a narrower list of 9 topics for his questioning at the examination. As the Senior Master noted, this was stated to be for pragmatic reasons. Mr Steele did not accept the proposal. On 1st December 2017 he applied to set aside, alternatively to vary, the withoutnotice order. The bases of the application were multifarious, but focusing on what is relevant for present purposes Mr Steele contended that the Letter of Request sought irrelevant evidence, was oppressive, amounted to a fishing expedition, and would compromise his source or sources. Alternatively, Mr Steele argued that the topics for questioning should be limited to the steps taken to verify paragraph 3 of the December memorandum, and the US Defendants’ acquisition of that document; and that protections should be emplaced to safeguard the confidentiality of his source or sources.

At this stage, I should note that the Order made by the Senior Master after the contested hearing was only very slightly different from the proposal which I had made referred to in paragraph 2336 above.

Indeed, the Senior Master, stated at paragraph 43,

“I consider that these topics should be limited as proposed by the US Plaintiffs, I do not consider that in that form they are oppressive to Mr Steele. This information is partly given by Mr Steele in his defence in the QB proceedings. In that regard I note the evidence of Mr Loble that the parties are unable to rely on the QB statements of case in the Florida proceedings. The topics concern evidence which appears to be in the public domain so far as media outlets are concerned, and the examination on these topics is likely to be very limited in scope. The topics are clear, limited and easily identifiable, and the issues as to distribution of the December memorandum are relevant to theissues pleaded in the defence in the Florida proceedings.”

Jay J summarised the evidence, as follows.

24. Mr Steele’s application was supported by the witness statements of Nicola Cain, a barrister employed as a legal director in RPC, and Edward Lucas, a respected journalist and expert in Russian affairs. Ms Cain’s evidence does not in my view take matters any further. Insofar as it contains matters of legal argument, she should in my view have left those for written skeleton submissions. She is not qualified to address matters of Florida law and does not purport to do so.

25. On 9th January 2018 the US Defendants issued an application notice by which they sought their own variations to the without noticeorder in the event that they failed to have it set aside in its entirety. I will come to the detail in due course.

26. The Senior Master also had evidence in the form of a second witness statement from Mr Loble which explained from the perspective of the US Plaintiffs how and why Mr Steele could give relevant evidence. According to paragraph 26(iv)(2) of his witness statement, the saliency of Mr Steele’s evidence covered:

“How [Mr Steele] came to make the allegations in the December memorandum/whether the allegations were verified. This evidence will go to whether the allegations are true [items 4-6 and 8 of the Schedule on the original numbering]”

and, according to paragraph 26(iv)(3):

“the circumstances of the provision of the dossier to various parties identified in [items 11-13] including whether cautions were given to such parties about the unverified nature of the allegationsin the dossier and warnings were given not to publish the same without independent verification. This evidence will go to the lack of care exhibited by BuzzFeed.”

27. Mr Millar [for Mr Steele] sought to make something of the point that Mr Loble’s evidence was solely directed to the issue of saliency from the point of view of the US Plaintiffs; it did not advance the case of the US Defendants. In my judgment, this point leads nowhere. If Mr Steele’s evidence could assist the case of the US Plaintiffs in discharging the burden of proofwhich was on them to establish falsity, and it was also relevant to any enhancement of the culpability of the publishers, the US Defendants would obviously seek to neutralise that evidence if they could; and, perhaps, to build a positive case – that the December memorandum was true - on the back of what Mr Steele had to say. …

28. The US Defendants rely on the witness statement of Ms Katherine Bolger who is a partner in a New York law firm. Ms Bolger makes clear that her clients have no intention of exposing or jeopardising Mr Steele’s sources. Paragraph 34 of her witness statement has been carefully examined by Counsel, and I therefore set out relevant parts:

“Further, the Defendants are entitled, in the Florida proceedings, to defendthemselves based on their decision to publish the whole dossier as opposed solely to paragraph 3 of [the December memorandum]. Although the parties dispute whether New York or Florida substantive law applies to the Florida proceedings, under either body of the law relevant issues will include: (a) whether the publication of the dossier is a fair and true report of anofficial proceeding, see [relevant authority] …; (b) whether the Defendants acted with “actual malice”, gross irresponsibility, or negligence in publishing the dossier, see [relevant authority] …; and (c) whether the publication of the dossier as a whole is protected by neutral reportage, see [relevant authority]”.

The judge referred to the Senior Master’s acceptance of the US Plaintiff’s submissions.

“I consider that these topics should be limited as proposed by the US Plaintiffs, I do not consider that in that form they are oppressive to Mr Steele. This information is partly given by Mr Steele in his defence in the QB proceedings. In that regard I note the evidence of Mr Loble that the parties are unable to rely on the QB statements of case in the Florida proceedings. The topics concern evidence which appears to be in the public domain so far as media outlets are concerned, and the examination on these topics is likely to be very limited in scope. The topics are clear, limited and easily identifiable, and the issues as to distribution of the December memorandum are relevant to the issues pleaded in the defence in the Florida proceedings.”


General Considerations in relation to Oppression

38.This is an unusual, and probably unique, case, where the witness is in many respects in the same position as a whistle-blower, because of the actions taken by him after the 2016 Presidential election, in sending the December memorandum to Senator McCain and to a senior government national security official, and in briefing sections of the US media.

39.I consider that the comments of Mrs Justice Andrews in Rio Tinto v Vale at §37 to 38, although made in the different context of the confidentiality of journalists’ sources, and the protection of whistle blowers, are apposite in this case:

“37. Nevertheless, it seems to me that in this rather different context, the court may take judicial cognizance of the truism that even in a democratic society such as this jurisdiction or the United States, whistle-blowers may be castigated for speaking out and suffer prejudice to themselves or their families, whether or not they act within the four corners of the law and whether or not they are exposing wrongdoing. Human nature is such that those who engage in corruption, particularly if they are in positions of power, do not take kindly to their wrongdoing being exposed. There are many corners of the globe where journalists are targeted and even imprisoned for fair and impartial reporting, or accused of being spies. This jurisdiction expressly recognizes the importance ofkeeping confidential the identity of journalists’ sources (indeed there is legislation to protect them) and I accept Mr George’s submissions that there is a degree of public policy overlap between that situation and this, especially in the light of the evidence that some of the sources concerned are sources of information provided to journalists, who may themselves be Associates of Livingstone.


“38. There is no reason to suppose that any of the sources in this case have acted unlawfully, but that does not mean that they have nothing to fear if their identities come to light. I am persuadedthat much of what is said by Mr Huband and Ms O’Connor rings true, although some of the sources may face more serious risks than others. It is in the public interest that they should not be discouraged from speaking out or from providingintelligence of this nature.”

38.See also comments made in Sanoma at §65 and §71, relating to breach of Article 10 in the context of confidentiality of journalists’ sources, again by analogy.

As a result of the information provided to the media, Mr Simpson’s evidence to Congress and the US Defendants’ publication of the dossier, much of the information in the dossier is likely now be in the public domain (not least perhaps by an event that occurred following the hearing, namely the investigation launched by US Justice Department Special Counsel Robert Mueller, involving a number of indictments against Russian businesses and individuals). A search of Mr Steele’s name on the internet reveals the extent of media interest in the issues the subject of the dossier, and one can readily understand why a view might be taken that the purpose of the Request might be for a wide ranging inquiry rather than simply for evidence in defamation proceedings relating to one paragraph in one memorandum of the dossier. No explanation has been advanced by the US Plaintiffs as to why they sought the topics for examination to extend so far beyond what would generally be expected for such proceedings, and they have not sought to explain why there was no attempt to demonstrate the relevance of each area of questioning in the Request, and the original formulation of Schedule A, to the issues in the case. The US Defendants, although they did not apply for the Request, and say they are neutral as to whether it be set aside or not, still seektomaintain part of the examination extending to the entirety of the dossier, in circumstances where there is no suggestion that Mr Steele had anything to do with their decision to publish the same.


Confidentiality and National Security


38.Those issues of confidentiality which can be protected can be dealt with by pre-conditions in an amended order, if I conclude that is permissible. I note that the US Plaintiffs have agreed to limit questions in relation to Mr Steele’s former employment with the FCO. In so far as national security concerns are in issue, I have no details of these and if, as a result of the order I make on this application the FCO decide that a section 3(3) Certificate should be issued they will no doubt list their application.


In Re Foreign Exchange Benchmark Rates Antitrust Litigation


In the second case, Aureus Currency Fund LP and ors v Credit Suisse Group AG and others and Mitesh Parikh known as In Re Foreign Exchange Benchmark Rates Antitrust Litigation, Mr Parikh opposed an application for an order that he give evidence in England for use in proceedings in the United States.


Senior Master Fontaine summarised the case as follows,

5.The examination of the Respondent is sought in aid of the Applicant Plaintiffs’ class action in New York, which brings claims against sixteen international banks alleging manipulation of the foreign exchange (FOREX) market by those banks, and claims compensation caused by losses allegedly incurred as a result (“the Class Action”). The Plaintiffs have now settled their claims with fifteen of those banks, including the Respondent’s former employer GoldmanSachs, subject to the approval of the New York Court. The Class Action is thus continuing against Credit Suisse only.

6.The evidence shows that the Respondent was a former employee of Goldman Sachs, a foreign exchange trader and Managing Director of G10 spot and forward trading atGoldmanSachs.

7.The US Federal Reserve Board imposed a civil penalty against Goldman Sachs of $54.75 million on 1 May 2018 for deficiencies in its internal controls following an investigation into practices relating to FOREX activities. On the same date Goldman Sachs reached an agreed resolution with the New York Department of Financial Services following its investigation into FOREX trading pursuant to which the bank agreed to pay an additional $54.75 million.

The Letter of Request at paragraph 16 states that in the opinion of the court the examination sought will not be oppressive to the Respondent in all the circumstances and bearing in mind the protections available to him. It states that the Respondent’s deposition will proceed underthe terms of a protective order of the court, and therefore be given confidential treatment in the litigation. It states that there are, or have been, criminal investigations into allegations of fraudulent conduct in the FOREX market. The UK Serious Fraud Office has closed its criminal investigations but the US Department of Justice (“DoJ”) has ongoing investigations.

The Letter of Request states that the Fifth Amendment of the US Constitution (“Fifth Amendment”) affords both criminal defendants and civil litigants privilege against compelled testimony that may later be used against them in criminal proceedings, similar to the protections provided by UK law under Section 14(1) of the Civil Evidence Act 1969. It is stated that if the Respondent indicates any intention to refuse to answer questions in reliance on his FifthAmendment right the testimony given by his refusal to answer certain questions may be of value in the action, as in civil litigation in the US the fact finder may draw adverse inferences against a party based on anon-party witness’s invocation of the Fifth Amendment. However, any refusal in reliance on the Fifth Amendment could not be used against him in US criminal proceedings. It is also stated in paragraph 16 that the Plaintiffs have settled with the Goldman Sachs Defendant on terms which have been preliminarily approved by the SDNY, which release the Plaintiffs’ claims against not only the Goldman Sachs entities but also former employees of Golden Sachs including the Respondent.

Later on in her judgment, at paragraph 54, the SeniorMaster said,

“I accept the submissions on behalf of the Applicants, that in circumstances where the consent order provides an undertaking by Goldman Sachs never to rehire the Respondent, and that the order is publicly available on the DFS New York website, that any regulator islikely to be aware of that, which is likely to negate any adverse consequences of the Respondent’s reliance on the Fifth Amendment.”

The Respondent opposed the application on two grounds, namely that

a. the proposed examinaton was investigatory in nature and not restricted to obtaining evidence for trial:

b. the proposed examination is oppressive.

34. If the width of the topics for questioning is too wide, or uncertain or vague, it may be refused on the grounds thatit is oppressive to the witness: First American per Sir Richard Scott VC at 1167F-H. This might also lead to the inference that: “the letter of request was designed to elicit information which might lead to the obtaining of evidence rather than to establish allegations of fact, and that would amount to an impermissiblefishing expedition.” Smith v Philip Morris per Andrew Smith J.at §§37-40.

35. If the request is considered to be too wide ranging, the court retains a discretion whether to grant the request and can “blue pencil”but not redraft the request. The court has no power to redraft a question or supplement the request on the basis it considers expedient to do so: State of Minnesota -v- Philip Morris at §§50-51.

36. The English courtshould rely on the requesting court’s determination of the issue of relevance of the evidence sought to the issues for trial: In re Asbestos Insurance Coverage Cases [ 1987] 1 QB 331 at page 339G.

37. There are limited circumstances where the court can consider the relevance of the evidence sought, where the relevance of the topics for examination in the request are not considered by the requesting court: Gubarev per Jay J. at §§ 54-59. In Gubarev Jay J. referred at § 55 to the comment of Stanley Burnton J in Gredd that:

“…orders for letters of request are normally made by the US judge without any real scrutiny. The order is normally made and the terms sought by the applicant without any (or any significant) amendment, and without the judge being informed of the significant differences between US federal procedure and of these courts”.

The Senior Master then referred to the decision of Jay J, who heard Buzzfeed’s unsuccessful appeal from her decision in Gubarev.

Jay J also referred at paragraph 57 to that issue as addressed by Simon J in Credit Suisse where the latter states at paragraph 15:

“It seems to me, however, that [Counsel] is correct in his submission that the approach of the court will depend on whether the requesting court has itself considered questions of relevance. If it has, then it is hardly in the interest of comity that the court to whom the request is made should embark upon on a close consideration of questions of relevance on what is likely to be limited material and a lessclear understanding of the issues than the requesting court. If, on the other hand, the requesting court has plainly not considered the question of relevance where it is clear, even on a broad examination, that the evidence is notrelevant then the Vice-Chancellor’s first question must be addressed”.

That is a reference to a dictum of Sir Richard Scott VC in First American when he identified that the first issue was:

“whether the intended witnesses can reasonably be expected to have relevant evidence to give on the topics mentioned in the amended schedule”.

Thus, Jay J in Gubarev concluded, at paragraph 58:

“if the position is that the requesting court plainly has not considered the question of relevance, it must fall on the receiving court to undertake that exercise”.

The test is identified as “Can the intended witnesses reasonably be expected to have relevant evidence to give on the specified topics?” Jay J. agreed that the test imported a low threshold. Jay J also stated in the same paragraph:

“In circumstances where the court has evidence from a lawyer with experience and qualifications in a requesting state, and that evidence stands uncontradicted, considerable deferencemust be given to it”.

Whether the Respondent has relevant evidence

It is accepted on behalf of the Respondent that he does have relevant evidence to give, so the issue for determination is whether the topics for examination have been sufficiently tailored so that the topics are relevant to the issues in the pleaded case. Mr Hunter QC for the Respondent criticises the topics on the grounds that there has been no attempt in the Letter of Request to identify what areas of the pleaded case each topic of examination relates to. The court is asked not to make an order for examination on the grounds that the breadth of the areas of questioning constitutes “a roving inquiry” and as such would be oppressive to Mr. Parikh.

The allegations in relation to conspiracy go beyond the chatroom conversations. The evidence of Mr Berezney, which is not disputed, is that it is for the Applicants/Plaintiffs to prove their case of a general conspiracy. They are entitled therefore to ask about communications between traders in which the Respondent participated beyond the communications in the chatroom. Where allegations of grand conspiracy are made, it would not be reasonable to limit the communications to those involving Credit Suisse, as is made clear by the Letter ofRequest. It is accepted by the Respondent that there were oral communicationsand indeed the copies of the chatroom discussions exhibited to the evidence make that clear. I do not conclude therefore that the evidence sought can be classified as impermissible investigatory questioning, such as mightconstitute oppression.

The Letter of Request expressly states that the evidence sought will be required at trial. Although the trial date has not yet been set the evidence is that the trial will take place in 2019, and it was originally planned for 2018, as is clear from the Letter of Request. That is sufficient to satisfy the requirement that the evidence be required for trial….



49.The fact that the Letter of Request was drafted by the Applicants is not a reason to refuse the request on that ground alone. Otherwise all Letters of Request coming from the United States would be likely to be refused as that is, in my experience, the procedure that is adopted. Mr Berezney’s evidenceisthat the Letter of Request was drafted after consultation with English Counsel, andwith the requirements of English law very much in mind. However, the court can take into account that many letters of request from US courts “simply record the applicant’s contentions as to relevance” (Mudan v Allergan per Cockerill J at §59.

50. In this case I consider that I should take the wording of the Letter of Request in relation to its explanation of why the evidence is relevant at face value. This request is not in the same category as other requests where it is apparent that there has notbeen such consideration, as in Gubarev.

51.In so far as any topics are too wide-ranging such that they might constitute a “fishingexpedition” this court could delete or“bluepencil” which I will consider below.

52.Accordingly, I do not consider that the purpose of the examination is investigatory, or constitutes a fishing expedition, such as to constitute oppression to the Respondent.

57. It is clear from the authorities, in particular Credit Suisse per Simon J. at §15, endorsed by Jay J. in Gubarev at §57, that it would be an exceptional case where in such circumstances this court would: “embark on a close consideration of issues of relevance on what is likely to be limited material and a less clear understanding of the issues than the requesting court.” Gubarev was such an exceptional case, involving issues of national security and the safety of intelligence agents and other sources. This case is not exceptional, and I do not consider that the areas of questioning can be described as oppressive where the Respondent has the protection of the Fifth Amendment privilege and the settlement order.

These two decisions clarify that the letter of request from aforeign court should make clear the relevance of the evidence which is sought and its relevance to the issues to be proved at trial. If the letter of request is not clear on its face, the English Court itself will have to examine whether the evidence sought is relevant to the issues to be decided at trial.

Gubarev was also an ‘exceptional’ case, due to issues of national security and the potential risks to sources.

The cases show that careful drafting of letters of request is required in order not to fall foul of the English rules relating to the obtaining of evidence for foreign proceedings, in relation to which see generally Depositions, Discovery and Obtaining Evidence in England.