Court Considers Confidentiality Club Membership

The Court of Appeal recently considered an application to include a client representative in the membership of a confidentiality club. The club related to documents provided in discovery in a procurement dispute. The Court refused the application on the basis that no special features justified making that order in this case. Our Commercial Disputes team considers the decision.

Cases involving intellectual property and trade secrets are most likely to involve requested limitations on who can access confidential discovered materials. Confidentiality clubs have been approved by the courts in appropriate circumstances. Their aim is to ensure that a disputing party cannot gain a competitive advantage by accessing a competitor’s confidential technical or commercial information. The limitations requested can involve disclosure being made available only to a counterparty’s lawyers and relevant expert witnesses. Even then, the clubs are subject to strict conditions around accessing the information. In a recent case involving a procurement dispute, an application to allow a client representative admission to such a ring or club was refused as no special feature justified client participation.[1]

Background

The underlying proceedings involved a dispute regarding the award of a tender. KSN, the applicant, had provided services to the respondent, SEAI. These services were provided under the terms of a contract which, following some extensions, was to expire on 31 July 2025. To replace that contract, the SEAI advertised a competition for a new contract in fairly similar terms for a period of 36 months, with two optional extensions. The applicant applied but was unsuccessful. It brought judicial review proceedings against the SEAI, as respondent, and Abtran, the successful tenderer, as notice party. The proceedings sought the setting aside of the contract. Mr Justice Twomey heard an application regarding discovery issues which was appealed. The Court of Appeal was asked to determine the matter in two ways:

1. Make an order for discovery for a specific category of discovery regarding the notice party’s methodology for aspects of delivery of the contract.
2. Decide whether a named executive of the applicant should be a member of the confidentiality ring already in place. It was this point which is the focus of this article.

Membership of the confidentiality ring would allow the executive to have access to confidential material disclosed on foot of the discovery process. The Court of Appeal allowed the appeal regarding the disputed category of discovery, subject to it being accessible only to members of the confidentiality club. However, the question of confidentiality club membership took up the more substantial part of the judgment.

The decision

The applicant accepted in an affidavit sworn by the named executive that some of the documents to be discovered were of a confidential and commercially sensitive nature. It also recorded an agreement that a data room would be established to allow inspection of unredacted documents. By agreement, the applicant was entitled to appoint an independent expert to inspect the documents in their unredacted form. However, whether the named executive should be a member of the confidentiality club, and therefore be entitled to inspect confidential and commercially sensitive documents discovered, was disputed.

The Court of Appeal began by referring to the High Court’s analysis of the case law regarding membership of confidentiality clubs. It relied on Chief Justice Clarke’s analysis in Word Perfect Translation Services Ltd v Minister for Public Expenditure.[2] In that case, which also involved a procurement dispute, the Chief Justice said that:

“… the starting point is that confidentiality rings are ‘ordinarily’ only open to the lawyers.”

The High Court had determined that decision was not authority for “a default rule that a confidentiality ring contains an employee/officer of each party”. Instead, the ‘default rule’ was that confidential documents are ordinarily made available only to the party’s lawyers and there was no reason to include the named executive. Although the named executive would give very specific undertakings, the High Court had found that there was no particularly specialised feature of the discovered documentation. It also found that the material was not so technical or specialised that it could not be explained by him to the applicant’s lawyers. The Court of Appeal specifically noted that there was no Irish case which permitted a representative of an unsuccessful tenderer to be part of a confidentiality ring. Rather, it confirmed[3] that:

“[e]xactly what is to be disclosed, and the terms on which it is to be disclosed, is to be decided on a case-by-case basis” and there was “no place for a ‘one size fits all’ approach.”

As put by Chief Justice Clarke:

“The confidentiality ring allows for limited disclosure of otherwise confidential documentation and information. Where a confidentiality ring is in place, the confidential documents and information in question are ordinarily made available in confidence only to the parties’ legal advisors. In circumstances where the information in question relates to a scientific or technical matter, the confidentiality ring may be expanded to include experts in that field.”

The Court of Appeal felt that rather than reflecting a ‘default rule’, this was “merely a recognition that, in most cases, setting up a confidentiality ring which includes the parties themselves would be self-defeating”. Indeed, the “purpose of a confidentiality ring would be undermined if… clients also have access to the documentation available to members of the ring.”

The Court of Appeal considered competing arguments about whether Chief Justice Clarke had approved English authorities[4] in his determination in Word Perfect. It rejected the applicant’s submission that he had inaccurately summarised those cases. Describing the argument as having “deviated from reality”, Mr Justice O’Moore for the court simply stated that the former Chief Justice “meant what he wrote, and not that he intended to approve the [English] judgments… but could not find the words to do so.” He went on to state that taking into account the Chief Justice’s “plain words”, his decision did not start from the position that a client representative should be included in the ring. In most cases, the confidential material which warrants the establishment of the ring would not be made available to the opposing party. After that, it was correct for the court to consider whether there was any “particularly specialised feature of the discovered documentation” requiring client input. In this case, the named executive stated that he had a unique understanding which he believed an expert would need. However, the Court of Appeal found it striking that the expert retained gave no indication that client inclusion in the confidentiality ring was required in order for her to carry out her role. She also did not say that she had any difficulty in understanding the documentation. In addition, the exclusion of the named executive had not prevented the applicant from producing a significantly enhanced amended ‘statement of grounds’.[5] Accordingly, there was no reason to disturb the initial finding that any technical aspect of the business could be explained to the lawyers and the expert without the named executive. It was not necessary for any applicant representative to be part of the confidentiality club. There was nothing exceptional about the applicant’s claimed difficulties which were “the universal ones”, which arise whenever a confidentiality club is put in place.

Conclusion

The courts have recognised that restricting access to discovery materials within an organisation that is party to proceedings is an exceptional measure. In IP disputes, client representatives have been permitted access to confidential information, albeit subject to strict conditions.[6] Those authorities did not feature in the Court of Appeal’s analysis of the law in this case. Therefore, it is unclear if the principles outlined are of general application, or if the decision should be understood as being limited to procurement cases. Although the extent and terms of any disclosure is to be determined on a case-by-case basis, the typical members of confidentiality clubs in the context under review at least are lawyers. Where technical or scientific issues arise in these cases, relevant experts may be included. However, it seems that only in limited cases might client membership be permissible. Without definitive guidance or clarity, it seems that for procurement cases at least one would need to show that client inclusion is necessary to explain matters to the other members of the confidentiality club. That argument would need to be substantiated by those other members. Whether this approach to restrictions on access to confidential discovery materials applies more generally, and to IP cases in particular, is something on which judicial clarity would be welcomed in due course. Pending this clarity, the better view may be to treat the decision as being specific to the context of procurement cases.

For more information and expert advice on similar disputes, contact a member of our Commercial Disputes team.

The content of this article is provided for information purposes only and does not constitute legal or other advice.

[1] Kerrigan Sheanon Newman UC v SEAI & Abtran UC [2025] IECA 196

[2] [2020] IESC 56

[3] Echoing Chief Justice Clarke from Word Perfect.

[4] Libyan Investment Authority v Societe Generale [2015] EWHC 550; SRCL v National Health Service Commissioning Board [2018] EWHC 1985. The applicant also relied on OnePlus Technology (Shenzen) Co v Mitsubishi Electric Corp [2021] FSR 13.

[5] A ‘statement of grounds’ is the document which an applicant in judicial review relies on to say why the decision being challenged was wrong.

[6] See Kelly J in Koger Inc v O’Donnell & Ors [2009] IEHC 385