Cyprus: Challenging The Use Of Illegal Means To Obtain Confidential Information

As a matter of reasonable consistency, it cannot be permitted to one party to secure and hold documents of confidential nature, which belong to another party, without any prior legal authorization to this effect, i.e., without previously securing a relevant court order (Norwich Pharmacal/Disclosure order), which authorizes such a kind of disclosure.

With a recent order of the District Court of Nicosia, Cyprus, Rusal's affiliated companies have been ordered to destroy all of the information they had illegally obtained when a Bank in breach of the client-bank confidentiality relationship "surrendered" full details and information in respect to the bank accounts of their client-defendant without such order of the Court.

The judgment reaffirms and clearly illustrates the principles applied within the context of Norwich Pharmacal (disclosure) proceedings and sets a sound precedent on this specific area and on issues of breach of confidentiality being an award we are proud of having devoted great effort to achieve and chased with diligence and persistence duly recognized also by the Court.

Our firm has been acting for the first Defendant*, one-time head of alumina and bauxite for Rusal who became target of international litigation by Rusal and its affiliated companies. Rusal's four affiliated associated companies launched their action against our client and his co-defendants shipping companies, alleging that in shipping contracts and transactions between 2003 and 2007 they had conspired to cheat Rusal. The reality being that in September 2007 Rusal had commissioned the independent Doll Shipping Consultancy of the UK to assess its shipping performance; it had reported that the transportation rates charged were six times below the prevailing market prices, and that the shipping arrangements for Rusal cargoes had been in every respect advantageous to Rusal. In support of the allegations, Rusal's Cyprus lawyers also sought to freeze Cyprus bank accounts of the Defendants and in parallel they managed to get the Bank to "disclose" everything it had recorded in their accounts in respect to the first Defendant's bank accounts.

In the latest development, our firm launched an application requesting an order of the Court preventing the Plaintiffs and their representatives by using, by any means, and/or within the terms of any judicial and/or forensic proceeding, within or outside jurisdiction to reveal and/or notify to any individual any documents and/or their content and/or information that the Defendant 6, namely the Bank, gave to them in the form of an affidavit.

Allied to the above our motion requested an Order of the Court ordering the Plaintiffs to hand over for destroying to the Registrar of the District Court of Nicosia, all the documents that were delivered by the Defendant 6 with the aforesaid affidavit and also any documents and/or any copies and/or reproductions of the same in any form.

In the 40-page text of the judgment issued by Senior District Judge Lena Demetriadou-Andreou it was concluded that:

"In the present case and as it arose from the unchallenged and undisputed facts, there was a disclosure of the bank accounts of Defendant 1/Applicant, without having secured a Court Order and without the Applicant/Defendant 1 being previously heard...".

The court documents also reveal that in pursuit of the Defendant the lawyers acting for Rusal in Cyprus had misled the Court and kept secret from the Defendant that his bank account data had been seized. In the exact words of the Court: " they themselves gave the impression that such an Order was issued ...."

Based on the undisputed facts that occurred in the present case and as they are stated above, the following was concluded by the Honourable Court:

The Applicant was deprived of his constitutional right to be heard in the context, in breach of the principles of a previous hearing and of fair trial but also of the Rules of Natural Justice that dictates that an opportunity should be given to anyone, whose interests are affected by the process, to be heard in any court proceedings. In this case, it is an undisputed fact that the Applicant was, at the time of filing of the Affidavit of the disclosure of the Bank without a court Order, a party directly affected and he had, therefore, the right to be informed of the process and to be heard, something which apparently did not take place.

The disclosure of confidential documents and information of the Applicant/Defendant 1 by the Bank was carried out without firstly securing the necessary Court Order and, therefore, without the Court considering whether it met the necessary requirements set out in the Law for the disclosure and delivery of such documents and information, and therefore without the judgment and the discretionary power of the Court, which authorizes such an act, being exercised.

In its ruling the Court ordered Rusal's lawyers to report back to the court by a sworn affidavit that they had handed over for destruction by the court registrar all copies of the information they had taken from the Bank. The Plaintiffs are also now barred from using or leaking the information.

The result of the Cyprus court proceeding also linked with parallel New York proceedings sends a vibrant message to those using illegal means to obtain confidential information and litigating further to attack their targets.

There is also a price to be paid when any Bank reveals confidential information without a court order and, therefore, the absence of judicial review concerning their use, allows the Plaintiffs to use the documents in question for the purposes that serve them. In this instance separate legal proceedings have been instituted for damages against the Bank involved for their failure to observe their fiduciary duties and for the breach of their obligations of confidentiality against the client. In fact, confidentiality remains one of the most eminent features which distinguishes the relationship between a banker and a customer.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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