'Members Only Club': Court Of Appeal Upholds Appropriateness Of Confidentiality Rings/Clubs For Discovery

Author:Mr Andrew Lenny, Elizabeth Upton and Conall O'Shaughnessy
Profession:Arthur Cox
 
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A recent decision of the Court of Appeal shows that the Irish courts are willing to impose confidentiality rings in specific circumstances.

The decision is helpful for entities concerned that competitors may use litigation to obtain access to their confidential or commercially sensitive information and so gain a commercial advantage.

The decision was given in Goode Concrete v CRH plc & Ors. We acted for CRH Plc and Roadstone Wood Limited

What is a Confidentiality Ring?

The risk that confidential or commercially sensitive information might have to be disclosed to a competitor in litigation can be a real concern for commercial parties, particularly where the disclosure might give a competitor an unfair commercial advantage. To prevent this, the courts can put in place what is known as a 'confidentiality ring' or a 'confidentiality club', restricting access to and use of the information in question.

While the parameters of a confidentiality ring will vary depending on the nature of the case and the sensitivity of the relevant documentation, typically the court will limit access to the documents to the party's lawyers and any experts retained by the party, precluding access by the parties themselves. The lawyers and experts concerned will be required to undertake not to reveal the contents of the documents to their clients or other third parties.

The protection of confidential information in this manner is well established in English law and is particularly common in competition proceedings or proceedings involving trade secrets or intellectual property rights. However, the Irish courts have traditionally been reluctant to curtail discovery rights in this way. One argument against their use is that they are not strictly necessary as parties to litigation impliedly undertake to only use information exchanged on discovery for the purpose of the existing proceedings. However, this offers little comfort to the party handing over sensitive commercial information as the reality is that the other party cannot "unsee" it and may therefore gain an unfair commercial advantage.

The Goode Concrete case

In Goode Concrete, the High Court established a confidentiality ring, on the defendants' asking, to limit access to commercial information relating to the defendants' pricing strategy, cost base and successful tenders. The Court was satisfied that it was not necessary for the purposes of the litigation for the plaintiff to see this information.

The...

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