IpsofactoJ.com: International Cases [2002] Part 15 Case 2 [CAEW]


COURT OF APPEAL, ENGLAND & WALES

Coram

Friedhelm Eronat

- vs -

Farhat Tabbah

LORD JUSTICE ALDOUS

LORD JUSTICE MANCE

SIR CHRISTOPHER SLADE

10 JULY 2002


Judgment

Lord Justice Mance

Introduction and history

  1. By judgment and order dated 13th December 2001 Moore-Bick J varied express and implied undertakings that had been given by the respondent, Mr Tabbah. The variation was made to enable him to produce certain documents and to give certain testimony before a Grand Jury in Washington, DC, USA. The role of the Grand Jury is to examine the foundation of a charge against the appellant, Mr Eronat, of trading with Iran, contrary to US legislation binding upon US citizens. Mr Eronat appeals against Moore-Bick J’s order by his leave.

  2. The matter has a long contentious history. Mr Eronat and Mr Tabbah were until early 1997 friends. They or their companies (principally Nichem Energy Limited in the case of Mr Eronat and Sitea International S.A. in the case of Mr Tabbah) shared certain office facilities at 18 Upper Brook Street, London W1. On 19th September 1997 Mr Tabbah issued proceedings in the Commercial Court against, inter alios, Mr Eronat, Mobil Trading CIS Inc. (“Mobil”), Mercator Corporation Inc. (“Mercator”) and Mr Giffen (the individual behind Mercator). He claimed commission (later quantified at US$34.5m) allegedly payable for services in respect of an alleged agreement involving a “swap” of oil from Kazakhstan with oil from Iran. The claim’s quantification at US$34.5m proceeded on the somewhat remarkable basis that Mr Tabbah would be paid commission on the full value of the swap agreement, whatever the quantities of oil in fact swapped. The one thing that seems clear is that very little oil can ever have been delivered from Kazakhstan, so that, if commission was calculated on the basis of oil delivered, the maximum claim could not have exceeded five figures in dollars. Mr Eronat’s basic position has however always been that he was never party to any commission agreement at all with Mr Tabbah in relation to any such swap. A thirty page “statement” of claim, signed by Mr Tabbah’s solicitors, was served on 6th November 1997. On 5th December 1997 Mr Eronat issued proceedings against Mr Tabbah claiming, inter alia, injunctions restraining him from dealing with or disposing of documents which Mr Eronat owned or had the right to possess and from using or disclosing any confidential information of Mr Eronat, and an order for delivery up of all such documents.

  3. The basis for Mr Eronat’s action was that Mr Tabbah, before issuing his commission claim, had (at first indirectly and then on 1st August 1997 in person) indicated and shown that he was in possession of documents or correspondence which, according to Mr Eronat, could only have been stolen from Mr Eronat, or intercepted, by some person or persons unknown. In respect of this claim, Mr Eronat sought interlocutory relief, relying on affidavits sworn 22nd and 23rd December 1997. Mr Tabbah responded with affidavits sworn 30th January 1998, to which Mr Eronat replied on 6th February 1998. Issue was joined as to the circumstances and legitimacy of Mr Tabbah’s possession of the relevant documents. Mr Tabbah’s affidavit dated 30th January 1998 also said that Mr Tabbah had, between 19th September and 5th December 1997, disclosed “material .... including [a] list of [Mr Eronat’s] bank accounts and assets ....”, to the United Kingdom Inland Revenue and the United Kingdom Immigration Services, as well as to the United States Inland Revenue Service and the United States Embassy in London.

  4. By letter dated 10th February 1998, Mr Tabbah’s then solicitors, James & Sarch, made an “offer to preserve the status quo until the respective rights of the parties can be established”. Mr Eronat’s application for interlocutory relief came before Colman J on 16th February 1998. The two actions were ordered to be consolidated. The application was disposed of by the judge upon undertakings being given by Mr Tabbah through counsel. One undertaking was to deliver up to James & Sarch, to hold to the order of the court and make available to Mr Eronat to inspect and copy, all copies and/or originals of documents (“the confidential documents”) in his possession, control or power shown to Mr Eronat and his lawyers on 1st August 1997. These were expressed to include the list of Mr Eronat’s bank accounts and assets, and any other documents (apart from documents addressed to Mr Tabbah or Sitea International S.A.) dated or coming into existence after 1st January 1994 in Mr Tabbah’s possession, custody or power sent to or by Mr Eronat or any company referred to in schedules to his first affidavit. A second undertaking was not to disclose to any third party any confidential information contained in such documents. The undertakings were subject to some qualifications – in particular they were subject to any leave that the court might subsequently give; and Mr Tabbah was permitted to release, or to allow inspection or copying, as necessary to comply with the request of any lawful authority or otherwise required by law in any jurisdiction in which the documents or copies of the documents were located. The latter qualification was, however, itself subject to the proviso that Mr Tabbah should give Mr Eronat’s solicitors 21days notice in writing of the intention, or (if he wished to disclose within the 21 day period) himself apply to the court.

  5. At a further hearing on 7th April 1998 Tuckey J ordered that Mr Tabbah’s points of claim in respect of commission “be amended in such a way as to show that they completely replace the original Statement of Claim”. Mr Tabbah was ordered to pay costs of preparing defences to the original claim and of and occasioned by the amendment. A ten page draft signed by counsel was duly substituted on 22nd April 1998, to which Mr Eronat responded with amended points of defence on 15th May 1998. Disclosure of documents took place in the commission claim in late 1998.

  6. In November 1998 Mr Tabbah gave notice, under the provisos to the order of 16th February 1998, of his intention to disclose the confidential documents to the National Security Committee of the Republic of Kazakhstan, which (he alleged) wanted them in relation to an investigation into Mr Eronat and Mobil. He produced a copy of a purported letter dated 2nd November 1998 allegedly originating from the National Security Committee. Mr Eronat, Mobil and Mercator sought injunctions restraining such disclosure. A basic forensic investigation then proved that the letter was a fake, and the chairman of the Committee also confirmed that no investigation was in progress in Kazakhstan and the letter was not genuine. Mr Tabbah’s request was withdrawn and he had to pay the costs. Whether Mr Tabbah had set out deliberately to mislead the court was reserved to be determined on a later date, but the commission claim was settled and withdrawn before that occurred. There is in these circumstances nothing to show who was responsible for the forgery, but, as Clyde & Co’s letter dated 25th May 2001 pointed out, Mr Tabbah has never given any explanation as to the letter’s origin.

  7. The other aspect of this matter is that on 26th February 1999 Colman J. ordered Mr Tabbah to swear an affidavit describing in full all contact that he had had with the National Security Committee of Kazakhstan or anyone in contact with it, so as to explain how the documents referred to in the undertakings given to the court on 16th February 1998 and his possession of such documents had come to the attention of that Committee. In a fourth affidavit sworn on 5th March 1999, Mr Tabbah said that the contact came about through Mr Salehi, a business associate involved in the alleged swap agreement; that Mr Salehi had told him that he had been contacted by a Mr Saddique of CAP (a Kazakh controlled company which had acquired the former Kazakh state controlled oil company) and a Mr Rashid (the son-in-law of the President of Kazakhstan), with a view to setting up a meeting with Mr Tabbah; and that a meeting had taken place in London on 28th March 1998 accordingly.

  8. Dr Felter of Mr Eronat’s then solicitors, Clyde & Co, swore an affidavit in reply attesting to telephone conversations in which Mr Saddique told him that the request for such a meeting had come not from him, but from Mr Salehi, who had referred to Mr Tabbah having claims on the swap contract as well as documents embarrassing to the Kazakh Government.

  9. In May 1999 the costs that Mr Tabbah had been ordered on 16th February 1998 to pay to Mr Eronat were assessed at £263,822.92, together with a further £17,262.61 for the assessment itself. At around the same time, Mr Tabbah engaged a new solicitor, Mr Richard Lilley, of Bowling & Co. In June 1999 Mr Tabbah’s commission claim as against Mobil was settled, on terms whereby (inter alia) Mr Tabbah undertook not, save as required or permitted by the court, to use or disclose confidential information of or relating to Mobil and to use best endeavours, subject to any order of the court, to deliver up all confidential information of Mobil. In July 1999 Mr Tabbah’s commission claim against Mercator and Mr Giffen was likewise settled, on terms withdrawing it and undertaking not to disclose confidential information of or relating to Mercator or Mr Giffen save with the consent of the court or as required by law in any jurisdiction and subject to the undertaking given by Mr Tabbah on 26th February 1999.

  10. By consent order dated 20th October 1999 Mr Tabbah’s commission claim against Mr Eronat was dismissed and Mr Tabbah gave very extensive further undertakings, including the following:

    (In the body of the order)

    1.

    To ensure delivery up to Clyde & Co. forthwith:

    (a)

    Any computer disks relating to Mr Eronat’s business or personal activities, the business of Nichem or Vaeko and

    (b)

    Any taped conversation with Mr Eronat or relating to Mr Eronat’s business or personal activities

    in his possession custody or power.

    2.

    To provide to Clyde & Co. within 7 days hereof an affidavit setting out details of any and all third parties to whom he has provided documents or copies of documents which contain Confidential Information as well as the circumstances and dates of any communication of Confidential Information to any third party as well as copies of any such communication with such third parties.

    3.

    To provide to Clyde & Co. within 7 days hereof an affidavit confirming points (a) to (c) set out in the letter of 9 June 1999 from Bowling & Co. to Clyde & Co. appended hereto.

    4.

    To ensure delivery up within 7 days hereof of any documents or copies of documents which contain any Confidential Information and which are within the possession, custody or power of any person to whom he gave such documents, or copies of documents, whether acting personally, by his servants or agents or otherwise howsoever.

    5.

    Not to use or disclose any of the Confidential Information.

    6.

    Not to repeat to any third party any allegation made during or in connection with the Commission Action or the Conspiracy Action.

    (In Schedule 1)

    5.

    Mr Tabbah and Sitea International S.A. hereby agree to notify Clyde & Co. immediately if any third party raises with Tabbah or Sitea International S.A. or any legal person which as a matter of fact or as a matter of law Tabbah controls or which in respect of which he has any direct or indirect legal or beneficial interest makes any enquiry in respect of the Confidential Information.

    6.

    Tabbah and Sitea International S.A. agree that neither he, nor Sitea International S.A., nor any legal person which as a matter of fact or as a matter of law Tabbah controls or which in respect of which he has any direct or indirect legal or beneficial interest, will instigate, commence or continue or procure any third party to instigate, commence or continue, in any jurisdiction any claim, demand, action, or proceeding which arises out of or is in any way related to the subject matter of the Commission Action or the Conspiracy Action.

    7.

    Tabbah and Sitea International S.A. agree that neither he, nor Sitea International S.A., nor any legal person which as a matter of fact or as a matter of law Tabbah controls or which in respect of which he has any direct or indirect legal or beneficial interest, has assigned, transferred or given (or will assign, transfer or give) to any third party any interest in any claim he or it may have against Mr Eronat, Nichem or Vaeko which arises out of or is in any way related to the subject matter of the Commission Action or the Conspiracy Action.

    8.

    Mr Tabbah and Sitea International S.A. jointly and severally hereby agrees fully and completely to indemnify and hold harmless Mr Eronat and/or Nichem and/or Vaeko in respect of any loss, liability, damages or costs arising from any breach of this agreement whether such breach is committed by either or both of Tabbah or Sitea International S.A.

    9.

    In the event that Tabbah, Sitea International S.A. and/or any other legal person (whether controlled by Tabbah or not) instigate, commence or continue against any third party, in any jurisdiction, any claim, demand, action or proceeding, which arises out of or is in any way related to the subject matter of the Commission Action or the Conspiracy Action. Tabbah and Sitea International S.A. agree jointly and severally, fully and completely to indemnify Eronat, Nichem and/or Vaeko in respect of any and all loss or damage (including, without limitation, legal costs, damages and interest) suffered by Eronat, Nichem and/or Vaeko arising out of any actions taken by that third party (including without limitation, joinder, issue of third party proceedings, issue of any contribution notice and /or issue of any subpoena) against any or all of Eronat, Nichem, Vaeko and/or any legal person which as a matter of fact or as a matter of law Eronat controls or which in respect of which he has any direct or indirect legal or beneficial interest.

    10

    For the avoidance of doubt the indemnities contained in Clauses 7 and 8 above shall not extend to any loss arising from the lawful acts of Statutory authorities.

    11.

    Tabbah agrees, upon a reasonable request in writing, to use his best endeavours to assist Mr Eronat, Nichem or Vaeko in relation to any enquiry by any third party arising out of or in relation to any Confidential Information.

  11. Pursuant to undertaking (2) in the body of the order dated 20th October 1999, Mr Tabbah swore a seventh affidavit dated 14th September 1999, describing the disclosure of confidential information to various third parties.

  12. I should say at this point a word about relevant documents that Mr Tabbah retains in his possession. First, Moore-Bick J records in his judgment that Mr Tabbah retains copy documents disclosed by Mr Eronat in the commission action. There was some uncertainty before us as to whether these included copies of any “confidential documents” within the scope of Colman J’s order dated 16th February 1998. On the face of it, they should not do so, and the understanding of counsel for Mr Tabbah, Mr King, was that they do not. Although the commission action is long since dead, Mr Tabbah’s continued retention of these documents appears quite legitimate, on the basis that there is no automatic duty (unless the court otherwise orders) to deliver up or destroy at the end of litigation documents disclosed by the other party during the litigation. This is so, even though the present would appear a prime case for such an order, had it been sought in October 1999. Second, Mr King informed us that Bowling & Co. have also retained copies of some confidential documents in the form in which they were exhibited to affidavits in the years 1997 to 1999. Mr King accepted that this should not have occurred, having regard to the order dated 20th October 1999.

  13. At some presently unknown date, the US Department of Justice began an investigation into trading with Iran by inter alios Mr Eronat. Such trading has been since the mid-1990s illegal for American citizens. Mr Eronat is an American citizen, although resident at the relevant times in this country or Spain, but Mr Tabbah is a Jordanian citizen, resident it appears in England. The applications were made by notice dated 9th August 2001, amended and, it seems, duplicated by notice dated 5th October 2001. They were supported by a witness statement of Mr Lilley dated 5th November 2001, to which Mr Blacker (formerly of Clyde & Co. and now of Ross & Co.) responded on 23rd November 2001, leading to a further witness statement from Mr Lilley dated 29th November 2001. How the US Department of Justice became aware of Mr Eronat’s potential involvement, and whether this had anything to do with Mr Tabbah’s disclosures of material in 1997 or 1998 remains unknown. According to Mr Lilley’s second statement, he was approached by Ms Wendy Wysong, the assistant US attorney in the Department of Justice handling this matter, some time prior to 1st September 2000, but cannot remember how she told him that she had been put in touch with him, although he “rather thinks” that it was through his predecessors, James & Sarch. If so, that might suggest that the US Department became interested as a result of Mr Tabbah’s disclosure of material in 1997-98. Mr Lilley met with Ms Wysong on 1st September 2000 and explained that the court’s orders prevented any disclosure of documents or cooperation. However, he wrote to Clyde & Co. on 22nd September 2000 saying simply that Mr Tabbah had been requested to attend at the American Embassy on 27th September 2000 in connection with an investigation into the alleged swap transaction. This letter was written purportedly, though plainly misguidedly, under clause 11 of the schedule to the order dated 20th October 1999. It did not refer to clause 5 of the schedule, or to undertakings 4 and 5 in the body of the order, or refer to or record the approach by or meeting with Ms Wysong. So, it seems, there is no contemporaneous record of the reason for her approach and no clear present recollection.

  14. To complete the history, at some date prior to 3rd November 2000 the US Department of Justice asked Bowling & Co. whether Mr Tabbah would give evidence to the Grand Jury investigating the swap transaction. By letter of that date, Bowling & Co. informed Clyde & Co. that Mr Tabbah intended fully to co-operate with the American investigation, and mentioned a proposal to subpoena Mr Tabbah. They asked whether Mr Eronat objected to such co-operation. Clyde & Co. replied referring to the constraints arising from the English court’s orders and suggesting that the proper course would be for the US authorities to invoke the assistance of the English courts. Mr Lilley’s second statement says that Ms Wysong told him by telephone that the US authorities proposed to serve the proposed subpoena on Mr Tabbah “through his US attorney Joe Donatucci”, and on 6th December 2000 confirmed that they would fund Bowling & Co. to make the applications to the English court which eventually came before Moore-Bick J. A subpoena was issued on 1st December 2000 (for attendance before a Grand Jury on 13th December 2000). Service appears to have been effected upon and accepted by Mr Tabbah’s attorney. The acceptance was presumably voluntary, in circumstances where Mr Tabbah was not within the jurisdiction of the United States. Further, as the judge put it, “Mr Tabbah has always made it clear that he is willing – indeed anxious – to co-operate by giving evidence against Mr Eronat”. So, as the judge said, it is not entirely clear why it was thought necessary to issue or serve any subpoena at all. It is not suggested that the subpoena is of any significance to the issues we have to consider.

    The applications for release and the relevant considerations

  15. On 1st February 2001, the US Department of Justice also sent to the United Kingdom Central Authority a request for assistance under the Treaty for Mutual Legal Assistance in Criminal Matters signed January 6, 1994 and in force since December 2, 1996. The assistance requested was “in facilitating the appearance of Farih Tabbah .... in Washington, D.C. .... for the purpose of testifying before the Grand Jury”. The request referred to the consent order to which Mr Tabbah was party, although giving its date as September, rather than October 1999. It recited (erroneously) that the consent order contained a provision allowing disclosure to statutory authorities, and said that Mr Tabbah wished to speak with US authorities “only with the protection afforded by permission from the British courts”. In these circumstances, there was nothing that the United Kingdom Central Authority could, or it appears did, do in response to this request under the Treaty. Article 10 provides that, where a requesting party seeks assistance in facilitating the appearance of a witness in its territory, the role of the Central Authority is simply to ask the “person whose voluntary appearance in the territory of the Requesting Party is desired whether he agrees to appear”. A cardinal feature of the present situation is, as already stated, Mr Tabbah’s willingness – indeed anxiety – to co-operate by giving evidence against Mr Eronat. Why that is so is a different matter, to which I shall return. Since there is nothing stopping Mr Tabbah going to the United States or attending at the place where any Grand Jury may happen to be convened at any time, the actual issue is whether he should be released from all or any of his undertakings, to enable him to give the evidence and produce the documents that he wishes to volunteer to a Grand Jury. That issue concerns him, Mr Eronat and the court, and can only be resolved upon an application by him to the court. For whatever reason, Bowling & Co. did not write to this effect until 11th April 2001, and did not issue any application until August 2001. Meanwhile, on 25th May 2001, Clyde & Co. had responded to the intended application by alleging that Mr Tabbah “has shown by his past actions that he is intent on doing everything he possibly can to damage” Mr Eronat, and that they were “concerned that the present application is simply a further example ....” Clyde & Co’s letter raised a number of specific matters of concern in detail, and seeking explanations on some of them. The applications issued in August 2001 were issued without response to Clyde & Co’s letter.

  16. The applications were supported by a first statement from Mr Lilley. Mr Lilley also failed to respond to Clyde & Co’s letter, giving as the reason that “I cannot be sure that Mr Eronat will persist in relying on these matters as grounds for opposing Mr Tabbah’s applications”. I interpose to say that that reason cannot survive Mr Lilley’s subsequent failure to provide proper responses in his second statement, at a time when it was on any view clear that Mr Eronat was relying on such matters. In his first statement, Mr Lilley listed five factors in support of the applications. Three of them related to the need for or desirability of co-operation, and disclosure of information, in criminal matters, as recognised by the Treaty and general principle, as well as (it was submitted) by the court’s orders. Another was that all parties had consented to Mobil being released from its implied undertaking not to disclose documents. The one remaining factor was that:

    (3)

    When the evidence is taken before the Grand Jury, Mr Eronat, Nichem Mobil and Mercator will be represented. It will be open to them to object to the admission of evidence on the ground that the evidence derives from material that has been unlawfully obtained. They will also have the right to cross examine Mr Tabbah and to put to him material that will discredit him. If it is truly Mr Tabbah’s purpose to injure Mr Eronat as Mr Eronat’s solicitors have alleged (see paragraph 15 above), Mr Tabbah can be asked about this and the material upon which the allegation is based can be put to him. Mr Eronat will not therefore suffer injustice by reason of Mr Tabbah giving evidence. Indeed justice is best served by not denying the Grand Jury the opportunity to hear and give appropriate weight to the evidence that Mr Tabbah will give.

  17. In most of this Mr Lilley was wrong, as he has subsequently acknowledged. It is now common ground that Grand Jury procedure is secret.

    • Firstly, Rule 6(d) of the Federal Rules of Criminal Procedure excludes the presence of any person, other than government attorneys, the witness (Mr Tabbah), an interpreter (if necessary) and the stenographer or operator of a recording device. Neither Mr Eronat nor any counsel on his behalf can therefore attend.

    • Secondly, a “general rule of secrecy forbids disclosure of ‘matters occurring before the [G]rand [J]ury”, which includes “not only the evidence actually presented to that body but also anything that may tend to reveal what transpired before it, such as summaries of grand jury testimony”: United States v. Eastern Airlines, Inc. 934 F.2d 241, 244 (2d Cir. 1991), quoting Rule 6(e). Mr Eronat would therefore have no means of knowing what had been said or produced before the Grand Jury.

    • Thirdly, the “suspect under investigation by the grand jury” has never “been thought to have a right to testify or to have exculpatory evidence presented” to the Grand Jury: United States v. Williams 504 U.S. at 52. Mr Eronat may still ask to present testimony to the Grand Jury, but, if this was permitted, any testimony he presented would be in ignorance of any other testimony or material before the Grand Jury, and could not therefore be specifically directed to meeting or explaining any such testimony or material.

  18. In these circumstances, the present applications required the judge to recognise and weigh competing considerations. Counsel took as their starting point authorities considering the nature and scope of the implied undertaking not to disclose or use documents disclosed under the court’s compulsory process. Charles J. summarised relevant considerations in A. v. A; B v. B. [2000] FLR 701, 718:

    In my judgment it is fair to say that the courts have demonstrated a greater willingness to order disclosure to the court of material obtained by others under compulsion than they have to permit disclosure by parties of material subject to the implied undertaking and thus, in general terms, of material which the court has obtained under compulsion or which the parties have had to provide to each other. No doubt in part this is due to the fact that the courts well understand and appreciate the public interest in the proper and efficient administration of justice, the need for proper discovery if this is to be achieved, the imposition that discovery imposes on parties and the desire of any court to have all information that is, or might be, relevant before it. In my judgment an additional factor is that the purposes for which a party to litigation is compelled to provide information are narrow and limited.

    In Crest Homes plc v Marks [1987] 1 AC 829, 860B Lord Oliver says that:

    .... the court will not release or modify the implied undertaking given on discovery save in special circumstances and where the release or modification will not occasion injustice to the person giving discovery. As Nourse LJ observed in the course of his judgment in the instant case, each case must turn on its own individual facts.

  19. Charles J then went on to consider the position with regard to information required in the public interest by prosecuting authorities. In this connection he cited Rank Film Distributors Ltd. v .Video Information Centre [1982] AC 380, 447, where Lord Fraser treated as “clearly correct” the proposition “that there might be a public interest in favour of disclosure which would override the public interest in the administration of justice which goes to preserve the confidentiality of documents disclosed on discovery”. At page 720 in proposition (4), Charles J treated the existence of a public interest of this type as an example of a “special circumstances” such as contemplated by Lord Oliver in Crest. In Charles J’s view, with which I would concur, it is for the court to decide, in any particular case, whether an overriding public interest exists and whether, therefore, the implied undertaking should be released. It was common ground before Moore-Bick J and before us that the relevant public interest in assisting the investigation, revelation and prosecution of crime extends to the assistance of foreign investigating bodies or courts and foreign offences, even though (as here) they would not constitute offences under English law. Mr Simon QC, representing Mr Eronat, suggested that the interest in assisting the investigation and prosecution of offences under foreign law which had no English parallel may be less powerful than it is in assisting in relation to other offences. There may be something in that, if one compares murder (for example) with the present charges reflecting American legislative policy with regard to Iran, but it is unnecessary to consider whether there is in this case and I shall simply proceed on the basis that there is no relevant distinction.

  20. The implied undertaking, which relates to the documents disclosed in the commission action, is not the only relevant undertaking in this case. The order dated 20th October 1999 required the confidential documents held by Mr Tabbah’s then solicitors to be delivered up to Mr Eronat unconditionally, and recorded express undertakings by Mr Tabbah which go wider than any implied undertaking. In particular, Mr Tabbah undertook expressly

    1. “not to .... disclose any of the Confidential Information”, defined as any information whatsoever contained in or derived from the confidential documents, and

    2. “not to repeat to any third party any allegation made during or in connection with the Commission Action or the Conspiracy Action”.

    It was common ground before us that the court also has power in this context to release or modify such express undertakings, in special circumstances (including the furnishing of assistance to foreign investigating bodies or courts) and where this will not occasion injustice.

  21. It is nevertheless appropriate to note a potential difference between the implied undertaking given on disclosure and the present express undertakings, to which the judge did not in terms advert. The express undertakings were given by way of consensual settlement of the proceedings. They were required and given in circumstances where Mr Eronat was complaining that Mr Tabbah had told lies and manufactured a claim against him, and that Mr Tabbah had in this context been in possession of and sought to deploy stolen documents to promote his claim. The purpose of the undertakings, from Mr Eronat’s viewpoint, was plainly to avoid any future risk of Mr Tabbah repeating conduct of this nature. The scope of the undertakings went in this respect much wider than could have been implied at law, particularly as regards the undertaking not to repeat to any third party any allegation made during or in connection with either of the two actions. The court has power to release or modify any such undertakings in the public interest. But I think that the court should be particularly careful regarding the appropriateness and manner of so doing, in circumstances where litigation involving complaints of this nature has been consensually settled, on terms designed to give the complainant the maximum protection. Further, although it is true that the merits of the litigation between Mr Tabbah and Mr Eronat were never determined by judicial decision, this was because the parties themselves reached an agreed outcome. The public interest in encouraging and enforcing the settlement of litigation by agreement is a factor present in relation to the express undertakings of 20th October 1999, which is not present in relation to the implied undertakings given on disclosure of documents in litigation. This additional factor reinforces the need for special circumstances before any release or modification of Mr Tabbah’s express undertakings. This is so, even though the special circumstance relied upon is to enable Mr Tabbah to assist the American investigating authorities or Grand Jury. Further, while there is in these respects a distinction of principle between, on the one hand, information contained in or derived from confidential documents and allegations made in one or other of the two actions and, on the other hand, other documents disclosed by Mr Eronat in the commission action, it would make no practical sense (and would not enable Mr Tabbah to give oral evidence in America) to vary the implied undertaking, while maintaining the express undertakings.

    The judge’s exercise of discretion

  22. Mr King rightly reminded us that the judge’s decision to vary all these undertakings involved an exercise of discretion, which this court should review with circumspection and with which we should only interfere if the judge was “wrong” (cf. CPR 52.11(3)) or if he “has exceeded the generous ambit within which a reasonable disagreement is possible” (cf per Lord Fraser in G. v. G. [1985] 1 WLR 647, 652, cited by Brooke LJ in Tanfern v. Cameron-MacDonald [2000] 1 WLR 1311, 1317). The judge’s exercise of his discretion in the present case is reflected in his ultimate conclusion (page 29) that:

    .... for the reasons I have given, I am not persuaded that the risk of injustice to Mr Eronat in allowing Mr Tabbah to give evidence in person is sufficiently great to outweigh the considerations in favour of enabling him to do so.

    Mr King acknowledged however that it was incumbent upon us to review and re-exercise the discretion, if satisfied that the judge went wrong, because he erred materially in law or in the considerations which he either took or failed to take into account, or if we otherwise concluded that the result which the judge reached was simply wrong.

  23. This brings me to the grounds on which Mr Eronat objects to the variations sought from and granted by the judge. Mr Eronat’s fundamental objection was and remains that the variations will enable Mr Tabbah to give evidence before a Grand Jury in secret which Mr Eronat will have no means of checking, challenging or (in any informed way) rebutting. It is submitted, as Clyde & Co. said in their letter dated 25th May 2001, that Mr Tabbah has shown himself repeatedly to be motivated by malice, and that Grand Jury proceedings would offer him an unparalleled opportunity to pursue his campaign against Mr Eronat by making false allegations, free from any countervailing evidence, or check. In response, it is submitted that it is not for the English courts to cavil at Grand Jury procedure, that this is essentially an investigatory process, that English prosecuting authorities investigate crime and interview potential witnesses, without having to allow suspects any role at that stage, and that, if and when a Grand Jury decided that there was a case to answer, Mr Eronat as a defendant would be given full details of what was alleged and would, with the assistance of lawyers and by cross-examination of prosecution witnesses, have every opportunity to answer it. As to these points, so far as appears, a Grand Jury appears to fulfil a type of judicial role, even though, unlike the old-style committal process in this country, the defendant is not entitled to be present or kept informed and cannot cross-examine. The right to play a full part, if and after a Grand Jury concludes that there is a case to answer, does not meet Mr Eronat’s primary case, that he should not have to defend criminal proceedings, with their attendant costs and trouble, at all, and that Mr Tabbah’s uncontrolled testimony may mislead a Grand Jury into concluding that he has a case to answer.

  24. Mr Simon submitted before the judge as before us, that in these circumstances Mr Tabbah’s applications for release from his undertakings in order to give evidence before the Grand Jury should be refused. At the same time, however, he held out an alternative possibility, to which Mr Eronat would not object. The United States authorities could have requested and could request the taking of Mr Tabbah’s evidence in England under Article 8 of the Treaty and s.4 of the Criminal Justice (International Co-operation) Act 1990. This would then lead to proceedings in the magistrates’ court under The Magistrates’ Courts (Criminal Justice (International Co-operation)) Rules 1991 (or, possibly, the Crown Court under the Crown Court Rules 1982). Both sets of rules would require the clerk or other court officer to note which persons with an interest in the proceedings were present, which were represented and by whom and whether any of such persons were denied the opportunity of cross-examining the witness or any part of his testimony. They therefore contemplate that persons interested, like Mr Eronat, may be present and may be permitted to cross-examine. It is right to say that both sets of rules also contemplate that “the court may, if it thinks it necessary in the interests of justice, direct that the public be excluded from the court”. Whether a suspect like Mr Eronat could count as a member of “the public”, bearing in mind the rules’ specific reference elsewhere to the potential role of a “person interested” is open to question. But, however that may be, the English procedure provides a route by which Mr Tabbah’s evidence could and would, subject to any contrary court order, be heard by Mr Eronat and his lawyers and cross-examined. Mr Simon’s submission is that the availability of this procedure reinforces the conclusion that it is unnecessary and inappropriate to release the undertakings to allow Mr Tabbah to give his evidence in secret before a Grand Jury in America.

  25. The judge (at transcript page 28) placed considerable weight on the desirability of the court “so far as possible” lending its assistance to overseas authorities in such a way as would enable them to conduct their investigations and take Mr Tabbah’s evidence in accordance with their “established” or “ordinary” procedures. By that he made clear that he meant orally and in person, and he pointed out that “it is generally accepted that it is a great advantage to any tribunal to see witnesses of fact for itself”. He added that this was “still true, although no doubt to a lesser extent” when the witnesses were not subject to cross-examination; and that “the risk that the witness might give false evidence, whether deliberately or not, is usually a matter best left to the tribunal itself”. For my part, it seems to me that the judge at this point did not address all the relevant considerations. First, although the established or ordinary procedure for taking the evidence of witnesses present in the United States is oral and in secret, the taking of evidence in this way from overseas witnesses depends on their willingness to attend in the United States. Otherwise, it is only possible under any treaty which may exist with the overseas country and in accordance with the domestic rules of that country. Here, it is only because of Mr Tabbah’s willingness and “anxiety” to go to the United States to give evidence in connection with Mr Eronat that oral evidence is even feasible. And if Mr Tabbah’s willingness and anxiety are the product of malice towards Mr Eronat, the court should consider the suggested benefits of the course Mr Tabbah wishes to adopt with circumspection.

  26. Secondly, although the judge touched on the inability to cross-examine before a Grand Jury, he did not mention the (most unusual and more fundamental) fact that the person affected would not even know, or therefore be able in any way to respond to or correct what was being said by Mr Tabbah. Further, he referred to cross-examination as a matter simply reducing the advantage to be obtained by seeing a witness. He did not compare the assistance which the Grand Jury would be likely to get in this case from (a) evidence given orally before it but in secret and without opportunity of cross-examination or response by Mr Tabbah as compared with (b) a transcript of evidence given before a magistrate or judge, which had been tested by cross-examination and to which Mr Eronat would have the ability to respond. Of course, it is the fact that Grand Jury procedures for the taking of evidence orally before it accept as appropriate the procedure indicated in (a). But the judge was, I think, right to attempt a wider comparison. The oral reception of evidence is not the only means by which a Grand Jury may receive evidence. English procedure is under the Act and the rules for the English court to decide, and the English court may think it appropriate that an interested suspect should not only be present and informed but permitted to cross-examine. In such circumstances, evidence may, quite naturally, be received by the Grand Jury by a procedure different from its own domestic procedure. Further, whatever would be the position in a case where the English court’s assistance was invoked without the constraints of any undertakings, the undertakings in this case introduce a special feature. The English court is entitled and bound to consider the interests of the suspect as well as those of the United States authorities, when determining whether and to what extent to release the undertakings. It is, to my mind, in no way surprising that Mr Lilley’s original witness statement sought to capitalise on the protections which he then believed that United States procedure would afford to Mr Eronat (see paragraph 16 above). The case now made for the irrelevance of any such protections in the United States, compared to this country, strikes somewhat hollow.

  27. The central plank of the judge’s reasoning rested on his analysis of the strength of Mr Eronat’s case that Mr Tabbah harboured feelings of malice towards Mr Eronat strong enough to make him concoct false evidence. The judge did “not rule out the possibility that there may be circumstances in which the risk that a person under investigation might be damaged by false and apparently plausible testimony is so great as to justify the court in declining to assist him to give his evidence in person in accordance with the usual procedures”. But he was not persuaded that the risk that Mr Tabbah would deliberately give false evidence before a Grand Jury in person was “as great as has been suggested”. He accepted the evidence as demonstrating that:

    Mr Tabbah was prepared to make use of confidential information to force Mr Eronat to concede his demands, and that he is willing to use improper means to secure his objectives.

    But he went on to say that:

    Apart from informing the police of the threats to kill him, however, and, perhaps, the passing of information to the authorities, all of which occurred nearly four years ago, they do not point very strongly towards the conclusion that Mr Tabbah harbours such strong feelings of malice towards Mr Eronat as to be likely to concoct false evidence against him before the Grand Jury.

  28. Mr Simon takes issue both with these general conclusions and with the judge’s assessment of the evidence. He submits, with some justification in my view, that the rolled up formulation in the last quoted passage leaves unclear what positive conclusion the judge was actually reaching about the significance of the matters covered, particularly the threats to kill and “perhaps” the passing of information. He also submits that, although the judge correctly expressed his ultimate conclusions in terms of risk, he did not, in the course of his analysis of individual factors, consistently focus, as he should have done, on the level of risk that Mr Tabbah would give malicious evidence. In Mr Simon’s submission, the court, when deciding whether and on what basis to vary the undertakings, should take into account the interests that the undertakings were given to protect and the risk that those interests would be damaged unjustifiably. The undertakings were given to avoid the determination of factual issues regarding the original possession and use of the confidential information, and because of the perceived risk that Mr Tabbah might misuse such information. The court could not and should not attempt now to determine the same issues, but should seek to evaluate the risks inherent in any variation of the undertakings. In contrast, the judge, Mr Simon submits, tended, when assessing particular aspects of the evidence, to approach them as if he had to make conclusive findings of fact. But, even if one evaluates particular aspects of the evidence and seeks to reach conclusions as a matter of probability, Mr Simon still submits that the judge’s evaluation was wrong in material respects.

  29. I turn therefore to the particular evidential matters on which Mr Eronat’s case relies. The first relates to Mr Tabbah’s possession in 1997 of confidential documents of Mr Eronat’s. Mr Eronat suffered two burglaries at his London house in 1994 and 1997, but the confidential documents post-dated the former and the latter involved only Mr Eronat’s computer and some floppy disks. Mr Eronat’s case was these burglaries were background, not that they led to the loss or interception of the confidential documents. The judge recorded, correctly, Mr Simon’s acceptance that there was no evidence to link Mr Tabbah to either burglary. But all he added with regard to Mr Tabbah’s possession of Mr Eronat’s documents was that:

    At most all that can be said is that Mr Tabbah was in possession of some documents and information which were probably stolen at some time from Mr Eronat, but when and by whom is entirely unclear.

  30. Mr Eronat’s evidence in fact opened up possibilities both that documents had gone missing from Upper Brook Street and that documents sent to him by third parties had been intercepted. The judge could not determine any issue in that regard. But, once it was accepted that documents in Mr Tabbah’s possession were “probably” stolen by someone from Mr Eronat, it was on the face of it for Mr Tabbah to explain how and why he came by such documents. The documents included copies of documents sent to but never received by Mr Eronat, and of incoming faxes which Mr Tabbah admitted that he copied without any express authority after relations with Mr Eronat became strained in March 1997. Why Mr Tabbah should have made such copies is unexplained. Mr Tabbah also compiled the list of Mr Eronat’s accounts and assets, which could only have come from some private document(s) or source(s). Mr Blacker’s first statement raised squarely the absence of any explanation of how and from what sources that list came. Mr Lilley’s only response was to assert (in context, obviously irrelevantly) that Mr Tabbah was not involved in the two burglaries (paragraph 4 of Mr Lilley’s second statement). Further, where Mr Tabbah did give explanations (such as that Mr Eronat gave him documents for information or to reinforce the credibility of Mr Eronat’s involvement with the Kazakh parties), they are in issue. The issue cannot be resolved on this application, but I have to say that I sympathise with Mr Simon’s submission that many of the explanations appear on their face less than likely.

  31. Secondly, Mr Simon relies upon Mr Tabbah’s use of the confidential documents in 1997. The judge accepted this point to the extent of saying that there was evidence “that Mr Tabbah was prepared to go to some lengths in pursuit of his claim, and to use his possession of confidential documents to put pressure on Mr Eronat, but not that he harboured a malicious desire to damage Mr Eronat as an end in itself”. It is however worth noting that these lengths extended to refusing to allow Mr Eronat to list or copy the confidential documents after deploying them in August 1997, until Mr Eronat, under compulsion of circumstances as he said, agreed that they could be reviewed “solely for the purposes of settlement” of the commission claim. Mr Eronat in his evidence and Mr Simon in his submissions also suggested as a third factor (with which the judge did not deal in his judgment) that references to certain of the confidential documents in Mr Tabbah’s original “statement” of claim were designed to try to attach a veneer of relevance (in the context of the swap contract) and of respectability to Mr Tabbah’s possession of some of the documents (particularly an invoice from Nichem to Mercator, a letter regarding the 16 year old son of the president of Karachanankgazprom and an APOil fax). Even in the context of an overall assessment of the risk that Mr Tabbah may have been and may still be malicious, this seems to me a point that can be left on one side.

  32. Fourth and more important, in my judgment, is the evidence regarding disclosure of the confidential documents to third parties. The judge identified this as a separate aspect of Mr Tabbah’s conduct that “might, however, be said to be more indicative of his harbouring malicious intentions towards Mr Eronat” (page 16). He took the facts from Mr Tabbah’s affidavit of 14th September 1999. But, although Mr Tabbah maintained there that his earlier affidavit sworn 30th January 1998 “remains a comprehensive description of all the parties to whom I have disclosed Confidential Information”, it is relevant to look at what the earlier affidavit actually said. Paragraph 35 said that, between 19th September and 5th December 1999, he “provided material to the Inland Revenue, including the list of bank accounts and assets which I had prepared for the purposes of a possible Mareva application”. Paragraph 36 said that “at about the same time I provided similar information to the US IRS, the US Embassy in London and the UK Immigration authorities”. Paragraph 39 gave a detailed account of telephone contact on and subsequent to 27th January 1998 by Mr Sarch of his then solicitors with first the CID and (as a result of the CID’s information that the US Embassy had expressed an interest in Mr Eronat’s activities) with a Mr Travers at the US Embassy. It ended: “Mr Travers asked for their [the solicitor’s] telephone number which indicated to them that he might well make further enquiries”. It said nothing about any recent meeting with the US Embassy. On the contrary, paragraph 40 went on to say: “I am not intending to disclose further information to any of the above authorities pending the hearing of Mr Eronat’s current interlocutory application” (which was evidently made in December 1997, probably on about 22nd December, the date of Mr Eronat’s supporting affidavit).

  33. In fact Mr Tabbah’s affidavit of 14th September 1999 reveals a materially different picture. It separates the disclosure of information into three stages:

    • The first was to the US IRS and Customs Services, “some time” in the summer of 1997 after a visit to Mr Tabbah’s US attorneys in Washington, when “they discussed with me the necessity for a referral of the Confidential Information to the U.S. Statutory Authorities”. Mr Tabbah does not say that these disclosures were made on advice, merely that they followed discussion. It seems unlikely that he can have been following strictly any advice in making them, since

      1. as the judge observed, the lawyers’ advice appears to have been prior to 1st August 1997, whereas according to his affidavit of 30th January 1998 all the disclosures were made after Mr Tabbah issued his commission claim, on 19th September 1997;

      2. his affidavit sworn 14th September 1999 reveals that the disclosures to United States authorities were made anonymously by posting.

      The second-hand evidence given in Mr Lilley’s second statement to the effect that “My client instructs me” that his American lawyers advised him that “the claim embraced matters, and contained information, criminal activities by American companies and individuals [sic]” and that they “recommended he report matters to the relevant authorities, which he did” comes long after and is in contrast with Mr Tabbah’s original account and fails to address any of these points. Mr Lilley’s statement is anyway hard to follow, since if the basis for the advice to disclose was that the claim embraced criminal activities (presumably, the suggested trading with Iran by American citizens), the sense of anonymous disclosure to the US IRS and Customs services is not apparent, at any rate to me.

    • The second set of disclosures was to the UK Inland Revenue and Immigration Services “in the late summer of 1997”, again by posting; no explanation at all is given for this conduct; it is easy to see how the UK tax authorities might be thought to be interested in a list of Mr Eronat’s accounts and assets. It is far less easy to view Mr Tabbah as making such disclosure as a public-spirited Jordanian national (who appears to be resident in this country), and that remains so, even if (as to which there is also no evidence) he happens himself to be a UK taxpayer. Nor has he in evidence suggested that this is why he made the disclosure.

    • The third is explained as follows: “Some time after Mr Sarch’s telephone conversation described [in paragraph 39 of his affidavit of 30th January 1998], in late January 1998, I had a meeting with Mr Travers and various other officials at the American Embassy in London. At that meeting I handed over Confidential Information”.

  34. It appears from the third point that Mr Tabbah’s affidavit of 30th January 1998 gave a seriously misleading picture about events which had occurred within a day or two before it was sworn. Far from the matter resting with Mr Travers indicating to Mr Sarch that he might well make further enquiries, Mr Tabbah in person had met with Mr Travers and handed over confidential information. Far from all the disclosures having been made prior to 5th December 1997 and Mr Tabbah “not intending to disclose further information .... pending the hearing of Mr Eronat’s current interlocutory application” issued around 22nd December 1997, Mr Tabbah had deliberately made disclosure to the US Embassy, during the currency and before the determination of Mr Eronat’s application. Notwithstanding this, his affidavit sworn 30th January 1998 (followed up in this respect by his solicitors’ open letter dated 10th February 1998) claimed the moral high-ground attaching to a litigant who awaits the court’s determination of what is appropriate. While Mr King could do no more than concede that Mr Tabbah’s affidavit of 30th January 1998 was in fact misleading, it is difficult to conceive how this could have resulted from any mere mistake. Further, Mr Tabbah, when swearing his affidavit of 14th September 1999, cannot have failed to note the discrepancy, but did not directly address it or apologise, or explain the previous fundamental inaccuracy.

  35. The judge did not observe or comment on this discrepancy, which appears not to have been drawn to his attention. But it is significant.

    • First, it is scarcely credible that it can have occurred honestly.

    • Secondly, even if one were to assume that the first affidavit was the result of some extraordinary mistake, it suggests that great caution is necessary before taking evidence sworn by Mr Tabbah at face value.

    • Third, Mr Tabbah, when drafting and swearing his affidavit of 14th September 1999, cannot have failed to spot the discrepancy, but did not identify or explain it as such. Rather, he suggested that he was simply being “more precise”. It is right that he did at least reveal (under court order) what one must now take to be the true position, even though one cannot know the full circumstances in which he came to do so. Nonetheless, a frank witness, who had an explanation to offer for the original misleading affidavit, would I think have addressed the matter directly. Again, that underlines the caution necessary in relation to his evidence.

  36. More important still, however, is the light thrown on Mr Tabbah’s motivation at the time. Mr King’s submission was and is that Mr Tabbah may have been acting public spiritedly, or at worst from mixed motives, in disclosing information to public authorities. The discrepancies in and the nature of Mr Tabbah’s evidence about the disclosures made to the US Embassy on 30th January 1998 add in my mind to the general implausibility of this suggestion. Indeed, Mr Tabbah in his affidavit of 30th January 1998 was claiming the opposite moral highground – credit for not making any disclosure pending the determination of Mr Eronat’s outstanding application. The judge did not have this discrepancy drawn to his attention, and in my judgment it requires a different and harsher evaluation of Mr Tabbah’s motives and conduct than that at which the judge arrived.

  37. Even on the way the matter was put before the judge, the judge’s conclusions on this aspect were, in my judgment, too generous by far to Mr Tabbah. The furthest that the judge was prepared to go was to say that the timing of the disclosures (on Mr Tabbah’s evidence) after he had commenced proceedings “does suggest that one of his motives may have been to cause difficulties for Mr Eronat” (emphasis added). Later in his judgment, in a passage which I have quoted in paragraph 27 above, the judge spoke only of the passing of information to the authorities as perhaps pointing (or - depending on how one interprets the relevant passage - as perhaps pointing “very strongly”) towards a conclusion of strong malice. The judge did not mention at this point either the delay in sending, or the anonymous nature of, the information sent to the US authorities. He did mention at one point the meeting with and disclosures to the US Embassy officials in January 1998. But he never focused on the improbability (quite apart from the discrepancy already considered) that Mr Tabbah can have thought at that time that it was his public duty to make this particular disclosure. For all these reasons, I consider that the judge’s assessment of the significance of this factor was clearly wrong.

  38. The judge acknowledged as a pointer towards malice (the fifth in Mr Simon’s list) Mr Tabbah’s accusations to the police that Mr Eronat had issued threats to kill and that there were witnesses who would bear this out. Mr Eronat’s evidence, which was supported by statements from those witnesses, was and is that there were no such threats. The judge rightly discounted any suggestion of a mistake. He pointed out that Mr Tabbah had never provided any explanation for making the, on the face of it, false charges, and that Mr Lilley had conspicuously failed to deal with the matter. He concluded:

    This is a more disturbing matter, since it provides some basis for thinking that Mr Tabbah is, or at any rate was, willing to make groundless allegations against Mr Eronat for his own purposes.

  39. The reference to its being “more disturbing” refers back to the judge’s assessment of the previous matter (the disclosures to public authorities), with which I have disagreed. Both individually, and even more powerfully in conjunction, these two aspects of Mr Tabbah’s conduct seem to me to point very strongly towards a conclusion - and certainly a very high degree of risk - that Mr Tabbah is someone prepared to act maliciously in order to damage Mr Eronat. I will consider later whether this is a conclusion or risk which can be significantly discounted because of the lapse of time since 1997.

  40. The sixth matter on which Mr Simon relies is Mr Tabbah’s request in November 1998 to be permitted to assist the Kazakh authorities on the basis of the forged letter (paragraphs 6-8 above). The judge said that it was not suggested that Mr Tabbah was a party to the forgery “and the evidence does not go far enough to support the conclusion that he knew that it was forged”. (This was the issue reserved, but never determined, having regard to the withdrawal of the commission claim.) As to Mr Tabbah’s role in instigating any involvement on the Kazakh side, the judge said only:

    There is evidence that he may himself have been more actively involved in the matter than he suggests, but that is not something that I can resolve on the basis of the witness statements.

    He concluded:

    The most that can be said about this incident, therefore, is that it shows a willingness to co-operate with the authorities in a way which might be expected to embarrass or harm Mr Eronat.

  41. Two observations apply.

    • First, the judge attached no significance to the possibility that Mr Tabbah had lied about his role in instigating any involvement on the part of Mr Saddique. It is true that he could not finally determine the issue as such on affidavits, but Mr Simon submits that the judge could and should have taken the evidence on this unresolved issue into account, as reinforcing the existence of a real risk that Mr Tabbah bears malice towards Mr Eronat and will tell lies to harm Mr Eronat.

    • Second, even the judge’s limited conclusion that Mr Tabbah is willing to co-operate with authorities to embarrass or harm Mr Eronat must be taken in conjunction with any other indications that Mr Tabbah will act dishonestly and maliciously, when it suits him. Mr Tabbah’s conduct in copying Mr Eronat’s incoming faxes, in compiling details of Mr Eronat’s accounts and assets, in disclosing such details and other confidential information to various authorities and in making false threats to kill makes it difficult to describe Mr Tabbah as other than seriously dishonest and malicious.

  42. The seventh factor relied on by Mr Simon in support of Mr Eronat’s case concerns a telex confirmation received recently (in May 2001) by Mr Eronat’s company, Nichem, in relation to a letter of credit issued by Mr Tabbah’s company, Sitea. The credit referred to an apparent sale of goods by Sitea to the Iraqi Ministry of Oil, with payment to be made from the United Nations Iraq account and subject to US Department of Treasury licence No. IQ-758. The letter of credit gave for Sitea Nichem’s address, with Nichem’s telephone number and telex answerback. Clyde & Co. said of this incident in their letter of 25th May 2001 that they could not say whether the intention was to damage Nichem by alleging that this was really a sale to Iraq by Nichem without proper licence, or whether it was a fraud by Sitea, hoping to trade with Iraq without giving their true address and operating details, and sought a detailed explanation of it. They said that they had immediately notified the relevant Swiss authorities of the true position. Mr Blacker in his statement dated 23rd November 2001 pointed out that there had been no explanation and no reply. Mr Lilley’s second statement, although asserting in other connections that he had taken Mr Tabbah’s instructions, addressed Mr Blacker’s statement as if its gravamen was that Sitea was involved in illegal activities with the Government of Iraq. He entirely failed to address the substance of Mr Blacker’s point that no explanation had been provided for what had happened.

  43. The judge said of this incident:

    I find it surprising that Mr Tabbah has not provided any explanation for this curious turn of events, but unless the existence of the telex is sufficient in itself to give rise to the inference that Mr Tabbah was seeking, by this means, to harm Mr Eronat, I do not think that his failure to do so provides a sufficient basis for drawing that conclusion. Banks do make mistakes, and it is the fact that Nichem and Sitea did business from the same address, albeit in London, for some time.

    He added that, if Mr Tabbah had wanted to give the impression that Nichem was trading with Iraq, “I am inclined to think that other and better means could have been found to do it”. I would agree with the judge that the evidence does not justify any positive conclusion that Mr Eronat was seeking to harm Mr Eronat, by implicating him in dealing with Iran. Nonetheless, I consider that the judge attached too little weight to Mr Tabbah’s failure to proffer any explanation for this incident, and too much weight to the entirely speculative and on its face remote possibility of some banking mistake, which Mr Tabbah could, if it occurred, no doubt easily have demonstrated. The reality is that Mr Tabbah must be able to produce the documents leading to the opening of the credit if he wants to, but has chosen not to do so. It seems to me permissible to infer from this that Mr Tabbah does have something to hide, even if it may only be that he wishes to conceal the misuse for whatever purpose of the cover of Nichem’s address and details. Again, it seems to me that this incident goes with others to establish a strong risk of dishonest behaviour by Mr Tabbah when it suits him. I accept however that it does not lend real weight to the case for saying that there is a risk that Mr Tabbah is out to damage Mr Eronat maliciously.

  44. Lastly, it is common ground that, in the course of recent bankruptcy proceedings in early 2001, Mr Lilley said, according to Mr Blacker, that Mr Tabbah “hates Mr Eronat” or, according to Mr Lilley, that they “hate each other”. The judge said that:

    It is clear that there has been a complete rift between Mr Tabbah and Mr Eronat, and it may be that hatred is the appropriate word to describe Mr Tabbah’s feelings for Mr Eronat. However, many advocates are given to using colourful language, and the court can usually tell from the circumstances and manner in which words are spoken whether they are intended to represent a considered statement or are used merely to add some colour to a submission. I do not know in what context the words in question were spoken, but I do not feel able to accept that they were intended to represent a considered statement of Mr Tabbah’s feelings.

  45. The only comment that may be made on this passage is that Mr Lilley had by then been acting for some two years for Mr Tabbah, and would be expected to have acquired a good grasp of Mr Tabbah’s feelings for Mr Eronat. There is, however, good sense in the judge’s reluctance to attach real significance to any such statement, without having heard it or its context. On the other hand, even if it is over-stated, it indicates at the least an ongoing dislike and does not suggest any change in Mr Tabbah’s feelings towards Mr Eronat over time.

  46. Standing back and looking at the position so far, I consider that the only proper assessment of the evidence as a whole is that there is a very strong likelihood and certainly a very strong risk that Mr Tabbah has acted dishonestly and maliciously to harm Mr Eronat, in different respects in the past, and that (leaving aside for one moment the lapse of time) he would be likely to view and utilise the giving of evidence against Mr Eronat before a Grand Jury in secret as an opportunity further to damage Mr Eronat and Mr Eronat’s interests by malicious and (particularly so far as it appeared to him to suit this purpose) inaccurate and misleading testimony. In differing from the judge in this area, I refer briefly at this point to the evidence and position regarding disclosures made to public authorities, in relation to which I consider that the judge’s assessment was clearly wrong. I also consider that the judge’s assessment was in other respects more favourable to Mr Tabbah than the evidence can justify, and that he did not always focus as he should have done on the effect of the evidence in establishing a significant risk of injustice to Mr Eronat, if Mr Tabbah were given free rein to express himself without check or scrutiny before an authority such as the Grand Jury.

  47. I turn to the question whether this is a likelihood and risk which can be regarded as having dissipated itself with the lapse of time since 1997-98. Apart from lapse of time, no reason is suggested for diminished malice. Nor do I think it axiomatic that lapse of time has a soothing or healing effect. I would suppose that it may, as or almost equally well, lead to a festering desire for revenge. Further the judge spoke of events occurring nearly four years ago. But, whatever the underlying reasons for the breakdown of Mr Tabbah’s and Mr Eronat’s friendship in 1997, the subsequent litigational history seems to me well capable of fuelling or keeping alive a desire for revenge on Mr Tabbah’s part. Mr Tabbah suffered during 1998 and 1999 a whole series of expensive litigational reverses - the collapse of his hopes of assisting the Kazakh authorities with information about Mr Eronat in 1998-99, the huge sums he had to pay by way of costs in Spring 1999 after the wholesale revision of his commission claims, and the complete collapse later in 1999 of his commission claims. If he felt malice towards Mr Eronat in 1997 and early 1998, these reverses seem well capable of continuing or aggravating that feeling. Further, as I have observed, whatever its value by itself, Mr Lilley’s statement in the bankruptcy court does suggest an ongoing attitude on Mr Tabbah’s part towards Mr Eronat. Mr Tabbah’s failure to respond to the points made in Clyde & Co’s letter dated 25th May 2001 and failure in Mr Lilley’s recent statements to address the points made and requests for explanations sought on Mr Eronat’s behalf may also be viewed as pointers towards an irredentist or hardened attitude. In addition, there is no suggestion that Mr Tabbah has had or therefore foregone since 1999 any other opportunity (prior to the present) to vent any malice he may feel on Mr Eronat. The United States’ authorities’ investigation, whether or not initiated by his own original disclosures, is so far as appears his first opportunity. Finally, I note again the enthusiasm with which Mr Tabbah has embraced the idea of giving evidence before a Grand Jury in America. To repeat, he is “willing – indeed anxious – to co-operate by giving evidence against Mr Eronat”. Unless this is due to long-standing resentment, it is difficult to understand the motivation of a Jordanian businessman resident in this country in volunteering to go to the United States to give evidence before a Grand Jury against a United States citizen resident in Europe, with whom Mr Tabbah alleges that he himself engaged in conduct which was or may be contrary to American law. Mr Tabbah has of course the privilege, that the charges being considered by the Grand Jury represent criminal offences in America for an American citizen like Mr Eronat, but not in America or anywhere else for a Jordanian citizen like Mr Tabbah.

    Overall assessment and conclusions

  48. I return, therefore, to the central question whether the court should in all the circumstances now release Mr Tabbah from his English undertakings to enable him to give oral evidence before a Grand Jury in America in conditions of secrecy as he wishes. I start with the proposition that it is for Mr Tabbah to establish the special reasons justifying the releases that he seeks. I would again underline the fact, to which the judge did not expressly advert in this context, that the releases are sought not merely from an implied undertaking given on discovery, but also from express undertakings arrived at in order to achieve a consensual settlement of litigation. The judge’s ultimate conclusion (set out in paragraph 22 above) may, it seems to me, also be vulnerable to the criticism that it tends to reverse the general onus of proof. These points support, though I do not view them as critical to, my decision on this appeal. The judge was right to weigh in the balance the desirability of permitting Mr Tabbah to give unrestricted evidence as both he and the United States authorities requested before a Grand Jury in America. However, I consider that he attached more weight to the desirability of following “established” or “ordinary” procedures than this factor can in the present case bear. Such procedures are only possible because Mr Tabbah is willing and “anxious” to go to the United States, rather that to give his evidence in England; and, if Mr Tabbah’s willingness in this respect is or may be the product of malice, that is a reason for caution, rather than enthusiasm, about the prospect of his giving evidence in secret and without check. Further, the judge did not in this context weigh all the advantages for an objective investigation of the available alternative procedures, involving use of the Treaty and the 1990 Act.

  49. Having made the criticisms which I have made in the preceding paragraph, the key area of the judge’s judgment remains his analysis of the evidence on malice. Summarising some of the respects in which I have differed from the judge: in relation to certain factors (e.g. disclosure of confidential information to third parties, Mr Tabbah’s wish to comply with the Kazakh Government “request” and the explanation of the Nichem/Sitea letter of credit), it is a justified criticism in my view that the judge appears to have approached the matter on the basis that it would be necessary to arrive at final conclusions, or at least conclusions on a balance of probability, rather than at an assessment of the risk that Mr Tabbah’s conduct may have been, and may still be, motivated by malice. More importantly, however, I consider that the judge was clearly wrong

    1. in his assessment of the evidence relating to disclosures to public authorities made by Mr Tabbah in 1997 and 1998 (in part because the discrepant nature of some of the relevant evidence does not appear to have been drawn to his attention), and (in large measure as a result) in his evaluation of the risk of malice demonstrated by the combination of such disclosures and the false accusations of threats to kill made to the police;

    2. in failing to attach any or real weight to the absence of any explanation (despite every opportunity) from Mr Tabbah for his conduct (e.g with regard to possession of apparently stolen documents and the taking and creation of documents such as the faxes and the list of accounts/assets, the circumstances in which M Tabbah came by the purported Kazakh Government letter and the circumstances behind the confirmation of the Nichem/Sitea letter of credit); and

    3. in the significance which he gave to the mere lapse of time since 1997.

  50. I have concluded in paragraphs 46 and 47 above that the proper assessment is that there is a very strong likelihood and certainly a very strong risk that Mr Tabbah would view and utilise the giving of evidence before the Grand Jury in secret as an opportunity further to damage, and revenge himself on, Mr Eronat by malicious and (so far as it appeared to suit this purpose) inaccurate and misleading testimony.

  51. In my judgment, this is a situation where it is pre-eminently desirable that, if Mr Tabbah is to be released from the implied undertakings given on disclosure and the express undertakings which he gave to procure a settlement of litigation, some check should be maintained over the use to which he puts his freedom. In so far as the American authorities have sought co-operation, in the form of oral testimony in the United States, they have of course done so

    1. because that is what Mr Tabbah is willing and anxious to offer and

    2. because, having regard to the undertakings, they are not in any position to assess the background or the factors which we alone know and can weigh.

    Nor would the Grand Jury be in any better position. That the Department of Justice has had a copy of Clyde & Co’s letter of 25th May 2001 is no substitute for the far fuller information and picture which appears in the affidavits, statements and other documents and which we have had to examine in this judgment. The American authorities’ legitimate wish to take Mr Tabbah’s evidence can however be met by an appropriate application under the Treaty and 1990 Act, and Mr King (although seeking to support the judge’s preference for the oral procedure before the Grand Jury) did not suggest to the contrary as a matter of law.

  52. For these reasons, the judge’s conclusion on these applications was in my judgment wrong and the appeal should be allowed. The applications to vary the undertakings to enable Mr Tabbah to give oral evidence before a Grand Jury in America should be refused. It should however be recorded, for future purposes, that Mr Simon on behalf of Mr Eronat, confirmed to us that Mr Eronat would raise no objection to an application under the 1990 Act to take his evidence before a magistrate or judge in England, in his and his lawyers’ presence and in circumstances where he would accordingly be aware of (and so in a position to make representations to the Grand Jury in response to) the evidence given against him by Mr Tabbah and could also apply to cross-examine Mr Tabbah.

    Sir Christopher Slade

  53. I agree.

    Lord Justice Aldous

  54. I also agree.


Representations

Peregrine Simon QC & Simon Salzedo (instructed by Messrs Ross & Co.) for the Appellant.

Richard King (instructed by Messrs Bowling & Co.) for the Respondent.


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