Background

The dispute was between Zaha Hadid Limited, which operates the renowned international architecture practice founded by Dame Zaha Hadid (the company), and The Zaha Hadid Foundation, which became the owner of the ZAHA HADID trademarks following Dame Zaha Hadid’s death (the foundation).

Under a licensing agreement between the parties, the company was required to pay the foundation a royalty of 6% of net income for “licensed services” – a definition broad enough to cover any and all services provided by the company, not limited to services actually using the trademarks. The critical clause, 12.1, provided that the agreement “shall continue indefinitely, unless terminated earlier in accordance with this clause 12”. Clause 12.2 conferred on the foundation alone a right to terminate on three months’ written notice, and Clause 12.3 allowed the foundation to terminate in the event of the company’s breach. The company asserted that it was entitled to terminate on reasonable notice; the foundation disagreed. 

The High Court held that the contract contained no term giving the company such a right to terminate, meaning the company was locked into the contract forever. The company appealed.

The Court of Appeal’s decision

The Court of Appeal allowed the appeal.

The court, having considered the line of authorities on the point, confirmed a two-stage approach:

1. A decision as to whether the agreement was intended to run in perpetuity or not. A contract which is not intended to be perpetual and has no other explicit duration is one of indefinite duration (and therefore may be terminated at some unspecified point). The court emphasised that this is a matter of construction as to the common intention of the parties, not a question of implying a term (which would be subject to the rigorous tests in case law for finding implied terms in commercial agreements).

2. Having decided that the contract may be terminated at some unspecified point, the only way to give effect to that common intention would be for the court to infer that all parties have the ability to terminate on reasonable notice.

The court noted the first and obvious point that the word used in clause 12.1 was “indefinitely” and not “perpetually”. While it acknowledged that it could not be said that the former may never be understood as meaning the latter, the court concluded as a matter of principle that to describe the duration of a contract as indefinite is fundamentally different from describing it as perpetual and, therefore, the word “indefinitely” is not, without more, to be read as meaning “perpetually”.

The court rejected the argument that the one-sided nature of the termination provisions (that only gave the foundation express termination rights) supported an inference of perpetuity. The court considered that such express rights were to be expected in a licensing agreement where the licensor has a clear interest in ensuring the trademark is used appropriately to ensure goodwill accrues to it, and it is not invalidated.

The court also considered that the conclusion that the contract was intended to be indefinite rather than perpetual accorded with business commonsense. While it emphasised that no presumptions should be either way, it commented that one might expect commercial parties not to lock each other into a relationship in perpetuity.

Crucially, the court held that to infer a power to terminate on reasonable notice would not be inconsistent with the express rights of termination conferred on the foundation under clauses 12.2 or 12.3 on three months’ notice or in the event of the company’s default.

Finally, the court explained that what amounts to reasonable notice depends on the circumstances at the time notice is given, so that in the early stages of the contract a very considerable period of notice might have been required (much longer than the three months’ notice required of the foundation under clause 12.2), whereas as the contract advanced, that period may reduce considerably (to significantly less than the three months required of the foundation).

Key takeaways

Certainty is usually what contract drafters strive for, but it can come at the cost of flexibility. There are circumstances in which an open-ended contract (and the degree of uncertainty it brings) is preferable to the rigidity of a fixed term, but even in those instances, the relevant terms should be drafted to avoid ambiguity as far as possible. Silence in this context is far from golden. Contracts – even open-ended ones – must address exactly what rights of termination each of the parties have, and if they have none, they must address that.

[1] [2026] EWCA Civ 192.

Background

Zedra, a minority shareholder holding approximately 13.2% of THG, brought an unfair prejudice petition in 2019 under section 994 of the Companies Act. The petition alleged various forms of unfairly prejudicial conduct by THG’s management. The central issue in the matter arose in 2022 when Zedra sought to amend its petition to allege that it was unfairly excluded from a 2016 bonus share issue, which Zedra argued caused it compensatory loss. THG opposed the amendment, contending that the claim was time?barred under the Limitation Act 1980, specifically under:

• Section 8: Imposing a 12 year period for “actions on a specialty”
• Section 9: Imposing a six year period for “actions to recover any sum recoverable by virtue of an enactment”

The High Court and Court of Appeal

At first instance, the High Court held that no limitation period applied, allowing the amendment. However, in a move that surprised many practitioners, the Court of Appeal overturned that decision. The Court of Appeal concluded that:

• Most section 994 petitions fall under section 8 as “actions upon a specialty”, and therefore have a 12 year limitation period.
• Monetary based petitions fall under section 9, attracting a shorter six year limitation period.

Because Zedra sought only monetary compensation, the Court of Appeal held the amendment was time?barred, having been brought more than six years after the 2016 events. This ruling created immediate concern within corporate litigation circles, as it imposed time limits where none had previously been understood to exist.

The Supreme Court

The Supreme Court was asked to determine the single (critical) issue: Do any statutory limitation periods in the Limitation Act 1980 apply to a petition under section 994 of the Companies Act 2006?

The Supreme Court allowed Zedra’s appeal by a 4 – 1 majority, holding that neither section 8 nor section 9 of the Limitation Act applies to section 994 petitions. The majority’s reasoning was as follows:

1. Unfair prejudice petitions are not “actions on a specialty” (Section 8).The majority emphasised that an “action on a specialty” historically referred to enforcing obligations created by deeds or statutes (and historical sources as far back as the 19th century were consulted on the issue). Unfair prejudice petitions do not enforce a preexisting obligation but instead invoke a discretionary, equitable jurisdiction. Therefore, they fall outside section 8.
2. Section 9 does not apply because section 994 provides a wide discretionary remedy. Section 9 covers claims where a statute mandates payment of a sum of money. By contrast, section 994 empowers the court to make any order it considers appropriate, including but not limited to compensation. Because monetary relief is discretionary – that is, not fixed or automatically recoverable – section 9 cannot apply.
3. Delay is governed by equitable principles. Affirming the conventional view, the Supreme Court held that delay should be addressed through equitable doctrines, such as laches or discretionary refusal of relief, and not by imposing statutory bars.

Lord Burrows dissented, finding the Court of Appeal’s reasoning persuasive and preferring an interpretation that subjected section 994 petitions to the section 8 limitation period of 12 years.

Key takeaways

The Supreme Court’s decision restores certainty and continuity in the law. By confirming that no statutory limitation period applies to unfair prejudice petitions, the Supreme Court has ensured that this key shareholder protection mechanism remains flexible, equitable and aligned with its historic purpose. It also underscores the need for companies to maintain proper governance records, as historic conduct may be scrutinised years later.

[1] [2026] UKSC 6.

Background

The proceedings arose from a property development dispute. Sanman Property Management Limited (Sanman) had agreed to lend 2020 Living Limited £1.5 million to purchase a property known as ‘The Square’ in Birmingham. The contract entitled Sanman to 50% of the profit from any on sale. Sanman alleged that to avoid paying its profit share, 2020 Living disposed of its interest in ‘The Square’ to a related company, Taylor Grange 2 Limited, for no consideration. Sanman brought claims for breach of contract, inducing breach of contract and unlawful means conspiracy against Samuel Ginda and various corporate defendants he controlled.

During the litigation, concerns arose about document deletion. The defendants had disclosed that Ginda’s practice was, and had been, to routinely delete his emails at the end of each day. This prompted the claimants to apply for an order requiring Ginda to preserve documents and permit forensic imaging of his electronic devices and online storage accounts.

On 3 July 2024, the High Court approved a consent order requiring the defendants to instruct an e-disclosure provider, Consilio, to take forensic images of Ginda’s devices and online accounts, interrogate them for deleted documents and produce a schedule and report detailing the results. On 31 July 2024, an unless order was made providing that the defendants’ defences would be struck out unless they complied with certain provisions of the 3 July order within specified time frames.

Critically, two problems emerged with Consilio’s work. First, Consilio was unaware that one of Ginda’s email accounts contained data in a separate Microsoft 365 tenant and did not image it. Second, Consilio applied a date range ending on 31 January 2023 to another account, even though the order imposed no such limitation. The result was that the schedule served on the claimants was incomplete.

The central legal question was whether the defendants had breached the unless order and, if so, whether they should be granted relief from sanction or have their defences struck out.

The High Court’s decision

The High Court concluded that the defendants had breached the unless order by failing to serve a complete and sufficient schedule. The judge held that the schedule was ‘plainly incomplete and insufficient’ because it did not contain information from all of the online storage accounts that should have been imaged.

The judge found that the defendants’ solicitor ought to have known that the schedule was incomplete because Consilio had not imaged all the online storage accounts that they were meant to image. He refused relief from sanction and struck out the defendants’ defences, debarring them from defending.

The judge also held that even if the unless order had not been breached, he would still have considered it appropriate to strike out the defences on account of the defendants’ failure to comply with court orders. He concluded that the disclosure exercise could not be completed in time for trial and that it was proportionate to take the draconian step of striking out.

The Court of Appeal’s decision

The Court of Appeal, in a judgment delivered by Lord Justice Newey (with Lord Justice Lewison and Lord Justice Cobb agreeing), allowed the appeal and ordered a retrial before a different judge.

The court’s first key finding was that the judge had misconstrued the unless order, which obliged the defendants only to ‘instruct’ Consilio to produce a schedule and ‘supply a copy of what Consilio provided’. It did not require the defendants to guarantee the completeness or accuracy of Consilio’s work. The court reasoned that this interpretation made sense because the preparation of the schedule had been entrusted to an external contractor and it would not be surprising if the appellants had assumed responsibility for giving the instructions rather than guaranteeing the result.

The court confirmed that the instructions given to Consilio complied with the terms of the order and took into account comments made by the claimants’ solicitors under the scheme set out in the order. There was no complaint about the instructions. Since the defendants had done what was required of them, namely given the specified instructions and supplied a copy of the resulting schedule, the order was not breached.

On the general principles governing unless orders, the court emphasised that such orders must be restrictively construed given the severe consequences of noncompliance. An unless order must make it clear what the party concerned has to do – ‘any order dealing with the dismissal of an action unless something is done should be absolutely and perfectly precise in its terms’.

Turning to the judge’s alternative ground for striking out, the court identified the key problem as the judge’s failure to address the possibility of making a further unless order instead of immediately debarring the defendants from defending. The court observed that: ‘an order debarring a defendant from defending is draconian and must be seen as a remedy of last resort’.

Takeaways

This judgment offers important guidance for commercial parties and their legal advisors.

First, unless orders must specify with precision what the party concerned must do. If the sanction attaches to giving instructions to a third party, compliance will be judged on whether those instructions were given, not by the quality of the third party’s output. Parties seeking to enforce unless orders should ensure that the order imposes clear obligations on the defaulting party itself, rather than relying on implied requirements.

Second, where third-party service providers are involved in compliance, those instructing them should consider whether the unless order makes them responsible for the result or only for the instruction. In this case, the defendants avoided sanction because they were required only to instruct Consilio; not to guarantee its performance.

Finally, parties should pay close attention to how draft instructions to e-disclosure providers are handled. The defendants benefited from having shared their draft instructions with the claimants for comment under the scheme in the order, and the claimants had not suggested any improvements. This collaborative approach ultimately provided a shield against allegations of noncompliance.

[1] [2026] EWCA Civ 117

Background

The dispute arose from a 2013 contract under which Sahara had supplied crude oil to SONARA, a Cameroonian refinery operator, between 2013 and 2016. In addition to claims for the principal amount of the invoices and contractual interest, Sahara claimed the following categories of loss:

• Incremental Interest, representing the difference between the contractual interest rate and the rates that Sahara had to pay its own banks over the period of nonpayment.
• Penal Charges, being excess interest and penalty charges levied by Sahara’s banks when Sahara failed to make payment on various letters of credit it used to finance the relevant cargoes.
• FX Differential, representing foreign exchange losses incurred by Sahara due to the depreciation of the Euro against the US dollar during the payment delay.

On 4 and 5 September 2019, the parties held a “reconciliation meeting”, following which a Joint Report was concluded and signed by the attendees. This Joint Report contained tables setting out SONARA’s claims as follows:

• The first table, headed 2013 Outstanding on Principal, recorded a sum due of approximately €8.8 million.
• The second table, headed Reconciled Claims, listed contractual interest and other items totalling approximately €27.3 million and US$4.97 million.
• The third table, the primary focus of the subsequent dispute, headed Undisputed Claims, contained the claims for Incremental Interest and FX Differential, totalling almost US$77 million.
• The fourth table, headed Disputed Claims, contained the Penal Charges claim of US$50+ million. This table had an additional column headed Comments, which included a comment to the effect that SONARA rejected the claim for Penal Charges.

Under a section headed Resolution, which included the following bullet points:

• SONARA would review and collate the documents for submission to the government of Cameroon.
• SONARA completely rejects all Penal charges and requests a waiver of the same.
• SONARA will communicate a date within two weeks to [sic] for the parties to reconvene and to propose potential flexible payment terms, a schedule and further negotiations on the undisputed claims.

With regard to the first of these, following a fire at its refinery, SONARA was in financial difficulty and would be reliant on the Cameroon government to fund any payments it made to Sahara.

The dispute continued and Sahara issued proceedings. By the time the claim reached trial, SONARA had paid the amounts set out in the first and second tables. The primary issue in dispute was whether the Joint Report constituted a binding agreement by SONARA to pay the amounts listed under Undisputed Claims.

The High Court’s decision

The judge at first instance held that the Joint Report was a legally binding agreement, but only in relation to the amounts set out in the 2013 Outstanding on Principal and Reconciled Claims tables. She rejected Sahara’s contention that there was also a binding agreement to pay the Incremental Interest and FX Differential amounts listed under Undisputed Claims.

The judge’s reasoning hinged on the meaning of the word “undisputed” in the context of the agreement. She considered that the parties had used “reconciled” to mean agreed as to both liability and quantum, but “undisputed” to mean something narrower – “undisputed” as to quantum but disputed as to liability, or vice versa. In her view, this interpretation was necessary to give full weight to the reference in the agreement to “further negotiations on the undisputed claims”. She reasoned that if the claims were truly agreed, there would be nothing to negotiate.

The judge also placed weight on the factual background, including SONARA’s dependency on the Cameroon government to fund payment to Sahara. She found that any “agreement” on the Undisputed Claims was, at best, an agreement to present the matter before the Cameroon government and reconvene for negotiations if the government refused to pay.

Finally, the judge considered previous drafts of the agreement that had been produced and were relied upon by both parties. She noted in particular that while the Incremental Interest and FX Differential were listed under an Undisputed and Reconciled heading in the first draft produced by Sahara, these were moved to appear under the Disputed heading by SONARA in the second draft and, even though they were moved under a new heading of Undisputed Claims in the final agreement, they remained separate from the Reconciled Claims.

For these reasons, she dismissed Sahara’s claims.

The Court of Appeal’s decision

The Court of Appeal allowed Sahara’s appeal.

The court started by setting out the nature of its task when interpreting an agreement: it is to ascertain objectivity, with the benefit of the admissible background, the meaning of the words that the parties used. The court will consider the words used in the context of the agreement as a whole; it will have regard to the nature, formality and quality of drafting the agreement; and it will have regard to the wider context. However, “notwithstanding the approach taken by the parties in this case, evidence of the negotiations and earlier drafts is not admissible as an aid to interpretation of the final agreement” – emphasis in the original.

The Court of Appeal considered, unsurprisingly, that the ordinary and natural meaning of the words “undisputed claims” was simply that there was no dispute about those claims.

In support of this being the correct meaning in the context of the agreement, the court noted that there was no difference in format between the tables for the agreed claims and the Undisputed Claims. Both lacked any Comments column indicating unresolved issues. The Disputed Claims table, by contrast, expressly recorded SONARA’s rejection.

With respect to the High Court’s reliance on the reference to “further negotiations on the undisputed claims”, the Court of Appeal determined that that could perfectly well be understood as referring to negotiations over SONARA’s proposed flexible payment terms and payment schedule, rather than negotiations over liability itself.

In the court’s view, it was not right to adopt a strained interpretation of “undisputed claims” to give meaning to the word “negotiations”.

As for the judge’s reliance on the requirement to submit documents to the Cameroon government, the Court of Appeal observed that this did not support a conclusion that government approval was a condition precedent to any binding agreement between the parties. There were no words to that effect anywhere in the Joint Report. Nor was there any evidence that any such condition had been communicated to Sahara. The documents were more likely being provided to enable the government to decide how much financial support to provide, rather than to give the government a veto over SONARA’s commercial autonomy. The court also observed that if the judge’s conclusion were correct, there was no obvious explanation why the government’s consent would have been required for the Undisputed Claims but not for the 2013 Outstanding on Principal and the Reconciled Claims.

While the Court of Appeal stressed that the prior drafts of the agreement were inadmissible, it was noted that these actually supported Sahara’s case. The claims for Incremental Interest and FX Differential had been deliberately moved from a Disputed Claims heading in an earlier draft to the new Undisputed Claims heading in the final document – a change that could hardly signal anything other than a fundamental shift in SONARA’s position. Furthermore, the earlier draft had referred to flexible payment terms being negotiated “if an agreement is arrived at”, whereas this condition was deleted from the final document and replaced with an unconditional requirement for SONARA to propose terms. This strongly indicated that an agreement had in fact been arrived at.

Accordingly, the court held that the Joint Report constituted a binding agreement by SONARA to pay the Undisputed Claims.

Takeaways

This is not a groundbreaking judgment; it simply restores the normal and proper status quo. Nevertheless, there are a few points to take from this:

• Firstly, while the courts often emphasise that labels and headings are not determinative, this case demonstrates that they are still extremely important.
• Secondly, references to subsequent steps to be taken or agreed – in this case negotiations regarding payment terms – do not prevent an agreement from becoming legally binding.
• Thirdly, if an agreement is to be conditional on, for example, third-party approval, it must clearly state that.
• Finally, it is easy while negotiating contracts for one’s understanding of a particular term to be clouded by its evolution over the course of several drafts. It is vital to review the final form of the agreement with fresh eyes to satisfy oneself that it properly and objectively captures the parties’ true intentions

[1] [2026] EWCA Civ 54

The judgment in Houssein & Others v. London Credit Ltd[1] provides a useful summary of the English penalty rule and guidance on its application in practice. It is an important reminder that a clause will be struck out in its entirety if any element of it is determined to be penal.

Background

The case concerned a default interest clause in a bridging loan agreement between the third claimant, CEK Investments, and the first defendant, London Credit Limited.

The loan agreement contained two interest rates: a standard rate of 1% compounded monthly and a default rate of 4% compounded monthly, triggered by an event of default. Events of default included CEK failing to make a payment under the loan agreement itself, making a false representation or warranty, and failing to make a payment on a third-party loan or judgment debt.

London Credit alleged that there had been a breach of the loan agreement and sought to charge CEK the default interest rate. CEK claimed that the default interest rate was an unenforceable penalty.

The High Court’s decision

The court set out the now familiar three?stage analysis. First, the penalty rule only applies to secondary obligations arising on breach of a primary obligation. Second, the court must identify the innocent party’s legitimate interest in performance for each primary obligation to which the same secondary remedy applies. Third, the court asks whether the secondary obligation is exorbitant or unconscionable in amount or effect. The judge emphasised that if any element of the clause is penal, the clause is unenforceable in its entirety.

Quoting from the leading Supreme Court decision on penalty clauses, Cavendish Square Holdings BV v. Makdessi[2], the judge reiterated that where a contract has been negotiated between properly advised parties of comparable bargaining power, “the strong initial presumption” is that the parties themselves are the best judges of what is legitimate in a provision dealing with the consequences of breach. At the same time, there is a recognised presumption, “though no more than that”, that a sum is penal if it is payable on event of varying gravity.

In this case, although the agreement was negotiated between sophisticated parties, the same default rate was engaged by multiple primary obligations, prompting the court to analyse the lender’s legitimate interest for each event of default.

The court readily accepted that there was a clear legitimate interest in protecting against the risk of nonpayment, and that a higher rate for nonpayment and other material defaults can, in principle, be justified. The more difficult question concerned defaults not obviously linked to repayment, such as failing to pay unrelated borrowings or judgment debts. The court found that it was not self?evident that the same default rate should apply to such events.

Ultimately, following a detailed, commercial analysis of bridging finance dynamics, the court accepted that a default on other borrowings or outstanding judgment debts would significantly reduce the borrower’s ability to refinance and repay the bridging facility; thereby grounding a legitimate interest for applying the same default rate.

As to the size of the increase in interest rate, while 4% compounded monthly was above the standard market rate, it was not exorbitant or unconscionable in the circumstances and therefore did not fall foul of the penalty rule.

Takeaway

The penalty bar remains a high one, and courts are slow to interfere in negotiated contracts between parties of equal bargaining power. Nevertheless, parties should carefully assess how a single secondary remedy applies across different primary obligations. If a legitimate interest cannot be articulated for imposing the remedy in respect of each obligation, the entire clause risks being struck out. Further, the court’s acceptance of 4% compounded monthly in this case should not be read as blanket approval for that rate in other contexts; penalty analysis is fact-sensitive and contract specific.

[1] [2025] EWHC 2749 (Ch)

[2] [2015] UKSC 67

Background

The claim was brought by 216 claimants said to represent about 1,410 funds, all investors in Standard Chartered, seeking around £1.5 billion in damages under sections 90 and 90A of the Financial Services and Markets Act 2000 (FSMA). The claims were based on alleged misstatements and omissions in Standard Chartered’s published information between 2007 and 2019.

In 2012 and 2019, Standard Chartered entered into settlements with US authorities admitting to sanctions violations and anti-money laundering systems and controls failings. Alongside those, a whistleblower, pursued claims (ultimately dismissed) alleging that Standard Chartered concealed post-2007 Iran sanctions breaches.

The claimants, relying in part on the conduct addressed in the Settlements and on allegations in the Brutus complaint, asserted that Standard Chartered’s disclosures were misleading or incomplete and that persons discharging managerial responsibilities (PDMR) knowledge was engaged for liability under section 90A.

Against that backdrop, Standard Chartered made an application to withhold approximately 250 documents on grounds of foreign regulatory confidentiality and risk of prosecution or sanction in the US. The documents in issue comprised two categories:

1. US SAR documents (the reports themselves and information revealing their existence) subject to the US Bank Secrecy Act and Financial Crimes Enforcement Network regulations.
2. CSI documents, over which the Federal Reserve Bank and the New York State Department of Financial Services claim property and confidentiality restrictions, save where regulators authorise disclosure.

Standard Chartered confirmed that the US regulators had refused consent for the SARs and for most CSI communications to be disclosed.

The High Court’s decision

Mr Justice Michael Green dismissed Standard Chartered’s application to withhold disclosure of the US SAR and CSI materials, ordering disclosure into a confidentiality ring. He applied the principles in Bank Mellat v. HM Treasury[2] and related authorities, focusing on whether there was a ‘real’ or ‘actual’ risk of prosecution or sanction under foreign law and, if so, balancing that risk against the documents’ importance to the fair disposal of the English proceedings.

On the CSI (non?SAR) materials, the judge rejected Standard Chartered’s assessment that communications with US regulators were only tangentially relevant. He emphasised their potential to illuminate oversight, compliance and PDMR knowledge in relation to the misconduct underpinning the Settlements and the alleged misstatements/omissions, especially where the claimants lacked underlying evidence beyond public settlement findings. He found that a confidentiality ring would adequately protect comity and regulatory sensitivities.

On risk, the judge found that Standard Chartered had ‘got nowhere near’ demonstrating a real risk of US criminal prosecution for disclosing CSI under an English court order. He preferred the claimants’ expert’s evidence that the prospect was remote, noting the absence of prosecutions in analogous circumstances. He reached a similar conclusion regarding civil/regulatory action, considering that any penalties were likely to be small, particularly given compelled disclosure and protective measures.

For US SARs, the judge accepted that US law prohibits unauthorised disclosure and provides for civil/criminal penalties. However, he noted that Standard Chartered’s expert had not assessed the risk of sanction in the specific scenario of compliance with a foreign court’s order, and there were no examples of penalties in that fact pattern. He again ordered disclosure into a confidentiality ring.

The Court of Appeal’s decision

The Court of Appeal (Miles LJ, with Snowden LJ and Newey LJ agreeing) dismissed Standard Chartered’s appeal on all grounds, endorsing the High Court’s application of Bank Mellat and its evaluative conclusions.

First, as to the applicable legal framework, the Court of Appeal reiterated that disclosure is a core feature of the English procedural code, controlled by relevance and proportionality. Confidentiality is a factor, not a bar, and the court may adopt safeguards, such as confidentiality rings, to protect third-party interests. It emphasised that procedural orders for production and inspection are governed by English law, and that the court must balance any real foreign prosecution risk against the importance of the documents to the fair disposal of the case, acknowledging that comity cuts both ways.

As to the risk of prosecution for disclosure of US SARs, the Court of Appeal rejected the contention that the judge set an unduly high threshold. It read the judgment as applying the correct test of a real or actual risk rather than ‘more probable than not’. The court also rejected the suggestion that the judge treated evidence of prior prosecutions as a threshold requirement, noting that he properly treated the absence of prosecutions as a pertinent factor while analysing the expert evidence in full.

Evaluating the risk associated with US SARs, the Court of Appeal accepted that there was no direct evidence assessing the likelihood of sanctions where disclosure is compelled by an English court and confined to a confidentiality ring. It was entitled to use ‘its own intelligence’ per Bank Mellat. Given mitigation factors – including historic SARs, cooperation with regulators, lack of ongoing investigations evidenced, compelled disclosure and protective measures – the court held that the judge’s conclusion that any prosecution/sanction risk was remote was rationally supportable.

As to the materiality of the documents to the litigation, the Court of Appeal confirmed that the judge did not adopt a simplistic ‘relevance-only’ test or irrebuttable tilt. Rather, he recognised the default of disclosure, the burden on the withholding party, and undertook the required assessment of the SARs’ potential significance to PDMR knowledge and the pleaded case. His conclusion that the documents could be highly relevant was not irrational.

As to the CSI (non?SAR) documents and issues regarding comity, the Court of Appeal rejected the submission that regulatory confidentiality owed to foreign regulators should, as a category, be accorded special or enhanced weight beyond other serious confidentiality interests. While the court confirmed comity remains relevant, it emphasised that it ‘cuts both ways’, and that an English court is entitled to expect foreign authorities to respect English procedural orders, especially where protections are in place. In circumstances where the US regulators did not intervene and had themselves authorised certain disclosures into a confidentiality ring based on relevance, the judge’s conclusion that a confidentiality ring adequately protected regulatory interests was sound.

Accordingly, the appeal was dismissed.

Key takeaways

The English court will apply its own procedural law and default to disclosure, even where foreign criminal or regulatory laws restrict disclosure, but will carefully balance any demonstrated real or actual risk of foreign prosecution/sanction against the importance of the documents. Protective measures such as confidentiality rings are central tools in striking that balance.

A party seeking to withhold documents bears a substantial burden. It must produce concrete, case-specific evidence of a real risk of prosecution or sanction under foreign law in the actual circumstances (e.g., compelled disclosure into a confidentiality ring), not merely show that the foreign law prohibits disclosure in the abstract. Absence of analogous prosecutions is not determinative, but it is a highly pertinent factor.

Expert evidence must squarely address the precise risk question the court must decide: the likelihood of enforcement in the factual setting of compelled foreign disclosure with safeguards and the mitigating factors regulators actually weigh. General propositions about prohibitions or maximum penalties will not suffice.

For practitioners conducting complex securities and FSMA litigation, early identification of foreign?regulated materials, proactive engagement with regulators and designing robust confidentiality regimes are critical to managing comity concerns while ensuring access to potentially important evidence.

[1] [2025] EWCA Civ 1581

[2] [2019] EWCA Civ 449

Multinational companies should monitor cross-border implications, especially in light of other evolving regimes like the EU AI Act and the proposed Digital Omnibus on AI, which will impact businesses’ AI compliance roadmaps.

Read Cooley’s full article on the Executive Order.

Background

Kieran Corrigan, the managing director and shareholder of the claimant, had (together with expert tax counsel) developed a tax mitigation structure involving the use of research and development (R&D) relief. While R&D relief is widely used, the structure Corrigan developed provided for significantly enhanced relief and allowed companies that would not otherwise involve themselves with R&D being able to take advantage of the relief.

In February 2014, Corrigan shared information regarding the structure at a meeting with three directors of OneE: Bashir Timol, Dominic Slattery and Timothy Johnson. A nondisclosure agreement was signed by Corrigan on behalf of the claimant and Slattery on behalf of OneE before the meeting.

OneE subsequently developed and promoted a tax mitigation structure that shared its fundamental features with Corrigan’s proposed structure. Slattery and Johnson, both tax experts, were personally involved in the development and promotion of that structure. Timol, who was a commercial man and had no tax expertise, signed off on that development and promotion but was not personally involved in it.

Following a trial on liability in 2023, the High Court found OneE, Slattery and Johnson both individually and jointly liable for breach of confidence. The High Court found that Timol was not liable, as he had not misused confidential information. The court made this finding on the basis that Timol, when signing off on the marketing of the structure, was only concerned with its commercial viability and not its technical features, and that he had therefore given his approval without reference to the claimant’s confidential information. The court found that, given Timol’s role was on the commercial side, he was entitled to simply rely (and had) on the tax expertise of others and was under no obligation to probe the details of the tax treatment.

In subsequent proceedings on quantum, a number of documents were disclosed that demonstrated that Timol was, in fact, much more familiar with the specifics of the structure than had been apparent at the liability trial. The claimant accordingly appealed the judgment, and a retrial as to Timol’s liability was ordered.

The High Court’s decision

Following the retrial, the High Court held that Timol was personally and jointly liable for breach of confidence. The judge concluded on the facts that Timol had been aware that the structure being marketed by OneE shared fundamental elements with Corrigan’s proposal, but clarified that this was not a necessary finding for personal liability. In this regard, the following aspects of the judgment are of particular note.

Timol would have been personally liable for breach of confidence even if he had not known that the structure to be marketed was based on Corrigan’s proposal. Once an obligation in confidence is imposed on a recipient by reason of their receipt of confidential information in circumstances importing such an obligation, they are a under a personal duty not to misuse it. An individual can later breach that obligation – even though they are not conscious that they are using the confidential information of another.

As long as Timol knew the key features of the structure OneE was developing and marketing, his sign-off would constitute misuse of confidential information if he had those key features in mind when deciding whether to sign off, or he was signing off on the marketing of a structure with those features (rather than just signing off on a structure that he had simply been told was robust from a tax perspective).

There is no requirement for the confidential information to be disseminated for it to be misused. All that is required is that the information is dealt with to the prejudice of the provider. This includes both the development of a product that is based on the information and the signing off on moving forward with it.

Once confidential information has been received, the recipient’s state of mind in deploying it is irrelevant to whether they had misused it. There is no requirement that the recipient should appreciate that what they are doing is misusing the information or that it amounts to a legal wrong.

Key takeaways

The judgment demonstrates the broad scope of the obligation on any recipient of confidential information. Once an individual is in receipt of confidential information, the burden on them to retain confidentiality is a heavy one and one that may be surprising to some.

Organisations would be well advised to take steps to ensure the obligation is understood and that appropriate steps are taken to identify and protect any confidential information received.

[1] [2025] EWHC 2759 (Ch).

The benefit of being first

“Leniency” refers to the benefits of bringing unlawful conduct to the attention of a competition agency in return for a discount on, or even complete “immunity” from, administrative fines. In return, an applicant will generally need to admit that the conduct was a competition law infringement and cooperate with the agency in its investigation. The greatest reward is typically available to the first company to report, and the extent of relative reward can depend on a company’s place in a leniency queue and various other factors.

In the UK, leniency is available to businesses and individuals that have participated in cartel activity in breach of UK competition law. While fine reductions can be available to all businesses that report cartel behaviour to the CMA, the updated guidance reinforces the incentives for businesses to be first in line to self-report conduct.

In particular, the guidance clarifies that only the first business that discloses the existence of a cartel to the CMA (where the CMA was not already investigating the behaviour) will receive full immunity (i.e. Type A immunity). This means guaranteed immunity from fines, director disqualification orders and criminal prosecution for all cooperating current and former employees and directors, as well as immunity from public contract exclusion and debarment. Leniency applications where the CMA already commenced an investigation (Type B immunity) along with all applications after the first (Type C immunity) will only be eligible for discretionary reductions in fines and immunity from director disqualifications and criminal prosecution. The new guidance also provides that, in practice, Type B and Type C discounts are unlikely to be above 75% and 50%, respectively, and may be significantly lower.

Deferred admissions … now possible

One of the most significant downsides of applying for leniency is the time pressure in “the race for leniency” to admit the conduct in question at a time when internal investigations may be ongoing and legal consequences are still under consideration. The updated guidance attempts to address this by removing the requirement for Type A applicants to admit to the cartel behaviour at the point when the conduct is first disclosed to the CMA. The CMA acknowledges that this had in the past disincentivised businesses from making leniency applications. Going forward, Type A applicants will only have to admit to having participated in the reported cartel at the point when the leniency agreement with the CMA is signed, which is much later and typically shortly before the CMA issues its Statement of Objections (i.e. draft infringement findings). This CMA is hoping that this will encourage businesses to approach it earlier, including in situations where they may not be certain whether the reported behaviour amounts to a cartel and/or where the extent of the unlawful conduct is not yet known.

Taking away with the other hand

The updated guidance includes changes in other areas which may make it less attractive for businesses to come forward in situations where an investigation has already commenced. In the past, Type B and Type C leniency applicants could get “leniency plus” – i.e. a further fine reduction – in relation to a particular cartel (the “first cartel”) by becoming a Type A or Type B leniency applicant in relation to a second cartel which had not been the subject of an early leniency application. The new guidance narrows the availability for “leniency plus” only to those applicants that become Type A applicants in a second market (i.e. where the CMA had not taken any investigatory steps). The CMA stated that this change reflects that the additional fine reduction is meant to incentivise applicants to make the CMA aware of conduct that it would not otherwise have known about, which Type B applications do not.

Further changes to the regime on the horizon relating to damages claims?

While the guidance updates are meant to encourage businesses to proactively disclose cartel behaviour to the CMA, the agency has separately acknowledged that exposure to private damages actions (including class actions) can be a deterrent for prospective leniency applicants – i.e. that the costs of precipitating and assisting follow-on damages claims, including class actions, outweigh the benefits from a successful leniency application. In its response to the UK government’s consultation on the operation of the UK’s opt-out class action regime for competition law claims, the agency said that this exposure, “can create a tension between public and private forms of enforcement”. The CMA believes that because secret cartel conduct is rarely detected without a CMA investigation, the existence of private rights to obtain redress for cartel conduct has the potential to frustrate the public enforcement process (leniency) that identifies secret cartel conduct in the first place.

In its response to the government’s consultation, the CMA therefore called on the UK government to legislate so as to fully protect successful Type A immunity applicants from private follow-on damages claims. Currently, Type A immunity applicants can only benefit from protection from joint and several liability for losses caused by other participants in the unlawful conduct, which means they will still be liable for claims from their own customers and indirect purchasers.

In the same submission, the CMA asked the government to consider enhancing the agency’s powers so that it can order those found to have infringed UK competition law to pay redress to persons harmed by the infringement (in addition to its existing fining powers). The CMA has equivalent powers already when enforcing against consumer law breaches and as part of its digital markets functions, but under the current law, it can only accept redress in competition cases if it is offered as part of voluntary commitments. The CMA notes that, to date, the voluntary redress regime has not been utilised, which suggests the incentives to use it are limited. 

In its response, the CMA set out that a discretionary power to issue directions for redress (i.e. damages awards) could be effective in certain cases to deliver quicker and more efficient outcomes, reducing the need for potentially duplicative follow-on damages claims and class actions. This is a laudable aspiration, but the CMA’s submission appears to ignore the complexity – and contentious nature – of questions of causation and approaches to quantifying potential damages that the courts must deal with in private litigation. The efficiency for parties, who would then have to consider appealing damages calculations, and for the Competition Appeal Tribunal is also questionable. The CMA’s suggestion that a redress power would be discretionary might be a nod to this, but there is also the complexity of how such a power would oust, complement or confuse existing rights to bring private damages actions.

Conclusion

The CMA’s update to its leniency guidance is timely, and aspects of it will be welcomed by businesses that have to consider using the procedure going forward. The deferral of needing to admit to cartel behaviour until later in the process should by itself achieve the CMA’s aim of encouraging more leniency applications. This will allow businesses under investigation more time to consider their options and incentivise submitting applications while they consider their position on the legal characterisation of the conduct and facts.

However, this tweak alone may not change the overall calculus for businesses in a fundamental sense. This follows from the fact that businesses under investigation need to consider more than just the potential for customers to claim redress by threatening litigation. They now must also consider the weighty spectre of potential class actions which would claim considerable additional sums, with the result that the cost of the follow-on litigation could greatly outweigh the discount on administrative fines that might be achieved on award of leniency or even full immunity. A decision to fight and try to defeat or restrict the scope of an infringement decision, rather than seeking leniency or settlement and conceding liability, might be justified when looking at all of the litigation risks. The CMA’s proposal to the government that immunity applicants might achieve full protection from fines and follow-on damages has more promise for changing the calculus. The government’s response is awaited.   

This practice direction responds directly to the UK Supreme Court’s decision in Dring[1], which highlighted both the principle of open justice and the practical difficulties nonparties face in obtaining documents that, in substance, are already in the public domain once deployed in open court. The judiciary has sought to promote the principles of open justice by establishing the Transparency and Open Justice Board in 2024 with the stated aim of putting ‘openness and transparency at the heart’ of the justice system. Practice Direction 51ZH is one of the key developments towards this goal.

How does it work?

Practice Direction 51ZH creates a pilot scheme operating from 1 January 2026 to 31 December 2027 in the Commercial Court, the London Circuit Commercial Court and the Financial List[2]. It applies to documents that become ‘public domain documents’ because they are used or referred to in a hearing held in public during the pilot period.  

Practice Direction 51ZH defines the main categories of public domain documents:

• Skeleton arguments
• Written opening and closing submissions
• Other written submissions provided to the judge and relied on
• Witness statements and affidavits (but not their exhibits)
• Expert reports, including their annexes and appendices

Somewhat controversially, the court may also order that any other document critical to understanding the hearing be treated as a public domain document (a so-called ‘key document’) – for example, a contract that is extensively referred to so pervasively that one cannot properly understand the arguments without reference to it. The parties can also agree to additional documents between themselves. Importantly, a document merely referred to in a public domain document does not itself become public unless it falls within these categories or is brought in by order or agreement.

Practice Direction 51ZH requires parties to file the public domain document on a public version of CE-File within the relevant filing period. For skeletons and written submissions, the filing period is two clear days from the start of the hearing at which they are relied upon. For other public domain documents, the filing period runs from the day the document is used or referred to in court and ends at 16:00 on the 14th day thereafter, unless the court orders a different timetable (likely due to complex trials with numerous public domain documents) or the parties agree to an earlier filing. Once filed, any person – including nonparties – may obtain copies via the public CE?File portal, subject to any order restricting access.

If a party does not comply with this filing requirement, then the court may order that party to file the document that has not been filed. There is no immediate penalty (with regards to costs or otherwise), but failure to comply with an order of the court will be treated as contempt in the ordinary course.

Are there restrictions?

A party (or nonparty) may make an application for a filing modification order (FMO), or the court may make an FMO of its own initiative. An FMO can restrict or waive filing, require redactions, adjust the filing period or otherwise regulate access. There is no specific guidance given as to the grounds or evidence that must be provided in order to persuade the court to exercise its discretion. Indeed, Practice Direction 51ZH explicitly states that the court anticipates any such applications to be rare. We expect that the type of arguments to be raised will focus on the potential damage caused to a party (or nonparty) if confidential or sensitive information is released to the public and that such damage outweighs the interests of open justice.

What does it mean?

While Practice Direction 51ZH does not amend the fundamental principles of open justice, it does, for practitioners, materially shift the practical burden onto them to make the necessary public filings of public domain documents. These new public filing requirements will certainly need to be factored into any case management timetable.

We may also see this requirement impact client advice on the now potentially increased risks of publicity as the pilot fundamentally changes the working assumptions around publicity in the Commercial Court and Financial List. Parties should plan from the outset on the basis that the written materials they deploy in open court will be made available publicly within short deadlines. It is also inevitable that parties will seek to use these mechanisms strategically to force their opponents to make public certain unhelpful or reputationally damaging documents by arguing that they are ‘key documents’ in the case. It is possible, therefore, that the dial may shift, with parties favouring more confidential mechanisms of dispute resolution such as arbitration or mediation and providing for these in boilerplate contractual clauses.

Certainly, close attention should be given to Practice Direction 51ZH, the accompanying guidance note and the early steps taken to secure FMOs should they be considered strictly necessary for commercially sensitive information.

[1] Cape Intermediate Holdings Ltd (Appellant/Cross Respondent) v Dring (for and on behalf of Asbestos Victims Support Groups Forum UK) (Respondent/Cross Appellant) [2019] UKSC 38

[2] Except where a party is not legally represented and has not used the CE-File system before.