Commission publishes guidance on confidentiality in damages actions
On 20 July 2020, the European Commission published guidance (Communication) setting out measures to protect confidential information in private enforcement proceedings to assist national courts when faced with requests for disclosure of confidential information.
This Communication follows a public consultation the Commission launched on 29 July 2019 inviting academics, practitioners and members of the judiciary across the EU, to provide their views on the Commission’s draft communication. Hausfeld submitted a response, offering a claimant bar perspective by drawing upon its extensive experience of litigating competition damages claims throughout the EU.
Measures to protect confidential information
The 2014 Damages Directive sought to harmonise certain rules across EU Member States to remove some of the barriers faced by claimants when bringing private enforcement proceedings. In particular, Article 5(4) requires the EU Member States to ensure that national courts have the power to order the disclosure of confidential information if certain criteria are fulfilled. This power goes hand in hand with the obligation to ensure that effective mechanisms are in place to protect such confidential information.
To support the national courts, the Communication provides practical, non-binding guidance on the protection of confidential information which does not introduce changes to existing EU or national laws. The Communication comes at a time when a number of follow-on damages actions are ongoing across the EU and we therefore anticipate that the national courts of the EU Member States will find this helpful.
Confidentiality not a bar to disclosure; protections are available
The Communication reiterates that the fact that information is confidential is not a bar to disclosure. It, however, does not provide a definition of confidential information: this should be determined on a case-by-case basis by the national courts. Equally, it notes that it is for the national courts to decide upon the most effective measure(s) to protect confidential information on a case-by-case basis having regard to several factors, including specific national procedural rules.
The Communication provides an overview of the most common measures of protecting confidential information:
- Redactions of confidential information: these may be an effective measure to protect confidential information when the volume of confidential information subject to disclosure is limited. In case it involves a large number of documents, other measures may be more appropriate and cost-effective.
- Confidentiality rings: the disclosing party makes confidential information available only to defined categories of individuals. The rings can be organised with two access levels: an inner ring level which usually includes only external legal counsel and/or other external advisers who have the right to access the most sensitive information; and an outer ring level which includes in-house legal counsel and/or company representatives who have the right to access the remaining confidential information. To be admitted to a confidentiality ring, individuals will be required to submit written undertakings to the court.
- Appointment of experts: national courts may decide to appoint an independent expert to review confidential information concerned by a disclosure request. The expert's assignment may, for example, be to draft a non-confidential summary of the information to be made available to the party requesting disclosure.
- Proceedings and judgment: suggestions regarding the protection of confidential information throughout and following the proceedings are made. For example, the use of confidential annexes to pleadings; holding hearings in camera as well as measures regarding the notification and the publication of a judgment which contains confidential information. The Communication also notes that national courts may need to protect confidential information in relation to requests for access to the court’s file.
The Communication also notes that it is important that national courts are able to impose sanctions for non-compliance with obligations to protect confidential information – the precise nature and scope of any sanctions will depend on the national rules.
Impact of the Communication
With the exception of the appointment of a third-party expert to review the confidential information at issue, all the other measures are already available in damages actions before the English courts and are regularly used by both claimants and defendants. Therefore, the Communication will be of most assistance to the national courts of the EU Member States where disclosure is less frequently ordered and, therefore, those courts are less experienced in dealing with the protection of confidential information.
The Communication states that the measures to protect confidential information described above may be used if they are available under, and compatible with, national rules. This poses a certain paradox as the proposed measures will be more useful to national courts in jurisdictions where those measures are not available and which therefore have less sophisticated and established practices for dealing with confidential information. Will this lead to EU Member States introducing new laws to make the measures proposed by the Communication available to their national courts, and compatible with their national rules to the extent they are not already? Time will tell.
The Communication is available in English.