You run a business and you want to run a case against a competitor. The trouble is, you have internal documents relevant to the trial that you really don’t want the other side to see. If they see it, they might found out about a corner of the market that they have overlooked, a technology that you are developing, or the price that is being bid for a competitive tender.

 

A case in the Supreme Court of Western Australia reminds us of what litigants can do to protect their confidential commercial interests while enforcing their legal rights. This being Western Australia, the main players were mining companies but the principles work for any industry.

 

The case was Alita Resources Ltdv Austroid Corporation [2023] WASC 350, and also involved were a number of other interested parties, including some based in the U.S. and Hong Kong. It was relatively simple – the case involved an implementation agreement for purchase of an asset from a liquidator. The applicants did not want that agreement viewed by its rivals.

 

Sometimes, businesses make the mistake of assuming that courts work like the business world. Documents that are marked confidential are not distributed to others. In fact, as soon as courts are involved in a dispute, they will err on the side of procedural fairness. This means courts will generally assume that all parties can inspect a document filed by an opponent. This is not only to ensure they know the case against them, but also to allow for settlement negotiations.

 

However, that is not the end of the story.

 

If the document is confidential, then you can argue it should be an exception to these rules. In this case, the plaintiffs were concerned that the implementation agreement was not finalised, that the defendants might make an offer to interfere with the finalisation of that agreement, and that obtaining remedies against overseas companies such as the defendants can be difficult.

 

Courts are concerned to prevent litigants from using proceedings to gain unfair commercial advantages in the market. If there is commercial sensitivity in a document or documents and there is potential prejudice to a party by disclosing it, there are steps that a concerned litigant can take.

 

The first option is you can obtain an undertaking (a signed promise) from the other party. The undertaking can require, for example, that only certain employees of the company view the particular documents and that they promise not to disclose these contents to any other person.

 

As part of this, the undertaking can require that those employees be based in Australia, and that they not be involved in any commercial negotiations related to the particular documents.

 

Sometimes, however, this won’t work. Where the document is particularly commercially sensitive and the other party is a direct commercial rival, it likely won’t be enough to restrict one person to viewing the document. Even if they don’t disclose the contents to anyone, they cannot forget what they see. What they see informs what they advise their company to do for particular decisions or broader strategic direction, seeking an unfair commercial advantage.

 

Therefore, the second option would be to ask for restrictions around access to the document. For example, that only people unrelated to the commercial negotiations can view the document, such as an independent expert. In very rare cases, only the legal representatives might view a document.

 

In this particular case, it was enough that only certain employees signing an undertaking could view the documents. The judge, Hill J, ruled that the companies had to nominate a representative to view the document and that those representatives inspecting the document were to sign an undertaking that they would not disclose its contents and would not be involved in the commercial negotiation for assets covered by the implementation agreement.

 

The case shows that companies must be mindful that courts will generally require all relevant documents to be made available for viewing to the other party. In most cases, even interested members of the public not a part of the proceedings can request access. Open justice is a cornerstone of the court system.

 

However, where there is commercial sensitivity for a particular document and this might be exploited by a rival, there are confidentiality steps that can be taken to limit the prejudice suffered by inspection of those confidential documents.

 

Businesses must inform lawyers of documents they want protected at the earliest possible stage. Doing so early allows lawyers to be proactive about which documents to include in court proceedings, and to seek appropriate orders for access to those documents before they are accessed. As the judge pointed out, “once a confidential document is inspected, information cannot be forgotten”.

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