BNP Paribas & Ors v Deloitte & Touche LLP

Factual and Procedural Background

An arbitration is ongoing between Company A and Company B concerning an agreement under which Company A acquired a group of Company B's companies. These companies were recently purchased by Company B from another entity, which later merged with Company B. The arbitration is governed by the ICC Rules, conducted in The City, and subject to the 1996 Arbitration Act. The governing law of the acquisition agreement is the law of The State of New York.

Company A alleges that Company B made false and fraudulent misrepresentations regarding the value of the businesses acquired, resulting in Company A overpaying substantially. The claim involves very large sums of money. Company B denies these allegations, relying partly on Company A's own due diligence conducted by accountants and on audited accounts for 1999 and 2000 certified by The Company C, English auditors. A witness statement from the relevant audit partner of Company C has been filed in support of Company B's defence.

Company A applied for permission under CPR Rule 34.4 to issue a witness summons to Company C to produce documents relevant to the arbitration. Company B remained neutral and did not participate in the court hearing of this application. Company A was represented by Attorney Stewart QC and Company C by Attorney Joseph QC.

Legal Issues Presented

1. Whether the court has power under section 43 of the Arbitration Act 1996 to order a third party, not a party to the arbitration, to disclose documents relevant to the arbitration.
2. Whether the application for a witness summons to produce documents constitutes an application for production of specific documents or an impermissible broad application for disclosure akin to discovery.

Arguments of the Parties

Appellant's Arguments (Company A)

• The application is for production of specific documents rather than broad disclosure.
• Section 43 of the Arbitration Act 1996, derived from Article 27 of the Model Law, allows the court to assist in taking evidence, including ordering production of documents with tribunal permission.
• Third party disclosure should be permitted to ensure parties in arbitration are not disadvantaged compared to court proceedings.
• Section 43(4) provides protection against overly broad or burdensome disclosure requests.
• Company C is closely linked to Company B by a Joint Defence Agreement, justifying the request.

Respondent's Arguments (Company C)

• Section 43 of the Arbitration Act 1996 only authorizes securing attendance of witnesses and production of documents in evidence, not broad disclosure.
• The power to order disclosure from third parties was repealed and not re-enacted in the 1996 Act, reflecting a policy of party autonomy and limited court intervention.
• The application is effectively a request for broad disclosure, which is not permitted under arbitration rules.
• The Model Law provision concerns taking evidence, not disclosure procedures.
• Case law requires specificity in document production requests to avoid document fishing expeditions.
• The procedure for third party disclosure under CPR 31.17 is not available in arbitration.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Panayiotou & Others v Sony Music Entertainment (UK) Ltd [1994] CH 142	Distinction between production of specific documents as evidence and broad discovery for document fishing.	Supported the court's view that the application was a broad disclosure request, not a request for production of specific documents.
The Lorenzo Halcoussi [1988] 1 Lloyd's Law Reports 180	Prohibition of speculative disclosure requests without clear relevance or probative value.	Reinforced the principle that broad requests for files without asserted relevance are impermissible.
Wakefield v Outhwaite [1990] 2 Lloyd's Law Reports 157	Limits on disclosure requests based on relevance and probative effect.	Supported rejection of broad disclosure requests lacking specific asserted relevance.
In re Asbestos Insurance [1985] 1 WLR 331	Distinction between permissible targeted document requests and impermissible broad class requests.	Confirmed that broad class requests for documents are not permissible.

Court's Reasoning and Analysis

The court examined whether section 43 of the Arbitration Act 1996 empowers it to order a third party to disclose documents in arbitration proceedings. The court found that section 43 permits securing attendance of witnesses and production of documents as evidence but does not extend to broad disclosure or discovery orders against third parties. This limitation reflects the repeal of similar powers under the 1950 Arbitration Act and embodies the principle of party autonomy and limited court intervention in arbitration.

The court distinguished between production of specific, identified documents for introduction in evidence and broad disclosure requests that amount to document fishing. The application before the court sought broad classes of documents, not specific items, effectively amounting to a disclosure request rather than production of evidence. Case law cited reinforced that courts do not permit speculative or overly broad document requests without particularity and relevance.

The court acknowledged the practical concerns raised by Company A regarding the ability to challenge the audit evidence but emphasized that these concerns do not override the statutory and policy constraints on court intervention in arbitration. The court noted that the arbitral tribunal is responsible for managing disclosure between parties and deciding on the admissibility and weight of evidence.

Consequently, the court concluded that the application was too broadly framed and did not fall within the powers granted by section 43. It clarified that a properly targeted application for production of specific documents might be considered on its merits but did not address such a scenario here.

Holding and Implications

The court DISMISSED the application for a witness summons to order disclosure of documents from the third party auditor.

This decision confirms the limited scope of court powers under the Arbitration Act 1996 regarding third party disclosure in arbitration proceedings, emphasizing party autonomy and confidentiality. The ruling directs that broad disclosure requests must be addressed within the arbitration tribunal, and courts will not entertain document fishing exercises by third parties. No new precedent was established beyond the application of existing statutory interpretation and case law principles.