Can you rely on your confidentiality clause in all circumstances, and what remedies might you have if you can't?

Confidentiality clauses are an important protection for parties wishing to share information. Will the confidentiality in your agreement be watertight?

In the recent case of Saab v Angate Consulting , a bank called in private investigators, who signed a retainer containing strict terms as to confidentiality. Following their investigation, the investigators disclosed documents and information to various outside parties, including Cypriot and US regulators. The investigators raised two defences to a claim by the bank that they had breached their confidentiality duties:

Public interest

The investigators argued that they were entitled to make the disclosures because of the bank's alleged criminal conduct, which was said to be so serious that it represented a threat, not only to the banking system but to the safety and welfare of other people.

It is an established defence that disclosure of "misdeeds" (both actual and contemplated) is justified in the public interest. That defence failed here, though, because the disclosure had been too broad and the conclusions reached by the investigators were "premature and speculative". Disclosure must have "focus, and a utility" to attract this defence.

Compulsion by law

This is an entirely separate defence, and works where a party is under a duty to disclose information pursuant to an order from a statutory authority or court.
That defence failed on the particular facts of the case: requests for information from the regulators had only asserted that a failure to comply "may" lead to a criminal offence and fine and the judge said that "That is not, in my judgment, the language of compulsion".

In reaching this conclusion the judge also considered the effect of the express confidentiality terms in the retainer. She held that if there is an express contractual duty of confidentiality where information would in any event attract confidentiality at common law, "the better view is that some greater weight should be given to that obligation of confidentiality".

Comment

Having found that the investigators had breached their confidentiality duties, this case demonstrates the difficulty in obtaining effective remedies for the breach of a confidentiality clause. The bank in this case obtained a declaration that the investigators had breached their confidentiality obligations (and were entitled to receive information about the exact nature of the disclosures) and the investigators were restrained from making any further disclosure.

But the disclosure had clearly been very wide (the evidence showed that what had already been supplied was virtually a "document dump" of everything obtained by the investigators) and no further disclosures were anticipated. Furthermore, claims for an account of profits or the legal costs incurred in seeking the return of confidential information failed (albeit in part because of a lack of evidence).