FL-2020-000038 - [2025] EWHC 2136 (Ch)

At para.17, she said as follows:

“In conclusion, I agree with S&C’s view regarding the seriousness with which US regulators view CSI confidentiality rules and the meaning of the regulations themselves. The history of CSI enforcement actions nonetheless reflects that such action has been thus far only taken where there has been egregious misappropriation of CSI for personal gains by insiders or where CSI violation was added to a more significant leading charge, such as significant anti-money laundering violations. This is demonstrative of the highly discretionary nature of regulators’ determinations regarding pursuit of both civil or potentially criminal enforcement actions related to unauthorised CSI disclosures, as well as the fact that CSI record-keeping does not generally rank among the supervisory priorities that lead to affirmative regulatory oversight and focus.”

This all makes a lot of sense to me and has not really been countered by Mr Bourtin or the Defendant. The burden is on the Defendant to satisfy me that it is appropriate to make this extraordinary order. They really seem to be pinning their hopes on the effect of the FRB and NYDFS’ refusal to consent.But in my view, this is exaggerated. Certainly the regulators take this very seriously, and jealously guard their CSI. But in nearly all of the authorities, starting with Bank Mellat itself, the respective regulator has refused permission to disclose. It does not seem to me to make matters materially worse that the regulators have refused their consent, and Mr Bourtin does not provide any explanation as to why it would make it more likely that they would take action. Far more material, as I have said before many times, is that the regulators will have to take into account the fact that disclosure has not been voluntarily provided.

In conclusion, then, on the CSI Documents, I find the Defendant has not demonstrated any real risk of criminal prosecution or even civil enforcement action being taken by its US regulators. Even if some action were taken, the penalties would likely be very small. I consider that the Defendant and its expert have failed to take into account that it has done everything within its power to avoid disclosure and that ultimately disclosure has been forced upon it by an order of this Court. This would be a highly material factor for the US regulators to take into account in deciding what, if any, enforcement action to take. But as I have said, I do not believe that there is any real risk of such action being taken, whether criminal or civil.

As for the importance of the documents and their probative value, I do not think it is appropriate for me to assume that they are of only minimal or tangential relevance. In any event, there is no real balancing to be done as they are relevant documents and there is not really anything on the other side to balance this against.

Accordingly, I will exercise my discretion to order disclosure of the CSI Documents. I will consider in the context of the CRO application what the terms of the confidentiality ring should be. But I think that sufficient protection is provided to the US regulators by disclosure into a confidentiality ring, which is, in any event, an exceptional derogation from the principles of open justice.