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Ocado Van
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Jane Lambert
Court of Appeal (Sir Geoffrey Vos MR, Lady Justice Nicola Davies and Lord Justice Nugee) AutoStore Technology AS v Ocado Group Plc and other [2021] EWCA Civ 1003 (7 July 2021)
This was an appeal by Ocado Plc, its subsidiaries and Tharsus Group Ltd from the decision of Judge Hacon in Autostore Technology AS v Ocado Group Plc and others [2021] EWHC 1614 (Pat) (11 June 2021) not to restrain AutoStore Technology AS from disclosing to the US International Trade Commission a document marked "CONFIDENTIAL & WITHOUT PREJUDICE PROVIDED FOR PURPOSES OF SETTLEMENT NEGOTIATIONS ONLY."
I discussed Judge Hacon's decision in Interim Injunctions - AutoStore Technology AS v Ocado Group Plc on 14 July 2021, I explained the reason for the dispute as follows:
"In the proceedings before the Commission, AutoSrore alleged that Ocado had infringed several of its US patents. Ocado pleaded that AutoStore was estopped from alleging infringement on the ground that AutosSrore had previously assured Ocado that Ocado had not infringed those patents. AutoStore claimed that the document in issue contradicted the alleged assurance. It would therefore undermine the estoppel defence."
I added:
"The learned judge directed himself at para [27] of his judgment that if he was to renew the injunction sought by Ocado, he had to be satisfied that Ocado had a sufficient case on the merits under one or both of its pleaded heads, namely breach of contract and breach of confidence. If he was so satisfied, he had to go on to consider the balance of irreparable harm, the balance of convenience and, if necessary, the status quo. Usually, it is enough for the applicant to satisfy the judge that there is a serious question to be tried. Both parties agreed that the judge should have regard to the underlying merits of the parties' respective cases as his decision would determine the issue."
The judge concluded:
"It may be that if the ITC judge were to admit the Document in Issue, Ocado's case before the ITC would suffer. But in my view, Ocado is not entitled to rely on damage caused to it by the prevention of a procedural injustice. I therefore take the view that the balance of irreparable harm falls clearly in favour of there being no grant of an interim injunction."
The Ocado companies and the Tharsus Group appealed to the Court of Appeal with Judge Hacon's leave on the following grounds:
"(1) The Judge was wrong to adopt the test of whether Ocado had a high probability of success.
(2) Even if the Judge was right to adopt that test, Ocado did have a high probability of success.
(3) The Judge erred in saying that the concept of "without prejudice" was well known outside English law.
(4) The Judge erred in finding that the balance of irreparable harm favoured AutoStore."
As the proceedings before the Commission were imminent, the Court of Appeal agreed to hear the appeal on an expedited basis. lt came on before Lord Justice Nugee, Lady Justice Nicola Davies and Sir Geoffrey Vos MR on 1 July 2021. Lord Justice Nugee would have allowed the appeal but the Master of the Rolls and Lady Justice Nicola Davies dismissed it.
At the appeal hearing, AutoStore supported Judge Hacon's decision on the grounds that comity and jurisdiction were central to his reasoning. It pointed out that the appellants had suggested and agreed that the admissibility of the document in US proceedings should be governed by rule 408 of the Federal Rules of Evidence ("FRE408") which was similar to but not quite the same as the English "without prejudice" rule. AutoStore argued that it would be wrong for an English court to decide the admissibility of a document that could have far-reaching consequences on the outcome of the US proceedings.
At para [65] of his judgment, the Master of the Rolls set out what he considered to be the central issues of the appeal:
(1) the correct analysis of the facts at this interlocutory stage,
(2) the significance of comity, governing law and jurisdiction,
(3) what legal test should, in the circumstances be applied to the facts, and
(4) the application of that test.
As to the first issue, his lordship identified two essential (and agreed) facts that seemed unlikely to be displaced by further evidence. One which had been relied upon by the appellants was that the document and subsequent emails referring to the discussions were expressed to be "without prejudice" and "provided for purposes of settlement negotiations only". The other, upon which AutoStore had relied, was the attendance note by the appellants' solicitor that the third meeting "was a continuation of the … without prejudice discussions between Ocado and AutoStore … and that any US law discussions were to be governed by [FRE] 408". His lordship did not regard those matters in conflict. He concluded that the parties had agreed that the discussions were without prejudice and that the document was provided only for the purposes of settlement negotiations, but that discussions about the US matters including the document were to be governed by FRE408.
The second issue depended largely on whether it had been agreed that the English courts would have exclusive jurisdiction to determine. Had there been such an agreement it would have been difficult to argue that FRE408 should apply. It was, however, common ground that there had been no such agreement.
As the English court's decision would affect the outcome of the US proceedings the Master of the Rolls regarded the application for an injunction as analogous to an antisuit injunction where the court requires the applicant to show a high probability of success in establishing an arbitration agreement, exclusive jurisdiction agreement, or agreement not to litigate elsewhere. That is because such injunctions are, "interfering, albeit indirectly, with the working or output of a foreign court,"
His lordship did not believe that there was a high probability that the appellants would succeed:
"First, I would expect AutoStore to establish at trial that the agreement was varied at the third meeting to provide that "any US law discussions were to be governed by [FRE] 408", rather than the English without prejudice rule. Secondly, that variation necessarily imports an understanding that it would be up to a US court to decide upon the admissibility of materials discussed at the London meetings into US proceedings within the provisions of FRE 408. Thirdly, in those circumstances, however blanket the "without prejudice" agreement may have been, it did not include decisions that would fall to be made in future US proceedings. In short, FRE 408 is inconsistent with an agreement as to the application of English without prejudice rules."
It was not necessary for the Court of Appeal to consider the balance of convenience. Had it done so it still would have decided not to grant the injunction. That would have enabled the American judge to determine whether to exclude or admit the evidence in accordance with FRE408.
Lady Justice Nicola Davies agreed with the Master of the Rolls.
In his dissenting judgment, Lord Justice Nugee considered the second ground of appeal first. He quoted the attendance note of the appellants' solicitor:
"this meeting was a continuation of the confidential and without prejudice discussions between Ocado and AutoStore (AS) and that any US law discussions were to be governed by rule 408 of the rules of evidence."
In his lordship's view, the critical issue was the effect of the words he had emboldened. There was no dispute that they mean that the parties agreed that FRE 408 would apply to any discussions of the US legal position and that that included the discussion of the document recorded in the attendance note. The question was whether, as the appellants contended, that had the effect that the protection of FRE 408 would apply in addition to the protection conferred by the "without prejudice" rule, or, as AutoStore contended, in place of the "without prejudice" protection.
This was ultimately a very short point. The appellants had had the better of the argument on the point and that there was nothing in the emboldened words that took away the protection of the without prejudice cloak under which the parties agreed that the London discussions should take place,
As to the first ground, Lord Justice Nugee inclined to the view that the special threshold applicable to the grant of an anti-suit injunction did not apply. It was sufficient for an applicant for an interlocutory injunction such as the present one to have the better of the argument. He did not consider it necessary to express a concluded view on the issue, Even if there had been a higher threshold, he would have held that the appellants had cleared it.
The third ground was scarcely argued and nothing turned on it.
He would have found for the appellants on the fourth ground. By refusing the injunction, the judge below had deprived the appellants of the benefit of their agreement with AutiStore,
His lordship also considered but dismissed the respondent's notice.
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