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          Civil Courts armed and ready to assist recovering stolen data

          Civil Courts have a variety a tools at their disposal to ensure the recovery of stolen material, and recent case law has again confirmed that Judges will be ready and willing to assist parties recover their assets.

          Date: 05/03/2018

          The recent High Court judgment in Corbiere Limited et al v (1) Ke Xu and (2) Secretary of Statement for the Home Department1  serves as a useful reminder of the availability of civil proceedings in preventing abuses and pursuing the recovery of stolen material, even where criminal proceedings have not procured the same. 
           
          The judgment also demonstrates the lengths a civil Court may be prepared to go to in assisting a party recover its assets, and the armoury available to the Court to achieve the same, on this occasion even ordering the delivery up of a wrongdoer's passport and potentially delaying his deportation pending the return of stolen data, as well as considering a Claimants rights under the ECHR.    

          Background

          In August 2014 Mr Ke Xu stole highly confidential information belonging to his employers (the Claimants), who specialise in quantitative investment research and software development.  He then fled to Hong Kong (hoping to travel on to China), where he was arrested and extradited back to the UK. 

          Following extradition, he was convicted on various counts of theft and fraud, and sentenced to four years' imprisonment. Later, he was sentenced to a further 18 months' imprisonment for failing to disclose the location of copies of the confidential information and because he had allowed third parties to access it. Despite that sentence, Mr Xu claimed to be unable to return the data to the Claimants, alleging that it was being held by his parents in China, who were refusing to release it to him.  

          Given Mr Xu's continued refusal to return the material, the Claimants commenced civil proceedings against him, seeking:

          - An injunction restraining him from using the material or providing it to any other person;
          - The delivery up or destruction (to be confirmed by oath) of all articles or materials the use or publication of which could contravene the injunction; and 
          - Damages for any loss suffered as a result of the misuse of the confidential information.

          Interim Relief

          In September 2017, at the conclusion of his extended sentence, the Secretary of State for the Home Department (the "SSHD") resolved that Mr Xu should be deported.  Fearing that this would effectively end their efforts to seek to recover the data, the Claimants made a further application to the Court, for an order requiring Mr Xu to disclose the location of the confidential information he copied, what became of it and the name of those who have or may have had access to it (the "Disclosure Application").

          The Claimants also made a supplementary application, requesting that Mr Xu be prevented from leaving the jurisdiction until he had complied with the Disclosure Order (the "Passport Application"). This would have the effect of delaying his deportation.

          The Disclosure Application

          Mr Xu resisted the Disclosure Application, arguing that (1) he should not be punished twice for the same non-disclosure and (2) there was no risk of harm to the claimants as there was no longer any value in the information stolen. 


          Under his first argument, Mr Xu stated, despite being sentenced for failing to provide the disclosure required in the criminal proceedings, he had sufficiently complied with the order by confirming that he took no copies of the confidential information. He also argued that granting the Disclosure Order would see him punished twice for the same non-disclosure.

          Mr Justice Zacaroli rejected these submissions, ruling that "the criminal proceedings and the civil proceedings serve different ends". The fact that the disclosure required was not obtained during the criminal proceedings did not preclude the Claimants from seeking to obtain this information during civil proceedings. Furthermore, the risk of Mr Xu being punished twice would only arise should he fail to provide the information requested and be sentenced as a result, and so was of his own making. 

          Mr Xu's second argument was also dismissed, with Mr Justice Zacaroli finding that there remained a real risk of substantial harm to the Claimants, should Mr Xu be able to exploit the confidential information stolen. 

          Mr Justice Zacaroli thefore granted the application, concluding that that the relief sought in the proceedings as a whole "would be rendered nugatory" if the Claimants were unable to recover the confidential information from Mr Xu and any other person to whom it had been disclosed. 

          The Passport Application

          Mr Justice Zacaroli also granted the Passport Application, prohibiting Mr Xu from leaving the jurisdiction until he had complied with the Disclosure Application.  Considering the interests of both parties, he found that on balance, the potential prejudice to the Claimants' claim outweighed the detriment Mr Xu would suffer as a result.

          However, the Judge refused to grant a broader application, prohibiting Mr Xu from leaving until after the trial of the matter.  In doing so, he emphasised the need for the restraint to be as short as possible. However, he also noted that the Claimants could make use of further pre-trial relief (for example, the delivery up of material) to remove any prejudice that may arise at a later stage. 

          Article 6 of the European Convention on Human Rights

          As part of the Passport Application, the Claimants sought a declaration from the Court that the deportation of Mr Xu would infringe their right to a fair trial under Article 6 of the ECHR.  Without presenting any additional evidence, the Claimants asserted that if the Court was prepared to prohibit Mr Xu from leaving the jurisdiction, it must necessarily find that Article 6 was engaged.    

          Mr Justice Zacaroli rejected the suggestion that upon granting the Passport Application he would automatically have to make the declaration sought.  As the Claimants had not made any arguments as to the scope of Article 6, or how they asserted Mr Xu's deportation may infringe those rights, the Judge did not consider it appropriate to reach a conclusion on whether Article 6 was engaged.  

          However, the Judge was very clear that the Claimants were entitled to a fair trial and that the deportation Mr Xu's may have infringed those rights.  Making these comments obiter, the Judge certainly gave encouragement to any other parties seeking to run a similar argument in future matters.  

          Commentary

          The judgment confirms that concurrent or past criminal proceedings relating to the same course of event(s) will not prevent a party from commencing civil proceedings to try and recover confidential information and/or obtain damages for its misuse.  It also highlights that, if criminal proceedings have not led to the recovery of stolen material, civil court Judges will be prepared to exercise their discretion and use machinery at their disposal to assist a party in achieving the same.  

          Civil proceedings offer a range of helpful tools that can be utilised to assist in the recovery of misappropriated confidential information. Civil Courts in England and Wales have a wide discretion to make interim orders as they consider suitable in any given circumstances.  For example:

          • Injunctions – prohibiting the use of and/or requiring the return of or destruction of the confidential information;
          • Disclosure orders – requiring the wrongdoer to provide information on the status of the confidential information e.g. the location and the name of those who have had access (and potentially compelling the wrongdoer to be cross examined in Court in relation to the same);
          • Norwich Pharmacal Orders – requiring the disclosure of documents or information from a third party in order to help track down a wrong-doer or misappropriated information;
          • Delivery Up – requiring the wrongdoer to deliver material to the Court or to the prosecuting party (including the material itself, and any items used to misappropriate the data, such as laptops, external hard drives or USB sticks, if need be for examination by a forensic expert) 
          • Passport orders - restraining the wrongdoer from leaving the jurisdiction; and
          • Freezing injunctions -  preventing the persecutor from removing assets located within the jurisdiction, or dealing with any assets whether located in the jurisdiction or not.

          If you have concerns regarding the potential misuse or misappropriation of confidential information, or options available in seeking to recover the same please contact our commercial litigation team.

          [1] (1) Corbiere Limited (2) Trenchant Limited (3) Trenchant Employee Services Limited v (1) Ke Xu (2) Secretary of State for the Home Department (as intervener) [2018] EWHC 112 (ch)

          Related people

          Joshua Fineman

          • Senior Associate