As a general rule, court proceedings and the related documents are open to the public. There is an important reason for that: justice must not only be done, it must be seen to be done. But what if that would lead to the disclosure of valuable and confidential commercial information to the opposing party or the public at large?
The UK judgment in LzLabs, applying well-established principles, is a good example of the practical approach the courts in the UK and South Africa will follow to balance the competing interests of open justice and confidentiality protection.
The defendants allegedly breached copyright laws and a licensing agreement with the claimant by exploiting their access to the claimant’s software to reverse engineer that software and develop similar software of their own. The determination of the claim accordingly required the court to interrogate the parties’ source code and to analyse their internal and external correspondence regarding the software development process.
The parties had agreed to a confidentiality regime in terms of which certain disclosed documents were designated as confidential if they contained commercially sensitive information. The designated documents were only to be disclosed to specified persons, such as legal representatives and independent experts, who signed a confidentiality undertaking.
The claimant sought an order compelling the parties to reconsider the designation of all documents included in the trial bundle. The defendants agreed that a reconsideration of the trial bundle was necessary, but argued that the exercise should be limited to those documents which the parties would refer to at the trial.
The court mentioned that a balance ought to be struck between the public’s interest in open justice and the parties’ interest in the protection of their commercially sensitive information. The court emphasised, on the other hand, a party’s right to understand the evidence deployed against them at trial. The court reasoned that it should only derogate from full disclosure if it is necessary and proportionate to do so in the circumstances of the particular case. Even then, the court should preferably order restricted access by way of redaction rather than outright non-disclosure of the whole document.
Applying these principles, the court ordered the parties to agree on a core bundle of documents that would be referred to at the trial and to prioritise those documents for reconsideration. The parties should then have an opportunity to add identified documents to the core bundle after the initial reconsideration is completed. The parties were required to provide good reasons where documents were to remain designated as confidential.
As we have seen in the landmark South African Crown Corkjudgment, our courts are likely to adopt a similarly pragmatic approach to the production of confidential documents in court proceedings.
The full citations of the two cases are IBM United Kingdom Ltd v LzLabs GmbH & Others [2024] EWHC 423 (TCC) (28 February 2024) and Crown Cork & Seal Co Inc & Another v Rheem South Africa (Pty) Ltd & Others 1980 (3) SA 1093 (W).