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Commercially sensitive? Justify that

18 June 18

Corporate briefing: if protection is sought for documents because of their commercial sensitivity, proper reasons in support must be given, as a ruling relating to the Edinburgh Tram Inquiry shows

by Emma Arcari

While giving oral evidence during the Edinburgh Tram Inquiry in late 2017, a former employee of Bilfinger (one of the seven core participants to the inquiry) disclosed the existence of monthly progress reports written during the project. In February 2018 these documents were requested by solicitors for the inquiry team. Bilfinger produced the documents in their entirety, but subsequently applied for a restriction order under s 19(2)(b) of the Inquiries Act 2005, in order to prevent their unredacted publication on the inquiry website.

The petitioner proposed redactions in respect of “highly sensitive confidential information” within the reports. Lord Hardie of Blackford QC, as inquiry chairman, refused the request and Bilfinger petitioned in the Court of Session for suspension of that decision and interdict against anyone publishing or disclosing (such as via the inquiry website) confidential information in the reports.

Lord Tyre in the Outer House heard and refused motions for interim suspension and interim interdict: Bilfinger Construction UK v Lord Hardie of Blackford QC [2018] CSOH 46 (8 May 2018).

The documents consisted of Bilfinger’s internal monthly reports which, it argued, in addition to their commercial sensitivity constituted a trade secret in relation to their format and structure. Sensitive information included pricing, tendering, margins, operating costs, commercial strategy and procurement information. The format and structure was used by its business globally in order to carry out costing and monitoring of major projects at management level, and assess key performance indicators, therefore the methodology mirrored Bilfinger’s strategy on the pricing of its other projects.

Statutory test for restriction order

Under s 19(3) of the Act, a restriction order must only specify restrictions which are:

  • required by statutory provision, enforceable obligation or rule of law; or considered to be conducive to the inquiry fulfilling its terms of reference or to be necessary in the public interest, having regard to s 19(4).

Matters set out in s 19(4) include:

  • the extent to which any restriction on disclosure might inhibit the allaying of public concern;
  • any risk of harm or damage that could be avoided or reduced by any such restriction;
  • any conditions as to confidentiality subject to which a person acquired information given to the inquiry;
  • the extent to which not imposing any particular restriction would be likely (i) to cause delay or to impair the effectiveness of the inquiry, or (ii) otherwise to result in additional cost (to public funds or to witnesses or others).

Commercially sensitive?

Refusing Bilfinger’s application, Lord Tyre held that no prima facie case had been demonstrated. The chairman’s decision could not be said to be irrational or unreasonable: the chairman was aware of the statutory test, and “the potentially conflicting considerations of the public interest in the publication of documents provided to the inquiry and the public interest in preventing harm or damage caused by disclosure of commercially sensitive information”. These, however, applied only if the information could be considered commercially sensitive, and the onus of proving this rested on the applicant.

Bilfinger’s application was made at a high level of generality “with little or no specification, and no examples, of either the commercial sensitivity or the anticipated harm”. Lord Tyre agreed with the respondent’s observation that there was little explanation as to why the substance or the methodology of the report had a “continuing commercial sensitivity” that could cause damage to Bilfinger or its wider group. The assertions of loss and damage were also not made out, given Bilfinger’s earlier published reports (which stated that the group had pulled out of the construction and civil engineering business and would not seek to acquire new projects).

Further arguments

Lord Tyre rejected the petitioner’s arguments that the decision was procedurally unfair and unreasonable. One strand of this argument concerned Siemens, another core participant, which had previously obtained a restriction order. Bilfinger had argued that it had a legitimate expectation that it would be treated equally and that the two applications were concerned with the same kind of confidential information and likely to cause the same kind of harm. Lord Tyre noted that the petitioner was unaware of the contents of the Siemens order and held that this argument was an unsubstantiated assertion. 

Another argument related to article 1 of Protocol 1 to the European Convention on Human Rights (“A1P1”) and whether the proposed interference with Bilfinger’s peaceful enjoyment of its possessions had a legitimate aim, and, if so, would be proportionate. Bilfinger’s arguments included that the value of the data would be diminished by disclosure and the information at issue was irrelevant to the purpose for which the monthly reports had been sought. Lord Tyre agreed that commercially sensitive information was a possession for the purpose of A1P1 but noted that, given Bilfinger had failed to establish commercial sensitivity, publication would not constitute a disproportionate interference with the peaceful enjoyment of possession.

Lord Tyre noted that the balance of convenience would have favoured Bilfinger had a prima facie case been stated. However, assertions without further explanation did not suffice in this case.

Comment

The case serves as a warning for those seeking to prevent commercial information from being disclosed via public inquiries. In this case, Bilfinger failed to persuade the chairman of the inquiry, and subsequently Lord Tyre, that their internal monthly reports were commercially sensitive. However, even if they had managed to get that far, they would still have faced a balancing test involving their legitimate interest in keeping commercially sensitive material confidential against the terms of interest of the inquiry (which are wide, given the nature of the inquiry here) and the public interest in disclosure.

Emma Arcari, associate, CCW Business Lawyers Ltd

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