FENWICKS ATTACKS MASONS AFTER WINNING INDEMNITY COSTS OVER OIL PROJECT CLAIMS

LITIGATION PRIVILEGE: no evidence partner acted improperly to gain confidential information

London law firm Fenwick Elliott has hit out at fellow construction specialists Masons after being awarded indemnity costs by the Vice-Chancellor, Sir Andrew Morritt, over unsubstantiated allegations that it acted improperly at an arbitration.The case also reasserts the limited exceptions to litigation privilege.Fenwick Elliott and its client - Techint International Construction Company - were sued by a consortium running the Muglad Basin oil development project in Sudan, which claimed they had improperly obtained confidential information.

Masons acts for the consortium.The consortium was seeking an order to reveal the source of the information, which related to possible extra payments due to Techint as a contractor.

A Fenwick Elliott statement said: 'It is regrettable that Masons issued the claim against this practice in the first place.

It has been found to be without substance or merit and has resulted in an order for indemnity costs.' Fenwicks estimated both sides' overall costs at 200,000.'It is also unfortunate that Masons declined in this case to adopt the principles of the engineering and construction pre-action protocol.' A Masons statement read: 'Proceedings were commenced in the context of two complex and on-going arbitrations.

Our clients have real concerns over the release of certain information to the arbitral tribunal.

As always, Masons acts in accordance with client instructions and all dealings with clients are kept in the strictest confidence.'In his witness statement, Masons partner Iain Black said his clients could not understand how the information reached Techint and its solicitors, for whom senior partner Robert Fenwick Elliott was acting.

The 'inevitable inference' was that it had been obtained improperly, he said.'[Fenwick Elliott] must have comprehended the confidential nature of the information, and either shut their eyes to its origin or, if informed thereof by their clients, were prepared nevertheless to make use of it,' he said.Handing down judgment last week, Sir Andrew was doubtful whether in the circumstances the information was confidential or privileged.Even if it was, he said, 'there is no evidence that in proofing that potential witness, Mr Fenwick Elliott, was either implicated in the original wrongdoing or himself liable for breach of any duty of confidence'.The consortium said that by Fenwick Elliott and Techint claiming the information from their source was privileged, the court should 'draw all possible inferences against them'.In looking at litigation privilege, Sir Andrew said that only work done outside of the usual course of a solicitor's retainer, such as to further crime or fraud, could remove privilege.He said there was no reason to do so in this case, adding: 'Even if the information given by the potential witness indicated some earlier breach of a duty of confidence by him or another, that cannot preclude privilege for the communication between him and Mr Fenwick Elliott.'Frequently information given by a potential witness to a solicitor indicates the past commission of a crime or fraud, but that is no ground for denying privilege in the communication; quite the opposite.'Neil Rose