NDAs – #timesup?

The Daily Telegraph has been (temporarily) stopped by the courts from reporting the details of alleged “discreditable conduct” by a “leading businessman”. Five former employees entered into settlement agreements, which included confidentiality restrictions. But in the internet age, and with the current backlash against NDAs, is “time up” for those seeking to rely on NDAs?

What is an NDA?

“NDAs” (non-disclosure agreements) are very common in settlement agreements between employees and employers – effectively, they are a contractual commitment that a party (or both parties) will keep certain information confidential (e.g. the terms of the settlement agreement and the amount of any sums paid under it, and the underlying complaints that the employee has made). If the NDA is breached, the other party can seek damages for breach of contract.

The settlement agreements

In this case, the Court of Appeal has restricted what information is available to the public, so we only have basic facts; the identities of the employer and the individuals involved (including the executive, known as “ABC”) have not been revealed – and must not be published.

What we know is that five employees made allegations of misconduct against ABC. The five employees signed settlement agreements which included obligations not to disclose details of the settlement or the underlying conduct (subject to certain carve-outs for “legitimate disclosures”, e.g. the right to report criminal conduct to the police). The employees received independent legal advice before signing the settlement agreements.

The Daily Telegraph story

The Daily Telegraph contacted ABC (and two companies in the group for which he worked) to ask for comment on a story it wanted to run on the underlying allegations, as well as the terms of the NDAs. ABC and the companies suspected that someone with knowledge of the NDAs had leaked details to the Telegraph, and tried to obtain an injunction from the High Court to stop the newspaper publishing the story. 

The High Court

The High Court had to carefully balance the press’ right to freedom of expression under the European Convention on Human Rights (the “Convention”), and the individuals’ (including the businessman’s) right to respect for their private and family life under the Convention.

It rejected ABC’s request for an injunction because the public interest in publishing the story (particularly given the current public debate around workplace misconduct and the use of NDAs) outweighed the confidentiality of the information. The High Court gave five reasons for allowing the Telegraph to publish the story:

1. the information it had was reasonably credible
2. there was little or no reasonable expectation of privacy
3. much of the information was already public
4. it had not been shown that the information was obtained in breach of the NDA
5. publication would be in the public interest

The judge therefore decided that the Telegraph could print the story (but not until any appeal had been heard).

The Court of Appeal steps in

The Court of Appeal has overturned the High Court’s decision, and has granted a temporary injunction that prevents the Telegraph (and anyone else) from reporting certain facts about the case. The Telegraph are furious, and have led with this story on their front page today.

The judges disagreed with the High Court’s conclusions on each of the five issues above (although their full reasons have not been made public, in order to protect confidentiality).

What seemed to be particularly important to the Court of Appeal is that the High Court had not considered the important role settlement agreements (and NDAs) have in settling disputes and avoiding litigation, and the need for the courts to respect contracts that parties have freely agreed. This is particularly the case when individuals have had independent legal advice about the agreements, where there is no evidence that they were bullied or threatened into signing the agreement, and where appropriate carve-outs exist (e.g. allowing the individual to disclose criminal conduct to the police).

Name and shame anyway?

But ABC and the group companies may not be home and dry. There are a number of ways information can still come out:

• at least one MP has hinted at revealing the identity of the businessman in Parliament. “Parliamentary privilege” means that she would not be breaching the injunction, and the press would be able to freely report on what is said (including the name of the businessman). This was a tactic used at the height of the injunction/super-injunction furore in the summer of 2011 (when Ryan Giggs was named in Parliament)
  
  The difficulty is that anyone passing the MPs information could well be in breach of the order (and therefore in contempt of court), and the MPs themselves could be open to claims for damages by encouraging anyone who has signed an NDA to disclose the information to them
• the terms of injunctions often only apply within England and Wales, so there is the additional difficulty in trying to restrict the press overseas (an issue where the individual is well-known internationally)
• in the internet age (and with instantaneous communication, such as WhatsApp) breaches of injunctions are common, and rumours spread quickly. In the ABC case, speculation is already rife as to who the businessman is. Whilst not an excuse for breaching an injunction, the practical reality is that information often leaks out and can become public knowledge

What’s next?

This is only a temporary injunction until there can be a full “speedy” trial of all the facts (so we can expect to hear a lot more about this case, and others like it, in the next few months). It is possible that a court will decide, after hearing all the evidence, that the story can be published.

What is certain is that the combination of #metoo, NDAs, the press feeling gagged, politicians threatening to use parliamentary privilege, and a sense that the rich and powerful are using (or abusing) the justice system unfairly to silence the vulnerable, means that this is a story that is likely to run and run – regardless of any injunctions the courts might grant.