Are confidential settlement agreements really confidential?

The Rolling Stones were in the press recently, after leaked court documents revealed confidential medical information on the band members.

Following the death of Sir Mick Jagger’s girlfriend, L’Wren Scott, back in March 2014, the band had to cancel part of its Asian tour. The band made a claim against their insurance policy for loss of earnings. The underwriters rejected the claim on the ground that Scott’s death was “not beyond her control”.

The band challenged the underwriters decision by issuing a $12.7m claim in the High Court in London. The underwriters subsequently filed applications in Utah and New York for permission to gather evidence on Scott’s mental health to defend the claim.

The claim between the Rolling Stones and their insurers has now been settled, but the leaking of confidential medical records has left the band “deeply upset”. One of the key elements of court litigation in the UK is that statements of case, judgments and court orders are documents of public record. A non-party is therefore entitled to make an application to the court for copies of these documents under Part 5.4C of the Civil Procedure Rules.  A non-party is also entitled to obtain copies of other documents on the court file with the court’s permission, which could include a consent order that annexes a settlement agreement, as held in ABC Ltd v Y [2010].

In this case, it is not clear how the references to confidential medical records got into the public domain but references to such material in pleadings, applications, statements or reports raises the risk of publicity, whether lawful or unlawful. It is likely that the leak occurred as a result of underwriters applications in the US to take depositions from associates and friends of Scott.

How to minimise the risk of such disclosure? Once litigation is underway, it is impossible to prevent all references to the dispute in the media. If parties have arbitration written into their contracts (insurers don’t seem to do this very often, for reasons which aren’t clear) the whole process is confidential and there is much less risk of disclosure of sensitive material.

Settlement negotiations and, increasingly, the use of alternative dispute resolution (ADR) techniques such as mediation or early neutral evaluation, should be both privileged and confidential, with serious adverse consequences for breach.

Although nothing can prevent the mischievous leaking of information, particular in a high-profile case such as this, the parties can draft tight terms for any ADR process and ensure that sensitive material is shared as narrowly as possible.

Charles Gordon, mediator and arbitrator with JAMS International, and Samantha Collins, trainee, DLA Piper