Back-to-back confidentiality agreements

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It is often said that confidentiality clauses have no teeth. Frequently agreed, but then difficult to enforce. It can be tricky to show a breach and, even then, what loss has been caused? Perhaps that is why they are rarely tested in court. A recent Court of Appeal decision (Dorchester v BNP Paribas, 7 March 2013), though, is a reminder that such agreements are contracts to be enforced like any other. They can have some Draconian effects, particularly where a party agrees to procure confidentiality from any third party to whom they pass on the confidential information.

The dispute in Dorchester related to a property deal. Dorchester disclosed to BNP confidential information about a development opportunity which BNP could then disclose to IKEA, a potential funder. BNP signed a “non-disclosure and non-circumvention deed” with Dorchester, the effect of which was that BNP agreed to procure that any party receiving confidential information was bound by similar non-disclosure and non-circumvention obligations…

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