Contractual Non-Disclosure Agreements Weigh Heavily in Media Test Case

The ability of litigants to settle their differences on confidential terms respects the privacy of all sides and is essential to effective dispute resolution – but what if such non-disclosure agreements (NDAs) collide with the rights of journalists to publish information in the public interest? The Court of Appeal considered that issue in a guideline decision.

The case concerned five employees of a corporate group who had made allegations of discreditable conduct against a senior executive. Three of them had launched Employment Tribunal proceedings before all five complaints were compromised. Each of them received a substantial sum. The settlements were subject to NDAs by which all concerned agreed to keep confidential their terms, the nature of the complaints and various other matters.

A national newspaper later contacted the group and the executive with a view to obtaining their comments in respect of a story that it was proposing to publish. Having formed the view that information had been disclosed to the newspaper in breach of the NDAs, they immediately launched proceedings and sought an interim injunction against the newspaper, restraining publication pending a full hearing of the case. A judge, however, refused to grant the order sought.

In upholding their challenge to that ruling, the Court noted the important role played by NDAs in the consensual settlement of disputes, particularly in the employment field. They had contractual force and created an enhanced obligation of confidence. There was no evidence that they had been procured by bullying, harassment or undue pressure being brought to bear on the complainants, two of whom had supported the application for an injunction.

The Court noted that the importance of freedom of expression rights enjoyed by the media was neither in issue, nor in doubt. The delay in publication of information in the public interest was never desirable. However, the most serious allegations were uncorroborated and denied by the executive. Publication of the story would cause immediate, substantial and possibly irreversible harm to both him and the group.

In granting the injunction sought, the Court found it unlikely that the newspaper would successfully establish a public interest defence to the breach of confidence claim. In those circumstances, the balance fell in favour of publication of the story being restrained pending a speedy trial of the action.