Ricardo Benjamin Salinas Pliego & Anor v Astor Asset Management 3 Limited & Ors

Stephen Houseman KC Introduction

1. Earlier today I dealt with a range of consequential matters arising from my judgment handed down on 13 November: [2025] EWHC 2968 (Comm) (“ Judgment ”). References below in square brackets are to paragraph numbers in the Judgment. Definitions are adopted for convenience, save that I refer to “the defendants” for simplicity.

2. The present hearing was listed in accordance with an order which I made on 14 November, pursuant to which: (i) the claimants’ interim undertaking, referenced in [67] & [71], was extended to the present hearing; (ii) the defendants filed statements of costs totalling over £2.4m; (iii) the claimants filed statements of costs totalling almost £1.8m following my direction about their ability to dispute any aspect of the defendants’ costs; and (iv) both sides filed indicative grounds of appeal in accordance with paragraph J12.3 of the Commercial Court Guide.

3. This further judgment deals with permission to appeal and indemnity costs. Other matters were taken care of in the hearing this morning. Permission to Appeal

4. As indicated in [9] and discussed in [84], there is obvious sense in giving permission to appeal and cross-appeal on certain issues or within certain parameters.

5. The claimants identify 11 grounds of appeal. The defendants identify two. Neither side suggests that the Court’s task in dealing with an abuse of process, where established, is other than to respond in a way that is both appropriate and proportionate: see [50]-[54], [75]. They largely challenge my evaluation of events or exercise of discretion.

6. In so far as the claimants seek to challenge my primary findings, I refuse permission to appeal as foreshadowed in [84](ii). This covers my findings about: (a) their participation in and responsibility for serious unethical conduct ([15]-[30], [63]); (b) the so-called ‘causation defence’ addressed in [28]; (c) the impetus for seeking summary judgment ([32]-[34]); and (d) alleged waiver of privilege or loss of confidentiality ([65]).

7. The focus of the claimants’ remaining grounds of appeal is three-fold: (1) the characterisation of their behaviour as an abuse of process involves an unwarranted extension to this doctrine based upon an artificial distinction between the quality of impugned behaviour and its potential future impact; (2) Mr Sklarov’s own alleged abusive behaviour was not taken into account; and (3) there was no basis for deferring determination of the evidential status of the illicit information or the impact of the claimants’ illicit knowledge.

8. I deal first with (2) & (3) as they involve procedural complaints. Both of them presuppose that the characterisation of the claimants’ conduct as an abuse of process is correct.

9. As regards (2) above: (i) No meaningful or memorable reference was made by the claimants during the 3-5 November hearing to any allegedly abusive conduct on the part of Mr Sklarov which ought to be evaluated by the Court or brought into account when choosing its response to the claimants’ abuse of process. The suggestion now that Mr Sklarov has himself abused the process of the Court is novel; cf. paragraph 273 of their skeleton argument addressing the admissibility of the illicit information. (ii) Mr Wardell KC’s oral submissions were well-structured. He identified a series of numbered points that should weigh with the Court when choosing an appropriate and proportionate response. None of them featured Mr Sklarov’s alleged behaviour; cf. Day 1, p.122 (lines 5-9) dealing with “ unclean hands ”. There was, accordingly, no responsive analysis on this subject from the defendants. (iii) I do not accede to a ground of appeal which relies upon a point raised afresh or resurrected from a state of disuse in this way. Given the gravity of the claimants’ abusive conduct, which is the focus of the Judgment, it is hard to see how these extraneous matters would have led me to exercise my discretion in a different way even if they had been raised and pressed as part of the circumstances to be taken into account in declining to strike out the action as a whole. (iv) If it has validity and remains admissible, this counter-allegation can be raised by the claimants in support of a separate application or (perhaps) as part of the circumstances said to inform a future judge’s exercise of discretion at or following the Information Review Hearing.

10. As regards (3) above: (i) This involves an attempt to second-guess my internal management of the 3-5 November hearing. The time estimate for that hearing was insufficient to deal also with (a) the granular and contextual review needed to ascertain the precise evidential status of each distinct ‘topic’ or ‘unit’ of the illicit information or (b) the consequent impact of such illicit knowledge upon the litigation conscience of the claimants and/or prospects of a fair trial: see e.g. [67], [69], [83](v). (ii) I told the parties during the hearing that the time estimate was inadequate: Day 1, p.106 (line 23) to p.107 (line 22). This was before the legal position recorded in [49] emerged as common ground - something which put the matter beyond doubt, as explained in the Judgment. (iii) My suggested estimate for the Information Review Hearing is 2-3 days with proper judicial pre-reading: see [69](iv). There may also be threshold points to consider. For example, the defendants have contended that it could never be appropriate for the solicitors who obtain potentially privileged material to conduct the sort of review as done by the claimants’ new solicitors in this case. I have not addressed the legal significance (if any) of this argument. (iv) In the time available I was also able to (a) deal with certain generic points made by the claimants as regards the evidential status of the illicit information (see [65], [68]); and (b) form a view from my own consideration of the material that there are “ arguments either way on privilege and iniquity ” (see [78](iii)). I have refused permission to appeal in respect of the former, as noted in paragraph 6 above. (v) There is no viable basis for appellate intervention in this approach to the internal management of a first instance hearing. This is reflected in, for example, the enormous volume of material presented to the Court (see [8]) and the minimal amount of time available at the hearing for the defendants’ response on the summary judgment application (about 45 minutes) and the claimants’ reply submissions (about 50 minutes). The parties’ combined costs of c.£4.2m corroborate this position: see paragraph 22 below. (vi) A time estimate directed by another judge at an earlier stage does not dictate the realities of what is achievable at the time. This becomes a matter of internal management for the allocated judge. What would the Court of Appeal do here - set aside my order and direct that another judge does everything in just 2.5 days? (vii) The fact that this potential outcome was not raised with the parties during the hearing itself is immaterial, even if both sides would have opposed such an approach. A procedural accord of this kind does not bind the Court. I learned that lesson in my first hearing as a deputy: see Boston Trust Co. Ltd. v. Szerelmey Ltd. & others [2021] EWCA Civ 1176 ; [2021] Bus LR 1647 at [36], [44]-[46]; cf. [2020] EWHC 1352 (Ch) ; [2020] Bus LR 1647 at [9], [45], [57], [87]. (viii) So far as relevant, both sides opposed my suggestion during the hearing that one solution would be for the Court to strike out the summary judgment application of its own motion or initiative. Neither side now suggests in their grounds of appeal that this route was not available as part of my broad discretion. (ix) I do not accede to the procedural aspect of this ground of appeal. In so far as it concerns a matter of substance, it overlaps with (1) above to which I turn next.

11. I regard (1) above as raising points which deserve appellate attention: (i) I do not regard my finding of abuse to be unwarranted or impermissible due to the absence of direct precedent or analogue in decided cases. Mr Wardell KC conceded, and indeed averred, during the hearing that one side (or someone on its behalf) hacking the server or an email account of solicitors who act for the other side would, or at least could, be an abuse of process irrespective of what was obtained or its evidential status. It is “ an attempt to flout the rules ”: Day 1, pp.238-246 (quote from p.245 (lines 6-7)). (ii) I have drawn a distinction between abuse comprised by the quality of behaviour and abuse comprised by the impact of such behaviour: see [43]-[47]. I recognise that this distinction, and its relationship with the disjunctive limbs of CPR 3.4(2)(b), is something that ought to be considered by the Court of Appeal. That may include consideration of Arrow Nominees and the somewhat circular concept of ‘forfeiting the right’ to trial or other determination; cf. [45], [81]. (iii) I have likewise drawn a distinction between what I call actual and anticipatory abuse, bearing in mind that the future impact of abusive behaviour need not itself be abusive in order to engage the second limb of CPR 3.4(2)(b): see e.g. [48](iii), [67], [78](i); cf. Arrow Nominees . I do not regard the concept of anticipatory abuse as something novel. Abuse can be recurring or continuing. Its future occurrence can be threatened by present or past conduct or circumstance. In some instances the Court acts with terminal effect in order to prevent an abuse of process taking place in future: see paragraph 16(iv) below. A party may be enjoined from pursuing foreign proceedings so as to prevent them abusing the process of this Court. (iv) In the context of asserted privilege and alleged iniquity, these distinctions may matter even if they operate as guidance rather than rigid rules. I regarded it as appropriate and indeed necessary to respond to this particular abuse of process, irrespective of whether a further response may be justified after its future impact (if any) has been established. The claimants’ behaviour is of a kind that cannot be countenanced by the Court, as I explained in [61]. It is wrong. Full stop. (v) The Court of Appeal may not share my value judgement expressed in this absolute way, however. It may regard it as premature to deal with an abuse of this kind before evaluating its impact on the future of the litigation. The claimants’ position is that an unsuccessful attempt to obtain privileged or confidential information from an opposing party’s litigation solicitor is not - without more - an abuse of process. I disagree but more senior judges may disagree with me. (vi) The Court of Appeal may also wish to consider the distinction between use of unethical methods to elicit sensitive information from a lawyer involved in underlying activity said to be fraudulent, on the one hand, and a lawyer representing an adversary in pending or prospective legal proceedings about such alleged wrongdoing, on the other hand: see [62]. The claimants disavow any case to the effect that X was “ involved in ” the transactions which are the subject-matter of their claim (paragraph 152 of their skeleton argument). (vii) This permission to appeal also embraces the point made in [55] & [78](ii) by reference to the RAKIA decision: how should the Court respond to a claimant’s abusive behaviour in circumstances where a defendant may be liable - as distinct from having been found liable - for serious wrongdoing? (viii) Without repeating [84](i), I am satisfied that various conflicting policies may be engaged in a case like the present. How they are to be weighed and where the line is to be drawn is obviously suitable for appellate consideration. This should cover the characterisation of abuse, as described in sub-paragraph (a) above.

12. I turn to the defendants’ grounds of appeal. Their focus is, perhaps inevitably, upon my decision not to strike out the action as a whole at this stage. My reasoning on this is summarised in [78] & [82].

13. There is no suggestion by the defendants that a ‘split’ approach, distinguishing between (a) actual and anticipatory abuse or (b) the quality of the claimants’ behaviour and its potential future impact or (c) the two limbs of the cross-application reflecting the scheme of CPR 3.4(2)(b), is impermissible as a matter of principle. This contrasts with the challenge sought to be made by the claimants, addressed above.

14. For the most part, the defendants’ criticisms concern matters considered by me which they say should not have been, e.g. decent prospects of the summary judgment application or X’s personal culpability. These factors and their relative weighting form part of my broad discretion. I chose to exercise that discretion whilst recognising that a further response may be due from the Court in future: see [72], [78](i), [82](iii), [83](vii).

15. Notwithstanding this position, and subject to paragraph 10 above, I can see sense in the Court of Appeal looking at the approach to dealing with an abuse of the kind found in the present case. As indicated in [84](ii), there is a risk that I have been too lenient on the claimants in my choice of response. The Court of Appeal is better placed to balance the various policies in play. This includes the role and scale of any deterrent factor reflected in the judicial response to an abuse of this kind: see [52].

16. I deal separately with a point of law raised by the defendants. They say that strike out is the only available response in practical terms given the nature and gravity of the abuse which has been established. As to this: (i) The defendants press the analogy to cases where striking out appears to be the default response of the Court, as summarised in [53]. I have sought to explain these scenarios by reference to their procedural context: see [54] & [76]. (ii) Other examples of this sort of procedural abuse can be found in cases where a claimant (a) seeks relief in respect of public law matters other than through the judicial review procedure or (b) seeks adjudication of non-justiciable matters or (c) seeks to pursue a claim that has been settled or (d) seeks to litigate the same or equivalent issue(s) both here and abroad in parallel for no legitimate purpose. Subject to an election between forums in the last scenario, the Court’s response to such abuse is ordinarily to strike out the relevant claim. The same applies to so-called vexatious claims which are, by definition, an abuse of process. (iii) These situations, like those mentioned in [53], involve a misuse of the system itself. Such misuse manifests as a claim on the court file that should not be there. Leaving aside whether its continued presence would involve any distinct future abuse or jeopardise a fair trial, the position is intolerable and therefore justifies an order with terminal effect. This excises or expunges the abuse in a literal sense. It restores the integrity of the court file. It avoids further waste of administrative and judicial resources. It also alleviates capacity, however notionally or incrementally, for the benefit of other litigants who wish to use the court system in a normal way. (iv) A similar ‘all or nothing’ response with terminal effect can be seen in cases where (a) permission to serve out of the jurisdiction is refused because a claim is susceptible to being stayed pursuant to s.9 of the Arbitration Act 1996 (see e.g. Tumpuan Megah Development Sdn. Bhd. v. ING Bank NV & another [2024] EWHC 2350 (Comm) at [53]) or (b) permission to amend is refused where a party has previously failed to include such an allegation (the so-called Aldi guidelines) or where it has previously been struck out or abandoned in the same proceedings (see e.g. Kensell v. Khoury [2020] EWHC 567 (Ch) ) . In these sorts of scenarios permission is withheld in order to prevent a misuse of the Court’s adjudicative procedure which may amount to an abuse of process. It may be that the relevant claim or allegation lacks threshold merits in circumstances where it would, if permitted in the first place, be susceptible to being struck out as an abuse of process. The making of the relevant permission application is not itself abusive. (v) All these examples involve the exercise of discretion. It just so happens that the appropriate and proportionate response of the Court may devolve onto a simple binary decision with terminal effect for the relevant action or part of it. As explained in [54], I consider the position to be different where the Court is faced with an abuse occurring ‘outside the system’ which amounts to an affront to justice or cheating the system or subverting the rule book: see [47], [61], [77]. (vi) My response to the claimants’ abuse, as so far established, has its own terminal effect in a more targeted way, as explained in [82] & [83](iv). It deprives them of the benefit of the Court’s summary adjudication in circumstances where (a) the illicit knowledge formed part of the impetus for seeking to use it, (b) they expected to be successful in obtaining it and (c) they could then expect to execute any monetary judgment through the practical effect of the WFOs. (vii) I am doubtful that my chosen response will incentivise a party to bring a contrived sacrificial application in the hope that it becomes the sole focus or target of the Court’s response to their abuse of process. Such an application might itself be abusive. Its fate would not necessarily dictate or foreclose the entirety of the Court’s response to the original abuse of process. (viii) It makes sense that the Court of Appeal should consider these issues in conjunction with the matters covered by paragraph 11 above.

17. In granting permission to appeal and cross-appeal, I acknowledge that there is (a) a real prospect of success on a challenge to the outcome of the summary judgment application and cross-applications and (b) a compelling reason for the issues dealt with in the Judgment to be considered at appellate level. This reflects both limbs of CPR 52.6(1). Indemnity Costs

18. I have ordered the claimants to pay the costs of the present hearing to be assessed on the indemnity basis, as foreshadowed in [82](iv) & [83](viii). This formulation ring-fences costs attributable to matters relating solely to the Information Review Hearing which comprise 25% of the defendants’ costs.

19. This decision does not depend on any independent finding to the effect that the claimants’ pursuit of the summary judgment application or resistance to any element of the cross-applications is itself an abuse of process. I nevertheless consider that the claimants’ procedural posture in this context is out of the norm: (i) To a large extent this follows from the simple fact that the claimants sought to justify the unjustifiable. To make matters worse, they did so in trenchant terms that lacked self-awareness or sensitivity to the gravity of their own misbehaviour. It strikes me as improbable that they would have made the summary judgment application but for their acquisition of the illicit knowledge. (ii) Nowhere in their 94-page skeleton argument was there an acknowledgement that what took place was unethical or untoward. The concession by Mr Wardell KC referenced in [22] was a response to a question I asked him in the opening few minutes of the hearing. No apology was offered to the Court, and none has been since, for abusing its process in this serious way. (iii) The claimants treated the allegation of abuse of process as tangential and subsidiary to the admissibility of the illicit information. Their skeleton argument described it and dealt with it as the “ Admissibility Application ”. They admitted being “ over-zealous in their evidence-gathering in support of their claim ” but nothing more. (iv) The claimants’ attempts to distance themselves from the conduct of BC were misconceived. The evidence they chose or attempted to put before the Court was selective, incoherent and incredible. They sought to hide behind an artificial legal analysis that denied the reality of their own unethical conduct: see [19]-[25], [63]. (v) The claimants’ causation defence - aka ‘ there should have been a nil return ’ - lacked both compassion and contrition. The interviewing methods of BCO in those meetings cannot be equated with the honest situation sought to be imitated by such a chilling covert operation: see [27]-[28], [66]. (vi) The claimants argued for waiver of privilege and voluntary loss of confidentiality in a way that was unseemly given the circumstances: see [31], [65].

20. Most of the points identified above operate as additional aggravating factors. The core point is that a party who engages in the kind of abusive conduct which the claimants did in this case can expect to pay indemnity costs related to any attempt they make to take advantage of such abuse or deny its existence.

21. In this regard and returning to the first example given in paragraph 16(iv) above: (i) A party who misuses the civil court system in violation of an arbitration agreement (or other exclusive jurisdictional promise) will ordinarily pay indemnity costs irrespective of whether such misuse constitutes an abuse of process: see Alrubie v. Chelsea Football Club Ltd. & another [2025] EWHC 541 (Comm) at [75]-[76]. (ii) It can be argued, however, that the unlawful engagement of the court’s process is unconscionable and, therefore, intrinsically abnormal and abusive: see, by analogy, Dreymoor Fertilisers Overseas PTE Ltd. v. Eurochem Trading GmbH & another [2018] EWHC 2267 (Comm) ; [2018] 2 Lloyd’s Rep. 536 at [84]-[85] (“ cannot be characterised as the breach of any contractual obligation unless it also amounts to unconscionable conduct ”); comments by Popplewell LJ in Enka Insaat Ve Sanayi AS v. OOO Insurance Company Chubb & others [2020] EWCA Civ 574 ; [2020] Bus LR 1668 at [65] (“ allegedly abusive proceedings ” being susceptible to a stay in accordance with art.II(3) of the New York Convention); cf. JP Morgan Securities Plc & others v. VTB Bank PJSC [2025] EWHC 1368 (Comm) at [130]-[142] (appeal pending); Renaissance Securities (Cyprus) Ltd. v. ILLC Chlodwig Enterprises & others [2025] EWCA Civ 369 ; [2025] 1 Lloyd’s Rep. 518 at [78] (implied anti-circumvention term). (iii) An alternative rationalisation for indemnity costs in these situations is that they operate as a proxy for compensatory damages: see Manta Penyez Shipping Inc. & another v. Zuhoor Alsaeed Foodstuff Co. [2024] EWHC 3109 (Comm) . (iv) This discussion illustrates the overlap between substantive wrongdoing or abnormal behaviour giving rise (indirectly) to liability to pay legal costs, on the one hand, and how those legal costs ought to be assessed, on the other hand. (v) As indicated in paragraph 20 above, an award of indemnity costs in a situation like the present one may send a signal to other present or future litigants: a party who engages in this kind of abusive conduct can expect to pay indemnity costs related to any attempt to take advantage of such abuse or deny its existence. (vi) I nevertheless include within the scope of permission to appeal any point of principle relating to the award of indemnity costs in this situation.

22. The parties’ combined costs are nothing short of staggering. The amount of work involved reflects the practical impossibility of dealing with all issues together in just 2.5 days: see paragraph 10(v) above.

23. I have ordered a substantial payment on account to be paid by the claimants into Court. The fate of that sum is reserved to the Information Review Hearing. Other Matters

24. The claimants have offered to extend their interim undertaking until further order of the Court. This is accepted and will be reflected in the order made on this hearing.

25. I make no direction as to the sequencing of listing of the Information Review Hearing relative to any appeal against my present decision. It is a matter for the Court of Appeal, if seised, as to how it may wish to deal with this aspect: see [84](iii). The rest is a matter for the listing office in the usual way.

26. I decline to stay the present action, as requested by the defendants. I give them liberty to apply, without showing change of circumstance, at the CMC, including by reference to any admissible evidence that the claimants’ interim undertaking has been insufficient to protect against risk of prejudice caused by the illicit knowledge.

27. I have requested an agreed order so that it can be approved for sealing without delay.

28. I am grateful to junior counsel for their focussed written and oral submissions.