Strike out the sting? Not so soon
Introduction
The Court of Appeal's decision in Salinas Pliego v Astor Asset Management 3 Ltd [2026] EWCA Civ 940 addresses whether deceiving an opponent's solicitor to extract privileged information constitutes an abuse of process and, if so, what remedy should follow. Males LJ, giving the leading judgment (Phillips and Foxton LJJ agreeing), had no doubt that it did but rejected the proposition that strike-out should follow as a matter of course.
Background
Underlying proceedings
The proceedings were brought by Mr Ricardo Salinas Pliego, a wealthy Mexican businessman and founder of Grupo Salinas, on behalf of himself and one of his group companies, against defendants who had allegedly deceived him into a fraudulent stock-lending scheme. In August 2024, following the issue of the claim form, worldwide freezing orders were made against several defendants. The defendants applied to discharge the orders but their application was dismissed.
Black Cube Operation
Without the knowledge of their solicitors, the claimants had engaged Black Cube, a UK company staffed by veterans of Israeli intelligence, on a retainer of over £1 million plus performance-based fees. Black Cube identified as its target one of the two partners at a law firm who had conduct of the defendants' case, referred to as "X". Posing as a potential new client, a Black Cube operative induced X to attend meetings in Amsterdam where X was steered into disclosing the defendants' litigation and settlement strategy, the advice he had given regarding the freezing orders, and perceived weaknesses in the defendants' case. Three meetings were held over approximately six and a half hours, all covertly recorded by the Black Cube operative and provided to the claimants who sought to rely on it in the proceedings. When the claimants’ solicitors were told about it, they refused to look at the materials, which resulted in the claimants instructing a different firm who were willing to put it in evidence.
Armed with the information obtained from Black Cube, including as to the impact that the freezing orders were having on the defendants financially, the claimants then issued an application for summary judgment on the liability elements of their claims for deceit and breach of contract, alternatively for an order for security in the sum of $315 million. After receiving the application, the defendants made a counter application to discharge the freezing orders.
Initial decision
All applications were heard together in November 2025. After hearing the applications, Deputy High Court judge Stephen Houseman KC held that the Black Cube operation was an abuse of process. He acknowledged that despite having felt at moments that he ought to strike out the claim entirely, such measure was disproportionate given the claimants' strong case on the merits. Instead, he struck out the summary judgment application and deferred the questions of whether the claimants were entitled to use or deploy the material they had obtained and whether a fair trial remained possible to a future hearing.
Following the decision, the claimants were granted permission to appeal against the finding of abuse and contended that they should be allowed to pursue their summary judgment application. As part of this, the claimants argued that the information obtained was not confidential or privileged because the iniquity exception applied. The defendants were granted permission to cross-appeal on the grounds that the first instance judge should have struck out the claimants’ claim in its entirety.
The Court of Appeal
The questions for the Court of Appeal were:
Was the claimants’ conduct an abuse of process of the court?
If so, was the first instance judge wrong to conclude that striking out the summary judgment application was the appropriate and proportionate response to the abuse?
If so, what was the appropriate and proportionate response?
The appeal was heard in June 2026 and the Court of Appeal handed down judgment in late-July. The Court of Appeal held that the claimants’ conduct did constitute an abuse of process of the court, that the first instance judge was right to refuse summary judgment, and that the appropriate response was not to strike out the entire claim but to discharge the freezing orders against the defendants and leave it open to the trial judge as to what impact the claimants’ conduct should have on any remedies they may be entitled to.
The key points which the Court of Appeal considered in its decision were:
Abuse of process
Males LJ agreed that the claimants' conduct constituted a very serious abuse of process. He rejected the defendants’ submission that the Deputy Judge had erred in treating certain conduct as abusive regardless of its impact — Black Cube's activities had plainly had a very serious impact, including:
the breakdown of the relationship of trust and confidence between the defendants and their first choice of legal team;
substantial hearings that would not otherwise have taken place;
delay of the proceedings by some 18 months; and
valuable insight for the claimants into the defendants' litigation strategy and pressure points that, once learned, could not be unlearned.
Iniquity exception
The Court of Appeal confirmed that the iniquity exception to legal professional privilege would make no difference. The exception will only be engaged if the iniquity involves an abuse of the normal lawyer/client relationship, and the claimants could not have known whether the exception applied when they sanctioned the operation or listened to the recordings. As the exception did not apply, the Court of Appeal held that the first instance judge was right to strike out the summary judgment application as that application was heavily tainted by the privileged material obtained by the abuse (and no attempt was made by the claimants to separate any untainted evidence) such that the judge was right to conclude that the summary judgment application should not proceed.
Strike-out is not the default remedy
Males LJ held that privilege hunting would not attract strike-out as a default remedy, identifying three governing principles: (i) the objective is not to punish the abusive party but to protect the court's own process; (ii) an element of deterrence; and (iii) the court's response must be proportionate — neither an over-reaction to misconduct nor a response that fails to reflect its gravity.
Freezing Orders discharged but no strike-out of the claim
The Court of Appeal held that the Deputy Judge had erred in failing to consider discharge of the freezing orders:
The claimants had failed to disclose the Black Cube operation contrary to their ongoing duty in obtaining the freezing orders to draw material matters to the court’s attention;
There was a real nexus: at the very time the claimants were resisting the defendants' discharge application before Calver J, Black Cube was deceiving X — had the judge been made aware, the orders would not have been continued; and
A key piece of intelligence obtained was the severe pressure the freezing orders were placing on the defendants' banking relationships — an insight the claimants could not "unlearn".
Accordingly, the Court of Appeal ordered that all the worldwide freezing orders be discharged, leaving the defendants to apply for enforcement of the claimants' undertakings in damages.
Ultimately, the claim itself was not struck out and will proceed to trial, where the trial court will decide whether and to what extent the claimants' conduct should disqualify them from the equitable relief they seek (including proprietary claims to recover the proceeds of the shares and claims for equitable compensation).
What does it mean
No default strike-out for privilege hunting. The Court of Appeal rejected the proposition that dishonest procurement of privileged material should attract strike-out as a default remedy.
Freezing orders and abusive conduct. Where a claimant which has obtained a freezing order commits a serious abuse, and the court would not have continued the order had it known of the abuse, discharge of the orders is available as a proportionate and targeted remedy for the abuse.
The iniquity exception is no safe harbour. Commissioning a privilege-hunting operation in the hope that the iniquity exception will retrospectively legitimise its fruits does not excuse the abuse.
Equity and discretionary relief remain at risk. The trial court is left to determine whether the claimants' conduct should forfeit their entitlement to the proprietary and equitable remedies they seek.
Different approach in Bourlakova and another v Anufriev and others
It is also worth noting that this judgment draws a stark contrast to the earlier recent decision in Bourlakova and another v Anufriev and others [2026] EWHC 1747 (Ch).
In that case, the claimants allegedly instructed enquiry agents, with the assistance of their solicitors, to obtain confidential and privileged information by ways including instructing an agent to make covert recordings of communications involving the defendants. The defendants had applied for declarations, disclosure and information on affidavit in relation to communications between the claimants and private investigators. The defendants asserted that using the private investigators the claimants had harvested the defendants’ confidential and privileged information “on an industrial scale” over five years. The defendants asserted that legal professional privilege did not attach to any relevant communications concerning the harvesting on the basis that the communications fell within the iniquity exception. Conversely, the claimants (responding to the application) asserted that a good part of the information their investigations revealed was not itself confidential as it revealed iniquity (the Judge did not decide this point, which was a matter for trial).
The Judge rejected the defendants’ arguments that the claimants had engaged in privilege hunting. The Judge held that the claimants’ methods were “towards the margin” but did not cross the line into privilege hunting.
The defendants in Bourlakova had cited the first instance decision in Pliego in support of their application, which was distinguished by the Judge on the grounds that Pliego involved a litigant orchestrating a “sting” operation with the purpose of obtaining privileged information, whereas in Bourlakova the claimants had “set in train” a process which could be expected to result in obtaining confidential information, which the Judge did not consider was iniquitous per se. It remains to be seen whether the defendants will look to appeal the decision.
