16 One mystery in this litigation is that at some point it appears to have become accepted that this list contains thirteen entities including the Investigation Committee of the Russian Federation which was established in 2010. I have not been able to discern how the Investigation Committee came to be regarded as being on this list but the parties seem unified in their view that it was. For example, Ms Semenova deposed to the following in her affidavit:
Spirits suggested a list of state authorities to FKP in 2005 which contained the 13 state entities relevant to this application. A copy of this list of entities suggested by Spirits, annexed to a Notice of Motion filed by Spirits on 23 November 2005 is at Tab 7.
17 I propose to yield to the parties' certainty and also to accept that Schedule B has thirteen entities on it including the Investigation Committee (notwithstanding the contrary being the case). I shall refer henceforth only to the thirteen entities on the Schedule B list.
18 It will be seen that the motion contemplated a variety of mechanisms by which discovery might be obtained from the Russian Federation. The first was to declare that the documents held by the Russian Federation were held by the Cross-Claimants for the purposes of discovery (prayer 2). The second was to make the Cross-Claimants give discovery of documents held, inter alia, by the Russian Federation (prayer 3). The third was to order the Russian Federation to provide third party discovery under Order 15A r 8 of the former Federal Court Rules (prayer 4). The fourth was to require the Cross-Claimants to take all reasonable steps to obtain the documents from the Russian Federation and to provide them to the Cross-Respondent (prayers 5 and 6). This last prayer was seeking, in effect, a Sabre order (see Sabre Corp Pty Ltd v Russ Kalvin's Hair Care Company [1993] FCA 841; 46 FCR 428). It made no provision for a stay if the discovery orders were not complied with.
19 The hearing of the motion was fixed for 3 March 2006. Prior to the hearing, the notice of motion was amended. There were three significant alterations. First, the claim to have the Cross-Claimants give discovery of documents held by the Russian Federation was abandoned leaving only the third party discovery application under Order 15A r 8 and the application for the Sabre order. Secondly, the list of Russian entities was removed as was the corresponding notation to the notice of motion. Thirdly, a prayer was added which had the effect that if the Russian Federation failed to give discovery consideration would be given to staying the proceeding (prayer 6A).
20 The amended notice of motion was heard on 3 March 2006. Judgment was delivered on 25 July 2006: S.P.I. Spirits (Cyprus) Ltd v Diageo Australia Ltd (No 2) [2006] FCA 931; 155 FCR 150. The removal of the list of thirteen entities from the amended notice of motion had the potential consequence that every agency of the Russian Federation would need to be searched, which was a notion which did not appeal to Edmonds J. At 154 [17] his Honour said this:
In effect, the orders now sought by Spirits would require every ministry, agency and instrumentality of the Russian Federation, not just FKP and FGUP, to undertake searches for documents in numerous, broadly defined categories, for the purposes of giving discovery in these proceedings. Even aside from questions of power, a lack of evidentiary support and the inappropriateness of granting such orders against an entity outside the jurisdiction, the orders are inappropriate because of their sheer scope. Further, the application is premature, in circumstances in which FKP and FGUP - the entities charged with dealing in and conducting proceedings in relation to the trade marks in question - have yet to give inter partes discovery.
21 Despite those concerns, Edmonds J then concluded that the Russian Federation was the real plaintiff (at 154 [18]) and, in principle, ordered it to provide discovery akin to an under Order 15A r 8. A significant factor in his Honour's reasoning on that issue was that it was the Russian Federation, rather than the Cross-Claimants, which claimed to be the owner of the Australian trademarks. His Honour made other findings along similar lines which it is not necessary presently to relate. The immediate point is that his Honour's conclusion that the Russian Federation was the real plaintiff rested upon a finding that it was the Russian Federation which claimed to be the owner of the Australian trademarks and the Cross-Claimants were mere conduits on its behalf. This matters because, as will be seen, sometime after the judgment of Edmonds J the Russian Federation assigned its interest in the Australian trademarks to the Cross-Claimants. On the present application, the submission was made that this meant that the conclusion of Edmonds J that the Russian Federation was the real plaintiff could no longer stand and should be revisited. I deal with this issue below from [140].
22 Returning to his Honour's reasons, it is necessary to note the terms of the former Order 15A r 8 (upon which prayer 4 was pursued before his Honour). It was in these terms:
8 Discovery from non-party
The Court may order that a person who is not a party and in respect of whom it appears that the person has or is likely to have or has had or is likely to have had in the person's possession any document which relates to any question in the proceeding shall make discovery to the applicant of any such document.
23 His Honour accepted at 156-157 [28]-[29] that such an order could be made. But his Honour observed that that that conclusion 'should not be read as indicating the form of the order I think should be made'. Although it was not necessary to do so his Honour then made some comments on the application for a Sabre order in prayers 5 and 6. He would have declined to make such an order. His Honour had a number of reasons for that conclusion of which two are presently material. First, he did not think that the Cross-Respondent had established on the evidence before him that there was a real possibility that the Cross-Claimants would be given access to the documents by the Russian Federation (at 157 [31]); and secondly, the form of order did not identify the relevant agencies or the kind of documents they might be expected to have (at 157 [32]).
24 His Honour's ultimate conclusion was at 157-158 [36]-[37]:
36 At this stage, I am not convinced that the discovery that might be given by the Russian Federation needs to be as comprehensive as "all documents falling within the categories set out in the schedule to the Notice of Motion". It may be that I can be persuaded, in the interests of doing justice between the parties, that discovery by the Russian Federation needs to be that comprehensive but I would first want to hear the parties on the matter. It may be that the parties can agree more confined categories, but if not, I will hear the parties prior to formulating the precise terms of the order.
37 I propose to stand the motion over to a date to be fixed to hear the parties on the categories of discovery that might be given by the Russian Federation and how the orders to give effect to these reasons might be formulated.
25 Once these reasons for judgment were delivered it was apparent that the Russian Federation would at some point be required to give discovery as a result of its status as the real plaintiff. However, the terms on which it would do so were not at all clear. The only order made by Edmonds J on 25 July 2006 was the order foreshadowed at 158 [37]:
1. The motion be stood over to a date to be fixed to hear the parties on the categories of discovery that might be given by the Russian Federation and how the orders to give effect to these reasons for judgment might be formulated.
2. The costs of the motion be reserved.
26 What happened thereafter is not clear but on 5 September 2006 the following orders were made:
1. Unless the Russian Federation provides discovery of all documents falling within the categories to be agreed or failing agreement determined by the Court, by filing and serving a verified list by such date as the Court may order, the Cross-Claim be stayed on that date until further order.
2. The Cross-Claimants pay the First Cross-Respondent's costs of the First Cross-Respondent's Motion (including as amended) dated 23 November 2005.
3. The Cross-Claimants have leave to appeal from Orders 1 and 2.
27 At this point, the terms of these orders meant that there remained unresolved the categories which were to be discovered and also the mechanism by which the Russian Federation was to give discovery. Order 1, when closely read, did not actually require anyone to do anything. Read in the light of the grant of leave to appeal in Order 3, it is likely that the purpose of the orders of 5 September 2006 was merely to allow the Cross-Claimants to test on appeal the correctness of the conclusion that the Russian Federation was the real plaintiff and therefore obliged in principle to give discovery.
28 The appeal was heard on 16 November 2006 and decided on 28 March 2007. The Full Court decided the appeal on a basis not considered by Edmonds J. It concluded that Order 1 should not have been made without first inviting the Russian Federation to give discovery voluntarily: Federal Treasury Enterprise (FKP) Sojuzplodoimport v Spirits International NV [2007] FCAFC 43; 157 FCR 558 (Black CJ, Allsop and Middleton JJ). Their Honours explained their view this way at 562-563 [22]:
In all the circumstances of this case, it was not necessary for the fair conduct of the proceedings for the learned primary judge to make the order of which the appellants complain without first giving the Russian Federation the opportunity to provide the discovery sought voluntarily and in cooperation with the appellants.
29 The consequence was that the Full Court set aside Order 1 of 5 September 2006 and in lieu thereof dismissed the notice of motion filed on 23 November 2005. A special leave application was then pursued in the High Court which was heard on 5 October 2007. At the hearing of the special leave application counsel for the Cross-Claimants was asked by the High Court how the invitation envisaged by the Full Court might be delivered. Counsel answered in part:
They would direct it the entity they call the Russian Federation and presumably say "Here is our litigation, here is our need for documents. Can you tell us whether you will give us anything voluntarily? If you will not, can you tell us what difficulties there may be by reason of practice or immunity or privilege in Russia in producing documents?"
30 The special leave application was dismissed. The anterior reasons of Edmonds J nevertheless contemplated that it would still be necessary to determine the actual discovery categories. The question of what form any discovery order against the Russian Federation might take appears, in light of the Full Court's reasoning, not to have been necessary to answer until such time as the Russian Federation was first invited to give discovery voluntarily. Also left unarticulated at this stage was the issue raised by Edmonds J at 154 [17] and 157 [32] as to what was encompassed in the concept of the Russian Federation.
31 In 2008 the proceedings as a whole went into a long hibernation whilst the parties pursued international settlement negotiations. On 23 December 2008 Edmonds J granted the Spirits Applicants leave to discontinue their proceeding against Diageo and they filed a notice of discontinuance pursuant to that grant of leave on 6 January 2009. This left on foot the Cross-Claimants' proceeding against the Cross-Respondent, Spirits International BV. Settlement negotiations nevertheless continued.
32 The long truce which had existed since 2008 was broken in 2010. Thereafter the parties engaged in a number of interlocutory skirmishes:
The Cross-Claimants sought an order that there be determined prior to trial a number of separate questions. This application was granted by Edmonds J on 26 November 2010: Federal Treasury Enterprise (FKP) Sojuzplodoimport v Spirits International B.V. [2010] FCA 1293.
On 4 March 2011 the Full Court heard an application by the Cross-Respondent for leave to appeal from that determination. This was refused on 20 May 2011: Spirits International BV v Federal Treasury Enterprise (FKP) Sojuzplodoimport [2011] FCAFC 69; 91 IPR 438.
On 27 September 2011 Edmonds J heard several complex interlocutory applications by both parties. These related to pleadings and security for costs. A dispute about discovery categories in relation to the hearing of the separate questions was resolved consensually. Edmonds J decided the various applications on 25 January 2012: Federal Treasury Enterprise (FKP) Sojuzplodoimport v Spirits International B.V. (No 2) [2012] FCA 23.
His Honour heard a further pleading dispute on 2 November 2012 which he resolved on 15 February 2013: Federal Treasury Enterprise (FKP) Sojuzplodoimport v Spirits International B.V. (No 3) [2013] FCA 85; 300 ALR 741.
An appeal to the Full Court was upheld on 18 September 2013: Spirits International B.V. v Federal Treasury Enterprise (FKP) Sojuzplodoimport [2013] FCAFC 106.
There was a subsequent costs debate decided by the Full Court on the papers on 29 October 2013: Spirits International B.V. v Federal Treasury Enterprise (FKP) Sojuzplodoimport (No 2) [2013] FCAFC 120.
33 On 4 December 2013 Edmonds J made orders for discovery by both sides. So far as the Cross-Claimants are concerned they were ordered to provide discovery in the following terms:
The Cross-Claimants provide discovery (by filing and serving a verified list) of documents falling within the categories specified in Annexure B to these orders, and any further categories agreed pursuant to order 5, by 30 April 2014.
34 There was further provision made in Orders 5-9 for the determination by consent or Court order for further possible categories of discovery. The categories in Annexure B were detailed and six pages in length. The possibility that additional categories might be agreed or ordered was never thereafter taken up. It is useful to refer to the categories in Annexure B as the Australian Discovery Categories (to contrast them with the US Discovery Categories discussed later in these reasons). The Australian Discovery Categories remain the categories presently the subject of the Cross-Respondent's complaint.
35 The orders of 4 December 2013 did not deal with the Russian Federation at all and appear confined in their operation to the Cross-Claimants. Presumably, the reason for this was because both parties understood that the consequence of the Full Court's earlier decision was that the Russian Federation first needed to be invited to give discovery voluntarily.
36 To those invitations it is now necessary to turn. The first was sent by the solicitors for the Cross-Respondent to the solicitors for the Cross-Claimants on 5 August 2014. The letter was as follows (so far as relevant):
We refer to your clients' discovery as provided pursuant to your clients' Fourth and Fifth Lists of Documents dated 24 June 2014 and 2 July 2014 respectively.
We would be grateful if you could confirm whether your clients' discovery includes all documents within the possession, custody or power of the Russian Federation which fall within categories set out at Annexure B to the orders made on 4 December 2013 in this proceeding.
As your clients will be aware, our client's position is that the Russian Federation, as the party on whose behalf this proceeding is brought and maintained by your clients, should provide discovery of relevant documents within its control in this proceeding. If the discovery already provided by your clients does not already encompass all such documents, please confirm whether your clients are willing and able to provide discovery of documents within the possession, custody or power of the Russian Federation which fall within the categories specified in the 4 December orders, and the timeframe in which they are able to provide such discovery.
Please provide us with your response by Friday 15 August 2014.
37 Of course, Edmonds J had already concluded that the Russian Federation was the real plaintiff and that determination had not been reversed on appeal. On 27 August 2014 the solicitors for the Cross-Claimants replied in these terms:
We refer to your letter dated 5 August 2014.
We note your client's position. Our clients' position, on the other hand, is and has always been that they are economic entities organised and existing under the laws of the Russian Federation. While the FKP acts in the interests of the Russian Federation and ultimately in its benefit, it does so as a commercial enterprise in accordance with the provisions of its charter.
Our clients are not the Russian Federation, nor do they have any right to any documents held by the Russian Federation.
Our clients are only required to produce documents that are within their possession, custody or power, which they have done by way of their fourth and fifth lists of documents.
Notwithstanding, our clients have prepared requests to be sent to each of the Russian Federation State bodies named in schedule B of your client's motion dated 23 November 2005 for documents in their possession, custody or power that fall within the agreed categories of documents for discovery by the cross-claimants. All of the requests will be delivered by the end of this week, at the very latest. We have been instructed that it may take between two and six months to receive a response from each state body.
We will keep you informed of any developments.
38 This was an important development for three reasons. First, it was the first time, so far as the evidence discloses, that the Russian Federation came to be identified for the purpose of the invitation to give voluntary discovery by reference to the 13 State entities who were listed in Schedule B to the notice of motion of 23 November 2005. This does not appear to have been something required either by Edmonds J or by the Cross-Respondent up to this point. Whilst it is true that the Notice of Motion of 23 November 2005 had sought to define the Russian Federation to include the 13 State entities there is no evidence before the Court that the Cross-Respondent had suggested that the voluntary discovery to be given by the Russian Federation should be seen as requiring only discovery from the 13 State entities. And, indeed, in its amended notice of motion the Cross-Respondent appeared to have abandoned the 13 State entities.
39 Secondly, it is of importance to understand that the proposal to alight upon the 13 State entities appears to have emerged from the Cross-Claimants' side of the ledger. Even if there is correspondence of which the Court is unaware which predates the letter of 27 August 2014, that letter certainly shows that at that time the Cross-Claimants were not concerned about the breadth or burden of the task of contacting the 13 State entities. Indeed, it shows that they would be shortly undertaking that task without complaint. I mention this because in its most recent evidence to this Court the Cross-Claimants suggest themselves surprised in 2017 that they had to seek discovery from such a broad range of entities. I cannot accept this in light of the letter of 27 August 2014.
40 Thirdly, it is significant that as at 27 August 2014 the Cross-Claimants were suggesting that it might take two to six months to obtain responses from the entities. I return later in these reasons to the adequacy of what has taken place, but it may be noted by way of preliminary observation, that as at the date that the present application was heard before me (14 March 2019) discovery was still not complete. This is just over four and a half years after it was first volunteered that it would be done in six months.
41 The next step appears to have been a letter sent by the Cross-Respondent's solicitors to the Cross-Claimants solicitors on 19 September 2014. This letter does not appear to be in evidence. However, the Cross-Claimants' solicitor's letter in response dated 16 October 2014 is in evidence. It is apparent from the last paragraph of that letter that the letter of 19 September 2014 had suggested that if certain discovery steps were not taken then the Cross-Respondent would apply for a stay. The letter set out in some detail the steps which had been taken to obtain discovery from the 13 State entities. The last two paragraphs of the letter were as follows:
You have advised us that you will be writing to the Embassy of the Russian Federation in Australia in relation to the production of documents by the Russian Federation for the purpose of this proceeding. Please provide us with a copy of your letter to the Embassy, and any response you have received.
In all the circumstances set out above, it would appear that the relevant State bodies are voluntarily, and in co-operation with your client, undertaking the discovery process. We can see no prejudice being caused to the parties as a result of the delay in obtaining responses from the remaining State bodies, who have indicated that a response will be forthcoming in the coming weeks. Therefore, our view/position is that it would be premature for your client to file an interlocutory application in relation to the production of these documents by the Russian Federation.
42 So it seems that as at 16 October 2014 the Cross-Claimants' position was that it was making inquiries of the 13 State entities and that the process would soon be finished. This may be contrasted with its present position which is that it is surprised to find out that it is required to inquire from such a range of entities about such a broad range of discovery topics.
43 Between October 2014 and November 2015, documents were produced by the Cross-Claimants from some of the 13 State entities. However, there were gaps. Much correspondence passed between the solicitors about the completeness of the process.
44 On 18 November 2015 the solicitors for the Cross-Respondent wrote to His Excellency the Ambassador of the Russian Federation to the Commonwealth of Australia. The letter was long but for present purposes it made these points. First, the Cross-Respondent had sought to obtain the discovery through the Cross-Claimants from the 13 State entities but, after a year, only a small number of documents had been produced. A number of deficiencies were identified (for completeness, in the First Stay Decision I accepted most of these deficiencies). Secondly, the Ambassador was asked to request each of the 13 State entities to provide documents in their possession, custody or control which fell within the discovery categories ordered by Edmonds J on 4 December 2013. Thirdly, a response was sought by 18 December 2015. A copy of the letter to His Excellency was also sent to the solicitors for the Cross-Claimants.
45 On the same day, an identical letter was sent to the Trade Mission of the Russian Federation in Australia also seeking a response in a similar timeframe. No response was ever received from His Excellency the Ambassador. This may be explicable on the basis that the matter seems, at least in the first instance, to have been handled by the Trade Mission. So much is apparent from an email sent by Mr Alex Kuznetsov, Consultant of the Trade Representation of the Russian Federation in Australia, on 18 November 2015 in which he said that his office 'will assist you in this matter'. However, nothing further emerged from his office. A follow up email from the Cross-Respondent dated 12 February 2016 went unanswered. I was not taken to any other evidence that the letter to the Ambassador has ever been replied to. Nor was I taken to any evidence of the Russian Federation ever indicating an awareness that the request had been made or taking any step to respond to the invitation (apart from the actions of the Cross-Claimants).
46 The solicitors for the Cross-Respondent and the Cross-Claimants then engaged in further correspondence. Without dwelling on all of its rich detail, these points were made: the Cross-Respondent asserted that the Russian Federation had failed to give proper discovery; this was denied by the Cross-Claimants who suggested that perhaps there were no documents; the Cross-Respondent suggested that if that were so the persons in charge of the 13 State entities might swear an affidavit to that effect; the Cross-Claimants countered that that would not be possible but that it could provide an affidavit explaining why it could not obtain such affidavits. This unrewarding exchange extended over the period between 3 December 2015 and 27 April 2016. On that last day, the Cross-Claimants indicated that the foreshadowed affidavit was being settled by counsel.
47 By 19 August 2016 no such affidavit had been provided. It was at this time that the Cross-Respondent applied to stay the proceeding until such time as proper discovery was given by the Russian Federation. I heard that application on 2 November 2016. On 20 November 2017 I granted the stay sought in the First Stay Decision. At [60] I accepted that there had been a failure by the Russian Federation to produce documents falling within the discovery categories ordered by Edmonds J on 4 December 2013, that the inquiries made on its behalf to find relevant documents were insufficient and that no proper explanation had been given as to how it was approaching the task. At [65] I explained what seemed to be the context of the situation:
65 What should the Court do? One option would be for the Court now to make the order originally made by Edmonds J on 5 September 2006. That would involve requiring the cross-claimants to give proper discovery, including by the Russian Federation, by a given date in default of which the proceeding would then be stayed. However, it seems to me that this has, in effect, already happened once. The invitation has been sent but not really responded to. It is difficult to justify putting Spirits to the inconvenience and expense of making this application a second time. In the extraordinary circumstances which this case throws up, I propose to stay the cross-claim until further order. I am fully cognisant of the gravity of that exceptional step. However, I can see no other way of ensuring that these proceedings are conducted fairly. To whet the appetite of the cross-claimants for the process, I will indicate that I will entertain an application by the cross-respondent after 30 November 2018 to dismiss the entire proceeding if proper discovery has not been given by then.
48 The formal orders made to give effect to this were as follows:
1. The proceeding be stayed until further order.
2. The Cross-Claimants pay the Cross-Respondent's costs of the application for the stay.
3. The stay in Order 1 does not prevent the Cross-Claimants from applying to lift the stay on the basis that they have caused proper discovery to be given by the Russian Federation.
4. In the event that proper discovery has not been given by 30 November 2018, the Cross-Respondent be granted leave to file an interlocutory application seeking the dismissal of the Cross-Claim.
49 It will be seen that the effect of the orders was not to dismiss the proceeding automatically on 30 November 2018 but instead merely to provide that the Cross-Respondent could apply for a dismissal at that time. The import of [65] and the leave granted to the Cross-Respondent to apply to dismiss the proceeding was plainly that if discovery was not adequately provided by the Russian Federation by 30 November 2018 dismissal of the proceeding was something which would be under active consideration.
50 As it happens, there was some activity going on within the Cross-Claimants' camp in the period between 20 November 2017 when the interim stay was put in place and 30 November 2018 after which the Cross-Respondent would then have leave to seek to dismiss the proceeding. Until 30 November 2018, however, these activities were communicated neither to the Cross-Respondents' solicitors nor to the Court. From the Cross-Respondent's perspective the Cross-Claimants (and the Russian Federation) went entirely silent for a year (though there was correspondence on unrelated topics).
51 At the end of that long silence, on 30 November 2018 at 2.31 pm the Cross-Claimants informed the Cross-Respondent's solicitors that they were in receipt of more than 40,000 pages of documents and were in the process of putting in place document management procedures. As will be seen the number of 40,000 has turned out to be incorrect. The Cross-Claimants intended to provide further documents to the Cross-Respondent and to deliver a first tranche in mid to late January 2019 and thereafter in tranches every two to three weeks. No discovery was itself given on 30 November 2018. The Cross-Claimants now say that the solicitors were wrong to refer to 40,000 documents and that the true number of documents produced in the US Proceeding was closer to 13,000. At other times, the number has been suggested to be 10,000.
52 On 7 December 2018 the Cross-Respondent filed an interlocutory application to dismiss the cross-claim. The application was returnable for directions on 14 December 2018 at which time it was fixed for hearing on 14 March 2019. No discovery was given on this day either. In fact, a first tranche of 7,427 pages of documents was not delivered to the solicitors for the Cross-Respondents until 7 March 2019, a week before the present hearing. Those documents were received by Mr Swinson, the solicitor for the Cross-Respondents at 3.38 pm (22 minutes before the Cross-Respondent's evidence and submissions were due). According to him, the documents were in Russian (at least the ones he inspected) and in many cases redacted. The hearing of the application for the dismissal of the Cross-Claim took place on 14 March 2019.
53 A number of factual submissions which were made at that hearing involved contentions about the processes of discovery which have occurred in the United States. For that reason, it is necessary to take a diversion through the proceeding presently pending in the United States District Court for the Southern District of New York and the discovery orders made therein.