The First-tier Tribunal’s Tate Gallery decision last month reiterates how public authorities’ disclosure obligations under the Freedom of Information Act (FOIA) cannot be avoided by including a confidentiality provision in the relevant agreement.
Contractors should be aware that the specific terms of their agreements with public authorities may not be able to escape public scrutiny, even where there is a clear contractual obligation for the authority to keep the terms ‘secret and confidential’.
The Freedom of Information Act
The FOIA requires public authorities to publish certain information if they receive a request to do so. Introduced in 2000, the Act’s aim is to improve government transparency and to ensure that public authorities are held to account for their actions and decisions.
Examples of authorities which are subject to the FOIA include:
- government departments;
- the NHS;
- local authorities; and
- publicly owned companies.
Broadly, the public can ask to see any information held by a public authority unless:
- an exemption is available to the public authority (outlined below);
- the cost of complying with the request for information exceeds £600 for central government/parliamentary requests and £450 for other authorities (calculated at a standard rate of £25 per hour); or
- the request is vexatious (goes over old ground already requested) or repeated (identical or similar to a previous request and reasonable time has not elapsed between the two).
If the authority can show that an ‘absolute’ exemption applies then it need not provide the requested information. Absolute exemptions include where the requested information is accessible by other means, is a court record or pertains to security matters.
A ‘qualified’ exemption can only be relied upon if the facts permit and if the public interest in maintaining the exemption outweighs the public interest in disclosing the information (the ‘public interest test’). Qualified exemptions are more numerous than absolute exemptions under the FOIA and include where the information is due to be published in the future and it is reasonable to wait for that publication, where retention of the information would safeguard national security, where disclosure would prejudice law enforcement activities and where the information is legally privileged.
Tate Gallery sought to rely on section 43 of the FOIA, the commercial interests exemption. This is a qualified exemption which provides (subject to the public interest test) that the authority need not disclose information:
- which constitutes a trade secret; and/or
- which would, or would be likely to, prejudice the commercial interests of any person (including the public authority holding it).
The Tate Gallery case
The facts of the Tate case turned on a freedom of information request submitted to the Tate Gallery by investigative journalist Brendan Montague. Montague had requested information relating to the sponsorship fees paid by BP to the Tate for the period 2007 to 2011.
The Tate refused the request citing the section 43 commercial interests exemption (set out above). Tate Gallery argued that disclosure of the sponsorship fees would prejudice its and BP’s commercial interests. Tate Gallery also argued that disclosure would breach the confidentiality clause contained in the parties’ sponsorship agreement. The clause obliged Tate Gallery to keep the terms of the agreement “secret and confidential” except where there was a legal obligation to make a disclosure.
Montague challenged the Tate’s response and the case made its way to the First-tier Tribunal on appeal.
The Tribunal’s findings
The Tribunal found in favour of Montague. The key conclusions were:
- The Tate had provided no “positive evidence” supporting its argument that disclosure of the sponsorship fee information would breach the confidentiality clause. As drafted, the clause permitted disclosure by Tate Gallery where there was a legal requirement to do so. If the Tate’s reliance on the commercial interests exemption failed then it would be legally required to make the disclosure under the FOIA and the confidentiality clause expressly permitted this.
- The Tate had also failed to demonstrate that disclosure would cause any reputational damage which would harm its ability to secure future sponsorship. It is a fundamental requirement of the commercial interest exemption that disclosure would prejudice a person’s commercial interests. Tate Gallery was unable to produce sufficient evidence to demonstrate this fact to the Tribunal.
Examining the facts in detail, the Tribunal emphasised that:
- The FOIA code of practice expressly provides that public authorities and contractors should be aware of the limited enforceability of confidentiality clauses in light of the effect of the FOIA. The Tribunal reiterated that Tate Gallery had a responsibility as a public authority to act transparently and accountably and that commercial sponsors were expected to be commercially aware of this obligation.
- Details of other sponsorship agreements between organisations were commonly in the public domain and so disclosure of the requested information would not be unusual. On this basis, the Tate would not be disadvantaged more so than its competitors by making the disclosure.
- The sponsorship agreements entered into between the Tate and its sponsors were bespoke and tailored to the parties’ particular needs at the time of agreement. Disclosure of the terms of the BP agreement therefore could not be exploited by potential sponsors or used to weaken the Tate’s bargaining position in the future.
The Tate Gallery case reiterates that to rely on the commercial interests exemption, an authority (or third party) must show genuine commercial prejudice arising from the disclosure. Mere conjecture alone will not be sufficient.
The case also highlights the Tribunal’s eagerness to look at industry standard practice to establish prejudice. In the Tate case, the fact that it was not unusual for sponsorship agreements to be in the public domain meant it was more difficult for the Tate to show commercial detriment as its ‘competitors’ were broadly subject to the same requirement.
This finding can be contrasted with the recent case of Jackley v Information Commissioner (4 August 2016). The Tribunal found that disclosure of the requested information would prejudice the commercial interests of the Department of Work and Pensions and the relevant contractor because the standard competitive tendering process used ‘sealed bids’. It was therefore unfair to the contractor for the terms of its bid to be publicly revealed as this was not common industry practice and the information could be readily exploited by the contractor’s competitors.
Whilst not treading new ground, the Tate Gallery case does serve as a reminder that contractors entering into agreements with public authorities should understand that the terms of those agreements could end up in the public domain. When contracting with a public authority, the authority’s obligations under the Freedom of Information Act will supersede its confidentiality obligations under the agreement unless an exemption can be relied upon.
Public authorities should ensure that their agreements with contractors always contain a confidentiality carve-which which permits disclosure required by law (often referred to as ‘mandatory disclosure’). It would be prudent to remind contractors of the authority’s FOIA disclosure obligations from the outset, particularly where it may not be immediately obvious to a contractor that the other party falls within the ‘public authority’ definition.
Sometimes law is as much an art as a science. For commercial advice on confidentiality and freedom of information requests, contact Laura Trapnell.