Dealing with Investigations

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What happens to a party’s duty to maintain confidentiality if a person with the ability to enforce its demands–say, a prosecutor–asks one of the parties for Confidential Information?

The model requires the party that received the request to notify the other party of it, so long as the notice is allowed by law. The parties may object to disclosure, so long as the objecting party bears its own costs. If the party asked to turn over the information is not the disclosing party, and the requested party cannot notify the disclosing party by law, the requested party must contest the disclosure if there’s a good faith reason to do so. While in general, all the costs and decisions related to objecting to disclosure are the responsibility of the objecting party, the exception is when the requested party contests on behalf of a disclosing party that is not allowed to be notified of the request. The contract requires the disclosing party to reimburse the requested party at the appropriate time.

Here is the language:

4.3 Potentially Enforceable Disclosure Requests: If a party receives a potentially enforceable request for the production of Confidential Information, including without limitation a subpoena or other official process, that party will promptly notify the other party in writing, unless such notice is prohibited by law. If allowed, such notice shall be given before complying with the request and shall include a copy of the request.

If the request is of the recipient of Confidential Information, and notice to the disclosing party is prohibited by law, the recipient must make a good faith effort to contest the disclosure, if appropriate. The recipient shall also make a good faith effort to obtain an agreement protecting the confidentiality of the Confidential Information prior to disclosing it.

If a party elects to contest the request, no party shall make any disclosure until a final, non-appealable or non-stayed order has been entered compelling such disclosure. The contesting party shall pay its own expenses and control its contest, provided that, if the recipient contests a request when forbidden by law to give the disclosing party notice of the disclosure request, the disclosing party shall reimburse the recipient’s reasonable expenses promptly after being notified of them.



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