This was then followed by an article in the Guardian by James Ball providing further background to this curious document.
The former WikiLeaks spokesman Daniel Domscheit-Berg was also reported as saying:
?WikiLeaks has become what it despises: a repressive organisation, using restrictive contracts to gag its staffers, cultivating intransparency and unaccountability?
For many commentators the document simply spoke for itself.
It was illiberal in its purpose and misconceived in its approach.
It was patently a commercial legal instrument, and the ?12 million figure was preposterous and worrying.
Given the express aims of the WikiLeaks organisation, it appeared to be hypocritical and discrediting.
However, this view was not shared by all.
WikiLeaks itself tweeted:
"WikiLeaks works on information that can change the destiny of states and other powerful groups. We are proud of using every possible instrument to be to defend our sources, staff, volunteers, collaborators from these groups, whose actions against us include legal coersion, bribery and violence. Although we have not sold raw information to other entities, for legal documents to be enforceable, they must be put into monetary form."
(By the way, that final assertion is simply - factually - incorrect as a matter of basic law.)
Others have sought to explain the document away: to normalise it and to contend that it is somehow unexceptional.
It may be well that for WikiLeaks partisans (like "the Birthers" in the United States), nothing - not even a disclosed document- will shift their adherence to their cause.
If so, that would present rather a paradox, as one claim for the WikiLeaks enterprise is that publishing original documents can undermine artificial and self-serving narratives.
So for WikiLeaks and its partisans, and for anyone else who is interested, what follows is a technical legal analysis of this extraordinary document. I also, at the end, provide a suggested draft for the NDA they should be using instead.
The starting point, as with any contract or transactional document, is the choice of law.
Here, there can be no doubt: clause 9 provides that it is under English law.
This has two important consequences.
First, it means that it will be presumed that the English laws of confidentiality and copyright will apply as between the parties.
Second, it means that the English law in respect of penalty clauses will also apply.
Confidentiality agreements under English law
Under English law, one does not need a contract to have enforceable obligations of confidentiality.
All one needs is for there to be information which is confidential in its nature imparted under the terms of confidentiality. If the recipient of the confidential information misuses or wrongfully discloses the information, then the provider of the information can apply to the court for an injunction or to recover the wrongful profits made by the recipient.
No written or oral agreement is required. This is partly because the English law of confidence is based on ?equity? rather than common law, and equity and common law were administered historically by separate courts.
Confidentiality agreements (or ?non-disclosure agreements? or ?NDAs?) then supplement the law of confidentiality in three ways.
They can identify and define the information which is to be regarded as ?confidential?; they affirm that the information has been imparted under the term of confidentiality; and they provide for what the parties agree would be the appropriate remedy for any breach.
A well-crafted confidentiality agreement ensures each of these three points is clear and legally enforceable.
Such agreements can also serve important non-legal and ceremonial purposes.
Once a transaction or joint venture is envisaged, parties often sign a NDA or memorandum of understanding to show a mutual commitment short of a formal business arrangement.
And being presented with a NDA can ensure that the recipients are made to realise the seriousness of their obligations in respect of information with which they about to be provided.
There is nothing wrong with an organisation like WikiLeaks having a NDA; the problem is in the content.
Definition of "information"
Turning now to the WikiLeaks document itself, you will see that the information to be covered is defined in the recital paragraph B.
This seems to be an extremely wide definition, which goes far beyond the leaked documents which the organisation possesses.
The definition is not that easy to follow. It is unclear to what the "it" at the start of the second sentence is referring (and this matters because the second sentence defines "information").
There are also three non-exhaustive lists of what the information "includes". It also looks as if there is a general test of "newsworthiness" as to whether information is caught by the definition, though this test is left undefined, and there is no indication as to whether this test of newsworthiness is objective (in the opinion of a court) or just in the opinion of WikiLeaks.
However, regardless of this woeful drafting, it could be arguable that the definition would cover all information leaked to and held by WikiLeaks that was worth leaking to a third party.
For an organisation which promotes transparency and accountability, one concerning element to the definition of "information" is that it purports to include the workings of WikiLeaks and details of its management and internal affairs.
That said, it would actually be difficult to enforce certain other provisions of this document in certain foreseeable cases, just because this definition of "information" is insufficiently precise.
If WikiLeaks was serious about enforcing this document, it needed a more precise definition of the information it should cover.
Ownership
I have noted elsewhere the extraordinary notion that WikiLeaks contends that it "owns" the information which has been leaked to it.
You will see clause 1 purports to claim all the "information" as defined "is...and remains the property of WikiLeaks".
In legal terms, this assertion of proprietary rights would mean that WikiLeaks has certain rights and remedies in respect of that leaked information which it otherwise not have but for this ownership.
WikiLeaks may, of course, have its own generated intellectual property. It may be also able to perhaps claim that it owns the databases in which the leaked information is stored.
But there is no legal basis whatsoever for WikiLeaks to have ownership of the information itself, especially when it has been provided in breach of various civil and criminal legal regimes.
For example, WikiLeaks cannot own the copyright in the leaked information (to the extent that the information is in a form capable of copyright protection). The creator has not assigned any ownership to WikiLeaks, and no licence has been given.
WikiLeaks cannot also take over the right of ownership of confidential information possessed by the original holders of the information before it was leaked.
And these points are crucial: without "ownership" then there is nothing at all which WikiLeaks can meaningfully sell. And, if this is the case, then various other provisions of this document become nonsensical.
Put simply, the leaked information cannot be "owned" but WikiLeaks would need to have something to own before it can commercially exploit as envisaged by recital paragraphs C and D of the document.
And so we come to commercial exploitation.
Commercial rights
The recital paragraphs C and D set out the basis of WikiLeaks ambitious claims to be able to commercially exploit the information (which they do not own).
The commercial value in the information is firmly connected to the "exclusivity" of these commercial agreements.
Recital paragraphs C and D (and indeed all the recital paragraphs A to E) contain absolutely nothing which, to quote the WikiLeaks tweet above, would protect "sources, staff, volunteers, collaborators [from...legal coersion, bribery and violence".
The only sensible reason for recital paragraphs C and D is to protect the commercial position of WikiLeaks in respect of its (imagined) exploitation rights in the information it contains.
And it gets worse.
For the most astonishing part of this document to me (more than the liquidated damages or penalty clause, on which more below) is in recital paragraph E.
Normally, a person in breach of a contract is liable for any direct loss caused. However, the law draws a line as to how much indirect loss one can also be liable for.
However, recital paragraph E provides for a person in breach of this document to be personally liable for the widest imaginable array of (entirely commercial) indirect losses so as to ensure that WikiLeaks can simply protect its commercial position.
It is paragraph E that makes the conclusion inescapable that this is wholly or primarily a commercial document. There can be no other explanation for the inclusion of this paragraph.
And now we come to the penalty clause.
Penalty clause
Unlike in some other jurisdictions, penalty clauses are unenforceable in English law. A party cannot include in a contract a provision which is there only to penalise a party in breach; any losses have to be genuine and flow from the breach.
Sometimes a party may seek to avoid the effect of this rule of English law by dressing up a penalty clause as a "liquidated damages" clause where the parties agree a "pre-estimate" of any loss suffered by a breach. However, English contract law tends to deal with substance not form, and so a clause will be struck down as a penalty even if the parties have called it liquidated damages.
In this document, clause 5 provides a figure of ?12,000,000 for loss in respect of a "significant" (presumably material) breach of the agreement. There is no basis provided for this figure.
It is not even obvious which heads of loss are covered. Damages for infringement of (non-existent) copyright? Profits in respect of breach of (non-enforceable) confidentiality? The indirect losses under recital paragraph E?
The figure appears to have been plucked out of the air.
It is so high that it can only be a penalty. As such it could not be enforced.
What this means is that, far from this being a document which would "defend our sources, staff, volunteers, collaborators [from]...legal coersion, bribery and violence" it is instead of almost no legal effect as the central protection (other than recital paragraph E) would be without effect.
Any competent commercial lawyer would tell someone producing this document that a court would be unlikely to uphold clause 5 as it was a penalty.
So, in seeking to make this an onerous document, WikiLeaks have instead produced an effectively pointless dud.
That is why, as I said in the New Statesman, this clause is ludicrous and undoubtedly unenforceable.
The penalty in clause 5 actually offers WikiLeaks no real protection at all.
What WikiLeaks should have done
You may have noticed that I have referred above to the lettered paragraphs as "recital paragraphs" and to the numbered paragraphs as "clauses". Unless you have the misfortune to be a commercial lawyer, this distinction may not mean anything.
However, for a contract under English law, the distinction can be very important.
In the event a contract is enforced, a recital basically tells a court what the parties intended by the agreement they had entered. A recital is thereby an aid to the court on how obligations are to be construed.
Whilst in badly drafted contracts, such as this one, recitals contain substantive obligations and liabilities, such provisions belong in the clauses which then follow.
In this document, you will see at the top of page 2 that "the parties hereby agree as follows" - the recitals lead up to this statement of agreement and the substantive clauses - the terms and conditions - then follow.
If this document was really to be used for the protection of "sources, staff, volunteers, collaborators" rather than for commercial exploitation then the recitals should be very different.
Instead of emphasising the commercial exploitation rights of WikiLeaks, it should be emphasising the need to protect sources and staff, the need to ensure information is disclosed properly without creating due risk to life and limb.
And instead of emphasising monetary amounts, the document should mention the public interest in uncontrolled disclosure of sensitive information.
A court would then be able to ensure that whatever remedy was ordered met the presumed intention of the parties in keeping the information safe for good reason.
Indeed, the WikiLeaks tweet quoted above, and the various justifications of WikiLeaks partisans on Twitter and elsewhere, would have been better recitals to this document than the ones actually used, unless - of course - the intention of WikiLeaks was in fact commercial rather than protective of its sources.
The fact that the document talks of commercial interests and liquidated damages, rather than the public interest, indicates it is a commercial document.
This blog does not provide legal advice.
But as I draft NDAs under English law as part of my day job, including for non-governmental and not-for-profit organisations, I would suggest that if WikiLeaks had been genuinely serious about protecting the integrity of its information and the safety of its sources, rather than commercialising the information, then the following would have been more appropriate.
Non Disclosure Agreement
Between
[WikilLeaks entity]
and
[Name X]
Whereas
A. [WikiLeaks entity] possesses and has access to information (including documents and other materials which has been passed to it in the public interest) which is of a sensitive nature the unauthorised disclosure or misuse of which could adversely affect the interests of third parties ("information").
B. [Name X] will have access to this information.
C. The carefully managed disclosure of the information into the public domain is in the public interest.
The parties hereby agree:
1. [Name X] shall not disclose to any third party or use for his or her own benefit or for the benefit of any third party, any of the information without the prior written consent of [WikiLeaks entity]. [Drafting note: same as clause 1 of the document.]
2. [Name X] shall not commercially exploit or otherwise misuse the information. In the event [Name X] does commercially exploit or otherwise misuse the information then [Name X] shall (a) account to [WikiLeaks entity] for any profit which is thereby made, and (b) indemnify [WikiLeaks entity] for any damages and legal costs thereby caused.
3. The liability of [Name X] under clause 2 shall be limited to ?12,000,000.
4. [WikiLeaks entity] is proud of using every possible instrument to be to defend its sources, staff, volunteers and collaborators, and [WikiLeaks entity] thereby indemnifies [Name X] against any loss or damage caused by [Name X] assisting [WikiLeaks entity] in respect of the information.
5. The liability of [WikiLeaks entity] under clause 4 shall be unlimited.
6. Nothing in this agreement shall provide [Name X] with any ownership, licence or other rights in the information.
7. Damages may not be an adequate remedy in respect of a breach by [Name X] of this Agreement and that [WikiLeaks entity] shall be entitled to injunction or other interim order so as to ensure that the information is held and disclosed in accordance with the public interest and the rights of any third parties who may be affected.
8. Unless terminated by the agreement of both parties, this agreement shall last for a period of three years.
9. This agreement is subject to English law and to the non-exclusive jurisdiction of the English courts.
Executed as a deed by
[WikiLeaks entity]
Witness
[Name X]
Witness
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Source: http://jackofkent.blogspot.com/2011/05/wikileaks-12m-legal-gag-legal-analysis.html
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