On 17 October 2025, Mr Justice Richard Smith handed down judgment in Gardner Aerospace Holdings Ltd v Various Government Departments [2025] EWHC 2627 (Ch). This decision provides a useful reminder of the deference that the courts give to the executive branch of the government when it comes to questions of national security, in this case in the unusual context of an application for third-party disclosure.
Daniel Saoul KC of 4 New Square Chambers acted for the Government Departments the subject of the application (leading James Stansfeld of Matrix Chambers) namely the Department for Business and Trade, the Cabinet Office (Investment Security Unit), and the Ministry of Defence of His Majesty’s Government (together, “HMG”).
In this article, Teen Jui Chow discusses the judgment.
Factual background
The Claimants in the underlying claim, and Applicants for third party disclosure, were two companies, Gardner Aerospace Holdings Ltd (“GAH”) and Gardner Group Ltd (“Gardner”). In 2017, GAH was acquired by Ligeance Aerospace Technology Co Ltd (“LAT”), a Chinese company. The Defendant to the underlying claim, Mr Upton, was from May 2018 to September 2022 a director of GAH and Gardner.
The claim arose from Mr Upton’s alleged conduct in relation to LAT’s refinancing (“the Transaction”) by a Chinese state-owned investment fund called Sichuan Development Holding Co Ltd (“SDH”). The claim was that Mr Upton’s conduct influenced the issue by HMG of a “call-in notice” (on 16 March 2022) and a “Final Order” (on 10 October 2022) under sections 1 and 26 of the National Security and Investment Act 2021 (“the NSIA”).
Sections 1 and 26 of the NSIA (as relevant) provide as follows:
1 Call-in notice for national security purposes
(1) The Secretary of State may give a notice if the Secretary of State reasonably suspects that—
(a) a trigger event has taken place in relation to a qualifying entity or qualifying asset, and the event has given rise to or may give rise to a risk to national security, or
(b) arrangements are in progress or contemplation which, if carried into effect, will result in a trigger event taking place in relation to a qualifying entity or qualifying asset, and the event may give rise to a risk to national security.
26 Final orders and final notifications
(1) The Secretary of State must, before the end of the assessment period in relation to a call-in notice—
(a) make a final order, or
(b) give a final notification to each person to whom the call-in notice was given.
…
(3) The Secretary of State may, during the assessment period, make a final order if the Secretary of State—
(a) is satisfied, on the balance of probabilities, that—
(i) a trigger event has taken place or that arrangements are in progress or contemplation which, if carried into effect, will result in a trigger event, and
(ii) a risk to national security has arisen from the trigger event or would arise from the trigger event if carried into effect, and
(b) reasonably considers that the provisions of the order are necessary and proportionate for the purpose of preventing, remedying or mitigating the risk.
The Final Order recorded that the national security risk in the Transaction related to military and dual-use applications of sensitive information and know-how held by Gardner, and the potential that the technology could be used to develop military capabilities.
In summary, the allegations by the Claimants were that Mr Upton breached his directors’ duties by:
- Lobbying politicians with a view to the issue of the call-in notice and influencing the terms of the Final Order;
- Sending allegedly misleading and prejudicial communications to HMG;
- Engaging with potential buyers of the Claimants’ business and encouraging them to lobby HMG about the Final Order;
- Concealing relevant communications from his co-directors; and
- Taking these steps to achieve LAT’s divestment of its ownership of GAH by making LAT’s continued shareholding impractical or unattractive so that a new owner would keep him in post as CEO.
The Claimants alleged that they had suffered losses of about £7 million caused by Mr Upton’s breaches of his directors’ duties. Mr Upton denied the claim and alleged that HMG would have issued the call-in notice and Final Order regardless of his alleged conduct. Thus, there was a central question as to causation. Notably, the Claimants made no allegation of wrongdoing against HMG and had not sought to challenge the Final Order.
In advance of the trial against Mr Upton, the Claimants made a third-party disclosure application under CPR r.31.17 (“the TPD Application”) against HMG, seeking documents which they said were highly material to the claim they were pursuing against Mr Upton.
The parties’ submissions
The Claimants’ position was that HMG was likely to have documents showing the full extent and impact of Mr Upton’s lobbying efforts. The documents they sought fell into four categories:
- Category 1: Minutes or records of meetings between Mr Upton and officials within the relevant HMG departments;
- Category 2: Emails from Mr Upton to those departments;
- Category 3: National security assessments in relation to the Claimants or the Transaction; and
- Category 4: Correspondence between certain MPs and HMG relating to the Claimants or the Transaction.
HMG adopted a neutral stance in relation to Categories 1 and 4 and confirmed that it had no documents falling within Category 2. However, it resisted disclosure of documents within Category 3 on the basis that the conditions under CPR r.31.17 were not met and that disclosure would likely be injurious to the public interest under s.35(1) of the Senior Courts Act 1981. In the alternative, HMG sought an order conferring public interest immunity over the relevant documents. In support of its position, the Respondents provided evidence stating that disclosure of documents in Category 3 would pose a real risk of causing serious harm to national security and to international relations.
The Claimants accepted that, in relation to Category 3, there were likely to be parts of the assessments which were sensitive and could not be disclosed because such disclosure would be injurious to the public interest. However, they submitted that there would be other sections of the assessments which would not be sensitive, and that the court should therefore make a disclosure order allowing HMG to redact material considered sensitive, with the Claimants having the right to come to court if they considered that any redaction had been made excessively.
Legal principles
Following a brief recitation of the well-known principles in relation to third-party disclosure orders, Richard Smith J referred to three Supreme Court cases relied upon by HMG, namely R (Begum) v Special Immigration Appeals Commission [2021] UKSC 7; [2021] AC 765, U3 v Secretary of State for the Home Department [2025] UKSC 19; [2025] 2 WLR 1041, and Shvidler v Secretary of State for Foreign, Commonwealth and Development Affairs [2025] UKSC 30; [2025] 3 WLR 346. In these cases, the Supreme Court had reiterated the deference the courts should give to the executive branch of the government in relation to questions of national security and the public interest in such an approach for reasons relating to the separation of powers as well as institutional competence.
Decision
Richard Smith J then sought to apply these principles to the facts of the case before him, which was (unlike the authorities referred to above) not a case involving the deprivation of citizenship or the imposition of sanctions, but rather a third-party disclosure application where the Claimants were contending that the documents in question had the potential to be highly material to the claim they were advancing. It was this question of relevance which had to be set against the importance of protecting national security, in circumstances where HMG had, in evidence and submissions, explained the sensitivity of the material in question and the risk to national security should it be disclosed.
The starting point of Richard Smtih J’s analysis in this regard is that he was satisfied that the documents in Category 3 were relevant and that – putting concerns over national security to one side – disclosure was otherwise necessary for the fair disposal of the claim, such that the conventional tests under CPR r.31.17 were satisfied. Nevertheless, disclosure was not ordered. His Lordship accepted HMG’s position that the assessments making up Category 3, especially considering the national security context in which they occurred and their likely content, were sensitive in nature (at [57]-[58]). Richard Smith J further rejected the Claimants’ fallback position that disclosure should be ordered with the Respondents allowed to make redactions of sensitive material. This was for five reasons: first, the substantial majority of the documents would have to be redacted due to sensitivity; second, the parts of the assessments which were of particular interest to the Claimants would have to be redacted due to sensitivity; third, the unredacted parts would not satisfy the relevance and necessity tests; fourth, even if the unredacted parts were relevant, such partial disclosure would create the risk of unfairness; fifth, the court does not have the power to order the Respondents to provide a statement as to the gist of documents under CPR r.31.17 (at [59]).
The result was, therefore, that there was no order for disclosure of the Category 3 documents.
This is thought to be the first case of its kind, in which a party to commercial litigation to which HMG is not a party but arising out of events involving it, has made such a third-party disclosure application against HMG for documents bearing on national security. The Court’s clear decision serves to confirm the caution the judiciary is required to adopt when broaching these matters, and may well serve to deter any future similar applications.
