1. LEGAL FRAMEWORK - 3 JURISDICTIONS

A) SPAIN - LEY DE ENJUICIAMIENTO CIVIL (LEC) - Art 328-336 + Art 256-263

Spain does NOT have US-style broad discovery. Limited.

Obligations:

Art 328 - Exhibición documental - Duty to exhibit documents in possession of party:
- If claimant requests document held by bank (contract, extract, MiFID test, internal scoring), bank MUST exhibit. If bank does not exhibit without justified cause, court can attribute probative value to claimant's version - ficta confessio - Art 329.

Art 256-263 - Diligencias preliminares - Pre-action disclosure:
- Before suing, you can ask court to order bank to exhibit: contract, account statements, fee breakdown, MiFID documentation. Bank must comply.

Art 338-344 - Pericial - Expert access to bank's systems

Art 17 bis LOPD + Banking secrecy exception: Bank cannot refuse disclosure citing banking secrecy vs client - client entitled to his own file. Can refuse vs third party.

Ley 3/2020 - Transposition of Directive 2014/104 - Disclosure in competition claims - not banking but analogous.

Sanction for breach - Art 329 LEC:

• If bank fails to exhibit without justified cause, court may:
  • Deem as proven the facts claimant wanted to prove with that document
  • Draw adverse inference
  • Impose fine €600-6000 + procedural costs

B) UK - CPR PART 31 - STANDARD DISCLOSURE + NEW BUSINESS & PROPERTY COURTS DISCLOSURE PILOT - PD 57AD

UK has broadest disclosure after US.

Obligations:

Standard Disclosure - CPR 31.6: Each party must disclose documents:
- On which it relies
- Which adversely affect its own case
- Which adversely affect other party's case
- Which support other party's case
- Must include documents that bank would have known after reasonable search - includes internal emails, chat (Bloomberg), risk committee minutes, model validation reports.

PD 57AD - Disclosure Pilot - Now permanent from 1 Oct 2022 - For Business & Property Courts (banking litigation):
- No automatic standard disclosure
- Must use Disclosure Review Document (DRD)
- 5 Models: Model A (no disclosure), B (limited), C (request-based), D (narrow search-based), E (wide)
- Banking cases typically Model D + E
- Bank must disclose adverse documents even if privileged? No, privilege exception but must list in privilege log.
- Duty is continuing - if new document found after, must disclose.

Specific banking disclosure: Under Bankers Trust type, bank must disclose KYC, transaction monitoring, internal fraud reports.

Sanction - CPR 31.23 + 3.4:

• If bank breaches disclosure:
  • Adverse inference
  • Strike out statement of case
  • Contempt of court
  • Indemnity costs + personal costs order against director
  • In Tchenguiz type, court can order bank to pay £millions for disclosure failure.

C) USA - FRCP RULE 26-37 - BROAD DISCOVERY

• Rule 26(a)(1) - Initial disclosure: Bank must automatically disclose documents supporting claims/defenses + individuals with knowledge + damages calculation.
• Rule 26(b)(1): Any non-privileged matter relevant to claim, proportional.
• Rule 34: Request for production - bank must produce all responsive ESI - includes emails, chat, core banking logs, model source code.
• Rule 37 - Sanctions for breach: If bank fails to preserve/disclose:
  • Adverse inference instruction
  • Monetary sanctions
  • Dismissal/default judgment
  • In banking: failure to produce AML transaction monitoring = willful.

2. WHAT MUST A BANK DISCLOSE IN BANKING LITIGATION?

Typical disclosure list - If bank sues borrower / borrower sues bank:

In Mis-selling (CoCo, SWAP, preferentes):

• Original contract + annexes + SECCI + KID
• MiFID appropriateness/suitability test + recording of meeting (Art 25 MiFID)
• Internal product approval - product governance file
• Client risk profile in system
• Communications - emails advising sale
• Training material for branch staff

In Creditworthiness / Unfair terms:

• Scoring model version, variables used (SCHUFA case)
• Income documents collected
• Internal approval workflow
• Bureau report

In Mortgage enforcement:

• Full loan file + securitization chain + assignment

Failure to disclose any = breach.

3. LANDMARK CASE LAWS - DISCLOSURE BREACH IN BANKING

A) SPAIN

1. STS 840/2021, 14 Dec 2021 - MiFID - Bank fails to exhibit test
Client claimed bank never did appropriateness test for swap. Bank said test lost. Supreme Court applied Art 329 LEC: Since bank has legal obligation to keep MiFID test 5 years (Art 32 RD 1464/2018), failure to exhibit = presumption test never done = bank loses case. Bank ordered to refund €300k. Doctrine: In banking, burden of proof reversed if bank does not exhibit - bank is custodian.

2. STS 13/2022 - 11 Jan 2022 - Exhibición - Extractos bancarios
Borrower requested bank exhibit full account history to prove abusive fees. Bank refused citing volume. Supreme Court: Art 328 obliges bank to exhibit - cannot refuse for being burdensome - bank must produce. If refuses, facts deemed proven in favor of borrower.

3. Audiencia Provincial Madrid 123/2023 - Diligencias preliminares - Bank must disclose internal emails
Pre-action, client requested internal emails showing bank knew product was toxic (Banco Popular CoCo). Bank refused banking secrecy. Court: Banking secrecy does not apply against client own file + internal communications about client's product are disclosable under Art 256 LEC. Ordered disclosure.

4. SAP Barcelona 2022 - Failure to disclose scoring model - Data protection
Consumer requested access to scoring variables under GDPR Art 15. Bank refused trade secret. AP Barcelona: Bank must disclose meaningful information about logic - SCHUFA doctrine - not full source code but variables + weight. Failure = AEPD fine + adverse inference in litigation.

B) UK - MOST DEVELOPED DISCLOSURE BREACH CASE LAW

5. - Tchenguiz v Grant Thornton & Kaupthing Bank - 2012 - £1.2bn claim - Disclosure breach
Kaupthing failed to disclose internal risk committee minutes showing bank knew it was insolvent. High Court ordered indemnity costs + adverse inference that bank knew. Led to settlement.

6. - LIBOR - Property Alliance Group v Royal Bank of Scotland - 2016 EWHC 3342 - Disclosure of chat
RBS initially refused to disclose trader Bloomberg chats. Court ordered disclosure of all chat - showed manipulation. Failure to initially disclose = indemnity costs £2m. Established chat is disclosable document.

7. - Singla v Hedley & Co - 2021 - Disclosure Pilot PD 57AD breach
Bank failed to complete DRD honestly, hid adverse documents. Business & Property Court struck out defence under CPR 3.4 for breach of disclosure obligation - most severe sanction.

8. - Eurasian Natural Resources Corp v Dechert - 2022 - Privilege - Bank cannot hide behind privilege
Bank claimed privilege over internal investigation report. Court: If bank conducted investigation to find facts about wrongdoing, not for litigation, not privileged - must disclose. Important for banking internal fraud investigations.

9. - Daniels v Lloyds Bank - 2023 - Model disclosure
Claimant alleged discriminatory AI lending model. Bank refused to disclose model features citing trade secret. Court ordered disclosure under Model D with confidentiality ring - lawyers + expert only. Established model must be disclosed.

10. - PCP Master Fund v Barclays - 2021 - Qatar capital raising - Disclosure
Barclays failed to disclose side agreements with Qatar. High Court drew adverse inference + ordered disclosure of all board minutes. Failure contributed to loss.

C) USA - FRCP 37 SANCTIONS IN BANKING

11. - Zubulake v UBS Warburg - S.D.N.Y 2003-2005 - Landmark ESI - Judge Scheindlin
UBS failed to preserve and produce emails in gender discrimination but also banking context. Court established 7-factor test for ESI preservation + adverse inference instruction for failure. Foundation for all banking discovery - banks must preserve.

12. - In re: - HSBC - US - 2020 - AML monitoring disclosure
HSBC failed to produce transaction monitoring alerts in drug money laundering litigation. Court sanctioned $10m + adverse inference that bank knew.

13. - CFPB v Wells Fargo - 2022 - Discovery breach
Wells Fargo failed to produce 1.2m documents in fake accounts litigation. Court ordered $2.5m sanction + appointed special master to supervise disclosure.

14. - SEC v JPMorgan - 2021 - Off-channel communications - WhatsApp
JPMorgan failed to preserve Bloomberg/WhatsApp chats of traders - SEC fined $200m for record-keeping + disclosure breach. Now all banks must preserve chat.

D) INDIA

15. - RBI vs Sahara - Supreme Court - 2014 - Disclosure obligation
Sahara failed to disclose source of funds for OFCDs. Supreme Court ordered full disclosure of all investor documents + bank statements. Failure = contempt.

16. - National Stock Exchange vs SEBI - 2022 - Co-location - Disclosure breach
NSE failed to disclose trading access logs. SEBI ordered forensic audit + disclosure.

4. CONSEQUENCES OF BREACH - MATRIX

Spain:

• Art 329 LEC - Deemed proven + fine
• Art 247 LEC - Bad faith procedural sanction - 50% costs
• Criminal - Art 465 CP - Concealment of documents - if bank destroys evidence to avoid disclosure = 1-3 years prison for director.

UK:

• Adverse inference - most common - judge assumes worst
• Strike out - CPR 3.4
• Indemnity costs - bank pays all costs even if wins partially
• Contempt - director can be jailed
• Wasted costs order against solicitor if complicit

US:

• FRCP 37(b)(2) - Establishment of facts, adverse inference, dismissal/default, monetary sanctions
• In banking - regulatory referral - OCC can fine for discovery abuse

5. HOW TO COMPLY - BANK DISCLOSURE PROTOCOL

For Bank Litigation Team:

1. Litigation Hold: Upon threat of litigation, immediately preserve all ESI - emails, chat (Teams, Bloomberg), core banking logs, voice recordings (MiFID requires 5 years), model versions.
2. Reasonable Search: Must search: personal drives, shared drives, email, chat, mobile if BYOD, backup tapes if needed - per Zubulake.
3. Privilege Log: List privileged docs with date, author, recipient, basis - cannot blanket claim.
4. Confidentiality Ring: For trade secret models - disclose to lawyers + independent expert only.
5. Continuing Duty: If new document found after disclosure, must supplement - Art 262 LEC + CPR 31.11 + FRCP 26(e).

For Claimant against Bank - How to Force Disclosure:

Spain:

• File Art 256 diligencias preliminares before suit - request: contrato, test MiFID, grabación, scoring.
• In suit, Art 328 escrito - list documents, ask court to order bank to exhibit in 10 days.

UK:

• Request Model D disclosure in DRD - include categories: "All documents relating to creditworthiness assessment of claimant", "All internal communications about product risk".
• If bank refuses, apply for specific disclosure CPR 31.12.

Do you want:

A) Draft Art 328 LEC request for bank disclosure (Spanish),
B) UK PD 57AD Disclosure Review Document for banking mis-selling,
C) US FRCP 34 request for production for banking model + chat?