The High Court has refused applications by Aer Lingus and Ryanair seeking further discovery in litigation over Ireland’s former differentiated air travel tax, including the State’s claim of litigation privilege over communications with the European Commission.
In a judgment delivered on 15 December 2016, Mr Justice Max Barrett said the proceedings formed part of a “triangulated situation”: Ireland faced challenges by the airlines to the tax while also seeking, in separate proceedings, to recover the €8 difference between the tax rates. Those recovery proceedings were stayed pending European-level litigation.
The tax, established under the Finance (No. 2) Act 2008, charged €2 per passenger for certain short-distance flights and €10 for longer-distance flights. The European Commission had determined that the differentiated rates involved State aid and directed Ireland to recover the difference. At the time of the hearing, a final judgment from the Court of Justice on related European proceedings was still awaited.
The airlines’ 2016 motions initially raised several discovery issues, including delay, the form of the State’s discovery affidavit and claims of Commission privilege. By the hearing, the dispute before the court had narrowed to whether litigation privilege covered Ireland’s communications with the Commission. The Commission had indicated that some documents could be released with minor redactions; the broader Commission privilege issue remained unresolved, with the airlines reserving the right to return to court if discussions did not resolve it.
The airlines argued that communications with an adversary in the context of anticipated litigation should not attract litigation privilege because the privilege protects a party’s private preparation from its opponent. The State relied on its legal duty to cooperate with the Commission during the State aid investigation and the relationship between that process and the airline litigation.
Justice Barrett concluded that the proceedings were closely related and that Ireland’s communications with the Commission took place within the protected “zone of privacy” associated with litigation privilege. He also held that a party claiming privilege need not describe a document’s contents in detail where doing so could undermine the protection.
The judge said that discovery had been made and that remaining complaints about delay and document formatting did not justify the requested orders. He noted that any difficulty with the format could still affect a future costs decision. The court declined to grant any of the orders sought by either airline. It did not determine the underlying challenges to the tax or the separate recovery claims in this discovery application.