"No man should profit from his own wrong"
(Common Law aphorism)
In September 2019, the United States filed a lawsuit against Edward Snowden for “breach of contract,” alleging that the book he wrote violated confidentiality agreements. A former employee of the National Security Agency (NSA) from 2005 to 2009, Snowden leaked classified government documents in 2013 revealing the existence of a global surveillance system targeting communications and the internet. In 2019, Snowden published his autobiography, titled “Permanent Record” (published in Brazil as “Eterna Vigilância” by Editora Planeta), without submitting it to intelligence agencies for review. The U.S. government seeks to seize all profits Snowden may earn from the sale of the book. Snowden currently resides in Moscow1.
The fundamental concepts of gain-based damages, disgorgement, and restitutionary damages are used in various common law jurisdictions to justify the fluctuating objective parameters of the various remedies whereby a benefit unlawfully obtained by the wrongdoer must be transferred to the victim of a tort. In this sense, restitutionary remedies serve the same fundamental purpose: to prevent anyone from profiting from the commission of a tort by recovering the gains derived from a breach of a legal duty or a violation of another’s right. Common to both types of restitution for unlawful acts—disgorgement and restitutionary damages—the judgment will not take into account the actual existence of damages on the part of the plaintiff, or, if such damages existed, whether there is proportionality between the losses and the defendant’s undue gains2.
However, the difference between the two forms of gain-based damages lies in how the amount of the restitution obligation is determined and, primarily, in their respective functions. While restitutionary damages involve reversing the transfer of assets between the parties, disgorgement involves eliminating the benefit acquired by the defendant, regardless of any transfer of assets by the plaintiff. In the former, the plaintiff receives an amount corresponding to the asset transferred or subtracted from their estate. In the latter, the benefit that the defendant obtained through the commission of the tort—which bears no relation to the use of the plaintiff’s assets—is eliminated3.
“Edward Snowden violated the obligation he assumed toward the United States by signing confidentiality agreements when he was hired by the Central Intelligence Agency and as a contractor for the NSA,” said Jody Hunt, Assistant Attorney General for the Civil Division of the Department of Justice, according to her, “the U.S.’s ability to protect sensitive national security information depends on compliance with confidentiality agreements signed by its employees and contractors. We will not allow individuals to enrich themselves at the expense of the United States without fulfilling their pre-publication review obligations.”
During a videoconference in Berlin to promote his book, Snowden stated that even though he had signed a confidentiality agreement to maintain secrecy, he had also sworn to uphold the U.S. Constitution. The former CIA analyst emphasized: “You told the government you wouldn’t speak to journalists. You told them you wouldn’t write a book; at the same time, you took an oath to defend the Constitution, and the secret they’re asking you to protect is that the government is violating the Constitution and the rights of people around the world.”
The fact is that, looking back at American history, the legality of criminals telling their own versions of events has never been questioned— something that falls within their freedom of expression, subject to any claims for compensation for non-pecuniary damages or even specific legal remedies such as the right of reply or correction in favor of those who feel offended by the content made public. Nor has there been any challenge to the right of writers to receive profits from the publication of stories about murderers, which attract and fascinate many curious readers around the world.
Consequently, what legal precedents would grant the United States the prerogative to deprive Edward Snowden of the profits obtained from the sale of his most recent book, on the grounds that these are undue economic benefits derived from the breach of a confidentiality agreement?
As a first precedent in common law, we go back 50 years in time. The English girl Mary Bell was 11 years old when she was found guilty of the murder of two children in 1968. She later collaborated with the writer and historian Gitta Sereny on the book Cries Unheard, in which she presented her account of the events. Later, the press reported that Mary Bell had received a portion of the profits from the sale of her memoirs. In light of the public outcry, legislation regarding the scope of criminal courts’ authority to confiscate the proceeds of crime was expanded, to include a civil remedy allowing authorities to recover assets related to criminal conduct, thereby prohibiting a murderer from deriving any benefit from his or her unlawful behavior.
However, the English precedent regarding the restitution of illicit gains was the House of Lords’ ruling4 in the case “Attorney General v. Blake [2001],” which concerned the autobiography of a traitor. Due to the special nature and importance of his service, a British secret agent with MI6 had signed a confidentiality clause with the government (an Official Secrets Act contract) as a fundamental part of his employment contract. Under the terms of the contract—as all agents do—Blake promised the British Crown that he would not disclose information about his work, a duty whose breach could even cost his colleagues their lives. However, years later, in violation of the agreement, he wrote his memoirs with the aim of securing a generous retirement. Despite an arrest warrant in England, while in hiding in Russia, he recounted his treasonous activities against his homeland5.
Unlike in cases of torts committed against property, under English law the remedies normally available for breaches of contract consist primarily of compensation for damages and, secondarily, of specific relief—specific performance or an injunction. This is explained by the fact that there is a certain tendency in English law to deny that a breach of contract constitutes a tort. A breach of contract is not considered to have the same gravity as a tort or even a breach of a fiduciary duty; in some cases, it is even regarded as economically efficient and, therefore, justified, provided that the plaintiff is adequately compensated for any economic loss. A enters into a contract to sell goods to B but sells them instead to C, who offered a higher price than B. The breach of contract cannot be discouraged by awards based on A’s profits, as the breach may serve a specific economic function. Nevertheless, this is not always true, as we must consider costs arising from the breach that exceed the resulting benefits (contracts that the plaintiff B may have entered into with third parties and was forced to repudiate or renegotiate as a consequence of A’s breach of contract)6.
However, in the Blake case, the English Attorney General obtained a specific order requiring the publisher that released the book to direct the “royalties” to the State. One might argue that the agent “Blake” breached a contract; however, the liability inevitably arose from the commission of a tort. This constitutes restitution for unlawful gain in a contractual context, bearing no relation to unjust enrichment, as the British Crown could not have established any direct connection to the gain in question. It is clear, therefore, that the only issue at stake is whether this breach of contract gave rise to restitution rather than the normal right to damages. As the presiding judge, Lord Nichols, aptly put it: “In awarding monetary damages, the law does not bow subserviently to the concept of compensation for financially measurable damages. When circumstances warrant, the award may be measured by reference to the benefit obtained by the offender”7.
With regard to the Snowden case, there is a well-established Supreme Court precedent, “Snepp v. United States”8, which specifically holds that the forfeiture of Snowden’s earnings is based not only on a breach of contractual obligations but also on a breach of fiduciary duties. In the 1980 ruling, when he accepted a position at the CIA in 1968, Snepp signed an agreement with the Agency stating that he would not publish any information during or after his tenure regarding the Agency’s activities without first obtaining the Agency’s approval. Snepp published a book about the CIA’s activities in Vietnam without first submitting his manuscript to the Agency for review. According to the court, the First Amendment could not protect Snepp because he had violated the “constructive trust” between him and the government. This was particularly significant in this case, as this type of breach by a former agent undermined the CIA’s ability to fulfill its legal obligations, jeopardizing the safety of government agents and Snepp himself.
A fiduciary relationship differs from a simple contract in that, while in the latter the parties maximize their own interests, in a fiduciary relationship, the party to whom power and trust have been entrusted (Snowden) must act strictly in accordance with the interests of the beneficiary—in this case, the United States of America— based on his position in roles of special trust, in which he negotiated on behalf of the CIA and the NSA, received regular access to classified national security information, and entered into confidentiality agreements with both agencies. Consequently, a breach of fiduciary duty requires a more incisive legal response than a breach of contract.
Returning to England, the Blake case illustrates the importance of fiduciary relationships. The beneficiary (or principal), in whom trust is placed, is entitled to the fiduciary’s unwavering loyalty. When someone fails to meet the highest standards of conduct expected of a fiduciary, the breach of duty constitutes a tort —even if the trustee is acting in good faith (which was not the case with Blake)—due to the need to control the trustee’s discretionary powers, thereby compelling the trustee to resist the temptation to serve their own interests rather than those of the beneficiary. A judicial remedy of restitution is available, as a person in a fiduciary relationship cannot place themselves in a position where their interest and duty conflict, and must prioritize their duty to the principal over their personal interest.
Thus, a remedy based on undue gains will only be granted as a last resort if other remedies are inadequate in the specific case (for example, compensatory relief or specific performance). In the Blake case, compensatory remedies were not adequate because the disclosure of information had no market value (the damage could not be measured) and, likewise, there was no way to apply specific performance or an injunction. Furthermore, the plaintiff had a legitimate interest in preventing the defendant’s profitable activities and in deterring other government employees from disclosing confidential information. This is a case of restitution for a tort. It falls under the rules governing breach of contract. It has nothing to do with unjust enrichment. If the British Crown had not been willing to seek restitution for undue gains, it could never have established any connection between its conduct and the gain in question. It is clear, therefore, that the only issue at stake was whether this unlawful breach of contract would give rise to a right to restitution, or merely to the traditional right to compensation for any damages9. Finally, the breach of duty was cynical and deliberate, allowing the defendant to enter into a second, more lucrative contract (publication of the book) to the detriment of the first contract. By entering into the new contract, the defendant eliminated his ability to perform the contract with the plaintiff10.
Following the judicial recognition of restitution for unlawful gains in Blake, the challenge has been (and remains) to identify the areas in which the restitutionary remedy may be applied. In the ruling itself, it was made clear that restitution could not be applied permissively, but rather sparingly, solely to fill gaps in the system in cases where compensatory relief would leave the victim at a disadvantage. In fact, in contrast to torts—whether under common law or equity—there is no tradition in English law of awarding restitution for breach of contract. The undue gain of a defendant from a breach of contract is generally irrelevant to the quantification of damages. As a rule, the defendant will be required to compensate the plaintiff for his or her contractual expectation (or reliance) —expectation damages—placing the plaintiff as close as possible to the position in which he or she would have been had the breach not occurred, but not to restore any profit the defendant might have obtained from the breach, nor to account for any expenses saved as a result of the termination. However, English legal doctrine on this subject holds that restitution for torts is not incompatible with the principles of the law of obligations, nor is it the case that its scope of application has already been covered by other legal remedies11.
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EDELMAN, James. Gain-Based damages. Oxford: Hart Publishing, 2002.
GIGLIO, Francesco. The foundations of restitution for Wrongs. Bloomsbury Publishing, 2007.
ROSENVALD, Nelson. A responsabilidade civil pelo ilícito lucrativo. Salvador: Juspodivm, 2019.
VIRGO, Graham. Principles of the law of restitution. Oxford: Oxford Press, 2015