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Court of appeal reasserts legal professional privilege

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Court of appeal reasserts legal professional privilege

Court of appeal reasserts legal professional privilege

What is Legal Professional Privilege (“LPP”)?

LPP is a combination of the principles of Legal advice privilege (“LAP”) and Litigation privilege (“LP”). It protects communications between a legal professional and their client, as well as documents created for litigation purposes, from being disclosed to the court or a third party.

LPP is particularly relevant to in-house lawyers who can’t protect business advice and administration from disclosure. For this reason, they must take care not to give business and legal communications in the same document, or they risk all the information being unwantedly disclosed.

Background to the Case

Eurasian Natural Resources Corporation Ltd (“ENRC”) was conducting an internal investigation into a whistleblower’s accusations of bribery and financial wrongdoing in a Kazakh subsidiary. In 2011 the Serious Fraud Office (“SFO”) became involved, leading to the SFO’s announcement that it was commencing a criminal investigation in April 2013.
In May 2017 the case of Serious Fraud Office (SFO) v Eurasian Natural Resources Corporation Ltd [2017] EWHC 1017 (QB) considered the SFO’s requested disclosure of documents produced by ENRC’s legal advisers.

The ruling tightened the scope of internal investigation documentation that was covered by LAP and LP. Interview notes, accountants’ reports and communications with a legally qualified businessperson, all produced by ENRC’s legal advisers, were found not be protected. ENRC were unable to show that it considered “litigation between itself and the SFO a real likelihood rather than a mere possibility” since “prosecution only becomes a real prospect once it is discovered that there is some truth in the accusations.” The judge also held the view that none of the considered documents had been created specifically for the purposes of SFO litigation.

New hurdles now stood in the way both for in-house practitioners and external legal advisers involved in internal investigations into suspected criminal offences. LP and LAP claims would practically, but difficultly, need reasons provided at the earliest stages of investigations as to the likelihood of criminal prosecution, as well as show that the documents were created for use in that prosecution.
Businesses would have needed to approach internal investigations accepting that a significant portion of the findings could be handed over to prosecutors before any legal advice could be received, potentially discouraging SFO co-operation or initial investigation in the first place.

The New Ruling

However, on 5 September 2018 the Court of Appeal has reversed the decision of the High Court. It was held that because “the whole…relationship between ENRC and the SFO was the possibility…of prosecution if the self-reporting process did not result in a civil settlement”, the SFO had made the potential prosecution clear to ENRC and the documents created during investigation were for the dominant purpose of avoiding those proceedings. So, LP was found to apply to all the documents in question, apart from two emails.

This decision has been received as a more realistic approach to the right of companies to conduct internal investigations and seek legal advice before needing to involve a prosecutor. However, despite declaring its desire to do otherwise, the Court of Appeal was unable to overturn the High Court’s ruling that LAP did not apply to communications between a company’s employee and its legal advisers, being bound to the judgement in Three Rivers (No 5). It shall be for the Supreme Court to decide whether to depart from Three Rivers (No 5) and further accommodate the LPP rights of companies in case law.

For more information on this article, please contact Damon Watt, or you can give us a call on 0345 070 6000.