Is Legal Professional Privilege really under scrutiny?
27 October 2017
Litigation privilege protects communications between clients or their lawyers and third parties for the purpose of obtaining advice in relation with existing or contemplated litigation. At the time of the communications litigation must be in progress or reasonably in contemplation; the communications must have been made for the sole or dominant purpose of conducting the anticipated litigation; and the litigation is adversarial not investigative.
The Court of Appeal is to rule on a landmark decision on the scope of legal privilege which could have profound implications for corporate internal investigations.
Eurasian Natural Resources Corporation (“ENRC”) has been granted permission to appeal against a landmark order requiring it to hand over a tranche of internal documents which the Serious Fraud Office (“SFO”) successfully claimed were not covered by legal professional privilege (“LPP”). The Court of Appeal will hear the case in 2018 and the outcome will be one of significant interest to the area of legal privilege and in particular on the practice of corporate internal investigations.
High Court Ruling
In the first Judgment handed down on 10 May 2017, Mrs Justice Andrews favoured the SFO in its attempt to obtain documents held by ENRC relevant to its alleged fraud, bribery and corruption. In December 2010, ENRC received a whistleblower complaint alleging bribery and financial wrongdoing in relation to one of its subsidiary companies. This led ENRC to instruct lawyers to conduct an internal fact-finding investigation into the allegations. In 2011, the SFO became involved. ENRC claimed professional privilege and refused to disclose relevant documents to the SFO. Andrews J held that privilege did not apply to any of the documents adding that LPP only protects documents prepared with the sole or dominant purpose of conducting litigation. Andrews J concluded that the commencement of a criminal investigation would not usually be sufficient of itself to conclude that prosecution is reasonably in contemplation. This breakthrough order means that internal documents relating to criminal investigations could now be seized by the SFO and other regulatory and investigatory bodies to assist prosecutions. This is worrying for corporate entities trying to abide by the rules of self-reporting to authorities and conducting internal investigations. Corporate bodies should think carefully about their strategy when conducting any internal investigations.
Note, however, the judge’s remarks on the difference between criminal proceedings and civil proceedings suggests that this decision does not change the present understanding of when litigation can be said to be in contemplation in ordinary civil litigation.