Stephen Baker
Managing Partner, Jersey
Stephen Baker is the Managing Partner at Baker & Partners.
Introduction
In recent years, legal professional privilege has been the subject of many high profile appeals. Cases such as Bilta v RBS1 and Three Rivers (No 5)2 demonstrate the extent to which the position on what constitutes privileged material has changed over the years. This has brought a lack of clarity and created concerns for both legal professionals and organisations which may find themselves on the receiving end of discovery and disclosure orders. However, the recent Court of Appeal judgment in ENRC v SFO to some extent restores the common law to a more conventional position, and allows legal advisors to sleep a little better.
What is Legal Professional Privilege?
Before delving into why this case is significant, it is helpful to understand that, in plain terms, legal professional privilege is broken down into two categories:
Legal advice privilege
Communications between a person and their legal adviser for the purpose of seeking legal advice are protected by legal advice privilege. For example, this would include merely seeking advice on how to draft a contract so as to limit liability in the event of a breach. There is no requirement that legal proceedings be contemplated or on foot.
Litigation Privilege
Confidential communications between lawyers, client and third parties are protected by litigation privilege if the dominant purpose of the correspondence or documentation in question is to obtain advice for contemplated litigation, or litigation which is already in progress.
Case Background
The Serious Fraud Office (SFO) began investigating Eurasian Natural Resources Corporation Limited (ENRC) in relation to allegation of fraud, corruption and bribery in 2013. As part of this investigation, the SFO requested that ENRC provide documents originating from ENRC’s legal advisors and forensic accountants dating back to 2011. Many of these documents were notes from meetings and interviews with ENRC employees as part of an internal investigation in relation to corruption.
ENRC resisted, protesting that these documents constituted legal advice, as ENRC were consulting with external lawyers and accountants to find out about their legal position in relation to the corruption allegations. The SFO then applied for a disclosure order against ENRC.
Mrs Justice Andrews, in the High Court, found for the SFO for three main reasons:
- Litigation was not reasonably contemplated by ENRC at the time these documents were created. Rather, they were merely assessing whether there had been any wrongdoing. Therefore, there was no protection under litigation privilege.
- Taking the Three Rivers (No5) approach, whilst ENRC were obtaining legal advice, many of the documents in question, including the interview notes between external advisors and employees, passed between the employees of ENRC and ENRC’s legal advisors, rather than between ‘the client’ (ENRC) and its legal advisors. This means that they do not strictly fall within the strict parameters of legal advice privilege.
- Given the widespread scale of the allegations and the nature of the criminal investigation, it was necessary in the public interest to order ENRC to disclose the said documents.
Naturally, ENRC were not satisfied with this finding, and in October 2017 they were given leave to appeal to the Court of Appeal, which produced the recent judgment.
The Court of Appeal Judgment
The President of the Court of Appeal, Sir Brian Leveson, reversed the High Court ruling, and found in favour of ENRC for the following reasons:
- ENRC had conducted their internal investigation and engaged in a thorough fact finding process with litigation in mind. At paragraph 121 of the judgment, the Court states ”It was part of ENRC’s fact-finding process at a time when criminal prosecution was in reasonable contemplation, and was also undertaken for the dominant purpose of resisting or avoiding that prosecution”. Therefore, interview notes, books and records obtained during this process were protected by litigation privilege.
- Given that this was the case, it was not necessary to deal with the Three Rivers position and make a ruling on legal advice privilege. The Court ruled that this was a matter to be dealt with by the Supreme Court if and when such an appeal was brought before it. However, the Court did say at paragraph 130 of the judgment that “If…it had been open to us to depart from Three Rivers (No. 5), we would have been in favour of doing so…
Looking Forward
This judgment is welcomed by many legal advisors because it appears to bring the current protective scope of legal professional privilege back into alignment with the conventional common law position.
This case reaffirms the wider, more inclusive interpretation of litigation privilege. We can now be confident that legal advice material created ‘for the dominant purpose of obtaining advice for current or anticipated proceedings’ includes that which forms part of the fact-finding process to determine whether there may even be a case on which to mount proceedings.
Further, whilst the comments at paragraph 130 of the judgment may not completely overturn the Three Rivers (No5) ruling, they are certainly indicative of the Court’s willingness to do so. However, this reversal will not happen until the Supreme Court has the opportunity to do so.
Where internal investigations are taking place in contemplation of resisting anticipated contentious legal proceedings, legal advice should be sought so that mistakes are not made with regard to failing to attract, or inadvertently waiving, legal privilege in documents and correspondence.
1 PLC [2017] EWHC 3535 (Ch)
2 [2004] UKHL 48