13/12/2018
This article was authored by Olivia Allbright, Litigation Assistant, London.
In the judgment of The Director of the Serious Fraud Office v Eurasian Natural Resources Corporation Limited [05.09.2018], the Court of Appeal overturned the High Court’s controversial ruling which had seriously narrowed the scope of legal professional privilege and created concerns for those conducting internal investigations.
The principle of legal professional privilege allows a client to refuse to disclose certain legal communications to regulatory bodies such as the police, the Health and Safety Executive and Environmental Health Officers during a criminal investigation.
It encompasses:
The case involved allegations of financial criminality in relation to subsidiary companies of Eurasian Natural Resources Corporation Limited (ENRC). Alerted to the allegations by a whistle blower in December 2010, ENRC instructed solicitors and forensic accountants to conduct an internal investigation.
In 2013, the Serious Fraud Office (SFO) opened a criminal investigation, requesting disclosure of the communications and documentation produced by ENRC in their investigation. This included notes taken by external lawyers in interviews with employees, books and records generated by the forensic accountants, and presentations given by external lawyers to the ENRC board of directors. Whether these documents were subject to litigation and legal advice privilege, was disputed.
In May 2017 the High Court held that the documentation was not subject to litigation privilege, on the basis that an investigation by the SFO does not amount to adversarial litigation. Rather, it was the first stage in deciding what further steps would be taken and therefore litigation was not in contemplation when the documents were created. There were also issues with the interpretation of those included within the term “client” with the High Court limiting it only to employees who are authorised to seek and receive legal advice on behalf of their company, reasserting existing case law.
The decision meant that caution would have to be exercised in conducting internal investigations with legal support, with the documentation produced capable of being seized and used as evidence in a subsequent prosecution.
On appeal by ENRC, the Court of Appeal overturned the decision.
On litigation privilege, it held that criminal proceedings were reasonably contemplated by ENRC from when they began their investigation after receiving information from the whistle blower.
Moreover, it considered it was in the public interest that companies should be able to investigate allegations without losing the benefit of legal professional privilege. To hold otherwise might act as a deterrent to conducting internal investigations.
This case marks a step in the right direction, enabling organisations to seek legal advice during the early stages of a regulatory investigation with the benefit of knowing that, with the right legal advice and safeguards, communications created should be protected from disclosure.
The Court of Appeal emphasised that this case was fact-specific, so it remains to be seen what approach will be taken in future cases. Because of this, it is important that when a serious incident occurs, early legal advice is taken on how best to ensure that privilege applies to the investigations into the incident and that communications remain confidential so that privilege is not lost.
This article was authored by Olivia Allbright, Litigation Assistant, London.
Read other items in Health, Safety and Environment Brief - December 2018
Related item: Legal professional privilege revisited – but not for the last time
