Landmark ruling for legal privilege

17th September 2018 Business Crime

A recent decision by the Court of Appeal in The Director of the Serious Fraud Office and Eurasian Natural Resources Corporation Ltd [2018] EWCA Civ 2006 (5 September 2018) has reinforced confidence in litigation privilege.

There are two types of legal privilege in the UK;

  • Legal advice privilege which is confidential communication between lawyers and clients when providing advice.
  • Litigation privilege which is confidential communications between client and their lawyers which have come into existence in connection with legal proceedings.

The recent decision related to the latter. The case involved the company, Eurasian Natural Resources Corporation (ENRC), who refused to disclose documents which were created by lawyers as part of an internal inquiry. The disclosure of documents, such as transcripts of interviews with past and present employees of ENRC, were sought by the Serious Fraud Office as it was claimed that such documents would show evidence of alleged financial wrongdoing within the company.

When the case was heard by the High Court last year, Mrs Justice Andrews ruled the documents requested were not protected by privilege and ordered disclosure to the Serious Fraud Office. This decision was overturned on appeal with the Court of Appeal ruling that it was reasonable to take the view that criminal proceedings were contemplated against ENRC at the time the company started the internal investigation in 2011. Litigation privilege therefore applied.

The Court of Appeal further highlighted that the High Court judge had been wrong to find that ENRC had agreed to or intended to disclose details of the internal investigations to SFO as part of a self-reporting process. The Court of Appeal further confirmed that the High Court had been wrong to rule that the main focus of ENRC-s internal investigation was broad issues of compliance. The wider purpose of the investigation was to defend the company in possible criminal proceedings but included within this wider purpose was the companies need to investigate corruption allegations.

Many have called this a landmark ruling as it has reinforced the importance of confidentiality and trust between lawyers and their clients. It also highlights the importance of business owners to be able to conduct internal enquiries without the fear of self-incrimination should court proceedings arise. The Serious Fraud Office have noted that the ruling is of high importance and could have potential implications for them. There is concern that with legal privilege protecting such documents there is a risk that evidence could be contaminated during internal inquiries and in turn contaminate important evidence relating to the Office’s investigations.

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Peter Grogan is a Partner and Head of Department located in Manchester in our Business Crime, Regulation & Driving Offences department

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