The Court of Appeal has backed legal professional privilege in a landmark ruling on the status of documents generated during an internal investigation.
In Serious Fraud Office v Eurasian Natural Resources Corporation [2018] EWCA Civ 2006, the Serious Fraud Office sought access to notes of interviews with current and former employees and other documents created by solicitors and forensic accountants during an internal investigation.
The High Court had held that the documents were not privileged because they were not prepared when litigation was reasonably in prospect, and the dominant purpose of the documents had been to avoid rather than prepare for litigation.
However, this judgment has now been overturned by the Court of Appeal, which held this week that the documents were privileged. It found that criminal proceedings against mining group ENRC were reasonably in contemplation when the company initiated its investigation. Additionally, it held that the purpose of avoiding litigation was a purpose that was protected by privilege.
Michael Roberts, partner at Hogan Lovells, which represented ENRC, said: ‘This historic ruling by the Court of Appeal is significant not just for ENRC but for any company faced with undertaking an internal investigation in response to a whistleblower or other allegation of wrongdoing.
‘It is critical that companies are not penalised for acting responsibly, and are able to instruct lawyers to conduct investigations without fear that the authorities will later be able to demand all of the lawyers' work product. Following this ruling, it will remain for the company to decide whether, and to what extent, it is prepared to waive privilege.’
Christina Blacklaws, president of the Law Society, which intervened in the case, said: ‘If the High Court ruling had been upheld, any organisation facing a prosecution—not just multinationals, but charities, newspapers, small businesses or local authorities—could have to turn over private communications with their lawyers.
‘The rule of law depends on all parties being able to seek confidential legal advice without fear of disclosure. That privilege belongs to the client, not the lawyer.’
Lawyers across the profession welcomed the result.
Julian Acratopulo, president of the London Solicitors Litigation Association (LSLA) and Clifford Chance partner, said: ‘Lawyers and clients investigating the most serious criminal issues will sleep a little easier in their beds, following ENRC's win in the Court of Appeal.
‘However, they may well still have nightmares about what constitutes a client for the purposes of legal advice privilege. The Court of Appeal made clear that, although in principle large corporations should be treated no differently, clarification of this issue was a matter for the Supreme Court.’
James Jevon, senior associate at DWF and a member of the Forum of Insurance Lawyers (FOIL)'s regulatory focus group, said the judgment would ‘provide renewed hope to clients and legal professionals alike,' adding: 'The judgment provides clarity to clients as to when investigations can be conducted without fear that regulators can later request materials produced by those investigations. We welcome these steps to restore this long recognised fundamental right.'
ENRC is now seeking recovery of fees from the SFO, likely to amount to £millions.
