In a much-anticipated judgment, the Court of Appeal in The Director of the Serious Fraud Office (‘SFO’) v Eurasian Natural Resources Corporation Ltd (‘ENRC’)  EWCA Civ 2006 has helpfully clarified the scope of litigation privilege and (reluctantly) also upheld the current definition of ‘client’ for the purposes of legal advice privilege.
The Court of Appeal’s judgment raises some important issues that individuals and companies, faced with the prospect of criminal or regulatory investigations/proceedings, should bear in mind before commencing internal investigations in order to ensure that litigation privilege can legitimately be claimed over any documentation or material that is created.
Litigation privilege – Internal Investigations
Litigation privilege applies to confidential communications and material which: (i) pass between a client and the client’s lawyer or between either of them and a third party; and (ii) are made for the dominant purpose of litigation where that litigation is pending, reasonably contemplated or existing at the time the material is created.
The Court of Appeal found that the High Court’s approach at first instance – in which it found that documentation created whilst ENRC were in the process of investigating corruption allegations but before a criminal investigation had been commenced by the SFO was not covered by litigation privilege merely because an investigation was contemplated – was an overly restrictive interpretation of the scope of litigation privilege.
Implications of Court of Appeal Judgment
#1 Are criminal or regulatory proceedings/investigations reasonably contemplated? – if criminal or regulatory investigations/proceedings cannot reasonably be contemplated by a company or individual at the point at which documentation or material is created, that documentation or material could fall outside of the scope of litigation privilege and subsequently be disclosable to the prosecuting and/or regulatory body.
Careful consideration should therefore be given as to the basis upon which such an investigation or proceedings are contemplated, including what evidence there is that they could be on the horizon.
#2 Documenting internal decision-making – being able to produce contemporaneous evidence which shows that, at both the inception of and throughout an internal investigation, criminal or regulatory investigations/proceedings were in contemplation when the documentation or material was created, will mean that a party is far better equipped to show that the dominant purpose of that documentation or material was for contemplated criminal or regulatory investigations/proceedings.
#3 Consider whether legal advice privilege is available – if there are concerns that litigation privilege cannot legitimately be claimed, consideration should be given as to whether legal advice privilege can be claimed in respect of any of the documentation or material in question.
#4 Definition of client for legal advice privilege – despite agreeing that the current prevailing definition of ‘client’ for the purposes of legal advice privilege in English common law is overly restrictive (it being limited to those individuals/employees specifically tasked with seeking and receiving legal advice on behalf of a company), thereby putting large corporations at a distinct disadvantage, the Court of Appeal regarded itself as being bound by previous authorities on this issue. As a result, the current definition of ‘client’ for the purposes of claiming legal advice privilege remains a narrow one.
#5 Structure of internal investigation – in light of the Court of Appeal’s findings on the respective scope of litigation and legal advice privilege, it is crucial to carefully consider how best to structure an internal investigation before it is commenced, in order to maximise claims of privilege.
If you would like any more information on any of the points raised above or any advice in connection with data protection matters, please contact Phil Bonner (Associate) or call 0161 672 5450.
Please note the information contained in this briefing is intended as a general review of the subject featured and is not intended as specific legal advice.