Court Cases, Internal investigations - Written by Barry & Richard on Monday, September 27, 2010 4:44 - 0 Comments
EU AKZO Nobel rejection of in-house privilege, what next?
On The 14th September 2010 the European Court gave judgement in the case of Akzo Chemicals. The case came about due to a European Commission enquiry into allegations of anti-competitive practices, the Office of Fair Trading (OFT) was asked to assist in the UK.
The OFT conducted raids and searches and seized documents.
Amongst the documents seized were communications between the General Manager and a member of the in house legal department (a member of the Dutch Bar) concerning competition issues. The company claimed Legal Professional Privilege in respect of these documents.
The Court, heard extensive argument on the question of the protection of communication from in house counsel within the company. In its judgment the Court took the opportunity to emphatically re-state their earlier judgment in the case of AM & S Europe v Commission  ECR 1575.
Importance of employee relationship
The Court were emphatic that in their view the fact that lawyer was ‘employed’ by the company was the decisive factor in the decision to refuse to give the protection of Legal Professional Privilege to the communications;
“Notwithstanding the professional regime applicable in the present case in accordance with the specific provisions of Dutch law, an in-house lawyer cannot, whatever guarantees he has in the exercise of his profession, be treated in the same way as an external lawyer, because he occupies the position of an employee which, by its very nature,does not allow him to ignore the commercial strategies pursued by his employer, and thereby affects his ability to exercise professional independence.”
Domestic law over-ruled
The European Court decided that where the enquiry was a Commission enquiry concerning the Anti-Trust provisions of the European Treaty then the laws on Legal Professional Privilege of whichever member state the enquiry concerned must give way to the law as stated in Akzo.
The Akzo case is an EU Anti Trust case.
However, if the courts decide to extend the principles laid out in the Akzo Anti-Trust scenario to other areas these statements of the law could have great potential impact upon the freedom of communication.
Communications could be impacted between General Counsel and the Legal Department with managers, directors and the board should issues of bribery or corruption arise under the Bribery Act, Proceeds of Crime legislation or otherwise for discussion and investigation.
What should you do?
Put another way, prudent organisations would be well advised to take steps to protect themselves against the risk that Legal Professional Privilege does not apply in other circumstances.
This decision is clearly unwelcome to responsible companies and in-house lawyers with ‘Akzo’ considerations having to be factored in to all internal communications of a company upon discovery of any potential problem of Anti-Trust bribery or corruption issues.
The position of independent counsel remains unaffected. Privilege remains, attaching to communications concerning legal advice and defence preparation as defined by the laws of the country concerned.
Litigation carve out from money laundering reporting obligations
The position of independent counsel assisting a UK company in relation to a European Commission investigation in the Anti-Trust area where issues of Money Laundering under Part 7 of the Proceeds of Crime Act 2002 are thrown up remains the same as it was before Akzo with protection continuing to apply, as before.
This is good news.
We have occasionally seen the law misrepresented with concerns that organisations should not seek independant legal advice in the context of envisaged criminal litigation proceedings for money laundering offences under the Proceeds of Crime Act for fear that the independant counsel would then have to report the subject matter of the advice to the police under the Proceeds of Crime Act.
This is wrong.
In short, if you seek legal advice in connection with advice related to criminal litigation this is unlikely to place your independant legal adviser under a reporting obligation under the Proceeds of Crime Act.