Last month, the Court of Appeal of England and Wales granted permission for Eurasian Natural Resources Corp. Ltd. (“ENRC”) to appeal the May 2017 decision by the High Court[1] relating to a dispute over the legal professional privilege with the Serious Fraud Office (“SFO”).[2] The Court of Appeal will likely hear the case next year.
The outcome of the appeal could have significant ramifications for lawyers and consultants conducting internal investigations in England and Wales for their clients under the “legal professional privilege” protection. The law of England and Wales recognizes two main types of legal professional privilege in the common law: (i) legal advice privilege over confidential communications between lawyers and their clients made for the purpose of seeking or giving legal advice; and (ii) litigation privilege over confidential communications between lawyers and their clients, or the lawyer or client and a third party, which come into existence for the dominant purpose of being used in connection with actual or pending litigation.
According to the High Court’s decision, the case arises from the ongoing criminal investigation by the SFO into ENRC concerning allegations of fraud, bribery and corruption in Kazakhstan and Africa. The decision notes that the SFO investigation began in April 2013, although SFO and ENRC had already begun communicating in August 2011, leading to, according to SFO, a discussion of self-reporting process by no later than November 2011. A corporate self-reporting of possible offense may be a relevant consideration as a public interest factor against prosecution for the SFO in determining whether or not to prosecute. The SFO will consider whether the self-report is part of a genuinely proactive approach adopted by the corporate management team when the offense is brought to their notice, involving self-reporting and remedial actions, including compensation of victims. The timing of a self-report is also important.
As part of its investigation, the SFO sought to compel ENRC to produce documents. ENRC resisted the production, claiming legal professional privilege grounds. However, the High Court primarily denied ENRC’s arguments for either litigation privilege or legal advice privilege, or both, on the four categories of documents: Category 1 – notes taken by Dechert of the evidence given to the firm by individuals during the internal investigation for ENRC; Category 2 – materials generated by forensic accountants as part of “books and records” review portion of the internal investigation for ENRC; Category 3 – documents of or containing factual evidence presented by Dechert to ENRC’s board of directors; and Category 4 – forensic accountants’ reports and email communications between two ENRC personnel.
Although ENRC claimed litigation privilege over Category 1 and Category 3 documents, the High Court denied litigation privilege for both Categories, finding that ENRC failed to establish that it was aware of circumstances which rendered litigation with SFO a real likelihood rather than a mere possibility. The High Court also held that Category 1 documents (the evidence gathered by Dechert) were intended to be used by ENRC to compile the self-reporting presentation to SFO. Also, none of the Dechert interviewees were authorized to seek and receive legal advice on behalf of ENRC, and therefore the legal advice privilege was denied over Category 1 documents. On the other hand, the High Court found the legal advice privilege narrowly applied over Category 3 documents, specifically the presentation slides prepared by Dechert created for the specific purpose of giving legal advice to the ENRC’s board of directors.
Additionally, ENRC claimed litigation privilege over the forensic accountants’ documents in Category 2 and Category 4. However, the High Court denied litigation privilege over these documents, finding that the dominant purpose of the documents was “plainly to meet compliance requirements or to obtain accountancy advice . . . .”
ENRC also unsuccessfully claimed legal advice privilege over the emails in Category 4. The High Court found that while one of the two ENRC personnel involved in the subject email communications had been ENRC’s general counsel in the past, his role had changed to that of a business person at the time of the emails. Therefore, the High Court denied the legal advice privilege over these emails, holding that “his professional duty was not to act as a legal adviser to ENRC” even if he may have felt that he was acting as a lawyer. In order for the legal advice privilege to attach, the emails should have been sent to ENRC’s then current general counsel.
The High Court’s opinion has alarmed corporations and legal professionals in England, as commentators have claimed that the protection of legal professional privilege surrounding internal investigations and self-reporting processes has been reduced by this decision. The Court of Appeal’s permission to ENRC to appeal the decision holds the possibility that the protection of legal professional privilege will be clarified. We will continue to follow the case and report on the appeal.
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[1] The High Court of Justice is part of the Courts of England and Wales and functions both as a civil court of first instance and a criminal and civil appellate court for cases from the subordinate courts. Appeals from the Crown Court will go to the High Court. Appeals from the High Court will go to the Court of Appeal and occasionally to the Supreme Court directly.
[2] The Serious Fraud Office was created under the Criminal Justice Act 1987 as part of the United Kingdom’s criminal justice system covering England, Wales and Northern Ireland. The SFO was established in 1988 and has the power to both investigate and prosecute cases and is a specialist prosecuting authority tacking the top level of serious or complex fraud, bribery and corruption.
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