While the attorney-client privilege is a legal concept of long-standing in the Anglo-American, common law tradition, some countries or jurisdictions, including Taiwan, do not recognize the attorney-client privilege as defined and developed by U.S. courts. Taiwan-based companies and their legal counsel (whether in-house or outside counsel), however, should be mindful of the applicability, scope and implications of the attorney-client privilege, particularly where the Taiwanese company is involved in U.S.-Taiwan cross-border disputes. In many instances, failure to pay sufficient attention to issues relating to privilege may result in the forced disclosure of sensitive and potentially damaging documents or communications, resulting in serious consequences for the Taiwanese litigant. This article will discuss briefly some of the issues relating to the attorney-client privilege that may arise when a Taiwan-based company (and indeed, non-U.S. companies in similar contexts) engages in U.S.-Taiwan cross-border disputes.
The Substance and Scope of the Attorney-Client Privilege
Simply stated, the attorney-client privilege protects from disclosure confidential communications between a client and his attorney. The purpose of the privilege is to encourage full and frank discussions between the client and the attorney, in recognition of the view that sound legal advice depends in part on the attorney being fully informed by the client. On the other hand, the privilege may serve to hinder the truth-seeking function of the justice system, and is generally strictly construed and limited in its application.
The privilege only applies to communications where legal advice is sought or rendered. Thus, for example, where an in-house attorney also performs business functions or duties at the corporation and the communication between the in-house attorney and the corporation contains business information or advice, such communication may not be protected by the attorney-client privilege. Sometimes, it may be difficult to discern the dividing line between “legal” information and “business” information. It is imperative that corporate employees and in-house counsel keep this in mind when communicating with each other and, when in doubt, keep the information that is intended to be confidential or is otherwise particularly sensitive in a separate email or communication. Preferably, such communications should be specifically labeled, such as with the words “confidential” and “privileged”, so as to leave no doubt that the parties intend the communication to be protected by the attorney-client privilege.
In addition, where the communication (such as an email) is addressed to or copied to multiple employees of a corporation, not only would the content of the communication be more likely to contain non-legal information, such a communication might not be sufficiently confidential to be protected by the attorney-client privilege. In the corporate context, not every employee’s communications with the company’s lawyers will be protected by the attorney-client privilege. The question arises as to which corporate employee’s communications should be deemed protected by the attorney-client privilege. A majority of U.S. courts and states have adopted a so-called “subject matter test” enunciated by the U.S. Supreme Court in Upjohn Co. v. U.S., 449 U.S. 383 (1981). Under that test, an employee’s communications with counsel are deemed privileged if (i) the employee made the communication with the lawyer for purposes of seeking or receiving legal advice; (ii) the communication was made at the direction or request of the employee’s supervisor; (iii) the subject matter of the communication falls within the scope of the employee’s duties; and (iv) the communication was limited to persons with a need to know.
The Attorney-Client Privilege Considered From a Taiwanese Litigant’s Perspective
A corporation in Taiwan, when communicating with its legal advisors (whether in-house or outside counsel), not only should keep in mind the “subject matter test” in determining which of its employees should be allowed to make or be included in such communications, it should also be aware that communications between its in-house legal department and its other employees may not necessarily be protected by the attorney-client privilege, where such in-house legal department employees are not admitted or qualified to practice law. With respect to the issue of the required qualifications of a foreign (non-U.S.) corporation’s in-house legal department employees, while U.S. courts have not been uniform on this subject, it would appear that many courts have required that, in order for the attorney-client privilege to apply, the legal department employee rendering the legal advice must be an attorney admitted to practice law. That communications between non-lawyer, in-house legal department employees and other corporate employees may not be protected by the attorney-client privilege is particularly problematic where the corporation is engaged in cross-border disputes governed by U.S. law and discovery rules. In such situations, the broad scope of U.S.-style discovery, coupled with the inapplicability of the attorney-client privilege, will in many cases force the Taiwanese litigant to disclose sensitive and potentially damaging information in the litigation, resulting in serious consequences for the Taiwanese litigant.
A Taiwanese corporation’s application or consideration of the attorney-client privilege is further complicated by the fact that under Taiwan law, the attorney-client privilege, at least as defined by U.S. courts, does not exist. In situations involving cross-border transactions or disputes, potentially perplexing issues may arise from the interplay between Taiwan law and U.S. law concerning the disclosure of potentially privileged information. For example, in a U.S. litigation involving Taiwanese litigants, there may be uncertainty as to whether U.S. law or Taiwan law should govern with respect to the disclosure of a particular communication that took place in Taiwan. Where the U.S. court finds that U.S. law should govern the disclosure of the communication, the attorney-client privilege may be held to apply, protecting the communication from being disclosed in the litigation. Conversely, where the U.S. court finds that U.S. law does not apply, the court may require the communication’s disclosure to the extent that, under Taiwan law, such communication is not protected from disclosure. If a communication specifically relates to U.S. legal proceedings or otherwise concerns advice on U.S. law, it seems relatively clear that a U.S. court would likely find that the communication’s disclosure should be governed by applicable U.S. privilege law. But the communication may not be protected from disclosure by U.S. privilege law if it does not specifically relate to U.S. legal proceedings or U.S. law. In many instances this may be the case, as (for example) where the communication took place long before the commencement of the U.S. lawsuit, or where the communication specifically concerns Taiwan law or Taiwan legal proceedings.
Furthermore, a Taiwanese litigant should be aware of potentially waiving the attorney-client privilege, particularly when it is engaged in litigation (or other proceedings) in multiple jurisdictions, such as Taiwan and the U.S. Disclosure of attorney-client communications in, say, a Taiwanese legal proceeding (because such communications are not deemed “privileged” or are otherwise required to be disclosed under Taiwan law) may result in a waiver of the attorney-client privilege in a U.S. proceeding. While in such situations there may be arguments that could be made against a finding of waiver in the U.S. proceeding, such as when the disclosure in Taiwan was “compelled”, Taiwanese litigants engaged in multi-jurisdictional or cross-border disputes nevertheless should be mindful of the potential consequences of disclosing sensitive and privileged information in Taiwanese (or other non-U.S.) legal proceedings.
Inadvertent disclosure of privileged information or waiver of the attorney-client privilege may result in the disclosure of damaging information, and may significantly affect the outcome of litigation. Taiwanese companies engaged in cross-border disputes should be aware of the scope and the applicability of the attorney-client privilege and, when necessary, should seek the advice of competent counsel.