On 14 September 2010, the Court of Justice of the European Union issued its eagerly awaited judgment on the scope of legal professional privilege ("LPP") under EU law. In short, the Court has confirmed that, in the context of a European Commission competition investigation, EU law only recognises LPP for legal advice given by external (EU qualified) lawyers and not for legal advice given by in-house lawyers. 1

Background

Akzo Nobel was subject to a European Commission competition law dawn raid during which an argument arose as to whether two emails involving an in-house lawyer were covered by LPP. Case law on this topic is sparse at European level but in a previous (rather old) case (AM&S), the Court held that LPP protection does not apply to legal advice given by the investigated company's in-house lawyers. Accordingly, in Akzo, the European Commission rejected the LPP claim.

The Court's judgment

Before the Court, the parties argued that the decision in AM&S was outdated. The key argument was that any lawyer who is a member of a regulated profession should be regarded as independent and LPP should accordingly attach to their advice irrespective of whether or not they are employed by the company.

However, in its judgement the Court considered that an in-house lawyer does not enjoy the same degree of independence from their employer as a lawyer working in an external law firm does in relation to their client. Consequently, in the Court's view, an in-house lawyer is less able to deal effectively with any conflicts between his professional obligations and the aims of their client. In relation to the potential impact that lack of LLP would have on the usefulness of an in-house lawyer's advice, the Court simply noted that any individual who accepts advice from a lawyer must accept the restrictions and conditions applicable to the exercise of the profession.

What does this mean going forward?

The Court's judgment means that the law as stated in AM&S, which rejects LPP protection for in-house lawyers, continues to apply. Broadly, therefore, EU LLP will only apply to communications with an external (EU qualified) lawyer (or a record reporting such communications) that relates to the company's "rights of defence". This means that companies may well feel required to channel competition law queries through external lawyers in order to benefit from LPP. Future disputes are also likely to arise as to when legal advice (even where from an external lawyer) relates to a company's rights of defence. This issue was not examined by the Court in this case but remains an area where the Commission has traditionally taken a very narrow approach. Finally, it is to be remembered that in relation to investigations by the OFT under UK competition law, LPP is recognised as applying to both external and in-house legal advice.