In the context of international cartel investigations by competition law authorities, a recent decision of the European Court of First Instance highlights the differences in the treatment of legal privileges in other jurisdictions.
In Akzo Nobel Chemical Ltd.& al. v. Commission of the European Communities, the court had to determine whether certain documents seized by the Commission in the context of a competition law investigation were covered by the "legal professional privilege," also referred to as solicitor–client privilege. These documents consisted of the following:
- a memorandum from a general manager to one of his superiors, containing information gathered from employees for the purpose of obtaining outside legal advice in connection with the company’s competition law compliance program; the memo bore handwritten notes referring to contacts with outside counsel, including his name;
- the general manager’s handwritten notes from discussions with employees, which were used to prepare the above memorandum; and two e-mails exchanged between the general manager and a lawyer from the company’s legal department.
- The court pointed out that European law recognizes the right of every person to consult, without constraint, a lawyer whose profession entails giving independent legal advice. The court also acknowledged that the protection of the confidentiality of written communications between lawyer and client is an essential corollary to that right. This means not only that the Commission cannot use privileged documents as evidence in a decision imposing a penalty, but that the Commission must refrain from reading the contents of documents over which privilege is claimed until a final decision is made. However, because privilege is an exception to the Commission’s powers of investigation, it must be construed restrictively. Thus, the person claiming privilege bears the burden of proving that the protection actually applies.
The court accepted that preparatory documents, such as working documents or summaries which present the information necessary for the lawyer to understand the context, nature and scope of the facts for which legal assistance is sought, could be privileged even if they were not exchanged with a lawyer or not created for the purpose of being sent physically to a lawyer. However, privilege over preparatory documents will be recognized only if such documents were drawn up exclusively for the purpose of seeking legal advice. The mere fact that a document has been discussed with a lawyer is not sufficient. The court held that the general manager’s memorandum and handwritten notes, which were not addressed to a lawyer and which made no mention of seeking legal advice, did not meet that test and were not privileged.
As for the e-mails exchanged between the general manager and in-house counsel, the court reaffirmed its controversial jurisprudence denying privilege to communications with in-house lawyers. The court held that to attract privilege, legal advice must be provided "in full independence," which means by a lawyer who is a third party, structurally, hierarchically and functionally, in relation to the corporation receiving the advice. A lawyer bound to his or her client by a relationship of employment does not meet this requirement. As a result, only communications with outside lawyers for the purpose of seeking legal advice are protected by privilege.
McCarthy Tétrault Notes:
In the context of increasing globalization, it is useful to know the extent to which communications with lawyers will be protected in various jurisdictions. Despite heavy criticism, European authorities continue to deny protection to communication with in-house lawyers, and this should be kept in mind in all internal communications. As for documents that may be used in seeking legal advice, the European approach is more restrictive than Canadian law in requiring that such documents be prepared for the exclusive purpose of seeking legal advice. However, since in both cases the burden of establishing privilege falls on the corporation, the Akzo Nobel decision reinforces the importance of clearly identifying as privileged all documents which are prepared for the purposes of seeking legal advice.