In-house counsel in the EU will continue to be denied the protection of legal professional privilege after the Court of Justice of the European Union ('ECJ') unambiguously reaffirmed the limited scope of the doctrine under EU law. The appeal arose from an action for the annulment of a European Commission decision to seize documents during a "dawn raid" on the offices of a subsidiary of Akzo Nobel under competition enforcement powers. Akzo Nobel disputed the finding of the Commission (upheld on appeal to the EU's General Court) that the seized documents were not protected by legal privilege since they were prepared by in-house lawyers.

On 14 September 2010, in Case C-550/07 P, Akzo Nobel Chemicals Ltd and Akcros Chemicals Ltd v. European Commission, the ECJ reaffirmed the criteria for legal privilege laid down in 1982 in Case 155/79, AM&S Europe Ltd. v. Commission. As such, the European Courts have accepted the existence of privilege only with respect to documents which, firstly, have been prepared for the purposes and in the interests of a client's rights of defence and, secondly, which have been prepared by an independent lawyer who is a member of an EU Bar Association.

The appeal in Akzo Nobel turned on whether in-house counsel can be deemed to be independent, though they are bound to their clients by a contract of employment.

In rejecting the appeal, the ECJ held that in-house lawyers' economic dependence and their close ties with their employers mean that they cannot attain a level of independence comparable with that of an external lawyer, even though they may be regulated members of a Bar Association of a European Union Member State. The Court rejected the claim that the changed "landscape" of EU competition law, in particular with the passage of Regulation 1/2003 and the accession of new Member States, warranted a departure from the strict position laid down in the AM&S jurisprudence.

The ECJ judgment adheres closely to Advocate General Kokott's Opinion of 3 May 2010 in its emphatic rejection of privilege protection for advice from in-house counsel. It, nonetheless, importantly differs in its silence on the status of non-EU qualified lawyers. Advocate General Kokott had expressed her view that the extension of privilege to lawyers who are members of a Bar or Law Society in a third country "would not under any circumstances be justified". Despite this, and despite the intervention of several European and international Bar Associations, the ECJ declined to rule explicitly on the question. This leaves the pre-existing position unchanged, meaning that advice from lawyers qualified outside of the European Union cannot be assumed to benefit from legal professional privilege.

Webinar

A webinar discussing the impact of the ECJ's judgment in Akzo Nobel Chemicals Ltd and Akcros Chemicals Ltd v. Commission, as well as developments in legal privilege in the UK and the US, will be held on Thursday, 23 September 2010.