A September 14 decision from the European Court of Justice (ECJ) has confirmed the rule that privilege cannot be claimed over communications between company employees and in-house lawyers.

Akzo and Akcros were ordered, as part of a competition law investigation, to allow European Commission officials access to various documents. The companies argued that some of those documents were privileged because they were communications between solicitor and client. In particular, privilege was asserted over emails passing between company officials and Akzo’s coordinator for competition law, who was a registered Advocaat of the Netherlands Bar and a member of Akzo’s legal department.

The ECJ’s decision broadly follows an earlier ECJ decision from 1982 (AM & S Europe v Commission1) that in-house lawyers cannot claim legal professional privilege. Legal associations (including the American Corporate Counsel Association and the International Bar Association) had intervened in the case, arguing that the ECJ should overturn the previous decision. The argument was based on the evolution of the role of in-house lawyer in the decades since AM & S Europe, with a trend towards Member States providing greater protection for communications from in-house lawyers. The ECJ rejected this argument, finding there was no identifiable overall trend towards such protection within the EU.

The ECJ found that the Akzo coordinator for competition law was bound to his client by an employment relationship and was therefore not capable of exercising strict legal independence from his client’s commercial interests. Legal professional privilege therefore did not apply. Specifically, at paragraph 44:

It follows that the requirement of independence means the absence of any employment relationship between the lawyer and his client, so that legal professional privilege does not cover exchanges within a company or group with in-house lawyers.

Similar arguments based on equal treatment between in-house and external lawyers were rejected by the ECJ on the same basis. Again, this follows the decision in AM & S Europe.

Companies operating in the EU taking in-house legal advice must continue to exercise caution over communications with in-house lawyers, because a claim for privilege cannot be successfully asserted. Indeed, the decision may well encourage regulators to seek production of these types of communications from in-house legal departments. Further issues may also arise involving advices or communications prepared jointly between in-house lawyers and external legal advisors. Because the ECJ is the highest-level appellate court in this sphere, the unambiguous decision in Akzo is now unlikely to be revisited for some time.