Akzo Nobel Chemicals Ltd and Akcros Chemicals Ltd v Commission (C-550/07 P)

The Court of Justice of the European Union ("CJEU") has today given its ruling in a landmark case on legal professional privilege under EU law, which has far-reaching implications for in-house lawyers across the European Union and more generally for the European Commission's (the "Commission") investigative powers.

The case concerns a long-running dispute involving Akzo Nobel about whether communications with in-house lawyers should be protected by legal professional privilege under EU law and, as such, can be withheld from disclosure in a competition investigation.

The CJEU has held that internal communications with in-house lawyers do not enjoy the protection of legal professional privilege under EU law, confirming the judgment of the then Court of Justice of the European Communities (now the CJEU) in the leading case AM&S Europe Ltd. v. Commission (C-155/79) ("AM&S"), and that of the then Court of First Instance (now the General Court of the European Union, "GC") in Akzo Nobel Chemicals Ltd and Akcros Chemicals Ltd v Commission (Joined Cases T-125/03, T-253/03). The CJEU considered that an in-house lawyer, despite his enrolment with a Bar or Law Society and the fact that he is subject to professional ethical obligations, does not enjoy the same degree of independence from his employer as an external lawyer. As a result of the in-house lawyer's economic dependence and the close ties with his employer, the CJEU held that, unlike communications with external lawyers, communications with in-house lawyers (who are EEA-qualified lawyers) are not privileged, and can therefore be examined and used by the Commission in an investigation.

Today's judgment firmly closes the door on the possibility for in-house lawyers to benefit from legal professional privilege in European Commission competition investigations for the foreseeable future.



Legal professional privilege is the rule under which communications between lawyers and their clients are treated as confidential and may not be examined or used by third parties, such as competition authorities, without the client's consent.

The European Union and the individual EU Member States have a variety of different privilege regimes. Some Member State regimes recognise privilege for in-house lawyers, others do not.

Under EU law, legal professional privilege for outside counsel was recognised by the Court of Justice in 1982 in AM&S. However, privilege for in-house counsel was not recognised in this judgment, since the Court held that to be privileged, advice must be sought from "an independent lawyer, that is to say one who is not bound to his client by a relationship of employment". Debate has raged for nearly 30 years about whether work product of in-house lawyers who are subject to professional ethical obligations should benefit from the protection of legal professional privilege, with many in-house lawyers, as well as Bar associations, lobbying hard for the AM&S judgment to be overturned.



In February 2003, seeking evidence of possible anti-competitive practice, the Commission conducted a dawn raid at the office of Dutch-based pharmaceuticals manufacturer Akzo Nobel. A dispute arose concerning the Commission's right to review and seize a number of documents, including email exchanges involving Akzo's in-house lawyer, who was a member of the Dutch bar.

Akzo appealed the seizure of the documents to the GC. The GC ruled that legal professional privilege does not cover in-house counsel communications, even where in-house counsel is a member of a Member State bar association (in this case, the Dutch Orde van Advocaten).

On 29 April 2010, Advocate General Kokott gave an opinion recommending that the CJEU dismiss the appeal in its entirety.



The CJEU followed its judgment in the leading case of AM&S v Commission (Case 155/79), and held that the protection of legal professional privilege is subject to two conditions.

The first is that the exchange with the lawyer must be connected to "the client's rights of defence". The second is that the exchange must emanate from "independent lawyers", that is "lawyers who are not bound to the client by a relationship of employment". With respect to the second requirement the Court noted:

(i) the requirement of independence means the absence of any employment relationship between the lawyer and his client. The concept of the independence of lawyers is determined not only positively, that is by reference to professional ethical obligations, but also negatively, by the absence of an employment relationship. The CJEU added that "an in-house lawyer is less able to deal effectively with any conflicts between his professional obligations and the aims of his client."

(ii) an in-house lawyer "occupies the position of an employee which, by its very nature, does not allow him to ignore the commercial strategies pursued by his employer, and thereby affects his ability to exercise professional independence". An in-house lawyer may be required to carry out other tasks, such as that of "competition law coordinator" which "cannot but reinforce the close ties between the lawyer and the employer";

(iii) enrolment with a Bar or Law Society and the fact of being subject to professional ethical obligations do not mean that an in-house lawyer can enjoy the same degree of independence from his employer as a lawyer in an external law firm does in relation to his client.

The CJEU rejected arguments that the AM&S judgment should be reinterpreted in the light of recent developments in the legal landscape since 1982, on the grounds that these had not been significant enough to justify a change in the case law. The CJEU noted:

(i) a large number of EU Member States still exclude correspondence with in-house lawyers from protection under legal professional privilege. In addition in a considerable number of EU Member States in-house lawyers are not allowed to be admitted to a Bar or Law Society, and they are accordingly not recognised "as having the same status as lawyers established in private practice";

(ii) Regulation 1/2003 (i.e. the main procedural regulation governing EU competition investigations) "does not aim to require in-house and external lawyers to be treated in the same way as far as concerns legal professional privilege, but aims to reinforce the extent of the Commission's powers of inspection". Although it is silent on the issue, the CJEU appears not to have been swayed by the arguments that the introduction of self-assessment by Regulation 1/2003 justifies a change in the case law.

The CJEU rejected arguments that the GC's interpretation lowers the level of protection of the rights of defence. Any individual who seeks advice from a lawyer must accept the restrictions and conditions applicable to the exercise of that profession. The Court noted that "in-house lawyers are not always able to represent their employer before all the national courts, although such rules restrict the possibilities open to potential clients in their choice of the most appropriate legal counsel".



This judgment is a considerable blow to those who have lobbied hard for in-house-lawyer work product to be protected by legal professional privilege under EU law. However, the judgment is hardly surprising in light of the Advocate General's opinion which preceded it. By refusing privilege to in-house counsel, even where they are subject to professional rules and obligations and members of a bar, the Court has not taken the opportunity to improve the efficiency and effectiveness of the competition law compliance process for companies. However, the judgment is consistent with the strong position of the CJEU on the consequences of an employment relationship for the treatment of privilege.

The judgment leaves in-house lawyers with the continuing difficulty of needing to be able to provide clear guidance on EU competition law compliance issues whilst being reluctant to produce advice knowing that it will not be covered by privilege and so may have to be disclosed to the European Commission in a future investigation. In contrast in-house lawyers' advice is protected by legal privilege in national competition investigations in some Member States such as in the UK and the Netherlands. It seems that alternative remedies for companies may be to expand outsourcing advice.

It is worth noting that the judgment does not deal with the issue of whether communications from non-EU qualified counsel should be privileged, as the Court was not required to deal with this issue. Existing case law (which has not been disputed by the Akzo judgment) rules that the protection of legal privilege only applies to communications with a lawyer who is EEA-qualified.

Companies should be alert to this final ruling on the EU's restricted approach to privilege, and ensure that it has appropriate procedures in place to maximise its protection of legal advice. The European Commission is likely to feel now further emboldened to raid in-house legal departments.