Today the Court of Appeal handed down its eagerly anticipated judgment in the appeal of Andrews J's controversial High Court decision in Serious Fraud Office v Eurasian Natural Resources Corporation.
In broad overview, the appeal concerned the earlier decision that ENRC could not assert litigation and/or legal advice privilege over documents requested by the SFO that had been prepared by ENRC's solicitors and accountants while investigating a whistle blowing report into alleged fraudulent activities.
The Court of Appeal found in ENRC's favour, overturning the vast majority of Andrews J's judgment and ruling that litigation privilege applied to all such documents. This has provided a much needed boost to the applicability of legal professional privilege to internal corporate investigations.
In this regard the Court of Appeal made the following key findings:
companies should be able to investigate allegations of wrongdoing with their legal advisers prior to engaging with a prosecutor, such as the SFO, without losing legal professional privilege;
uncertainty as to whether or not proceedings or a prosecution are likely does not prevent litigation being reasonably in contemplation by the company while conducting an internal investigation;
documents prepared for the purpose of settling or avoiding contemplated proceedings are protected by litigation privilege as much as documents prepared for resisting or defending such proceedings; and
privilege should apply to draft documents prepared by solicitors even where the ultimate intention is to disclose a final version of the document to the opposing party.
The Court of Appeal also took the opportunity to articulate its strong (but non-binding) view that the definition of the "client" for the purpose of legal advice privilege should be expanded to include all employees of a company that engage with its legal advisers as part of an investigation. At present, the position following Three Rivers No. 5 is that only those employees that have been formally tasked with seeking and receiving legal advice are held to be the "client", meaning that other employees' communications are not covered by legal advice privilege. The Court of Appeal noted that it is only the Supreme Court that could reconsider the current law in this regard. Should this matter be referred to the Supreme Court, clarification regarding the definition of the "client" would be very much welcomed to bring an end to this ongoing debate.
Overall, this judgment provides much needed comfort to corporate clients regarding their ability to investigate potential issues with their legal advisors without the fear of this work being ultimately disclosable to a regulator or opposing party in legal proceedings. It remains to be seen whether the SFO will seek to appeal this decision to the Supreme Court.