As has been widely reported, on September 14, 2010, in the case of Akzo Nobel Chemicals Ltd. et al. v. European Commission, the European Court of Justice (“ECJ”) confirmed prior European Union case law that a company’s internal communications with in-house counsel are not entitled to the protections of the attorney-client privilege (or, as it is often called in Europe, the “legal professional privilege”) in E.U. competition proceedings. As this had been the rule in E.U. competition proceedings since at least 1982, the ECJ’s ruling hardly came as a surprise, even though many national governments and bar associations had petitioned for a broader recognition of the legal professional privilege for a company’s communications with its in-house counsel. The ECJ’s ruling was prompted by the fact that: (1) in-house counsel are economically dependent on their employers, calling into question their professional independence; (2) in many countries, in-house counsel are not members of the local bar association (i.e., are not licensed as independent legal practitioners); and (3) it is often unclear whether in-house counsel are acting in a legal, business, or hybrid capacity when they render advice.
The Akzo Nobel decision has created some uncertainty about which communications may be protected in a competition- related investigation in Europe—or even in the United States or elsewhere in the world. Several questions present themselves.
- Communications with in-house counsel are privileged in some E.U. jurisdictions, such as England, Ireland, the Netherlands, and Spain. They are not privileged in other E.U. states, however, including Austria, Estonia, France, Finland, and Italy. So what is the privileged status of communications in investigations where a national competition authority and the European Commission are conducting a joint investigation, or where one is assisting the other? The basic (but certainly not the safest) assumption where the E.U. competition authority is involved is to assume that communications will not be privileged. But this creates the prospect for errors— and the waiver of otherwise valid privileges—in responding to investigative requests and, worse, “dawn raids,” where the company and counsel may be pressed to make snap decisions about what materials are privileged.
- The reasoning in Akzo Nobel should not be, at its core, limited to competition proceedings. Is there a risk that its holding will expand over time to subsume other areas as well?
- In light of the Akzo Nobel decision, will a United States court recognize a privilege for European in-house lawyers in competition matters, where the same materials would not be recognized as privileged in an E.U. proceeding? What about circumstances in which the E.U. is conducting a parallel proceeding and has already determined that information is not privileged, even if it would be under a company’s national legal professional privilege law?
- What is the privileged status of communications made across national borders, such as a memorandum between an American in-house lawyer and company management in the United States, that nonetheless finds its way into a file in a company’s European offices? Many of the principles the ECJ stated in Akzo Nobel in refusing to identify a privilege for communications with in-house counsel would appear inapplicable in this circumstance. Would the ECJ recognize an exception in this situation? But how are communications made by an American lawyer, for an American client, substantively any different than communications made by an English lawyer—a lawyer in a jurisdiction that recognizes the legal professional privilege—for an English client?
- What are the consequences of a laptop belonging to an American in-house lawyer being seized by E.U. Customs? Are communications stored on the hard drive protected? Has the lawyer waived any privilege by taking the laptop to a jurisdiction in which the communications stored on it may not enjoy a privilege?
In light of these, and a host of other questions, how can a company maximize the chances that a privilege will be recognized for communications with its in-house counsel in a European competition proceeding?
- Direct all competition-related questions to external counsel.
- Keep all privileged communications in files marked “privileged.”
- Avoid preparing summaries or digests of external competition law guidance.
- Keep documents and other communications made by in-house counsel in non-European jurisdictions out of com - pany files located in Europe, including e-mail accounts and other electronic channels that could be tapped or seized by E.U. authorities. In other words, avoid company-wide distribution of materials you intend to classify as privileged.
- Avoid bringing any media containing privileged material into the E.U.
- If defending against a “dawn raid,” or any other information- gathering exercise by a competition authority, immediately identify what authority is acting—communications that would not be privileged vis-à-vis the European Commission may nevertheless still be privileged if a national competition authority is investigating instead.