On 8 May 2017, the SFO received a judgment in its favour (SFO v ENRC  EWHC 1017), which declared that all but one category of documents generated during internal investigations by Eurasian Natural Resources Corporation (ENRC) were not subject to legal professional privilege. The documents in question (including interview notes prepared by a law firm and documents prepared by forensic accountants) had been sought by the SFO during the course of its ongoing criminal investigation into ENRC's activities in Kazakhstan and Africa. The SFO's investigation, which has been on foot since late April 2013, is focused on allegations of fraud, bribery and corruption around the acquisition of substantial mineral assets.
The materials in question were created between October 2010 and March 2013, and thus before the SFO commenced its own investigation in April 2013. ENRC subsequently received a notice under section 2 of the Criminal Justice Act 1987 requiring production of relevant materials, but ENRC refused to produce these materials. Companies and individuals are entitled to refuse to produce privileged materials when responding to a section 2 notice. However, the SFO challenged ENRC's claim to privilege, and ENRC's arguments (addressing both legal advice privilege and litigation privilege) were rejected by the court, except for documents relating to a presentation given by an external lawyer to ENRC's nomination and corporate governance committee and/or the ENRC board, which were found to be protected by legal advice privilege.
While it is clear that ENRC's evidence submitted in response to the SFO's application was below par, and the scope of privilege outlined in this judgment is largely consistent with existing case law, there are certain principles and key points from the judgment that should be borne in mind by anyone undertaking internal investigations:
· Criminal investigations. Contemplation of regulatory or criminal scrutiny is not necessarily sufficient to support a claim of litigation privilege. The test applied by the judge required that for litigation privilege to arise an investigation by the authorities must be on foot, or a company must at least be aware of enough incriminating evidence to anticipate that there is some truth in, or material to support, the allegations such that there is a good chance of successful prosecution and conviction. If this part of the judgment survives, companies wishing to assert litigation privilege in this context will be put in a very awkward position indeed.
· Record-keeping. The best evidence of what was contemplated or foreseen by the company at the time is contemporaneous documents. Consider keeping full records of decisions to instruct lawyers or third-party advisors and why.
· Purpose of the documents. Documents created with the purpose or intention of showing them to the potential adversary in litigation are not subject to litigation privilege. In the case of ENRC, the judgment reflected that from an early stage the company adopted an open, transparent posture with the SFO and promised to share information generated by their internal investigation, no doubt with the aim of achieving a civil (rather than criminal) outcome. When relations soured, the company could not re-characterise the purpose for which it had created relevant documents.
· "The client". The narrow definition of "the client" from Three Rivers (No 5)  UKHL 48 remains the law .Thus, at the outset of any investigation, consider who is authorised to instruct (and receive advice from) external lawyers and how legal advice will be sought and shared within the business.
· Working papers. A claim for privilege over lawyers' working papers (which could, in principle, extend to lawyers' notes of witness interviews) will only be successful if the documents would "betray the trend of legal advice".
· In-house lawyers. The role of in-house lawyers was considered and the judge re-affirmed that no privilege can attach to communications of a lawyer when carrying out non-legal roles or duties in the business (that is, as a "man of business").
· Instructing external lawyers. Carefully consider how you instruct external advisers and your external advisers' role(s). Instructing separate firms for the investigatory and advisory work could undermine a claim for privilege and it may be better to consider instructing one law firm to advise on all aspects of the investigation.
In a judgment that the Law Society's President has called "deeply alarming", the court did acknowledge that this is a controversial area of law, noting the more liberal approach adopted in other jurisdictions. ENRC has made an application to appeal the decision, but in the meantime this victory will no doubt bolster the SFO's confidence and its willingness to push back hard on assertions of privilege. For more information see Legal update, Application of LPP to internal investigations (High Court).