Last year's High Court decision in SFO v ENRC caused widespread concern in the legal community as to a corporate's ability to claim litigation privilege over the output of an internal investigation conducted in the shadow of a criminal investigation by the SFO. The implication of the decision is that it may be more difficult for corporates to claim litigation privilege over documents produced as part of their internal investigations, even after a criminal investigation has been commenced or the SFO has sought to exercise its powers under Section 2(3) of the Criminal Justice Act 1987.
ENRC's appeal against the High Court decision was heard this week and included an intervention by The Law Society (the representative body for solicitors in England and Wales). Judgment is expected in October.
Two subsequent cases since ENRC
The Court took a different approach to ENRC in Bilta (UK) Ltd v Royal Bank Of Scotland Plc & Anor, about which we circulated two alerts in February 2018 (available here). In light of the specific facts, the Court found in Bilta that cooperation by RBS with HMRC did not mean that the RBS internal investigation was not conducted for the dominant purpose of litigation.
Shortly after the Bilta decision, the Court followed the ENRC approach in R (for and on behalf of the Health and Safety Executive) v Paul Jukes. In Jukes, the Court determined that a witness statement given by an employee to his company's solicitors during an internal investigation into a death in the workplace did not attract litigation privilege, as criminal prosecution could not have been in reasonable contemplation at the time.
Court of Appeal arguments
Although judgment is not expected until October, a number of salient points emerged during the course of this week's appeal. The most interesting are summarised below:
1. Does fact-finding without knowledge of what you might find automatically preclude the application of litigation privilege?
a) ENRC argued that fact-finding does not mean that an investigation is not being conducted for the dominant purpose of litigation.
b) The SFO's position was that fact-finding is not covered by litigation privilege, as its dominant purpose is to understand events. Specifically, the SFO argued that it was clear throughout their engagement with ENRC that the SFO would benefit from ENRC's work product.
c) The Court was critical that there were no contemporaneous documents to support or refute the claim that ENRC had a genuine apprehension of litigation, other than the evidence produced by ENRC for the proceedings. This suggests that ENRC's case may have been helped had they produced a non-privileged internal note at the time, contemplating the real risk of litigation on the facts already evident to them, therefore justifying the need for a detailed fact-find.
2. Does cooperating with a public body mean a company has to waive privilege?
a) ENRC argued that there could be an agreement with the SFO to be cooperative, but not to share all information or waive privilege.
b) The SFO argued that documents provided to it by a corporate for the purposes of cooperation - when a formal investigation has not been initiated - could not have been produced in contemplation of litigation, as at that stage it is not known whether there is a case to be made.
c) The Court suggested that agreeing to provide the SFO with full and frank disclosure was at odds with later claiming legal privilege over every document produced in an internal investigation. However, the Court acknowledged that this should be balanced with the public policy of encouraging corporates to cooperate fully with the SFO.
Until judgment is handed down, the safest approach will usually be to assume that documents created during a fact-gathering internal investigation will not be protected by litigation privilege. The application of litigation privilege in the context of internal investigations remains a tricky area in which corporates should continue to work closely with their legal advisers. A fuller update on the decision will follow in October but, in the meantime, our insight into the first instance decision and other useful material, is available here.