The recent European Court of Justice (ECJ) decision in the Akzo case (see our e-bulletin of 14 September) has sparked renewed interest in legal professional privilege issues.
The judgment has not altered the legal position in respect of privilege in the context of EU competition law investigations. Privilege continues to be denied for communications between in-house lawyers and their clients.
There are nonetheless a number of practical steps that can be taken in order to maximise any protection that is available.
The judgment does not affect the scope of privilege as a matter of English law, under which communications with in-house lawyers are privileged so long as they are acting in their capacity as a lawyer and not an executive.
Legal advice privilege under EU competition law
Privilege is the way in which the law protects the confidentiality of communications between legal advisers and their clients. There are various categories of privilege but this guide focuses on legal advice privilege under EU competition law. Articles 101 and 102 of the Treaty on the Functioning of the European Union (TFEU) and their implementing and procedural regulations do not contain any provisions on legal privilege. Instead, the principle has been developed through the case law.
In the leading case, AM&S (AM&S Europe Ltd v Commission, Case 155/79), upheld in the recent Akzo ruling, the ECJ held that communications between lawyers and their clients should be protected at EU level, so long as these communications:
- are made for the purposes and in the interests of the client's right of defence; and
- emanate from independent lawyers entitled to practise in the EEA who are not bound to the client by a relationship of employment.
The appeal before the ECJ in Akzo was mainly concerned with the issue of independence of lawyers (i.e. the second condition), and the ECJ confirmed that legal professional privilege does not apply to protect communications between parties and their in-house lawyers. However, it is useful to note that, at first instance, the General Court provided some useful guidance in respect of the procedure to be followed during an investigation and on the position of privilege for preparatory documents.
Procedure during a dawn raid
In the Akzo case, the General Court confirmed that, despite the Commission's wide powers of investigation, a company under investigation by the Commission does not have to reveal the contents of those documents for which it claims privilege, as long as it presents the Commission officials with appropriate reasons which demonstrate the confidential nature of the document justifying protection (for example by providing information such as the author of the document, the addressee, the duties and responsibilities of the correspondents, the objective of the document and the context in which the document was drafted). A company is entitled to refuse to allow the Commission officials to take even a cursory look at the documents which it claims to be privileged, provided such a cursory look is impossible without revealing the content of those documents.
Types of documents protected by legal privilege
In order to be privileged, the communications must be made for the purpose of the exercise of the client's rights of defence and must emanate from independent lawyers. This will include all written communications exchanged after the initiation of an administrative procedure which may lead to a decision on the application of Articles 101 and 102 TFEU, and can also extend to earlier written communications which have a relationship to the subject matter of that procedure.
In-house documents which simply report the text or content of an external lawyer's advice are covered by legal privilege if that advice would have been privileged if received in writing from the external lawyer (Hilti v Commission, Case T-30/89). Any opinions expressed on or amendments made to the external lawyer's advice by the in-house lawyer or employee of the company will however not be privileged.
At first instance, the General Court's judgment in Akzo also clarified what type of preparatory documents may be covered by privilege. The Court made it clear that the possibility of treating a preparatory document as privileged should be construed restrictively and that it will be for the company claiming the privilege to prove that the documents in question were drawn up with the sole purpose of seeking legal advice from a lawyer. This should be unambiguously clear from the content of the documents themselves or the context in which the documents were prepared and found.
Communications between the company and professional advisers other than an external lawyer entitled to practise in the EEA will not be privileged under EU law. It may however be possible to argue that expert reports prepared for the purposes of obtaining legal advice in connection with EU competition proceedings are privileged. Although the status of such expert reports is potentially a grey area, it may be easier to argue that they should be privileged where the external lawyer instructs the expert and incorporates the report in its legal advice before sending it on to the company.
External lawyer for the purpose of EU privilege
In order to be privileged, communications must emanate from an independent lawyer not bound to the client by a relationship of employment, who is entitled to practise in an EEA Member State. Whether or not a lawyer is entitled to practise in one of the EEA Member States is governed by the Directive on legal services (Council Directive 77/249).
The EU rules on privilege apply in the context of an EU competition law investigation that is led by the European Commission (conducted by the Commission on its own or assisted by national competition authorities).
Where the investigation is conducted by the national competition authorities on behalf of the European Commission, or where the national authorities are carrying out an investigation under their own competition rules, the national rules of privilege will apply. In that case, as long as the national regime recognises privilege for communications between in-house lawyers and their clients, documents that fall into the relevant category will not have to be disclosed by the company.
Dos and Don'ts to try and maintain privilege
- Do make sure that privileged documents are clearly marked as such and are kept on a separate file marked 'privileged and confidential'.
- Do make sure that any advice of a sensitive nature provided by the in-house lawyer is given orally.
- If written advice of a sensitive nature is required, do consider instructing an external lawyer entitled to practise in the EEA (referred to below as an "external EEA lawyer"). This can be done in writing and should state that you are seeking legal advice and should be marked 'Legally Privileged and Confidential'.
- Do clearly label preparatory documents which are created with the sole purpose of seeking legal advice from an external lawyer as being created for this purpose. This can be difficult to prove and will be assisted by clearly setting out the purpose of the documents when they are created.
- Do instruct non-legal experts through your external EEA lawyer and ensure that their reports are transmitted and signed off by external counsel.
- Do only circulate advice received from your external EEA lawyer in its original form. Avoid creating a new document, such as a summary or a commentary on the advice, as this may not be privileged.
- When circulating legal advice from external lawyers, do make it clear that recipients must treat the advice as confidential and make sure that the document is not circulated more widely than is absolutely necessary.
- When subject to a dawn raid, do not allow the Commission to take even a cursory look at privileged documents, as this could result in loss of privilege.
- In the event of disagreement over the privileged nature of a document during the course of an investigation, do not hand over such documents but provide details as to why you are claiming privilege over the document and if necessary ensure the document is placed in a sealed envelope marked 'legally privileged and confidential – do not open'.