The long awaited ruling of the European Court of Justice on 14th September in the Akzo Nobel case was as disappointing as it was predictable.1 Despite the company's submissions and the support of many bar associations and law societies, the Court did not move from the ruling of the lower Court nor from the opinion of the Advocate General in finding that legal professional privilege does not apply to or protect communications between a company and its in-house lawyers, at least in the context of EU Competition investigations. The Court was not persuaded that in-house counsel's membership in a professional regulatory body would impact the conduct of in-house counsel, whose obligation would be primarily if not solely to the employer. This would imply that the Court views in-house counsel as only able to serve one master and may believe that in-house counsel's conduct will inevitably be directed by his paymaster rather than by any independent professional obligations or ethical requirements.
The Akzo Noble case concerned the status of documents seized from Akzo Nobel by the EU Commission during a dawn raid on the Company's offices in England. Among the documents seized were correspondence between the company and its in-house counsel over which it claimed legal professional privilege. The Courts ruling means that, despite domestic law to the contrary, this privilege will not be sustained and Akzo Nobel's communications with its in-house lawyer will be available to the Commission.
We would not suggest that compliance issues cannot now be dealt with by in-house counsel. However, serious thought clearly will have to be given as to how the business manages its requirement for legal advice in this area to ensure that the requests for advice on particularly sensitive areas and the response it receives remain confidential within the business. Greater care must be taken to ensure that where advice is required it can be delivered in such a way as to ensure it is not disclosed. EU discovery procedures are limited to documentary evidence, and it may be that in some instances, sensitive issues must be dealt with orally. However, one must be equally sensitive to the fact that even oral communications have a tendency in today's electronic media age to find their way into a written communication such as an email, a text message or other form of documentation. Additionally, it must be borne in mind that in cross-border enquiries involving countries where depositional or other testimonial discovery may be available, even oral communications may be discoverable, particularly if documentary production or seizure as the result of Akzo Nobel is deemed a subject matter waiver of privilege. Where complex legal advice is sought and the issues are likely to be ongoing, a business wishing to maintain confidentiality will best seek advice from external counsel. Even the subject of such an external engagement should not be mentioned in any written communications internal to the business or its in-house lawyer, as this would not be protected. However, any correspondence with the external lawyer would be protected by the legal professional privilege.
Care must also be taken as to how written material is disseminated and filed internally. All materials covered by the privilege should be limited to those with a need to know in the business's decision-making process, as well as kept and filed separately from other business documents. The fact that a file is labeled as privileged will not necessarily mean that privilege applies if the material is not genuinely privileged, but it will help both the company and the Commission identify and segregate material which is claimed as privileged whilst a determination as to its status is conducted.
It should be noted that this means that internal correspondence with the legal department will have to be disclosed where there is a Commission investigation, even if local law would otherwise provide the protection afforded by legal professional privilege.
Finally, whilst the Court did not directly address the issue, it did not overrule or contradict the Advocate General's further opinion that legal professional privilege in the context of EU Commission investigations is limited to those outside lawyers who are duly enrolled as members of an EU bar or law society. Therefore, in those cases with cross-border ramifications, it will be advisable that European-qualified counsel be involved in all sensitive communications regarding legal advice.