Serious Fraud Office v Eurasian Natural Resources Corporation

An important case on legal advice privilege.

NEWSFLASH +++ HIGH-COURT OVER-RULED +++ MORE TO FOLLOW +++ September 2018

The pithy paragraph — not that pithy, since whoever held the pen is no prose stylist — was number 126 — emphasis added:

... large corporations need, as much as small corporations and individuals, to seek and obtain legal advice without fear of intrusion. If legal advice privilege is confined to communications passing between the lawyer and the “client” (in the sense of the instructing individual or those employees of a company authorised to seek and receive legal advice on its behalf), this presents no problem for individuals and many small businesses, since the information about the case will normally be obtained by the lawyer from the individual or board members of the small corporation. .... In the modern world, however, we have to cater for legal advice sought by large national corporations and indeed multinational ones. In such cases, the information upon which legal advice is sought is unlikely to be in the hands of the main board or those it appoints to seek and receive legal advice. If a multinational corporation cannot ask its lawyers to obtain the information it needs to advise that corporation from the corporation’s employees with relevant first-hand knowledge under the protection of legal advice privilege, that corporation will be in a less advantageous position than a smaller entity seeking such advice. In our view, at least, whatever the rule is, it should be equally applicable to all clients, whatever their size or reach.

And then, at para. 130, the Court of Appeal gives a nod and a wink and basically tells ENRC to appeal this to the Supreme Court and get Three Rivers No. 5 v overruled too:

If, therefore, it had been open to us to depart from Three Rivers No. 5 v , we would have been in favour of doing so. For the reasons we have given, however, we do not think that it is open to us, so it is a matter that will have to be considered again by the Supreme Court in this or an appropriate future case.

For now, see:

• This briefing from the Law Society Gazette.
• The judgment transcript of the Court of Appeal decision Serious Fraud Office v Eurasian Natural Resources Corporation [2018] EWCA_Civ 2006.

Serious Fraud Office v Eurasian Natural Resources Corporation [2017] EWHC 1017 was a civil claim brought by the SFO challenging ENRC’s claim to privilege in respect of various documents created in anticipation of criminal investigation and while reporting to the SFO in a self-reporting process.

Andrews J in the High Court considered the Court of Appeal’s controversial decision in Three Rivers No. 5 of who constitutes the “client” when it comes to legal advice privilege; it traversed similar ground to the RBS Rights Issue Litigation.

Among the High Court’s findings that the Court of Appeal considered were the following:

• A claim for legal advice privilege require the proponent to show that the information was obtained for the dominant purpose of obtaining legal advice?
• None of the documents was protected by legal advice privilege because:
  • the information they contained was not communicated to ENRC’s solicitor by anyone authorised to give or receive legal advice on behalf of ENRC or its subsidiaries;
  • the information they contained was not communicated to ENRC’s solicitor for the purpose of obtaining legal advice, but rather for the purposes of that solicitor’s investigation of the facts;
  • there was overwhelming evidence that ENRC had intended or agreed to share the information they contained with the SFO as part of a self-reporting process.
• lawyers’ working papers are only protected by legal advice privilege if they would betray the tenor of the legal advice.

The High Court rejected all of ENRC’s claims to privilege, holding that criminal litigation privilege only arises in limited circumstances, far more rarely than in a civil litigation. The court found:

• an SFO raid and the processes it triggers (including an SFO investigation) are *not* adversarial litigation;
• “reasonable anticipation” of an investigation did not amount to reasonable anticipation of litigation;
• litigation privilege applies only to documents prepared for the dominant purpose of conducting litigation, not to those produced to obtain advice in anticipation of litigation;
• litigation privilege does not apply to documents created with the purpose of obtaining advice about how to avoid contemplated litigation.

As regards interview notes, Three Rivers No. 5 set down a general test as to who was the “client” for legal advice privilege. The court also rejected ENRC’s case that the interview notes comprised lawyers’ working papers.

The Judge refused permission to appeal on all aspects of the decision so the application for permission (including in relation to the Judge’s approach to the evidence, which she regarded to be inadequate to substantiate the claims to privilege) will be made to the Court of Appeal.

This decision is likely to have profound consequences on the practice of corporate internal investigations in a civil and criminal context and self-reporting in the criminal context.

The full High Court judgment is available here.