Legal advice privilege applies for foreign in-house lawyers, court rules

Out-Law News | 21 Sep 2020 | 3:37 pm | 3 min. read

The High Court in London has ruled that advice given by foreign in-house lawyers can be subject to legal advice privilege regardless of foreign national standards of qualification or regulation, in a ruling which experts said would increase certainty for businesses working on cross-border matters.

Mrs Justice Moulder found that communications between employees of Russian oil and gas company Tatneft and its in-house legal team should be treated as privileged, and Tatneft could therefore withhold disclosure of these documents in English legal proceedings.

The assertion of privilege had been challenged by Igor Komoloisky, who argued that because Tatneft’s legal team were not Russian ‘advocates’ admitted to the Russian legal bar, the Russian equivalent of legal professional privilege therefore did not apply to them, and so English legal advice privilege did not apply.

The judge said Tatneft’s in-house counsel were acting as lawyers. She said that Russian rules prohibited advocates from being employed in-house, and prohibited in-house lawyers from being admitted to the Russian bar.

Mrs Justice Moulder said excluding communications by Russian in-house counsel from the protection of legal advice privilege would be “unfair and inconvenient”. She said: “The only requirement in order for legal advice privilege to attach is that they should be acting in the capacity or function of a lawyer.”

The judge agreed with previous judgments in courts including the UK Supreme Court that it was not necessary or relevant to consider the training and experience of an individual foreign lawyer in order for legal advice privilege to apply.

Dispute resolution expert Emilie Jones of Pinsent Masons, the law firm behind Out-Law, said the decision would give comfort to foreign parties looking to use the English courts to resolve their disputes, as well as English businesses which may need to seek advice from a foreign lawyer.

“Regardless of the law applicable to the dispute, whereabouts legal advice is given, or the privilege or secrecy laws in that location, the English courts will apply English principles of legal professional privilege. These operate fairly towards foreign lawyers by looking at the functional nature of what those lawyers were doing rather than scrutinising the detail of their national training or qualifications. The key question is simply whether the lawyers were acting in their professional capacity, in connection with the provision of legal advice,” Jones said.

“This increases certainty, and therefore supports a key rationale underlying privilege, that businesses should be able to take a clear view, at the time they communicate with their lawyers, as to whether those communications will remain confidential or are at risk of exposure to third parties in a subsequent dispute or regulatory or law enforcement action,” Jones said.

Jones said it was however important to remember that other jurisdictions could take a different approach from England to the question of whether privilege attached to advice given by a foreign lawyer and indeed to privilege generally.

“Businesses and their legal advisers, whether in-house or external, dealing with matters with an international element, must always be live to the risks that the matter may end up in a dispute or investigation in another jurisdiction where different privilege rules apply. Local law advice on privilege may be needed,” Jones said.

Jones said the Tatneft case also contained an important reminder that only legal, not commercial, advice may be covered by legal advice privilege.

“In light of the multiple ‘hats’ sometimes worn by in-house lawyers, claims to privilege over in-house legal advice are particularly vulnerable to challenge on this basis. In-house lawyers and their internal clients must always be clear whether what is being sought is legal or purely commercial advice, and avoid mixing the two,” Jones said.

Dispute resolution expert Michael Fenn of Pinsent Masons said: “Given its subject matter, the case will be of particular interest to businesses in Russia.

“If the decision had gone the other way, all their communications with their in-house legal teams for the purpose of obtaining legal advice would have been excluded from the protection of legal advice privilege in disputes in the English courts, since such in-house lawyers cannot be advocates in Russia. Similarly, communications with external Russian lawyers who are not advocates would not be privileged on the same basis,” Fenn said.

Fenn said English courts continued to be popular with Russian litigants, but similar questions to those highlighted by the Tatneft case could also arise in relation to lawyers in other jurisdictions.

“As a result, if the judge had reached a different decision in this case, this would have been a significant blow to London’s position as an international centre for dispute resolution,” Fenn said.