Out-Law News | 03 Oct 2018 | 2:25 pm | 2 min. read
The decision will be welcomed by many businesses, and means that the Court of Appeal's judgment in the case now stands as "an authoritative statement of the principles in this area", according to civil fraud and asset recovery expert Alan Sheeley of Pinsent Masons, the law firm behind Out-Law.com.
"The Court of Appeal's judgment was pragmatic, recognising the importance for businesses of being able to conduct thorough investigations, and restored litigation privilege to its proper scope," Sheeley said.
"That said, the decision is fact-specific, and it is notable that at the same time as announcing its decision not to appeal, the SFO has fired a warning shot that it will continue to closely scrutinise assertions of privilege. No doubt other regulators and third parties will follow suit. It therefore remains critical that businesses obtain specialist legal advice before embarking on an internal investigation and that appropriate steps are taken to maximise the chances of privilege applying," he said.
Last month, the Court of Appeal overturned an earlier judgment by the High Court that ENRC could not claim litigation privilege over documents generated during its internal investigations in connection with an SFO investigation into allegations of fraud, bribery and corruption. The appeal court ruled that the High Court had incorrectly decided that SFO criminal proceedings were not "reasonably in contemplation" at the time when the documents were created. ENRC has denied the allegations.
The High Court's original decision in the case had led to "uncertainty and concern" for businesses, prompting the Law Society to intervene in the appeal, said Sheeley, who contributed to a recent Law Society update on the topic of privilege and internal investigations. However, some would be disappointed that the topic would not now be considered by the Supreme Court, particularly after the Court of Appeal concluded that English law was 'out of step with the international common law' on the related topic of legal advice privilege, he said.
"The Supreme Court will not now have the chance to revisit the scope of legal advice privilege, including in particular whether it applies to lawyers' records of fact-finding interviews with employees who are not in the 'client team' tasked with seeking and receiving legal advice on behalf of a corporate," he said. "The position therefore remains that extreme caution should be exercised around notes of such interviews, unless you can be confident that you are in a situation where litigation privilege will apply."
Litigation privilege applies to confidential communications and documents that have been prepared for the dominant purpose of conducting adversarial litigation which is "in progress or in contemplation"; while legal advice privilege generally attaches to confidential communications between lawyers and their clients which relate to the provision of legal advice. A document which is protected by either form of privilege need not generally be shared with regulators, enforcement agencies or counterparties to litigation.