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Eurasian Natural Resources Corporation Ltd – Legal professional privilege, corporate internal investigations and beyond

9 June 2017

The judgment in The Director of the Serious Fraud Office (SFO) and Eurasian Natural Resources Corporation Ltd (ENRC) [2017] EWHC 1017 (QB) has become the subject of widespread commentary. The apparently perverse outcome of the Serious Fraud Office’s success in the case is that corporations may be more likely to avoid cooperating with the SFO (or in future the National Crime Agency) self-reporting regime.

The judgment limits the scope for claiming litigation privilege in connection with SFO and, by extension, possibly other regulatory investigations, by regarding only a prosecution, and not a criminal investigation by a prosecutor, as ‘litigation’. Consequently, preparing documents for the ‘dominant purpose’ of a contemplated criminal investigation does not bring with it the protection of litigation privilege, even if the ultimate purpose was to prepare for a contemplated prosecution. As a result, the bar for claiming litigation privilege is being set rather higher in criminal proceedings than in civil litigation.

The judgment also took a restrictive approach to claims for legal advice privilege, following Royal Bank of Scotland (RBS) in excluding interviewed employees as the ‘client’.

The problems raised by the judgment were anticipated by Lord Neuberger in his speech last year, reflecting then upon Three Rivers DC v Bank of England (Three Rivers). As ENRC is to be appealed, subject to permission, there may yet be an opportunity for revisiting the effects of Three Rivers

The ENRC case is just one part of a worrying trend. For all the oft-quoted reassurance that legal professional privilege is ‘a fundamental human right established in the common law’, there is mounting concern within the in-house and corporate law community about the impact of the erosion of legal professional privilege (LPP), particularly in relation to cross-border business. At a recent International Bar Association conference, a panel discussion on the cross-border aspects of LPP demonstrated a strong global interest in the erosion of legal professional privilege in English Law resulting from a combination of legislation, decisions in the courts and public policy initiatives. Why the jurisdiction should appear to be so determined to shoot itself in the foot was not entirely clear to an international audience well aware of the divergence between this and competitor jurisdictions.

In a letter to the Financial Times (FT), the president of the Law Society described the ENRC judgment as ‘deeply alarming’. ‘LPP is a fundamental part of the relationship that solicitors have with their clients, and undermining it threatens the foundations of our justice system’ said Robert Bourns. The Law Society will be taking a very close interest in the progress of the ENRC appeal, and in the meantime will be engaging with in-house counsel, corporate and criminal law firms to discuss the impact of the judgment.