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Privilege for Internal Investigations: Latest Developments

Welcome news for corporations conducting internal investigations and concerned about the scope of legal professional privilege with the recent handing down of the English Court of Appeal’s judgment in The Director of the Serious Fraud Office v Eurasian Natural Resources Corporation Limited (ENRC). 

In 2010 ENRC received a letter from a whistle blower which alleged corruption and financial wrong doing on the part of one of its subsidiaries.  ENRC then engaged DLA Piper UK LLP and later Dechert to investigate the allegations contained in the letter. This investigation was published in an article in The Times on 9th August 2011, and it was then that it came to the attention of the Serious Fraud Office (the SFO). The SFO wrote to ENRC on 10 August 2011 encouraging it to consider the SFO’s self-reporting guidelines whilst undertaking its internal investigation.

It was only in 2013 following the formal announcement by the SFO that ENRC was under criminal investigation that ENRC asserted legal professional privilege over the documents generated by its solicitors and forensic accountants during the internal investigation.

On the issue of litigation privilege, reversing the High Court decision, the Court of Appeal ruled that “the Judge was wrong to conclude that a criminal prosecution was not reasonably in prospect once the SFO had written its letter of 10th August 2011” and decided that it “was not right to suggest a general principle that litigation privilege cannot attach until either a defendant knows the full details or what is likely to be unearthed or a decision to prosecute has been taken. The fact that a formal investigation has not commenced will be one part of the factual matrix, but will not necessarily be determinative.”

They found that as the categories of disputed documents the subject of appeal were prepared at a time when criminal prosecution was in reasonable contemplation with “the dominant purpose of resisting or avoiding that prosecution” they were therefore covered by litigation privilege.

With regard to legal advice privilege, the Court of Appeal was asked to clarify its earlier decision in Three Rivers (No.5) which held that legal advice privilege only applied to those who had been given responsibility for coordinating communications with solicitors and everyone else would be considered a third party to which the privilege would not apply.  However, it declined to do so on the basis that it fell beyond the scope of the present appeal, but added that if it had been open to it to depart from Three Rivers (No.5) it would have done so. The Supreme Court will eventually have to consider this point in the future.

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