Academic journal article Business Law International

The Director of the Serious Fraud Office V Eurasian Natural Resources Corporation Limited

Academic journal article Business Law International

The Director of the Serious Fraud Office V Eurasian Natural Resources Corporation Limited

Article excerpt

The United Kingdom's Serious Fraud Office may have lost the battle in its challenge of Eurasian Natural Resources Corporation (ENRC)'s claim of privilege in the Court of Appeal, but the war isn't over yet.

On 5 September 2018, the Court ofAppeal of England and Wales issued its judgment in The Director of the Serious Fraud Office v Eurasian Natural Resources Corporation Limited1 regarding the privileged nature of documents created in the context of an internal investigation.

Legal professional privilege in English law

By way of reminder, the English law of privilege has two distinct heads:

1.Legal advice privilege, which applies to confidential communications between a client and its lawyers, acting in their professional capacity, in connection with the provision of legal advice. Privilege attaches to all communications that form part of the continuum of the lawyer/client communication, even if they do not contain a request for legal advice or advice itself.

In a corporate context, the 'client' is limited to those individuals authorised to obtain legal advice on the company's behalf (see Three Rivers District Council and Others v Governor and Company of the Bank of England (No 5) 2). In this respect, English privilege law diverges from its equivalents in many other common law jurisdictions. It was one of the points considered by the Court of Appeal - see comment below.

2.Litigation privilege, which attaches to communications between parties or their solicitors and third parties for the purpose of obtaining information or advice in connection with existing or contemplated litigation, but only where:

* litigation is in progress or in reasonable contemplation;

* the communications have been made for the sole or dominant purpose of conducting that litigation;

* the litigation is adversarial, not investigative or inquisitorial.

Background and the judgment under appeal

In December 2010, ENRC received an email from someone claiming to be a whistleblower, alleging bribery and corruption in relation to its Kazakh subsidiary. ENRC instructed external lawyers to carry out an investigation. The Serious Fraud Office (SFO) became involved in August 2011, sending a letter to ENRC notifying it that it was not under formal investigation but that it should consider its position in the light of the SFO's then-in-force Self Reporting Guidelines. ENRC's external lawyers conducted interviews with current and former employees, and a forensic accountancy firm carried out a 'books and records' review to consider the company's financial crime systems and controls. The SFO did not formally open an investigation into ENRC until April 2013.

As part of its investigation, the SFO sought the compulsory production of certain documents under its formal information gathering powers in section 2 of the Criminal Justice Act 1987. A person in receipt of a section 2 notice is not obliged to produce to the SFO material that is subject to legal professional privilege, and ENRC refused to provide certain categories of documents to the SFO, on the basis that they were subject to either or both legal advice privilege or litigation privilege.

The documents ENRC sought to withhold included:

* interview notes taken by ENRC's external counsel of over 100 witness interviews with current and former employees or officers of ENRC and its subsidiaries;

* materials generated by the forensic accountancy firm as part of its books and records review;

* documents created by ENRC's external solicitors that contain accounts of factual events, which were used to give updates to ENRC's corporate governance committee and board; and

* a smaller category of miscellaneous other documents.

The SFO brought proceedings against ENRC in the High Court, seeking a declaration that the documents ENRC sought to withhold were not properly protected by privilege. The High Court ruled in favour of the SFO, rejecting ENRC's claim to litigation and advice privilege. …

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