Antitrust Alert: ECJ Advocate General Recommends That Court Not Extend EU Legal Privilege Protection to In-house Lawyers
On 29 April 2010, Advocate General ("AG") Juliane Kokott at the Court of Justice of the European Union ("ECJ") issued her opinion in Akzo Nobel Chemicals Ltd and Akcros Chemicals LTD v European Commission (Case C-550/07 P). This case deals with the question whether, in the context of European Commission ("Commission") investigations and proceedings, communications with in-house lawyers are protected by the legal professional privilege. The AG recommends that the ECJ should say that such communications are not protected. If the Court follows the approach the AG suggested—as it normally does—no communications between the management of a company and its in-house lawyers will be protected from search and disclosure in EU investigations and proceedings.
This case stems from a Commission investigation into a cartel on the plastic additives market. During a dawn raid at the premises of Akzo and Akcros in the United Kingdom in February 2003, the Commission copied and placed in its file two e-mails exchanged between the general manager of Akcros and a member of Akzo's in-house legal department, who was admitted as a lawyer to the Netherlands Bar. Akzo and Akcros brought a challenge before the General Court, arguing that the communications were protected by legal professional privilege and therefore that the Commission should not be permitted to have access to them and other privileged documents (Cases T-125/03 and T-253/03). The General Court dismissed this challenge on the basis of an earlier ECJ ruling on the scope of legal professional privilege.
Earlier ECJ Ruling on Privilege
The authority relied upon by the General Court in rejecting Akzo and Akcros' challenge dates back to the 1982 AM&S case (Case 155/79). In AM&S, the ECJ recognized that the confidentiality of written communications between lawyer and client must be protected only if:
- the communication with the lawyer has a connection with the exercise of the client's right of defense, that is, it was a "communication" made "for the purposes and in the interests of the client's rights of defence"; and
- it is a communication with an independent lawyer, that is, a lawyer who is "not bound to the client by a relationship of employment."
The issue considered by the AG in her Akzo opinion concerns only the second of these criteria, the independence of the lawyer with whom communications are exchanged.
Akzo and Akcros, supported by the IBA, the Netherlands Bar and may other intervenors, submitted that the ruling in AM&S did not preclude protecting as privileged documents from in-house lawyers registered at the national Bar and subject to their disciplinary regimes. Alternatively, they submitted that AM&S required reconsideration, particularly in view of recent developments in many EU member states regarding the status of in-house lawyers; they argued that the court should extend legal privilege to communications of certain in-house lawyers.
The AG rejected these arguments, despite acknowledging developments that had taken place in the EU member states since the 1982 AM&S case:
In addition to their economic dependence on their employer, enrolled in-house lawyers usually exhibit a considerably stronger personal identification with the undertaking for which they work, as well as with its corporate policy and corporate strategy than would be true of external lawyers in relation to the business activities of their clients.
Both their considerably greater economic dependence and their much stronger identification with the client—their employer—militate against the proposition that enrolled in-house lawyers should enjoy the protection afforded by legal professional privilege in respect of internal company or group communications. (¶70/71)
If the ECJ follows the AG's opinion, it will remain the case that communications from in-house lawyers are, in the context of EU competition law investigations and proceedings, not covered by legal professional privilege, even if the in-house lawyer is registered with the local Bar of one of the EU member states. An Advocate General is a member of the Court, but not a judge, and act as the court's senior legal advisor. The AG independently propose to the Court a legal assessment of the case.
National Legal Privilege
Some national competition law authorities in the EU, such as Ireland, the Netherlands, and the United Kingdom, respect the legal professional privilege for communications from in-house lawyers. In other EU jurisdictions, such as Germany and Austria, the legal profession privilege may be available, depending on the scope and organization of the in-house's counsel's work and the matters involved.
Akzo and Akcros argued that it is unacceptable that the protection of a document containing legal advice should depend on whether it is a national competition authority or the Commission that takes it in a dawn raid. Although the AG expressed her sympathy for this concern, her view is that it is "none the less untenable from a legal point of view."
It follows that, if for example the German Federal Cartel Office ("FCO") assists a Commission investigation, the FCO will be entitled to access internal communications with in-house lawyers. Conversely, if the FCO investigates a company in its own right, either on national or EU competition law grounds, national legal professional privilege rules may apply and the FCO will not be able to access internal communications with in-house lawyers. In case of a dawn raid, companies therefore must check which authority ordered the search when the officials come knocking on the door.
The AG's opinion is of significance to all in-house counsel. Their exclusion from legal professional privilege protection is increasingly troublesome, given their invaluable role in their client’s daily work, in particular their intimate knowledge of the business and the growing importance of internal compliance programs.
The AG's opinion is also of significance for external lawyers who are not admitted in the EU. The legal professional privilege is considered to apply only to communications with (external) EU lawyers, and therefore it follows that communications with non-EU lawyers are not protected from search and disclosure in EU investigations and proceedings.
The AG's opinion does not call into question the General Court's earlier findings that certain internal documents prepared for the purpose of seeking legal advice from an external EU lawyer are protected by legal professional privilege. Whether or not an internal document merits such protection will depend on the factual circumstances concerned. It remains good practice to add wording such as 'Privileged and confidential. Prepared for the purposes of obtaining external EU legal advice' to emails and other communications.
One question that remains unanswered is whether legal advice from external EU counsel that does not relate to the subject matter of a Commission investigation is protected. While such legal advice may be safe from Commission inspection on grounds of relevance, it would be useful for the EU courts to clarify that all communications between external lawyers and their clients exchanged for the purposes of obtaining legal advice are privileged. This question arose, for example, in relation to documents containing legal advice from external IP lawyers during the dawn raids conducted by the Commission in its pharmaceutical sector inquiry. On that occasion, the Commission took the view that legal professional privilege is restricted to legal advice in connection with EU competition law proceedings and, on this basis, it copied the documents containing IP legal advice, despite the fact that it came from external EU lawyers. Several companies complained that, in doing so, the Commission infringed the applicable legal professional privilege principles, but no formal complaint has ever been brought to date against the Commission in this regard. This question therefore remains unsettled.
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