In jurisdictions across the UK, parties can claim legal advice privilege to prevent communications with their lawyer from being disclosed to third parties. The purpose of the privilege principle is to encourage openness and honesty between a client and their lawyer, thereby facilitating the provision of informed legal advice.

Legal professional privilege consists of two categories; litigation privilege and legal advice privilege. In this article, we will focus on legal advice privilege and the implications of a recent Commercial Court Judgment on this topic.

Save for certain exceptions, including criminal activity and fraud, as a general rule, correspondence between a solicitor and client will attract legal advice privilege provided this has been made for the purpose of giving or receiving legal advice. To qualify for legal advice privilege, such communications must have been made within the context of a solicitor–client relationship of confidence. For the purpose of legal advice privilege, advice can include informing the client of the law and advising them how they should proceed in the circumstances. It can also include advising the client about their position from a legal perspective.

In Northern Ireland, in High Court proceedings, disclosure of documents is governed by Order 24 of the Rules of the Court of Judicature (Northern Ireland) 1980. Parties to High Court proceedings are subject to discovery obligations and must disclose certain categories of documents to other parties to the proceedings unless a claim for privilege is established. Under Order 24 Rule 5(2), if a party seeks to withhold documents by claiming they are privileged, their List of Documents must provide a sufficient statement setting out the grounds on which privilege is claimed.

Allocation of documents to privileged categories is a standard part of the discovery process in High Court proceedings. However, case law demonstrates the challenges faced by parties who wish to claim privilege over advice received from in-house lawyers practising in foreign jurisdictions. By way of illustration, we will consider the recent decision of the Commercial Court of England and Wales (“the Commercial Court”) in https://www.bailii.org/ew/cases/EWHC/Comm/2020/2437.html. 

 PJSC Tatneft v Bogolyubov and Others [2020] EWHC 2437 (Comm):

In this case, the Commercial Court considered the issue of whether legal advice privilege could be claimed by the Claimant in respect of correspondence with its in-house lawyers. The Claimant, PJSC Tatneft, a Russian Company, argued that legal advice privilege applied to communications between its employees/officers and members of its in-house legal team.

In Russia, self-employed advocates are considered to be independent legal professionals which benefit from a right known as ‘advocate’s secrecy’. Advocate’s secrecy affords similar protection to client-lawyer communications as that offered by legal advice privilege. However, advocate’s secrecy is only applicable to self-employed advocates in Russia and not to in-house lawyers. The Second Defendant therefore submitted that the Claimant’s in-house lawyers were not “appropriately qualified” and should not benefit from privilege.

The Second Defendant sought an Order requiring the Claimant to provide inspection of all documents previously withheld under legal advice privilege. This was to include correspondence between the Claimant’s employees/officers and members of its in-house legal team. In addition, the Second Defendant sought inspection of relevant documents prepared by members of the Claimant’s in-house legal team.

In considering the arguments, the Commercial Court observed that there is a public interest in ensuring that clients can obtain legal advice, knowing that communications with their lawyer will remain confidential. In support of this analysis, the Commercial Court cited Lord Scott in Three Rivers (No 6) at [34], “in order for the advice to bring about that desirable result it is essential that the full and complete facts are placed before the lawyers who are to give it”.

In assessing whether legal advice privilege applied, the Commercial Court found that it is the function performed by the lawyer that is important, as opposed to their status as in-house or independent. On this basis, the Commercial Court confirmed that under the jurisdiction of England and Wales, legal advice privilege applies to all foreign lawyers, regardless of any distinctions that apply to their professional status under national standards.

The Second Defendant also argued that advice provided by the Claimant’s in-house lawyers should not benefit from legal advice privilege as such lawyers were the Claimant’s employees and were therefore not independent. Having found that foreign lawyers benefit from privilege, the Commercial Court held that this principle extends to foreign in-house lawyers.

The Commercial Court’s decision reaffirms that it is the professional capacity within which a lawyer acts and the nature in which the advice is given that is relevant for the purpose of legal advice privilege. The implications of this decision will have far reaching effects for a wide range of organisations which operate in-house legal teams, irrespective of jurisdiction. The Court’s conclusion to extend legal advice privilege to foreign in-house lawyers is consistent with the objective of privilege, namely, to encourage transparency between client and lawyer in the interests of justice.

As a result of the UK’s departure from the EU, the extension of legal advice privilege to foreign in-house lawyers will become even more significant for organisations engaged in cross-border transactions between the UK and EU Member States. The decision of the Commercial Court will be welcomed by the UK’s legal profession, given that it will not deter parties from other jurisdictions from taking legal proceedings in England and Wales. Having regard to the principle of comity and the current market conditions, this Judgment offers both professional and commercial benefits by enabling cross-jurisdictional working to continue.

Whilst there are some differences in the laws governing disclosure across the UK, it is anticipated that the Northern Irish Courts would adopt a similar approach to that of the Commercial Court in relation to the application of legal advice privilege. Nevertheless, we must await the outcome of the final negotiations between the UK and EU to see whether there are any specific implications for the legal profession in Northern Ireland.

This article has been produced for general information purposes and further advice should be sought from a professional advisor.