Hogan Lovells wins historic privilege appeal on behalf of ENRC

LONDON, 5 September 2018 - Hogan Lovells today won a landmark victory at the Court of Appeal, in a historic decision which will have lasting implications for the law of privilege in the UK.

In a judgment handed down this morning, the Court of Appeal has overturned the controversial High Court decision in Director of the Serious Fraud Office v Eurasian Natural Resources Corporation Limited. Hogan Lovells was instructed to represent ENRC following the first instance decision, and successfully argued that documents prepared during an internal investigation are protected by litigation privilege.

Michael Roberts, Partner at Hogan Lovells representing ENRC commented: "This historic ruling by the Court of Appeal is significant not just for ENRC but for any company faced with undertaking an internal investigation in response to a whistleblower or other allegation of wrongdoing. It is critical that companies are not penalised for acting responsibly, and are able to instruct lawyers to conduct investigations without fear that the authorities will later be able to demand all of the lawyers' work product. Following this ruling, it will remain for the company to decide whether, and to what extent, it is prepared to waive privilege".

Background to the appeal

Civil proceedings were initiated by the SFO in 2016, challenging ENRC's claims to privilege over documents generated by solicitors and forensic accountants during an internal investigation. The documents included notes made by ENRC's former solicitors of interviews with ENRC's current and former employees. In a 2017 High Court judgment, Mrs Justice Andrews found that the documents were not protected by privilege, making a number of controversial findings which threatened to severely limit the application of privilege in internal investigations. The judgment caused widespread alarm in the legal community, and had repercussions well beyond even the immediate context of an internal investigation.  

Litigation privilege  

In today's comprehensive judgment, the Court of Appeal upheld ENRC's claim to litigation privilege over substantially all of the documents at issue. The Court found that criminal proceedings against ENRC were reasonably in contemplation when it initiated its investigation in April 2011, noting that "the whole sub-text of the relationship between ENRC and the SFO was the possibility, if not the likelihood, of prosecution if the self-reporting process did not result in a civil settlement".

The Court of Appeal held that Mrs Justice Andrews was wrong to find that ENRC's dominant purpose was compliance and governance. Rather, the need to investigate corruption allegations was just a "subset" of the dominant purpose of defending contemplated proceedings. The judge was equally wrong to find that ENRC had intended to or agreed to share materials from the internal investigation with the SFO as part of a 'self-reporting' process, or that participation in such a process precludes the application of litigation privilege.   

Legal advice privilege

Notably, the Court of Appeal found that, if it had been open to it to depart from Three Rivers (No. 5) on the vexed issue of who constitutes the 'client' for the purposes of legal advice privilege, it would have been in favour of doing so. The Court of Appeal concluded that this was a question which would have to be considered again by the Supreme Court in the future, either in this or another case.  

The legal line-up for the Appellant, ENRC:

Bankim Thanki QC, Tamara Oppenheimer and Rebecca Loveridge of Fountain Court Chambers, instructed by Hogan Lovells partner Michael Roberts.

Today's judgment can be found here.

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