The Court of First Instance of the European Communities
(CFI) has just published its ruling in a case between Dutch
chemical company Akzo Nobel and the European Commission, which was
investigating Akzo over alleged price-fixing.
The Court said that not all communication about a case between a
company and its in-house lawyers was protected by confidentiality
rules, and ordered the release to the Commission of some documents
held in escrow until the resolution of the case.
The ruling says that communication by in-house lawyers to people
within a company did not attract the same protection as
communication from an external lawyer to a client.
The ruling said that, in a previous case, "the Court of Justice
expressly held that the protection accorded to [legal professional
privilege] under Community law … only applies to the extent that
the lawyer is independent, that is to say, not bound to his client
by a relationship of employment".
It said that the law differed in European countries, where some
offered identical protection to in-house lawyers, some did not, and
many had laws that were unclear or untested.
Competition law specialist Guy Lougher of Pinsent Masons, the
law firm behind OUT-LAW.COM, said that UK companies were already
being careful about protecting document confidentiality, and that
they would have to continue to be careful.
"As a result of the ruling, existing costly practices used by
in-house lawyers within the UK to protect the confidentiality of
some communications, such as routing certain documents through an
external independent lawyer, will have to continue," he said.
The CFI said that some in-house documents would be protected,
but only if they were created specifically for seeking advice from
external lawyers.
"It is helpful that companies can rely on legal privilege under
this exception even when an internal document is not to be sent
physically to the external independent lawyer, because for example
telephone advice is being sought, as long as it is to be used for
the sole purpose of seeking legal advice from an external lawyer,"
said Lougher.
"In rejecting the claim to privilege the CFI intends to set a
high threshold for determining when the exception will apply.
Companies will need to consider very carefully precisely how they
gather information or documents in order to maximise the
possibility that this new exception might apply," he said.
Akzo Nobel was being investigated for potential price-fixing in
the market for coatings and plastics when it was raided by European
Commission investigators. Investigators seized internal company
documents in 2003 and Akzo sought to protect them under legal
privilege.
That attempt was rejected, though Akzo won one small part of the
ruling when the Court said that the Commission did infringe
confidentiality when it forced the company to allow it a cursory
glance at some documents.
