Erosion of Litigation Privilege in Criminal Investigations?

Published 25 May 2017

In the case of SFO V Eurasian Natural Resources Corporation Ltd (“ENRC”), the High Court recently held that ENRC, a mining company, head-quartered in London and subject to an SFO investigation relating to allegations of fraud, bribery and corruption was unable to claim privilege (either litigation privilege or legal advice privilege) in respect of various documents created in connection with its internal investigation connected to the SFO inquiry.

A party is able to claim litigation privilege if at the time a document was created:

• Litigation was in reasonable contemplation; and
• The document was prepared for the dominant purpose of litigation.

In this instance, the court held that a criminal investigation did not constitute “litigation” and as such litigation privilege would only apply if:

• ENRC contemplated an actual criminal “prosecution”, rather than a criminal “investigation”; and
• The document was created with the dominant purpose of conducting litigation, rather for avoiding litigation

ENRC also claimed legal advice privilege over notes taken by its lawyers of interviews with certain of ENRC’s employees. Legal advice privilege covers communications between a client and its lawyers for the purpose of giving or receiving legal advice. The court followed the approach adopted by the court in the RBS Rights Issue Litigation, which in turn applied the principles of Three Rivers (No.5) as to who could constitute the client for the purposes of legal advice privilege. The court held that the client for the purposes of legal advice privilege consists only of those employees specifically authorised to seek and receive legal advice from the client’s lawyers and does not extend to information provided by employees to, or for the purpose of being communicated to, the lawyers. The court therefore held that ENRC was obliged to disclose the interview notes. The court also rejected ENRC’s case that the interview notes comprised lawyers’ working papers.

ENRC is set to apply for leave to appeal and its outcome will be very closely monitored. In the meantime, however, companies must think very carefully about how they conduct their internal investigations and how the results of those enquiries are recorded.