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Court of Appeal Hands Down Important Judgment on Privilege

Posted on 5 September 2018

Tribunal breaks new ground in Carrimjee case

The much awaited judgment of the Court of Appeal in the ENRC case was handed down on 5 September 2018. It overturned the High Court's findings on whether litigation privilege was available to ENRC in relation to a variety of documents (see Enforcement Watch 22 "Privilege in Internal Investigations Following SFO v ENRC").

In short, pursuant to its statutory powers, the SFO had compelled ENRC to provide various documents created in the course of its own internal investigation into allegations of corruption. It was of course common ground that privileged documents could not be compelled.  The issue was whether various categories of documents were protected by legal professional privilege, whether in the guise of litigation privilege or legal advice privilege.

In relation to litigation privilege, the test is whether the documents were created for the sole or dominant purpose of litigation, which was at that time in progress or contemplation.  The Court of Appeal took a very different view of the relevant facts than the High Court, allowing a claim to litigation privilege over a far wider range of documents. Of particular note, the Court of Appeal held:

  • that litigation (meaning, adversarial litigation) had been in reasonable contemplation by ENRC before the SFO had started an investigation;
  • this was the case even though it was at least possible that entering the self-reporting process could lead to a civil settlement that avoided criminal litigation; 
  • that whilst a party anticipating possible prosecution will often need to make further investigations before it can say with certainty that proceedings are likely, that uncertainty does not in itself prevent proceedings being in reasonable contemplation; 
  • advice given so as to head off or even settle reasonably contemplated proceedings is as much protected by litigation privilege as advice given for the purpose of resisting or defending such contemplated proceedings.

As for legal advice privilege, the Court of Appeal clarified what it understood the test of Three Rivers (No 5) to be and, although was "much pressed" with the argument that it had been wrongly decided, considered it was bound by the decision and was not in a position to overrule it.  That was for the Supreme Court. However, it did make it clear that it considered that Three Rivers was ripe for review. It was plainly troubled by the Three Rivers test that confines relevant communications to those from the lawyer to the "client", where the client is restricted to the instructing individual or those employees of the company authorised to seek and receive legal advice on its behalf. In the modern world, this meant that many corporates would frequently not be able to claim it. The Court of Appeal's view (although not binding) was that, whatever the rule, it should apply equally to all clients, whatever the size or reach of the client.


Following the High Court's decision on litigation privilege in ENRC, many advisers feared that litigation privilege would be very hard to claim for documents created in internal investigations (eg interview notes), save in relatively narrow circumstances. The Court of Appeal has not changed the test for claiming litigation privilege. However, its judgment is very significant because it applied the test to the facts in a far more generous way to the party claiming litigation privilege than the High Court had done.  Many companies and their advisers have breathed a huge sigh of relief.

The more generous application of the test was no doubt driven in part by policy considerations.  Indeed, at one part of the judgment, the Court of Appeal states that it is obviously in the public interest that companies can investigate allegations from whistle blowers or investigative journalists, prior to going to a prosecutor such as the SFO, without losing the benefit of legal professional privilege for the documents they create. 

Whilst each case will need to be assessed on a case by case basis, there is now far greater scope to claim litigation privilege than appeared after the High Court decision. All parts of the factual matrix will need to be taken into account. So, for example, if there is no current FCA or PRA investigation on foot, that is simply one part of the factual matrix, but it is not determinative.  Equally, if an FCA or PRA investigation was on foot, that would again not be determinative, but it is easy to see how that might weigh heavily in considering whether litigation was in reasonable contemplation.

What is also interesting about the case is what it said about legal advice privilege.  The Court of Appeal plainly felt constrained by the state of the law, but it made clear its view that the Three Rivers test of who was the "client" was no longer fit for purpose.

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