In England and Wales, a party to litigation can generally assert legal advice privilege in communications with its lawyers. But what is the position when the communication is with in-house lawyers practising in another country, particularly where those lawyers would not benefit from privilege under that country's own laws? This was the situation the Commercial Court considered in PJSC Tatneft v Bogolyubov and Others  EWHC 2437 (Comm).
Legal advice privilege
In very broad terms, legal advice privilege applies to communications between a lawyer and client for the dominant purpose of giving or receiving legal advice. These privileged communications can be withheld from an opponent in civil litigation in England and Wales. It is well established that legal advice privilege applies to foreign lawyers and to in-house lawyers in England and Wales.
In many other jurisdictions though, communications with an in-house lawyer are not afforded the same protection as those with an external lawyer, because the in-house lawyer is not seen to be independent of the organisation that employs them. Indeed, there are certain overlap situations where this position also affects in-house lawyers practising in England and Wales. For example, although communications with an in-house lawyer in England and Wales will generally be privileged in civil litigation in this jurisdiction, they are not protected from disclosure in an EU Competition investigation.
Background to the case
In these proceedings, the Russian claimant company claimed legal advice privilege for communications between its internal legal department and other employees.
The second defendant challenged this claim to privilege on the basis that:
- The claimant's in-house legal advisers practised in Russia;
- The Russian legal system distinguishes between independent, self-employed "advocates" and employed in-house lawyers;
- In Russia there is a concept of advocate's secrecy (which was said to be similar to legal professional privilege) - but it applies only to advocates, not to in-house lawyers;
- As a matter of Russian law, the claimant's in-house lawyers could not therefore claim "advocate's secrecy" in the advice they gave to the claimant; and
- Accordingly the in-house lawyers were not "appropriately qualified" foreign lawyers who could properly claim legal advice privilege in England.
The Court considered the defendant's submission that the claimant's lawyers were not "appropriately qualified" foreign lawyers such that their communications were privileged, but Moulder J found that it is the function of the lawyer that matters, not their status.
English courts have held that it is not necessary to enquire into the qualifications of foreign lawyers, because to do so would lead to uncertainty and unfairness. It could also raise issues of comity if courts were required to express views on the qualifications and regulation of foreign lawyers. Citing Lord Neuberger in R (Prudential plc and another) v Special Commissioner of Income Tax and another, the judge noted that English courts have come to the view that legal advice privilege extends to all foreign lawyers "regardless of their particular national standards, regulations or rules with regard to privilege".
In this particular case, the second defendant's evidence suggested that all in house lawyers in Russia and a large proportion of those working in Russian law firms were not "advocates" and thus should not benefit from privilege in England – an outcome that the judge regarded as unfair and inconvenient.
The second defendant further submitted that the claimant's in-house lawyers should not be afforded the protection of privilege because (a) English in-house lawyers have to be regulated and have a practising certificate; and (b) in-house lawyers are paid employees and not independent.
Moulder J found that, once one had accepted that foreign lawyers benefit from privilege without enquiring into their qualifications or regulation, extending this to foreign in-house lawyers followed as a matter of logic and principle – the only difference is that they act for one client rather than many. So the fact that English in-house lawyers may require certain qualifications and regulation was not a reason to deny foreign in-house lawyers the protection of privilege.
Meanwhile the objection that in-house lawyers are not independent has been firmly rejected by English courts in relation to English in-house lawyers, and was not a reason to deny foreign in-house lawyers the benefit of privilege.
Accordingly, the court concluded that:
- Legal advice privilege extends to communications with foreign lawyers whether or not they are "in-house".
- The court will not enquire into the foreign lawyer's regulation or qualifications under their local law.
- The only requirement for legal advice privilege to attach is that they should be acting in their professional capacity or function as a lawyer, in connection with the provision of legal advice.
This decision will be of particular interest to in-house lawyers working in global organisations or on cross-border matters. Whilst of course they will still be bound by the rules of privilege in their own jurisdictions, which may be more restrictive, this decision will no doubt be welcomed by companies that might need to litigate in England. As such, it is also a politically and economically pragmatic decision in the face of Brexit, and attempts to ensure the ongoing attractiveness of England and Wales as a jurisdiction for commercial litigation.