Articles | In-House Investigations – Losing Privilege

A recent case has limited the scope of litigation privilege for in-house investigations.  

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Bill Dixon

Bill Dixon

The recent decision of Mrs Justice Andrews in SFO v ENRC [2017] EWHC 1017 came to some surprising conclusions on litigation privilege, particularly in a criminal or regulatory context. Essentially a claim to privilege was disallowed.

ENRC became concerned about overseas corruption allegations. They engaged external solicitors to investigate and those solicitors had various preliminary contacts with the SFO. Ultimately the SFO issued notices compelling ENRC to produce various categories of documents from the internal investigation (which included, for example, notes the external solicitors had taken of interviews with witnesses). ENRC resisted, claiming legal professional privilege. The issue then came before Mrs Justice Andrews.

The Criminal Justice Act 1987 allows claims for privilege in respect of notices to produce documents on the same basis as in civil proceedings. There are two types of privilege. Legal advice privilege covers the obtaining and receiving of legal advice from a lawyer. The second type, litigation privilege, is wider. This covers documents generated where the dominant purpose is connected with litigation which either already exists or which is in reasonable contemplation.

Although Mrs Justice Andrews did uphold a claim to legal advice privilege, she was much more restrictive in her approach to litigation privilege. She drew a distinction between the investigation and the prosecution stage of criminal proceedings. Just because there was an investigation that did not mean that litigation was necessarily in contemplation, because there might not be a prosecution. Where ENRC had generated documents with the intention of disclosing these to the SFO (or in connection with that disclosure) again they were not covered by litigation privilege. Documentation with the aim of avoiding litigation was not in reasonable contemplation of litigation. To be covered by litigation privilege, the documents had to be produced in contemplation of the conduct of litigation.

This surprising decision has serious implications for criminal and regulatory investigations in particular. In recent years, in areas like corruption the SFO has encouraged companies to self-report in order to receive lenient treatment. However usually there would be an initial internal enquiry by a company before deciding whether or not to self-report. It has now become very difficult for companies to undertake internal investigations and then make preliminary contact with the SFO without running the risk that documentation will be discloseable. In the future, great care will have to be taken over how these investigations are handled.