Are Documents Created During an Internal Investigation Privileged?
This is an important question for all employers who are undertaking internal investigations, whether they are carrying out the investigation themselves or commissioning others to do it.
In the recent case of The Director of the SFO v Eurasian Natural Resources Corporation Ltd the Court of Appeal has provided some useful guidance, particularly where the employer is investigating conduct which is potentially criminal in nature.
Legal Background
Legal professional privilege prevents the disclosure of confidential legal communications. There are two types of privilege:
- "Litigation privilege" concerns communications between clients or their lawyers and third parties where the dominant purpose of the communication is for conducting actual, pending or contemplated litigation.
- "Advice privilege" concerns communication between a client and their lawyer where the client seeks, and the lawyer gives, legal advice.
In the early 2000s the scope of advice privilege was narrowed following a decision by the Court of Appeal that communications between an employee of a company and the company's lawyers cannot attract advice privilege unless that employee had been tasked with seeking and receiving that advice on the company's behalf.
In addition, it is questionable whether investigation materials (such as witness statements) are created for the purpose of taking legal advice, or whether they are created for the purpose of investigating factual allegations.
The Facts of SFO v ENRC
In 2010, following allegations of bribery and financial wrongdoing in relation to foreign subsidiaries, ENRC instructed lawyers and forensic accountants to carry out an internal investigation.
In August 2011 the Serious Fraud Office (SFO) became directly involved with ENRC and in April 2013 commenced criminal proceedings. As part of this the SFO requested that ENRC disclose a range of documents including:
- notes taken by lawyers of evidence given to them during their investigation, including 184 interviews with current and former employees
- material generated by the forensic accountants as part of their review
ENRC argued that the SFO could not compel them to release the documents on the basis that they were subject to litigation privilege.
In 2017 the High Court ruled that ENRC were required to disclose the documents. In the High Court's view, no criminal prosecution was contemplated at the time the documents had been created. ENRC appealed.
The Court of Appeal Decision
The Court of Appeal overturned the High Court's decision. It held that when the materials had been produced litigation with the SFO was a real likelihood rather than just a possibility. The uncertainty that litigation would commence did not prevent it being in contemplation.
The Court of Appeal was clear that litigation privilege protects legal advice given to head off, avoid or settle possible legal proceedings. It also held that employers should be able to investigate whistleblowing allegations prior to going to a prosecutor like the SFO without losing the benefit of litigation privilege.
What Does This Mean?
The decision will provide comfort that internal investigations are likely to benefit from litigation privilege when there is a real risk of prosecution.
However, the judgment did not interfere with narrower view of legal advice privilege adopted by the courts since the early 2000s. This means that employers still need to be very clear about the likelihood of their internal investigations being privileged right from the start. It may well be that investigations commenced when there is no real possibility of litigation will not attract privilege.