The future of legal professional privilege

Serious Fraud Office SFO

The Court of Appeals anxiously awaited decision in The Director of the Serious Fraud Office v Eurasian Natural Resources Corporation Limited was handed down in September this year, with the Court of Appeal overturning the ruling of the High Court insofar as it related to litigation privilege. We now know that the SFO does not intend to appeal to the Supreme Court (it has, however, warned that it will “continue to thoroughly assess the merits of all privilege claims and remains prepared to challenge those it considers to be ill founded”).



Eurasian National Resources Corporation Limited (ENRC) is part of a multinational group of companies that operate in the mining and natural resources sector. ENRC and its subsidiaries operate in countries where the risk for public sector bribery and corruption is extremely high. In 2010 ENRC received a letter from a whistle blower which alleged corruption and financial wrong doing on the part of one of its subsidiaries, Sokolov-Sarbai Mining Production Association (SSGPO) located in Kazakhstan.  ENRC engaged DLA Piper UK LLP and subsequently Dechert to investigate the allegations contained in the letter. This investigation was published in an article in The Times on 9th August 2011, and it was then that it came to the attention of the Serious Fraud Office (the SFO).

There followed a series of meetings between the SFO and ENRC, culminating in the SFO formally announcing on 25th April 2013 that ENRC was under criminal investigation. At this stage, ENRC asserted legal professional privilege over the documents generated by its solicitors and forensic accountants during their investigation.

In early 2016 the SFO sought declarations that documents created during ENRC’s investigation were not the subject of legal professional privilege.


First Instance decision

The matter went to trial in relation to four categories of documents which were part of the internal investigation. Mrs. Justice Andrews ruled in favour of the SFO in relation to three of those categories, namely: 1) Notes taken of the evidence given by employees and former employees of ENRC and its subsidiary companies, their suppliers and other third parties during the internal investigation; 2) materials generated by the forensic accountants’ review of ENRC books and records; and 4) 17 documents which were referred to in a letter sent to the SFO by the solicitors for ENRC[1]. In the Judge’s view, ENRC fell short of the test in USA v Philip Morris[2] because it was not “aware of circumstances which rendered litigation between itself and the SFO a real likelihood rather than a mere possibility” and that “…anticipation that the SFO might carry out a criminal investigation into ENRC’s affairs is not the same thing as preparing for the conduct of adversarial litigation or enabling lawyers to give advice about its conduct….”


Court of Appeal

The Court of Appeal allowed ENRC’s appeal concerning the documents in Categories 1, 2 and 4(save in respect of two emails). The appeal was otherwise dismissed.

Litigation privilege

In relation to litigation privilege the Court of Appeal decided it appropriate to address the following issues:

“1) Was the judge right to determine that, at no stage before all the Documents had been created, criminal legal proceedings against ENRC or its subsidiaries or their employees were reasonably in contemplation;

2) Was the judge right to determine that none of the Documents was brought into existence for the dominant purpose of resisting contemplated criminal proceedings against ENRC or its subsidiaries or their employees;

3) In the circumstances, which if any of the Category 1, 2 or 4 documents are protected by litigation privilege.”

The Court of Appeal ruled on Issue 1 “that the Judge was wrong to conclude that a criminal prosecution was not reasonably in prospect once the SFO had written its letter of 10th August 2011” and decided that it “was not right to suggest a general principle that litigation privilege cannot attach until either a defendant knows the full details or what is likely to be unearthed or a decisions to prosecute has been taken. The fact that a formal investigation has not commenced will be one part of the factual matrix, but will not necessarily be determinative.”

On Issue 2 they concluded “not only was a criminal prosecution reasonably in ENRC’s contemplation, but the judge ought also to have determined that the Category 1 documents were brought into existence for the dominant purpose of resisting or avoiding those (or some other) proceedings.”  They surmised that the judge had misinterpreted the contemporaneous material by thinking wrongly that ENRC had formally agreed to share core material from the internal investigation with the SFO.

On Issue 3, the Court found that all documents contained in Categories 1, 2 and 4 were “covered by litigation privilege” as they were all prepared at a time when “criminal prosecution was in reasonable contemplation” with “the dominant purpose of resisting or avoiding that prosecution”.

Legal advice privilege

With regard to legal advice privilege, the Court of Appeal reviewed the decision in Three Rivers (No. 5)[3] as it concerned the definition of “client” for the purpose of lawyer and client communications. In that case it was held that, within the corporate context, a communication between a lawyer and an employee could not attract legal advice privilege unless that employee was tasked with seeking and receiving such advice on behalf of the client. In coming to their decision the Court of Appeal felt, reluctantly, that they were unable to ignore the decision in Three Rivers and made it clear that if the only claim to privilege was based on legal advice grounds, with respect to Category 1 documents, the judge would have been right to follow Three Rivers. Tellingly, however, the Court of Appeal remarked that “had it been open for us to depart from Three Rivers (No. 5) we would have been in favour of doing so”. They opined that the Supreme Court will eventually have to consider this point in the future.


Insofar as it relates to litigation privilege, ENRC is a welcome result for corporations facing the challenge of maintaining privilege over documents created during internal investigations. The mere fact that the outcome of such internal investigations is not yet known (such that the corporation may not know whether there is any truth to the allegations and therefore the risk of adversarial proceedings arising), does not necessarily mean that a claim to litigation privilege over documents created during the investigation process will fail. Whether or not adversarial litigation is in reasonable contemplation at the time of creation of a document will in all cases be a matter of fact.

As to legal advice privilege, Three Rivers remains with us for the time being; and has indeed been followed recently in a passing off case heard before the English Intellectual Property and Enterprise Court[4].


Jacqueline Ziemniak - Harneys

Written by:

Jacqueline Ziemniak, Associate at Harneys.







[1] As to the other category of document – factual evidence used by lawyers to present to a committee of ENRC or to ENRC’s board – the Judge found that these would be subject to legal advice privilege.

[2] 2004 EWCA Civ 330, Brooke LJ at 54.

[3] Also a Court of Appeal decision: [2003] EWCA Civ 474.

[4] Glaxo Wellcome UK Ltd and ors v Sandoz Ltd and ors [2018] EWHC 2747 (Ch)

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Author: Jacqueline Ziemniak