A host of international legal associations are making a last-ditch attempt to obtain legal privilege for in-house lawyers in EU competition cases, following an earlier defeat in the European Court of Justice Court of First Instance. By Richard Parnham.

A growing body of international lawyers’ associations have signalled their intention to fight the recent preliminary ECJ ruling on legal privilege for in-house lawyers. To date, the European Company Lawyers’ Association, the Association of Corporate Counsel and the CCBE have all confirmed their intention to appeal. As parties to the original hearing before the ECJ Court of First Instance (CFI), these organisations are entitled to demand an appeal, even if the main party to the original dispute – Akzo Nobel and the European Commission – decide against proceedings with their own legal challenges. However, it is now understood that Akzo Nobel now intends to appeal in its own right.

Together, these organisations hope to overturn the September 2007 CFI ruling, which stated that European in-house lawyers were not entitled to legal privilege in EU competition law cases. While the judgment, Akzo Nobel v Commission, re-affirmed existing ECJ case law, it had also come as a bitter blow to in-house campaigners. Many international lawyers’ associations had demanded that the ECJ overturn what they regarded as outdated assumptions of the role of in-house lawyers in Europe.

Although the organisations are yet to finalise their legal arguments for the appeal, early evidence suggests they will each focus their attention on challenging different aspects of the original CFI ruling.

For its part, ECLA – assisted on a pro bono basis by Clearly Gottlieb – intend to challenge various CFI statements in relation to the recognition of legal privilege for in-house lawyers in EU member states. The CFI had stated that, because there was no unanimity among EU countries over whether privilege should be granted to corporate counsel, it was therefore unwilling to permit the concept to be applied in disputes involving EU competition law. Unfortunately for ECLA, the percentage of EU states which grant legal privilege to their in-house lawyers has actually decreased since the last time the ECJ addressed the issue in 1982 – mainly as a statistical by-product of EU expansion. However, as Paul de Jonge, ECLA’s new president, argues, while the overall percentage of countries who accept legal privilege for corporate counsel has decreased, the number of countries who accept it has also increased. In many regards, Mr de Jonge’s home country of The Netherlands is typical of how the debate has evolved in recent years. Dutch in-house lawyers were only granted the right to join their local bar, and therefore obtain the right to legal privilege under domestic Dutch law, in 1996 – 14 years after the earlier test case, known as AM&S v Commission.

In addition, although ECLA accepts that many EU countries – especially in the former Soviet states – do not grant legal privilege for their corporate counsel, it does not accept that this state of affairs necessarily reflects the countries’ policy on the issue. “What isn’t clear is whether national governments have made a conscious decision not to grant privilege to their in-house lawyers, or whether this is a just a default position because they never thought to give it to them,” continues ECLA’s Mr de Jonge.

To obtain a true picture of attitudes towards legal privilege, Mr de Jonge and his colleagues intend to carry out a comprehensive analysis of attitudes towards granting legal privilege for in-house lawyers by all EU governments. To assist it with its appeal, ECLA has commissioned a new study, outlining the exact position of legal privilege in each EU country – who has it, who doesn’t, and any special conditions and exceptions. As part of this research, ECLA intends to organise high-level meetings with national justice ministries and other specialists. This, it is hoped, with provide ECLA with sufficient information to persuade the ECJ that EU member states would, in fact, support giving privilege to in-house lawyers.

ECLA also intend to challenge another key principle of both the AM&S and Akzo Nobel rulings – that in-house lawyers are incapable of being sufficiently “independent” of their employers to warrant legal privilege. For ECLA’s Mr de Jonge, this assertion by the European Court that only lawyers who are not “bound to his client by a relationship of employment” should be entitled to legal privilege is indefensible. In the Akzo Nobel dispute, the lawyer in question was also a member of both the Dutch Bar and the local in-house lawyers’ association – and both organisations oblige their members to be “independent” when giving advice. In addition, the Dutch lawyer at the centre of the dispute enjoyed additional contractual and regulatory safeguards. These safeguards need to be “independent” above his contractual duties to his employer. To reinforce their argument on this point, ECLA have engaged a professor of law and a labour law specialist to write a special report for the ECJ appeal, arguing why in-house lawyers are sufficiently independent to be worth of legal privilege.

For its part, the CCBE – which mainly represents Europe’s private practice lawyers – intends to keep up the pressure on the ECJ in a different way. Because CCBE members are themselves divided over their attitude towards in-house lawyers – many of its members agree with the CFI ruling that corporate counsel are not sufficiently “independent” of their employer to warrant legal privilege – the CCBE is promoting a compromise solution. It suggests making the recognition of legal privilege for in-house lawyers in EU competition law case a matter of local law. Thus, if local law gives in-house lawyers the right to legal privilege – normally by granting them membership of their local bar – then the European Commission should also recognise this right in EU competition law disputes. Although the CFI explicitly refused to endorse this argument in its ruling, advocates of reform hope that the full court may be more willing to accept this compromise position.

Although the final outcome of the appeal is now several months away, one aspect of the initial CFI ruling that most commentators hope the ECJ will uphold relates to what documents the European Commission is entitled to seize. During the initial investigation by the European Commission, Commission officials decided they should “briefly examine” contested documents, to check if it was likely that they may be covered by legal privilege. In its ruling, the Court of First Instance explicitly disavowed the Commission’s behaviour – it was not, it said, the Commission’s place to unilaterally decide on the matter.

Instead, where the privilege status of a document was in question, it should be placed in a sealed envelope and taken away by the Commission. If necessary, the document’s privilege status should be decided by the European Court in an interim application. What is more, the Commission was not entitled to unilaterally decide to break the seal of the envelope and read the document until after the time limit for making an application had expired. Companies would, obviously, be deterred from making vexatious claims to privilege, on pain of being made to pay for the cost of any ECJ ruling – and possibly fined by the Commission itself.
The Court also gave a definitive ruling on which type of documents were entitled to attract privilege. Here, the key test was whether they were drawn up exclusively for the purpose of seeking legal advice from an (external) lawyer, for the purpose of exercising its right to file a defence claim. Helpfully, the document does not actually have to have been sent to the lawyer in order to attract privilege – it is sufficient that the person writing it intends to send it to a lawyer. As a result, background “preparatory documents”, can potentially be covered by legal privilege, even if not written by a lawyer. However, the Court also made it clear that the simple act of writing to a lawyer does not automatically give the correspondence privileged. For this reason, correspondence in relation to a competition law compliance programme does not, automatically, attract privilege. Such programmes often encompass information which goes beyond the exercise of a right of defence.
While the various lawyers’ associations have welcomed the clarification by the CFI about which document can potentially attract privilege, they regard the overall judgment as deeply flawed. In the 25 years since the original AM&S judgment, they argue, the in-house legal profession has changed enormously – and the ECJ case law should reflect those changes. This latest appeal reflects the “last throw of the dice” for in-house lawyers, who are determined not to be forced to wait another 25 years to get way.

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