The case involved a claim by the SFO that certain documents generated during ENRC’s internal investigations undertaken by ENRC’s solicitors and forensic accountants are not subject to legal professional privilege. 

ENRC contended that the sensitive documents were protected by litigation privilege, legal advice privilege or both and could, therefore, remain confidential.

The SFO disputed ENRC’s generic claim to legal privilege and contended that ENRC could produce the documents but redact any specific legal advice contained in them.

 The issue for the Court to decide was whether ENRC could refuse to produce the documents on the grounds of legal privilege.  The case is the first time the Courts have considered a claim for legal privilege linked to criminal rather than civil proceedings.

Background to the case

ENRC is a former FTSE100 UK company operating as part of a multinational group of mining and natural resource companies.  Its main operations have been in Kazakhstan and various African countries widely perceived as being high risk for bribery and corruption.  In 2011, ENCR instructed lawyers and forensic accountants to conduct an internal investigation following whistleblower allegations and media reports of corruption, bribery, and fraud.  Over the next 2 years, ENCR met over 30 times with the SFO and gave repeated assurances that it was committed to cooperating and reporting any wrongdoing.

In 2013, the lawyers made a presentation to ENCR’s board on factual evidence relating to the company’s dealings in Africa.  Shortly afterwards, ENCR dismissed its lawyers, shook up its board members and the SFO then launched its own criminal investigation.  The SFO exercised its powers under the Criminal Justice Act 1987 requiring ENCR to produce certain documents.  ENCR refused to hand over the documents claiming they were protected by legal privilege.

Last year, the SFO was given additional funding from the government to pursue the case against ENCR who have always denied all allegations and any wrongdoing.  To date, no one has been charged or prosecuted in relation to the criminal investigation.

The Judgment

 The case focused on 4 categories of documents:

•  Category 1:  notes taken by lawyers of evidence given to them by, amongst others, employees and officers of ENCR.  ENCR argued the notes were protected as the purpose of the interviews was to enable the lawyers to obtain relevant information to provide ENCR with advice on anticipated criminal litigation.  ENCR argued the notes were lawyer’s work and would give a flavour of their legal advice;            

• Category 2:  accounts generated by accountants. ENCR argued that the documents were protected as the dominant purpose was to identify any issues which may give rise to prosecution;             

• Category 3:  documents containing factual evidence relating to the presentation by the lawyers to the board in 2013; and            

• Category 4:  documents mainly comprising forensic accounts, reports, and correspondence, raising the same arguments as category 2.  

The Court found that, save for category 3, no documents were covered by legal privilege and the sensitive documentation could, therefore, be obtained by the SFO.

The judgment raised some interesting points:

•  In relation to the category 1 documents, those interviewed were not the “client” in the client-lawyer relationship.           

• Documents produced by lawyers investigating on behalf of a company will not have the same privilege as documents advising on litigation.            

• Litigation must be in reasonable contemplation, and the document must have been prepared for the dominant purpose of litigation to be protected by litigation privilege.  ENRC failed on both limbs of this test.  The Court found that even though a criminal investigation by the SFO was reasonably contemplated, this does not necessarily equate to the contemplation of prosecution.  The Court also concluded that the primary purpose of the documents was fact finding to establish if there was any truth in the whistleblower allegations and not preparation for litigation.            

• The first limb of the test for litigation privilege appears to be easier to satisfy in civil cases than criminal ones.  The critical difference between civil and criminal proceedings is the basis on which they can be started.  Civil litigation is easier to commence than criminal proceedings which cannot be started until the prosecutor is satisfied that there is sufficient evidence for prosecution and the public interest test is satisfied.           

• The Court rejected the submission that litigation privilege extends to documents created to obtain legal advice on how to best avoid litigation. The Judge commented that “avoidance of a criminal investigation cannot be equated with the conduct of a defence to a criminal prosecution.”            

• The SFO never received the report into corruption allegations in sub-Saharan Africa despite ENRC repeatedly promising to give full and frank disclosure of the results of its internal investigations.  The Court held that these reports were produced with the intention of disclosing them to the SFO at a time when the relationship was collaborative rather than adversarial and were therefore not privileged.            

• Legal advice privilege will not apply to lawyers’ working papers unless they contain actual legal advice.           

• Legal advice privilege does not extend to fact finding, only to advice on the facts.  This is a delicate distinction which may cause difficulty in practice.

Impact of the case

An ENRC spokesman stated, 

“we are very surprised by this ruling, and we will appeal today’s decision because the effect of this judgment is that a party who wishes to consult a lawyer in relation to an SFO dawn raid or criminal investigation is not entitled to the protections afforded by litigation privilege.”

If the ruling stands, it could have profound implications on internal investigations and may change the willingness of companies to cooperate with the SFO and other bodies.  Companies can no longer assume that interview records, reports and documents prepared in genuine internal investigations into allegations are afforded the protection of legal privilege.  Companies will be left conducting investigations knowing that the documentation can be seized by the SFO and other prosecuting agencies.

Mike Appleby, partner at Fisher Scoggins Waters, told IOSH Magazine that businesses should take note. He said:

“It is not uncommon for lawyers in health and safety cases to give instructions for an accident investigation for the purpose of advising their clients. This ruling limits the circumstances for claiming the investigation report is privileged, therefore running the risk that it may end up as a prime exhibit in a future prosecution.”

To read the full IOSH Magazine article Click Here

Fisher Scoggins Waters are a London based law firm who specialise in construction, manufacturing and engineering law.  If you would like more information or advice about litigation claims and procedures, please phone us on 0207 993 6960.