The decision by the European Court of Justice in Akzo Nobel
Chemicals Ltd and Akcros Chemicals Ltd v Commission of the European
Communities (C-550/07P) earlier this week held that internal
communications by company employees with in-house counsel do not
satisfy the lawyer/client test. Hence such communications are not
The decision means that in-house lawyers' communications in
the EU will be available to regulators there, giving them an
important tool for their investigations into cross-border
What is legal professional privilege?
Legal professional privilege protects communications where:
there is a communication between lawyer and client for the
dominant purpose of seeking or providing legal advice or for use in
actual or anticipated litigation; and
the communication is confidential.
Why the ECJ found that in-house counsel's
communications are not privileged
The European Court of Justice (ECJ) relied heavily on its
earlier decision in AM & S Europe v Commission (1982)
ECR 1575 (Case 155/79) which had found that for communications
between lawyers and clients to be protected, the exchange must
emanate from an "independent" lawyer.
The EJC in Akzo Nobel found that:
the need to establish independence is incompatible with any
employment relationship existing between the lawyer and client. So
communications within a company or group with in-house lawyers will
not attract privilege;
despite the fact that in-house lawyers may share essential
characteristics with external lawyers, and both are subject to a
number of professional ethical obligations, an in-house lawyer does
not enjoy a level of professional independence equal to that of
external lawyers; and
many Member States did not allow in-house lawyers to be
admitted to a Bar Association or Law Society and therefore did not
regard them as having the same status as lawyers in private
What does this mean for in-house counsel
Although the decision in Akzo Nobel is limited on its facts to
investigations in the EU conducted in the competition sphere, it
may have wider ramifications.
In Australia, confidential communications with in-house legal
counsel attract privilege provided the capacity and independence of
in-house counsel can be established.
Australian law recognises that in-house counsel can be
independent of their employer. Whether they are in any given case
is ultimately a question of fact. Relevant to this inquiry are many
does the in-house counsel hold a practising certificate?
does the in-house counsel's employment contract reflect
their independence (this may not be so if, for example, the
in-house counsel's remuneration is linked to the performance of
what are the in-house counsel's reporting lines?
The risk remains however for multinational corporations with
business operations in the EU. Communications involving in-house
counsel which are protected by privilege here may be required to be
produced in the EU. Once produced, disclosure between agencies is
often specifically authorised.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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