Australia: No Privilege to be an In-House Lawyer in the European Union

Last Updated: 23 September 2010
Article by Monique Nymeyer

On 14 September 2010, the European Court of Justice (ECJ) refused to extend legal professional privilege (LPP) to internal company communications with in-house lawyers in the case of Akzo Nobel Chemicals and Akcros Chemicals v Commission and Others (C-550/07 P, 14 September 2010).

The ECJ's decision confirms communications between a company and its in-house lawyers are not protected by LPP in relation to certain investigations carried out by organs of the European Union. Currently, the scope of the decision is limited to litigation arising from the Treaty of the European Union, and the common law position in European Union member states is not affected. Companies that do business in Europe will be affected by the decision if they receive a notice from the European Commission regarding anti-competitive issues.


In 2003, Akzo Nobel Chemicals Limited (Akzo) and Ackros Chemicals Limited (Ackros) became the subject of an investigation by the European Commission on cartel conduct. The investigation was carried out by Commission officials assisted by representatives of the British Office of Fair Trading at the companies' headquarters in the UK.

During the course of the investigation the Commission seized a number of documents, including two emails exchanged between the Director General of Ackros and Akzo's coordinator for competition law (i.e. a member of Akzo's in-house team) referred to as "Mr S" in the judgment. Mr S, in addition to being employed as a lawyer in the legal department of Akzo, was also enrolled as a member of the Netherlands Bar.

In May 2003, the Commission rejected a claim made by Akzo and Ackros that the emails were subject to LPP. The companies appealed to the General Court of the European Union, which dismissed their claim in September 2007. Subsequently, Akzo and Ackros appealed to the ECJ.

Legal Professional Privilege in the European Union

The test for LPP within the European Union as set out in Case 155/79 AM & S Europe v Commission [1982] ECR 1575 consists of the following two elements:

  1. legal advice must be requested and given for the purposes of the "client's rights of defence" i.e. it must be related to actual or anticipated litigation; and
  2. the exchange must emanate from "independent lawyers," that is to say "lawyers who are not bound to the client by a relationship of employment."

Arguments advanced by Ackros and Akzo

The arguments advanced by Ackros and Akzo and the ECJ's responses can be summarised as follows.

  1. The Court had wrongly applied the second part of the LPP test in holding that the relationship of employment prima facie excluded any document from the protection of LPP. Mr S' contract of employment made clear that "the company was to respect the lawyer's freedom to perform his functions independently and to refrain from any act which might affect that task". The contract specifically authorised Mr S to comply with all the professional obligations imposed by the Netherlands Bar.
  2. Legislation within the Netherlands treats in-house lawyers in the same way as external lawyers, and also includes within its legal professional regulations "additional guarantees aiming to resolve in an impartial manner any differences of opinion between the undertaking and its in-house lawyer." Accordingly, the companies submitted that the decision of the Court in refusing to apply LPP violated the principle of equal treatment.
  3. The Court should have re-interpreted the test for LPP to reflect the emerging trend in European Union member states that communications with in-house lawyers should be afforded LPP in certain circumstances. Particularly, the companies noted that the modernisation of the procedural rules in relation to cartel investigations increased the need for in-house legal advice, as in-house lawyers are often in the unique position of having intimate knowledge of the company they work for and its activities.
  4. The finding of the Court undermined the principle of legal certainty, as the cartel provisions of the Treaty for the European Union are often applied in parallel with corresponding national cartel laws. In member states which maintain that LPP can apply to communications with in-house counsel, certain communications will be privileged within the national jurisdiction, but not within the jurisdiction of the European Union.

Ruling of the ECJ

The ECJ held that overall, "in-house lawyers and external lawyers are clearly in very different situations," and an in-house lawyer's employment by a company prevents them from ignoring the commercial strategies pursued by their employer.

With regards to the fact that the in-house lawyer may be subject to the same national practice rules as an external lawyer, the ECJ noted that

"An in-house lawyer, despite his enrolment with a Bar or Law Society and the professional legal obligations to which he is, as a result, subject, does not enjoy the same degree of independence from his employer as a lawyer working in an external law firm does in relation to his client."

The ECJ also noted that under the terms of their contract of employment, in-house lawyers are often required to carry out tasks other than the provision of legal advice. In the present case, Mr S was appointed as the "competition law coordinator", which "may have an effect on the commercial policy of the undertaking." The principle of equal treatment between in-house and external lawyers was held to apply only insofar as the formal act of admitting an in-house lawyer to a Bar or Law Society and the professional ethical obligations incumbent on them.

In responding to the argument that the test for LPP should be amended to reflect emerging trends within national frameworks to protect communications with in-house lawyers, the ECJ held it was not possible to identify tendencies which were sufficient to justify a change to the test outlined in AM & S Europe v Commission. The ECJ noted a considerable number of member states do not allow in-house lawyers to be admitted to a Bar or Law Society, and do not recognise them as having the same status as lawyers in private practice.

Finally, the ECJ held that the test for LPP did not undermine the principle of legal certainty. The European Commission's investigatory powers could be distinguished from enquiries which may be carried out at national level by government bodies. With respect to the competition law regulations that were the subject of the present proceedings, the ECJ noted that there was an agreed division of power between national and European Union competition authorities.

Accordingly, the ECJ held that companies are in a position to clearly determine when communications with in-house lawyers may be subject to a claim of LPP.

Considerations for local in-house counsel

Although Akzo Nobel is not binding in Australia, the decision is still significant for Australian in-house lawyers.

Specifically, Australian companies with business in the European Union must be careful when obtaining advice from in-house counsel in relation to activities in European Union member countries, as those communications may not attract LPP.

On a broader level, the decision prompts a re-evaluation of the importance of the independence requirement in the current test for LPP in the Australia. Privilege is considered to be a substantive right of the client. However, the ECJ's decision in Akzo Nobel completely removes the client's right to claim privilege, without exception, based on the employment relationship between in-house lawyers and their employer company.

Notwithstanding the limited impact of the of the ECJ's decision, restricted currently to competition investigations by the European Commission, the case may provide further impetus for a reconsideration of the independence requirement set out in Australian LPP cases such as Rich v Harrington [2007] FCA 1987 and Waterford v Commonwealth (1987) 163 CLR 54. In the recent Federal Court decision in Dye v Commonwealth Securities Ltd (No 5) [2010] FCA 950 (1 September 2010), Katzman J appeared to move away from a requirement of independence completely. Although ultimately Katzman J did not have to decide on the issue, she commented that the test enunciated by Branson J in Rich v Harrington could be defined without reference to a requirement of independence. Katzman J said:

"Thus, with the greatest respect, I doubt that the decision in Waterford requires anything more than that the legal adviser be professionally qualified and acting in a professional capacity."

For more information, please contact:


Monique Nymeyer

t (02) 9931 4755


John Dalzell

t (02) 9931 4755


Snezana Vojvodic

t (02) 9931 4993


Bran Black

t (02) 9931 4896


To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions