Ireland: Privilege And The Conduct Of Internal Investigations

Last Updated: 26 October 2018
Article by Richard Willis, Michael Twomey and Elizabeth Upton
Most Read Contributor in Ireland, October 2018

Corporates undertaking an internal investigation into potential wrongdoing will welcome a recent decision of the English Court of Appeal.

The Court confirmed that, provided all other criteria are met, documents generated during the course of an internal investigation in anticipation of regulatory action or criminal prosecution may be protected by litigation privilege. In other words, the documents may not have to be disclosed to the regulator or prosecutor.

The Court said that it is in the public interest that corporates should be able to investigate allegations of wrongdoing, prior to going to a regulator or prosecutor, without losing the benefit of privilege. Otherwise corporates might not investigate at all for fear of being forced to reveal what their investigations uncovered.

While not binding before the Irish courts, the decision could be of persuasive value should a similar case arise here.

WHAT IS LITIGATION PRIVILEGE?

Communications which are privileged do not have to be disclosed to the court or to the other side in legal proceedings.

Litigation privilege applies to:

  • confidential communications between a lawyer and a client, or between either of them and a third party;
  • where the communication was for the dominant purpose of litigation; and
  • at the time the communication was made, the litigation was in being or reasonably contemplated.

Litigation privilege may also apply in the context of regulatory investigations. (Read our previous article here).

WHAT HAPPENED IN SFO V ENRC?

The English Court of Appeal decision was delivered in The Director of the Serious Fraud Office v Eurasian Natural Resources Corporation Ltd.

ENRC conducted an investigation into practices at its Kazakhstan subsidiary following allegations by a whistleblower of corruption and financial wrongdoing. The UK Serious Fraud Office (SFO) became aware of these allegations and for a period of two years engaged in

a dialogue with ENRC with a view to getting it to self-report. However, the SFO subsequently initiated a criminal investigation and sought various documents generated during ENRC's internal investigation, including notes made by ENRC's solicitors of 184 employee interviews. ENRC asserted that these documents were privileged.

WHAT WAS THE DOMINANT PURPOSE OF THESE DOCUMENTS?

For litigation privilege to apply, the communication must have been for the dominant purpose of litigation.

Somewhat controversially, the English High Court found that none of ENRC's documents were created for the dominant purpose of defending anticipated criminal proceedings, but rather to avoid the instigation of criminal proceedings. The High Court said that litigation privilege could not apply in these circumstances.

However, the English Court of Appeal helpfully clarified that legal advice given so as to head off, avoid or even settle reasonably contemplated proceedings is as much protected by litigation privilege as advice given for the purpose of resisting or defending contemplated proceedings.

It said that where there is a clear threat of a criminal investigation, the dominant purpose of the internal investigation is likely to be preventing or dealing with litigation.

WAS A CRIMINAL INVESTIGATION IN REASONABLE CONTEMPLATION?

It is not enough that documents are created for the dominant purpose of litigation. The party claiming privilege must also be able to show that at the time the documents were created, litigation was in being or was reasonably contemplated.

The English Court of Appeal in ENRC found that while a party anticipating possible prosecution will often need to make further investigations before it can say with certainty that proceedings are likely, that uncertainty does not prevent proceedings being in 'reasonable contemplation'.

The Court disagreed with the High Court's finding that litigation privilege cannot attach until either a defendant knows the full details of what is likely to be unearthed or a decision to prosecute has been taken. The fact that a formal investigation has not been commenced is only one part of the factual matrix and is not necessarily determinative.

The party claiming privilege will need to be able to point to contemporaneous evidence to show that it had a regulatory investigation or a criminal investigation in mind at the early stages of its internal investigation. The chronology of events and the structure of the internal investigation may prove crucial here. In the ENRC case, for example, the Court of Appeal had regard to the fact that, as soon as it received the whistleblower allegation, ENRC instructed external counsel to set up and conduct its internal investigation. The Court also referred to emails that showed that ENRC's general counsel had a "sense" from discussions with the general counsel of other large companies that ENRC was firmly on the SFO's radar, and that he upgraded ENRC's dawn raid procedures in anticipation of a raid. This showed that even at the very early stages, ENRC anticipated a possible criminal investigation.

VIEWS ON LEGAL ADVICE PRIVILEGE

The ENRC case also involved a consideration by the Court of Appeal of legal advice privilege.

Legal advice privilege applies to:

  • Confidential communications
  • Between a lawyer and a client
  • For the purposes of giving or receiving legal advice.

A decision of the English Court of Appeal in 2003 in what is known as 'the Three Rivers case' found that in a corporate context, the 'client' for the purposes of legal advice privilege is not the entire corporate entity but rather only those employees who are specifically authorised to seek and obtain legal advice from the company's external lawyers. To take an extreme example, this could mean that communications between the CEO of a company and its lawyers, setting out legal advices, may not be privileged unless the CEO has been authorised to deal with the external lawyers.

The decision has been much criticised as being entirely impractical for large corporates.

The Court of Appeal in ENRC added its voice to the criticism, noting that the English position is entirely out of step with the rest of the common law world and that it is unsatisfactory given the cross-border nature of multinational operations. However, the Court said that only the UK Supreme Court could overrule the decision.

For now, Three Rivers remains good law in England. Although never considered in detail in an Irish context, the Irish courts appear to have shown some support for the rationale, but the position here remains unclear. As such, corporates should adopt a cautious approach and should have a clear policy on who within their organisations has authority to seek and obtain legal advice.

KEY TAKEAWAYS

  1. Do not assume that litigation privilege will automatically apply to documents prepared for an internal investigation. Each case will depend on its own facts.
  2. Before embarking on an internal investigation, seek legal advice as to how best to structure the investigation so that appropriate steps can be taken to maximise privilege.
  3. Be prepared for challenges to claims of privilege and be ready to robustly defend these. Keep a written record of any privilege calls made at the different stages of an internal investigation so that you are in a position to show that the dominant purpose of any documents created was for anticipated litigation or regulatory action.

This article contains a general summary of developments and is not a complete or definitive statement of the law. Specific legal advice should be obtained where appropriate.

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

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

Authors
Similar Articles
Relevancy Powered by MondaqAI
Maples and Calder
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Maples and Calder
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
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
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

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 or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq 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 of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

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