European Union: ECJ Rules Out Legal Professional Privilege for Communications with In-House Lawyers

Last Updated: 15 September 2010
Article by SJ Berwin's EU & Competition Team

The European Court of Justice (the "ECJ") today rejected the appeal from Akzo and Akcros v Commission. The ECJ:

  • decided that communications between in-house lawyers and other employees of the same business should remain outside the scope of legal professional privilege ("LPP") under EU law; and  
  • ruled that the application of LPP at the EU level requires independence which, in part, means the absence of any employment relationship between the lawyer and his client.

Background

The decision of the ECJ stems from a challenge to the existing interpretation of EU law on legal privilege in Akzo and Akcros v Commission.

The longstanding EU position, as laid down in the AM & S case, is that written communications between a lawyer and their client would only be protected by LPP where:

  1. the communications were made for the purposes of and in the interests of the client's rights of defence; and
  2. they emanate from independent lawyers, who are not bound to the client by a relationship of employment.

It was the second of these two limbs that Akzo and Akcros sought to contest.

The case centred on a number of items of correspondence between an in-house lawyer and an employee seized by the Commission in the course of an EU competition law dawn raid.  The applicants argued that first, communications with in-house lawyers who are members of the Bar or Law Society of a Member State should be protected under LPP.  The principle of 'independence', it was suggested, also applied equally to in-house and external lawyers, since membership of professional organisations subject all lawyers to professional and ethical requirements.  It was argued that the distinction should therefore be drawn between those lawyers who are and are not subject to these professional requirements, rather than on their relationship of employment.

In the alternative, it was argued that if the AM & S decision did exclude in-house lawyers, it would be appropriate for the ECJ to extend the scope of LPP.  It was argued that in the majority of Member States, including the UK, LPP extended to in-house counsel.  It was further argued that the increased responsibilities placed on undertakings to self-assess their compliance with EU competition rules means that the use of in-house lawyers was becoming essential in large organisations and should be positively encouraged by an extension of the protections available.

These arguments were rejected by the Court of First Instance (now the General Court) on 17 September 2007 and Akzo and Akcros submitted an appeal. 

Akzo and Akcros were supported in their appeal by interventions from The Republic of Ireland, The Kingdom of Great Britain and Northern Ireland, The Kingdom of the Netherlands, The International Bar Association, the Society of Bars and Law Societies of Europe, the Nederlandse Orde Van Advocaten, the American Corporate Counsel Association and the European Company Lawyers Association.  There were no interventions supporting the position of the Commission. 

The Chief Executive of the Law Society of England and Wales, Des Hudson, remarked that "it appears to be a foolish move by the court not to refresh its case law to reflect the realities of the 21st century. The role of in-house counsel has greatly evolved since 1982."

Advocate General's Opinion

Advocate General Kokott on 29 April 2010 again rejected, in unusually forthright language, the arguments raised by Akzo and Akcros in favour of maintaining the position in EU law of LPP and the original interpretation of AM & S (see Community Week issue 470).  In brief, the Advocate General argued that due to economic dependence on their employer, in-house lawyers were not sufficiently independent from their 'client' and could be less prepared in dealing with conflicts of interest.  She further suggested that the changes in the legal landscape since AM & S were not sufficient to justify such a significant change in the EU's approach to LPP.

The American Corporate Counsel Association reflected that "the AG's ruling infers that on the day that an experienced and ethical lawyer enters a corporate headquarters to work on-premise, they somehow check their credentials and honor at the front door."

It was anticipated that the ECJ would follow the recommendations made by the Advocate General in her opinion.  

The ECJ Judgment

The ECJ, following the Advocate General's recommendations, found in favour of the Commission in the appeal.

The ECJ held that the General Court had not erred in its interpretation of the AM & S decision and that, despite enrolment with a Bar or Law Society and any additional professional ethical obligations placed on an in-house lawyer, he cannot be deemed to be truly independent for the purposes of LPP.  The position of an in-house lawyer is inevitably influenced by and subject to the commercial strategies undertaken by the employer.  The ECJ supported the approach taken by the Advocate General, that the independence of lawyers should be framed positively, with reference to their professional ethical obligations, and negatively, by the absence of an employment relationship.

Furthermore, the argument proposed by Akzo and Akcros regarding the purported breach of the principle of equal treatment was dismissed by the ECJ.  The ECJ supported the view of the Commission that in-house lawyers and external lawyers are in fundamentally different positions and therefore can be treated differently in the application of LPP.

Additionally, the ECJ considered that a change in the established case law could not be justified by the developments in competition law since the judgment in AM & S and, further, that there was no discernable trend in Member States in favour of extending the scope of LPP to in-house lawyers.  The ECJ considered the EU rules on LPP formed part of the framework of restrictions and conditions that apply to lawyers in the exercise of their profession and that it is for the client to determine whom to seek advice from based on the framework applicable to that particular profession.

The ECJ additionally supported the view of the Commission that it was right to have LPP defined at an EU level to avoid the complexity and uncertainty in attempting to apply the differing national rules on LPP in the pursuit of EU competition investigations, thereby ensuring that undertakings are treated equally.

Effect of the Judgment

This judgment affirms the longstanding approach of the EU courts to the question of LPP under EU law.  The appeal and its judgment consider most of the persuasive arguments raised by proponents of a change in the law.  None of these arguments were, however, deemed compelling enough, in the opinion of the ECJ, to alter its approach.  The judgment therefore can be seen to bring a degree of certainty to the privileges attached to the role of in-house lawyers in the EU. 

There remains, however, a divergence between the approach on an EU level and that in some of the Member States, including the UK.  Whether this decision will have a significant impact on the provision of in-house competition advice remains to be seen. 

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.

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
 
In association with
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
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (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 www.mondaq.com

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 Mondaq.com’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.

Disclaimer

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.

Registration

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 by clicking here .

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 unsubscribe@mondaq.com 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.

Cookies

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.

Links

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.

Mail-A-Friend

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.

Security

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 webmaster@mondaq.com.

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 EditorialAdvisor@mondaq.com.

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 enquiries@mondaq.com.

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