A new judgment, handed down by the High Court earlier this week, has significantly changed the law on litigation privilege.
In both civil and criminal cases, litigation privilege applies to protect material that is prepared by a party for the dominant purpose of the litigation in which the privilege is later asserted.
However, the new ruling has limited that position for cases where there is potential liability under criminal law. Specifically, where a company carries out its own internal investigation into suspected criminal activity within the company – such as fraud, bribery or corruption – the results of that investigation and documents created during the investigative phase might no longer be protected by litigation privilege.
The Court's analysis in reaching this decision on the facts of Serious Fraud Office (SFO) v ENRC [2017] EWHC 1017 (QB) was, broadly, that at the time of the internal investigation no "adversarial litigation" was contemplated. The Court's view was that the threshold would only be met once a criminal prosecution was contemplated, but not at the point where only an investigation was contemplated. The judge also said that documents prepared for the dominant purpose of avoiding litigation, as opposed to conducting litigation, do not engage litigation privilege.
The effect of this ruling will allow the SFO to access the company's internal, investigative documents which the company had believed would be protected by litigation privilege. Those documents can now be used by the SFO to further its case against the company.
The decision is likely to be appealed but in the meantime companies should be mindful of what they prepare when carrying out internal investigations into potential criminal activity.
For further information, please visit the judgement here
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