UK: High Court Upholds Claim To Privilege In Respect Of Underlying Instructions To Law Firm Relating To Escrow Monies

Last Updated: 31 January 2019
Article by Herbert Smith Freehills

The High Court has rejected an application for disclosure of documents containing the underlying instructions to a law firm acting for a party funding a transaction, in circumstances where the law firm provided a confirmation to the seller as to the nature of its irrevocable instructions regarding escrow monies: Raiffeisen Bank International AG v Asia Coal Energy Ventures Ltd [2019] EWHC 3 (Comm).

The court rejected an argument that the instructions were not confidential, or that privilege had been waived, because the client had authorised the law firm to state what instructions it had been given. The judge emphasised that underlying instructions do not cease to be confidential just because the client authorises the solicitor to divulge information it has received in confidential communications from the client. The question is whether the client has given the solicitor authority to disclose the underlying communications.

Caution is needed however. It may be difficult to distinguish between cases where the client has given the solicitor authority to disclose the underlying communications and cases where it has merely authorised the solicitor to divulge information received from the client without disclosing the underlying communications. Particular care should also be taken where a party is considering referring to lawyer/client communications in the context of legal proceedings. If the court finds that the underlying privileged material is being deployed in the proceedings it may order those communications to be disclosed along with any other documents relevant to that issue, under the principle of collateral waiver or the "cherry picking rule".

The decision also illustrates the broad protection which can be afforded to lawyer/client communications under the head of legal advice privilege. The privilege is not limited to requests for legal advice or the provision of advice, but will include the entire continuum of communications between solicitor and client relating to a transaction in which the solicitor has been instructed, provided that they are directly related to the solicitor's performance of his professional duty as legal adviser. Here that principle meant that instructions regarding the holding and transfer of escrow monies were privileged, even if they did not contain advice on matters of law.


The claimant ("RBI") and the first defendant ("ACE") entered into a sale and purchase agreement ("SPA") in relation to the sale by RBI of certain loans and ancillary rights in connection with a proposed public takeover of a company in which RBI held shares. The purchase by ACE was financed by a third party ("SMM") which was represented by the second defendant ("Ashurst").

The SPA contemplated the parties agreeing an escrow arrangement under which the maximum amount due to RBI, US$85 million, would be held in escrow and released on satisfaction of the conditions precedent under the SPA. If the escrow agreement was not entered into within 30 days of the SPA, the parties would discuss alternative arrangements to achieve the same commercial purpose. As provided in the SPA, Ashurst issued a confirmation to RBI (the "Confirmation") which stated:

"(a) we have been put in funds in an amount that is not less than US$85 million...; and

(b) we have irrevocable instructions as follows: (i) to transfer the Escrow Amount to the Escrow Agent upon the signing of the Escrow Agreement in accordance with the terms thereof; and (ii) in the event that the Escrow Agreement is not signed within 30 days of the date hereof, to continue to hold the Escrow Amount pending agreement by the Parties contemplated by [the SPA]..."

Ultimately, the transfer of the loans and ancillary rights was not completed and the relevant funds were not transferred. RBI brought a claim against ACE for breach of contract and against Ashurst alleging misrepresentation in respect of the Confirmation and a breach of a duty of care to RBI.

RBI sought disclosure from Ashurst of any document containing the "irrevocable instructions" referred to in the Confirmation, or any variation to those instructions, as well as any instructions as to what was to be done with the $85 million. Ashurst resisted the application on grounds that such documents were subject to legal advice privilege, which SMM had refused to waive when requested by Ashurst. RBI argued that the documents were not privileged for a number of reasons, including:

  • The instructions in question were not confidential, or any privilege had been waived, because SMM had authorised Ashurst to enter into a legal relationship with RBI and asked Ashurst to state what instructions it had been given (which Ashurst did).
  • The nature of the instruction as to the use of funds was not a communication of a kind which attracted legal advice privilege: Ashurst was doing no more than a bank often does in similar circumstances.
  • To the extent that Ashurst communicated the instructions to ACE, these communications were not privileged as ACE was not Ashurst's client and it was unlikely that the instructions were shared on a confidential basis.

RBI also sought disclosure of the balance of Ashurst's client account into which the escrow amount was paid, from when the money entered the account to when it left the account. Ashurst did not consent to the order but did not object to such an order being made.


The High Court (Mrs Justice Moulder) ordered disclosure of Ashurst's client account balance, which she accepted did not involve legal advice privilege, but upheld the claim to privilege in respect of the instructions.

Were the instructions confidential or had privilege been waived?

It was common ground that, unless a document is confidential, there can be no question of legal advice privilege arising.

RBI relied on the Court of Appeal decision in Conlon v Conlons [1952] 2 All ER 462 as authority for the proposition that legal professional privilege does not extend to a communication which the client instructed the solicitor to repeat. In that case, the plaintiff's solicitors wrote to the defendant stating that the plaintiff was prepared to accept £1000 in settlement. In the court's view, this was akin to saying "my client authorises me to say to you that he will accept such and such an amount in settlement". It held that the plaintiff could not claim privilege in respect of what he had said to his solicitor and at the same time had told his solicitor to communicate to the other side. The plaintiff therefore had to answer the question as to whether or not he had authorised his solicitors to settle the case for £1000.

Moulder J said that the application in the present case was much broader than in Conlon where the plaintiff was able to give a simple "yes" or "no" response. Here the  claimant sought specific disclosure of documents which might well contain legal advice as well as containing the irrevocable instructions. This was closer to the position in Ramac Holdings Ltd v Brachers [2002] EWHC 1683 (Ch), in which the court rejected a submission that, where a solicitor was instructed by his client to certify a particular matter, privilege was thereby waived so that the solicitor was at liberty to refer to the underlying facts and matters on which he relied and which had been communicated to him in confidence for the purpose of legal advice.

In the present case, properly analysed, SMM did not authorise Ashurst to tell RBI what the client's instructions were. The purpose of the instructions was to enable Ashurst to provide independent and legally binding representations on its own behalf to RBI, irrespective of the position as between Ashurst and SMM which was a matter for Ashurst. The documents which contained the instructions remained confidential, the judge concluded, for the following reasons:

  1. Unlike in Conlon, Ashurst was not acting as the client's agent in giving the Confirmation.
  2. In Conlon the plaintiff put in issue the authority of his solicitor and so the decision could be viewed as a form of waiver.
  3. Underlying instructions do not cease to be confidential merely because the client authorises his solicitor to divulge information which has passed in the course of confidential communications; the question is what authority the client has given to his solicitors. Here SMM did not give authority to disclose the underlying communications.

Moulder J rejected for similar reasons the argument that any privilege had been waived, describing it as a repackaging of the arguments made in relation to confidentiality.

Was there a relevant legal context?

It was common ground that privilege attaches not only to a document conveying legal advice and a specific request for advice but (as stated by Taylor LJ in Balabel v Air India [1988] Ch 317 at [330] and cited with approval by Lord Carswell in Three Rivers DC v Bank of England (No 6) [2005] 1 AC 610):

"where information is passed by the solicitor or client to the other as part of the continuum aimed at keeping both informed so that advice may be sought and given as required, privilege will attach... Legal advice is not confined to telling the client the law; it must include advice to what should prudently and sensibly be done in the relevant legal context."

Further, as noted by Lord Carswell in Three Rivers, all communications between a solicitor and his client relating to a transaction in which the solicitor has been instructed for the purpose of obtaining legal advice will be privileged, provided that they are directly related to the performance by the solicitor of his professional duty as legal adviser of his client.

In the present case, Moulder J noted, communications regarding the transfer of the funds and the confirmation to be provided to RBI were part of the completion arrangements for the purchase of the loans and the provision of finance by SMM. Ashurst's role was to provide legal advice to SMM in relation to the provision of that finance. The Confirmation had to be viewed in the context of the transaction as a whole and the legal advice that Ashurst would give as to how to achieve its client's commercial objective and safeguard its interests. The underlying communications were inextricably bound up with that legal advice.

The judge recognised that the documentation containing the instructions relating to the holding of the $85 million might not contain advice on matters of law, but said it would still be part of the continuum of communication.

Accordingly, all of the categories of instructions were privileged as they were given in a relevant legal context and were directly related to Ashurst's performance of its role of providing legal advice to its client.

Did it matter if the instructions were shared with ACE?

RBI accepted that if the instructions were shared with ACE confidentially, privilege would apply, but it submitted that it was inherently unlikely that that was the case.

Moulder J did not accept that it was unlikely that communications between Ashurst and ACE were intended to be confidential. ACE and SMM shared a common interest in the purchase of the assets and may therefore have exchanged information through Ashurst on a confidential basis. There was no such common interest between ACE and RBI or SMM and RBI which would suggest that communications between Ashurst and ACE as to instructions received from SMM were intended to be shared with RBI.

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

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

In association with
Related Topics
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please 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 (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

To Use 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.


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.


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