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Disclosure of material created during internal investigations

6 September 2018

The Court of Appeal yesterday handed down one of the most awaited court judgments in recent times, Serious Fraud Office (SFO) v Eurasian Natural Resources Corp. Ltd [2018] EWCA Civ 2006.

The mining group ENRC has won its appeal against a High Court decision of May 2017, ordering it to provide the Serious Fraud Office (SFO) with communications and material generated during the course of a lawyer led internal investigation into allegations of fraud, bribery and corruption.

In May 2017, Mrs Justice Andrews ruled that documents prepared by ENRC during the internal investigation conducted by their lawyers were not subject to legal professional (litigation) privilege, since at the time the documents were created there could be no reasonable contemplation of proceedings (in particular criminal proceedings at the early pre-charge stage).

The High Court ruling created justified unease that clients would feel deterred from seeking legal advice and conducting internal investigations for that purpose if documentation created during those investigations could fall into the hands of investigators at a later stage.

In overturning the High Court ruling the Court of Appeal concluded that the disputed categories of documents including interview notes, and material associated with a review by forensic accountants had, on the facts before them, the benefit of legal (litigation) privilege. Importantly, the court also said that advice in respect of which the dominant purpose is to avoid legal proceedings, or which is given with a view to settlement, is as much protected by litigation privilege as advice given for the purpose of defending such proceedings. The success of the appeal means that ENRC will no longer be required to disclose the relevant documents to the SFO.

Although the factual background to the appeal is a financial crime investigation, the ruling will impact upon a wide range of internal corporate investigations.

The Law Society, which had intervened in the appeal, emphasised the importance of the ruling for the principle of lawyer-client confidentiality. Christina Blacklaws, Law Society President, stated that "the rule of law depends on all parties being able to seek confidential legal advice without fear of disclosure."

Browne Jacobson will be analysing the judgment in the coming days with a view to commenting in more detail upon the case and producing practical guidance for clients in the sensitive but important area of internal corporate investigations.

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