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England and Wales High Court (Queen's Bench Division) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Queen's Bench Division) Decisions >> Serious Fraud Office (SFO) v Eurasian Natural Resources Corporation Ltd  EWHC 1017 (QB) (08 May 2017)
Cite as:  Lloyd's Rep FC 330,  Crim LR 63,  1 WLR 4205,  EWHC 1017 (QB),  2 Cr App R 24,  WLR(D) 317
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QUEEN'S BENCH DIVISION
Strand, London, WC2A 2LL
B e f o r e :
| THE DIRECTOR OF THE SERIOUS FRAUD OFFICE
|- and -
|EURASIAN NATURAL RESOURCES CORPORATION LTD
(instructed by Eversheds Sutherland LLP) for the Claimant
Richard Lissack QC, Tamara Oppenheimer and Saaman Pourghadiri
(instructed by Signature Litigation LLP) for the Defendant
Hearing dates: 6, 7, 8 and 9 February 2017
Crown Copyright ©
Mrs Justice Andrews:
"International business operates in challenging parts of the world, geographically, politically, commercially and in terms of corporate governance. Those are the realities for a good part of the oil and gas industry…
Cognisant of those realities, Parliament has, however, prioritised combating corruption. By the Bribery Act 2010 ("the Bribery Act"), Parliament has legislated, with extra-territorial effect (s.12), making it an offence (under s.6) where a person (P) bribes a foreign public official (F) and P's intention is to influence F in his capacity as a foreign public official and obtain or retain business or an advantage in the conduct of business. S.7 of the Bribery Act provides that a commercial organisation may incur criminal liability if a person who performs services for it commits bribery on its behalf and the commercial organisation cannot prove that it had adopted adequate procedures that were designed to prevent such conduct. Both ss. 6 and 7 supplement the two main general offences of bribery under the Bribery Act, namely, bribery of another person (s.1) and being bribed (s.2)."
The self-reporting regime
The 2009 Guidelines
i) the Board of the corporate was genuinely committed to resolving the issue and moving to a better corporate culture;
ii) the corporate would work with the SFO on the scope and handling of any additional investigation it considered to be necessary;
iii) at the end of the investigation (and assuming acknowledgment of a problem) the corporate would be prepared to discuss resolution of the issue on the basis, for example, of resolution through civil recovery, a programme of training and culture change, appropriate action where necessary against individuals and (at least in some cases) external monitoring in a proportionate manner;
iv) the corporate understood that any resolution must satisfy the public interest and must be transparent.
THE DISPUTED DOCUMENTS
THE CLAIM FOR LEGAL PROFESSIONAL PRIVILEGE
THE RELEVANT LEGAL PRINCIPLES
(1) Litigation is in progress or reasonably in contemplation;
(2) The communications are made with the sole or dominant purpose of conducting that anticipated litigation.
(3) The litigation must be adversarial, not investigative or inquisitorial.
See Three Rivers (No.6) per Lord Carswell at .
"litigation privilege… is based on the idea that legal proceedings take the form of a contest in which each of the opposing parties assembles his own body of evidence and uses it to try to defeat the other, with the judge or jury determining the winner. In such a system each party should be free to prepare his case as fully as possible without the risk that his opponent will be able to recover the material generated by his preparations."
Likewise, in Wheeler v Le Marchant (1881) 17 Ch D 675, which concerned reports obtained by solicitors from surveyors and estate agents in the course of earlier proceedings unconnected with the relevant litigation, Cotton LJ said:
"hitherto such communications have only been protected when they had been in contemplation of some litigation, or for the purpose of giving advice on obtaining evidence with reference to it. And that is reasonable, because then the solicitor is preparing for the defence of bringing the action, and all communications he makes for that purpose, and the communications made to him for the purpose of giving him the information, are, in fact, the brief in the action, and ought to be protected."
"in my judgment we should start from the basis that the public interest is, on balance, best served by rigidly confining within narrow limits the cases where material relevant to litigation may be lawfully withheld. Justice is better served by candour rather than suppression."
That was the basis for the requirement that the communication or document should be for the "dominant purpose" of the contemplated litigation. In Balabel v Air India  Ch 317 at 332A Taylor LJ spoke of the need to "re-examine the scope of legal professional privilege and keep it within justifiable bounds". Lord Scott in Three Rivers (No 6) suggested at  that in the light of developments in civil procedure that encourage more openness between the litigating parties, it may be time for a new look at the policy justification for this limb of LPP. That review has not yet taken place, but those judicial observations underline the need for the Court to be vigilant to avoid extending the ambit of the privilege beyond its current recognised confines.
"Whether or not litigation is reasonably in prospect is an objective question on which, again, the views of any deponent are not necessarily conclusive, see Guinness Peat Properties Ltd v Fitzroy Robinson Partnership  1 WLR 1027."
That approach is consistent with the test as set out by Lord Carswell in Three Rivers (No 6) referred to above.
"One has to be careful about the use of the phrase "brought into existence for the purpose of the conduct of the litigation," as a distinction should be drawn between bringing a document into existence for the purpose of conducting litigation by a party on the basis that the document will not be shown to the other party, unless there be an express waiver, and a document brought into existence during the course of litigation for the purpose of settling the litigation, which is intended to be shown to the other party. Properly characterised, it is not correct to say that a document is brought into existence for the purpose of conduct of litigation, and so is privileged from production, if it is brought into existence, albeit to try and settle the litigation, but for the purpose of being shown to the other side."
I respectfully agree with and adopt that analysis, which must apply with equal force in a situation such as this, where litigation has not commenced.
Legal advice privilege
"The principle is that if an employee is not authorised to communicate with the company's solicitors for the purpose of obtaining legal advice, then that communication is not protected by legal advice privilege. We do not find this principle exceptional. When a company retains solicitors for legal advice, the client must be the company. But since a company can only act through its employees, communications made by employees who are authorised to do so would be communications made "on behalf of his client". The only relevant issue is whether the communication is made for the purpose of obtaining legal advice, and if so, the communication falls within the privilege provided the other requirements of the privilege are present, viz, that the communications are confidential in nature, and the purpose of the communication is for the purpose of seeking legal advice. Authorisation need not be express; it may be implied, if that function is related to or arises out of the relevant employee's work."
"… documents communicated to the solicitors of the defendants by third parties, though not communicated by such third parties as agents of the clients seeking advice, should be protected, because those documents contained information required or asked for by the solicitors, for the purpose of enabling them the better to advise their clients." [emphasis added]
Cotton LJ made the following pertinent observations (at 684-685):
"it is said that as communications between the client and his legal advisers for the purpose of obtaining legal advice are privileged, therefore any communication between the representatives of the client and the solicitor must also be privileged. That is a fallacious use of the word "representatives". If the representative is a person employed as an agent on the part of the client to obtain the legal advice of the solicitor, of course he stands in exactly the same position as the client as regards protection, and his communications with the solicitor stand in the same position as the communications of his principal with the solicitor. But these persons were not representatives in that sense. They were representatives in this sense, that they were employed on behalf of the clients, the Defendants, to do certain work, but that work was not communicating with the solicitor to obtain legal advice. So their communications cannot be protected on the ground that they are communications between the client by his representatives and the solicitor." [emphasis added].
"When addressing the question of which communications with the lawyer attract legal advice privilege, the courts will only regard as privileged those communications with officers or employees expressly or impliedly authorised by the company (a) to give instructions to the lawyer and (b) to seek and receive his legal advice. This is ultimately a question of attribution, namely which acts of which employees are to be attributed to the company. This, it is suggested, is the proper implication of Three Rivers 5. Although on the unusual facts of Three Rivers 5 the people within these two categories i.e. (a) and (b) above were seemingly held to be the same, there is no principled reason why this should be so and in a corporate context they will very often - perhaps usually - not be the same."
"without knowing the identity of the person with whom [the lawyer] communicated in any given case it is not possible to say whether that person is properly to be regarded as his client for these purposes."
The anonymity of certain of the sources of the information deposed to by Mr Spendlove creates a serious problem for ENRC in that regard.
Privilege attaching to lawyers' work product
"The principle is accurately summarized by Bray:
… all memoranda or writings of any kind made by the solicitor, whether for his own use in his client's business, or for the client's use, are within the privilege and stand in all respects on the same footing as actual communications between solicitor and client".
"The internal investigation at SSGPO relates to conduct that is potentially criminal in nature. Adversarial proceedings may occur out of the internal investigation, and in our view, both criminal and civil proceedings can be reasonably said to be in contemplation. There is a possibility that this view may be challenged by third parties in the future, but if this is accepted, litigation privilege will apply."
In the absence of any documents evidencing consideration of the contents of that letter, it is reasonable to infer that those to whom this letter was addressed accepted Mr Gerrard's advice at the time, and therefore believed that they could make out a case for the documents generated during the Kazakh investigation being subject to LPP, but they also knew that there was a chance that the claim to privilege would not be accepted if it were challenged.
THE CLAIM FOR LITIGATION PRIVILEGE
THE CLAIM FOR LEGAL ADVICE PRIVILEGE
The use of the Part 8 Procedure
Mr Gerrard's authority
i) It was submitted that unauthorised communications by Mr Gerrard could not fairly form part of the Court's assessment of whether the necessary requirements for litigation privilege have been established;
ii) if the SFO knew or ought to have known that the communications were unauthorised, and yet sought to rely upon them, it was contended that this was a factor militating against the exercise of the discretion in favour of granting the declaratory relief that it seeks.
"it must be wrong in principle, when a litigant has succeeded in making good his case and has done nothing to disentitle himself to relief, to deny him any remedy unless, at any rate, there are extremely strong reasons in public policy for doing so."