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England and Wales High Court (Commercial Court) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Commercial Court) Decisions >> PJSC Tatneft v Bogolyubov & Ors  EWHC 2437 (Comm) (11 September 2020)
Cite as:  WLR 403,  EWHC 2437 (Comm),  2 All ER 224,  WLR(D) 571,  1 WLR 403
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BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
COMMERCIAL COURT (QBD)
Fetter Lane, London, EC4A 1NL
B e f o r e :
| PJSC Tatneft
- and –
|(1) Gennady Bogolyubov
(2) Igor Komoloisky
(3) Alexander Yaroslavsky
(4) Pavel Ovcharenko
Ewan McQuater QC, Matthew Parker and Nathaniel Bird (instructed by Enyo Law LLP) for the First Defendant
Mark Howard QC, Ruth den Besten and Tom Ford (instructed by Fieldfisher LLP ) for the Second Defendant
Kenneth MacLean QC and Owain Draper (instructed by Mischcon de Reya LLP ) for the Third Defendant
Marcus Staff (instructed by Sherrards Solicitors) for the Fourth Defendant
Hearing dates: 27 and 28 July 2020
Crown Copyright ©
Mrs Justice Moulder :
"(1) Original and copy correspondence and other communications and documents passing either directly or indirectly between the Claimant and its legal advisers (including but not limited to advice, notes of telephone conversations and meetings, Instructions to Counsel, notes of consultations and conferences with Counsel, Counsel's written advice, drafts of any of the foregoing) all being confidential and consisting of, referring to, requesting or having been prepared for the purpose of requesting or giving legal advice and assistance."
"that the Claimant provides specific disclosure and information relating to Tatneft's compliance with its disclosure obligations in these proceedings"
"A party who wishes to challenge the exercise of a right or duty to withhold disclosure or production must apply to the court by application notice supported where necessary by a witness statement."
The Claimant shall by 28 August 2020 provide inspection of all documents previously withheld on the basis of legal advice privilege: (a) containing or evidencing communications between, on the one hand, Tatneft employees/officers and, on the other hand, Ms Savelova and/or Mr Glushkov and/or members of the Tatneft in-house "Legal" department; (b) comprising documents prepared by Ms Savelova and/or Mr Glushkov and/or members of the Tatneft in-house "Legal" department.
The case advanced for the second defendant
"Given that advocate's secrecy does not apply to in-house lawyers, it appears that the communications with, and documents generated by, Ms Savelova and/or Mr Glushkov and/or members of the Tatneft in-house "Legal" department are not properly subject to a claim of legal advice privilege, and inspection should be ordered to be provided."
"24…It in fact appears from the answers given that communications with and work by such individuals are not the subject of a valid claim to legal advice privilege as a matter of English law (nor, if and insofar as relevant, as a matter of Russian law).
25 As confirmed in the Trukhanov Memo 2, in-house lawyers are not members of the Russian Bar and their activity does not fall under regulation provided under Federal Law governing advocates.
26… The Trukhanov Memo set out that there is a clear distinction between the status of a self-employed, independent and officially registered advocate, and an employed in-house lawyer. The closest concept to legal professional privilege is "advocate's secrecy" … which applies to the relationship between advocates and their clients. On this basis the Second Defendant set out in the D2 Application that it appears that communications between Tatneft's employees / officers and member of its in-house legal team are not properly subject to a claim of legal advice privilege.
27. Mr Trukhanov further confirms that the Russian legal system has made a clear distinction that its legal concept of advocates secrecy (an equivalent to the English law of privilege) applies to advocates, but does not apply to non-advocate in-house lawyers. This also applies to the Russian Court's power to order the disclosure of documents…" [emphasis added]
i) an Advocate is an independent legal advisor who has been admitted to the Russian legal bar and that there is a register of Advocates maintained by the Ministry of Justice of the Russian Federation;
ii) In-house lawyers are not Advocates;
iii) there is a legal concept of legal professional privilege termed "advocates secrecy" which does not apply to lawyers who are not Advocates.
Accordingly it was submitted for the second defendant that as a matter of English law, legal advice privilege does not apply to communications with and documents generated by the in-house legal department of Tatneft who are not "appropriately qualified" foreign lawyers.
i) "professional lawyers" i.e. a legal adviser who is professionally qualified and a member of a professional body: Lawrence v Campbell (1859) 4 Drew 485; R (on the application of Prudential plc and another) v Special Commissioner of Income Tax  UKSC 1;
ii) in-house lawyers if the in-house lawyer is admitted to practice and regulated: Alfred Crompton Amusement Machines Ltd v Customs and Excise Comrs (No 2)  2 QB 102;
iii) foreign lawyers if they are "appropriately qualified": Hollander on Documentary Evidence at 14.09; Thanki The Law of Privilege 3rd edition at 1.47.
i) legal advice privilege applies to all communications made in confidence with professional legal advisers for the dominant purpose of giving or obtaining legal advice including communications with in-house lawyers: Three Rivers (No 6)  1 AC 610; R (Jet2.com Ltd) v Civil Aviation Authority  2 WLR 1215;
ii) the court does not enquire into the standards of regulation or training applying to the foreign lawyer: R (on the application of Prudential plc and another) v Special Commissioner of Income Tax  UKSC 1); and
iii) the courts have recognised that legal advice privilege is not confined to barristers and solicitors provided that the advice is sought from a "variety of lawyer": Wilden Pump Engineering v Fusfeld  FSR 159 at 167.
"None of these judicial dicta tie the justification for legal advice privilege to the conduct of litigation. They recognise that in the complex world in which we live there are a multitude of reasons why individuals, whether humble or powerful, or corporations, whether large or small, may need to seek the advice or assistance of lawyers in connection with their affairs; they recognise that the seeking and giving of this advice so that the clients may achieve an orderly arrangement of their affairs is strongly in the public interest; they recognise that in order for the advice to bring about that desirable result it is essential that the full and complete facts are placed before the lawyers who are to give it; and they recognise that unless the clients can be assured that what they tell their lawyers will not be disclosed by the lawyers without their (the clients') consent, there will be cases in which the requisite candour will be absent. It is obviously true that in very many cases clients would have no inhibitions in providing their lawyers with all the facts and information the lawyers might need whether or not there were the absolute assurance of non-disclosure that the present law of privilege provides. But the dicta to which I have referred all have in common the idea that it is necessary in our society, a society in which the restraining and controlling framework is built upon a belief in the rule of law, that communications between clients and lawyers, whereby the clients are hoping for the assistance of the lawyers' legal skills in the management of their (the clients') affairs, should be secure against the possibility of any scrutiny from others, whether the police, the executive, business competitors, inquisitive busybodies or anyone else (see also paras 15.8 to 15.10 of Zuckerman's Civil Procedure (2003) where the author refers to the rationale underlying legal advice privilege as "the rule of law rationale"). I, for my part, subscribe to this idea. It justifies, in my opinion, the retention of legal advice privilege in our law, notwithstanding that as a result cases may sometimes have to be decided in ignorance of relevant probative material.." [emphasis added]
This dicta shows that firstly the seeking and giving of legal advice is in the public interest and it is "necessary" that communications between clients and lawyers whereby clients are hoping for the assistance of the lawyers should be secure against the possibility of any scrutiny from others.
"29. There is room for argument whether, by allowing Prudential's appeal, we would be extending the breadth of LAP or would simply be identifying the breadth of LAP. On the former view we would be changing the common law; on the latter view, we would be declaring what the common law always has been. I do not think it necessary to address this issue, as the important point for present purposes is that it is universally believed that LAP only applies to communications in connection with advice given by members of the legal profession, which, in modern English and Welsh terms, includes members of the Bar, the Law Society, and the Chartered Institute of Legal Executives (CILEX) (and, by extension, foreign lawyers). That is plain from a number of sources, which speak with a consistent voice." [emphasis added]
"45. Such principled justification as there is for the restriction of LAP to lawyers seems to me to be further undermined by the extension of LAP which the court has approved to all foreign lawyers, without (it would seem) regard to their particular national standards, regulations or rules with regard to privilege. That extension appears to originate from Lawrence v Campbell (1859) 4 Drew 485 (Sir Richard Kindersley V-C), and was approved and applied in Macfarlan v Rolt (1872) LR 14 Eq 580 (Sir John Wickens V-C), In re Duncan, decd  P 306 (Ormrod J), and Great Atlantic Insurance Co v Home Insurance Co  1 WLR 529, 536 (Templeman LJ)…" [emphasis added]
"…none of the statements of principle in the case law have identified the relationship of lawyers with the court or the arrangements for the admission or discipline of lawyers as a relevant factor. If it had been, then the English courts would not have recognised a privilege for legal advice which was wholly independent of any forensic proceedings, actual or prospective. Nor would they have recognised the privilege attaching to the advice of foreign lawyers. There is no suggestion in any of the cases about foreign legal advice of any interest on the part of the English court in the standards of their training or discipline, and they are certainly not amenable to the supervision of English judges. Nor could Sir John Romilly have recognised the privilege attaching to the advice of a person whom the client believed to be a solicitor and professionally consulted on that basis, but who in fact was not: see Calley v Richards (1854) 19 Beav 401. Third, the legal basis of the privilege was worked out by the courts at a time when most claims for legal advice privilege concerned communications with solicitors and attorneys, whose professional standards were then notoriously low. Many of them were not enrolled and the court's supervision of their professional practices was nominal or non-existent. This was particularly true of attorneys, who practised in the common law courts and whom Sir Vicary Gibbs, Chief Justice of Common Pleas from 1813, once memorably described as "the growling jackals and predatory pilot fish of the law": see The Oxford History of the Laws of England, xi (2010), 1110 (the whole of this chapter repays reading). The high modern standing of solicitors (as all of them were called after 1873) was due very largely to the work of the Law Society, which was founded after 1825 to address this perception, and which together with its provincial affiliates gradually transformed the profession in the course of the nineteenth century." [emphasis added]
"It is none the less understandable why LAP was so extended: the extension was, I suspect, based on fairness, comity and convenience. While that extension does rather undermine much of the principled justification for LAP being confined to cases where the advice is given by professional lawyers, it is consistent with the argument that the court should restrict LAP to its currently understood bounds for reasons of practicality and certainty." [emphasis added]
"…By their answer they state that they have been admitted as solicitors before the Courts of law in Scotland, that they are practising in London as Scotch solicitors and law agents, and that the letters were written and received by them confidentially and in their professional capacity. Here, then, is a very distinct statement, which would, if these gentlemen had been English solicitors, have entitled them to protection from production. These letters consist of two series—those written by these gentlemen to Mr. Campbell, and those written by Mr. Campbell to them; and I think that there can be no question but that they should not be produced. They are professional communications made as between a solicitor—though a Scotch solicitor—and his client, Mr. Campbell. The question is new in specie, but the cases have settled the general principle, and I think that principle must apply to this case. The general principle is founded upon this, that the exigencies of mankind require that in matters of business, which may lead to litigation, men should be enabled to communicate freely with their professional advisers, and their communications should be held confidential and sacred, and that no one should have a right to their production. The reason is that the exigencies of mankind require it; and no mischief arises from it, as it does not in any way break in upon the principle that Courts of Equity may  require the production of all documents which will tend to prove the case before them…" [emphasis added]
"an issue as to the extent of the privilege covering communications between the plaintiff and his English solicitors and various foreign lawyers acting on his behalf in the relation of lawyer and client."
"The basis on which this head of privilege rests was stated by Lord Cottenham L.C. in Reid v. Langlois in these words:
"... the object is to protect the party who wishes to take the advice of professional men, and he would be prevented from taking such advice if there was the hazard of having it revealed on entering into a contest with an opponent."
In Anderson v. Bank of British Columbia, Jessel M.R. adopted this statement of principle with the gloss that by "professional men" Lord Cottenham meant members of the legal profession, a phrase which he uses interchangeably with "professional lawyers." There is nothing in these judgments to suggest that either judge intended to limit the rule to legal advisers whose names appear on the roll of Solicitors to the Supreme Court or who are members of the English bar. The basis of the privilege is just as apt to cover foreign legal advisers as English lawyers, provided only that the relationship of lawyer and client subsists between them." [emphasis added]
"123. It is consistent with the view that I have expressed that the courts have in recent times expanded the categories of lawyer whose advice may attract privilege, in particular to cover salaried legal advisers and foreign lawyers. This development has been the natural consequence of the functional character of the test combined with the law's pragmatic willingness to recognise the changing patterns of professional life. The privilege attaching to the advice of salaried legal advisers was first recognised judicially by the Court of Appeal in Alfred Crompton Amusement Machines Ltd v Customs and Excise Commissioners (No 2)  2 QB 102. Lord Denning MR, at p 129, justified the result primarily on the ground that, although the communications of a corporation with an in-house legal adviser were internal to the corporation, nevertheless the adviser was performing the same function as the lawyer in independent practice. Relevant communications with foreign lawyers have for many years attracted the same privilege for the same reason. In Lawrence v Campbell (1859) 4 Drew 485 privilege was claimed in English litigation for communications between a Scottish client and a Scottish solicitor practising in London. Sir Richard Kindersley V-C held (at p 491) that "the same principle that would justify an Englishman consulting his English solicitor would justify a Scotchman consulting a Scotch solicitor." Subsequently, communications with foreign lawyers were treated as being entitled as a matter of course to the same privilege as communications with English lawyers in like circumstances: see Macfarlan v Rolt (1872) LR 14 Eq 580 ; In re Duncan, decd  P 306; Great Atlantic Insurance Co v Home Insurance Co  1 WLR 529, 535–536. Sir Sydney Kentridge QC, appearing for the Law Society, described these cases as "anomalous". But he did not suggest that they were wrong. I think that they were clearly right, and I do not regard them as anomalous. They reflect the functional approach which English law has always taken to legal advice privilege." [emphasis added]
"…does not extend to communications between client and foreign lawyers where such communications are not privileged by the municipal law of the forum of the foreign lawyer. In other words, if the foreign lawyer's own court insists on disclosure of communications between him and his client in litigation in that country, this court will not regard such communications as privileged in litigation in this country."
"[Counsel for the defendant] cited no authority in support of it and, in my judgment, it is inconsistent with the tenor of the judgment of Sir Richard Kindersley V.-C. in Lawrence v. Campbell… The mere fact that the Scots lawyers were practising in England was clearly not a relevant consideration and the vice-chancellor expressly rejected the suggestion that the Scots law of privilege had any bearing on his decision. The essence of the judgment is that privilege attaches to communications between professional legal advisers and their clients…"
"it seems to me that the position is that it is impossible to uphold an utterly wide test of privilege extending to any communication by the litigant with any person from whom he has sought, or happens to have received, advice on any point of law relevant to the litigation in question. It is far too wide, and the courts have never adopted such a wide approach. The narrow approach of the common law is to recognise certain types of person as being legal advisers, communications with whom on matters of law are privileged. Besides barristers and solicitors, this, it seems from the old authorities, originally also included scriveners and doctors of the civil law practising in Doctors' Commons and Proctors in the Ecclesiastical Courts - whether or not they were solicitors. But those were regarded as varieties of lawyer.
I do not regard the patent agent as a variety of lawyer, and I take the view that the patent agent is not within the common law privilege." [emphasis added]
"…Given that the general rule is that legal professional privilege does not attach to communications between a lawyer and his client unless the former is qualified to practise, it seems to me that the burden is on the Defendants to show that they continued to believe that Mr Simms held a practising certificate as a solicitor at the time when the Eagle documents came into existence and that in the absence of such evidence the claim to legal professional privilege in the documents cannot be maintained…"
"Foreign lawyers: Communications with foreign lawyers also attract legal professional privilege, even where the lawyer advises on matters of English law. The rationale for this recognition has never been fully explained in a decided case, but Lord Neuberger has speculated that it is based on fairness, comity, and convenience. If an adviser is a lawyer admitted in a foreign country it is unnecessary to require evidence about legal and ethical practices and controls by foreign courts, though the position may be different if the circumstances otherwise raise questions as to the position of the lawyer, such as whether he is a lawyer at all. " [emphasis added]
i) English in-house lawyers have to be regulated and (other than in the limited case of government lawyers) have a practising certificate; and/or
ii) In-house lawyers are paid employees and not independent (Transcript Day 2 page 94 line 23).
"Although the older cases (decided at a time when legal advice was generally obtained from or through solicitors in private practice) concern external lawyers, LAP applies to communications, not only with a lawyer in independent practice, but also with an in-house lawyer (see, eg, Alfred Crompton Amusement Machines Ltd v Customs and Excise Comrs (No 2)  2 QB 102, and Financial Services Compensation Scheme Ltd v Abbey National Treasury Services plc  EWHC 2868 (Ch) at )." [emphasis added]
"…Many barristers and solicitors are employed as legal advisers, whole time, by a single employer. Sometimes the employer is a great commercial concern. At other times it is a government department or a local authority. It may even be the government itself, like the Treasury Solicitor and his staff. In every case these legal advisers do legal work for their employer and for no one else. They are paid, not by fees for each piece of work, but by a fixed annual salary. They are, no doubt, servants or agents of the employer. For that reason Forbes J. thought they were in a different position from other legal advisers who are in private practice. I do not think this is correct. They are regarded by the law as in every respect in the same position as those who practise on their own account. The only difference is that they act for one client only, and not for several clients. They must uphold the same standards of honour and of etiquette. They are subject to the same duties to their client and to the court. They must respect the same confidences. They and their clients have the same privileges." [emphasis added]
"However, it must be taken into account that to the best of my knowledge, the workers of most international law firms operating in Russia are hired under employment contracts and do not hold advocate status."
Conclusion on the scope of legal advice privilege
"communications passing between a client and its lawyers, acting in their professional capacity, in connection with the provision of legal advice" [emphasis added]
There is no additional requirement in my view that foreign lawyers should be "appropriately qualified" or recognised or regulated as "professional lawyers".
Further relief sought
"Tatneft should not now escape …properly explaining how it has applied privilege in the case of such in-house employees."
"holding a law degree is not sufficient to constitute someone a professional legal practitioner, otherwise the principles set out in Dadourian are wrong."
"It seems that members of Tatneft's in-house "legal departments" in fact had an extensive role in matters relevant to the issues in dispute, including contemporaneously communicating with S-K and including apparently taking quasi-commercial decisions on behalf of Tatneft." [emphasis added]