Serious Fraud Office (SFO) v Eurasian Natural Resources Corp. Ltd

This appeal concerns the scope of legal professional privilege arising from solicitor-led internal investigations. The Court of Appeal held that litigation privilege can protect documents generated by solicitors and forensic accountants where, on the facts, criminal prosecution was reasonably in contemplation and the dominant purpose of the work was to resist or avoid those proceedings; the court found that prosecution was reasonably in contemplation by April/August 2011. The court declined to overturn or extend the approach to legal advice privilege stated in Three Rivers (No. 5) and confirmed that questions as to expanding the class of "client" (for example to encompass a wide range of employees) are matters for the Supreme Court or Parliament. Applying these principles, the court allowed the appeal in part: it held that the Category 1 (interview notes) documents and the Category 2 (books and records) and most Category 4 documents were protected by litigation privilege, save for two October 2010 emails to Mr Ehrensberger which were not privileged; other arguments about legal advice privilege and lawyers' working papers were largely dismissed.

Background and parties. ENRC (a multinational mining group) instructed external solicitors (initially DLA Piper, then Dechert) and forensic accountants (FRA) after receiving a whistle‑blower email about alleged corruption in Kazakhstan and Africa. The Director of the Serious Fraud Office sought declarations under section 2(9) of the Criminal Justice Act 1987 that specified classes of documents (interview notes, FRA books-and-records reports and related material) were not protected by legal professional privilege. Andrews J in the High Court declared that documents in Categories 1, 2 and 4 were not privileged; ENRC appealed.

Nature of the application and issues. The SFO sought a declaratory judgment that the Documents were not protected by legal advice privilege or litigation privilege. The issues before the Court of Appeal included whether criminal proceedings were reasonably in contemplation at relevant times; whether the documents were created for the sole or dominant purpose of litigation (the dominant purpose test for litigation privilege); the correct scope of legal advice privilege in respect of communications between solicitors and employees (and ex‑employees) of a corporate client, including the effect of Three Rivers (No. 5); and the protection, if any, for lawyers' working papers.

Procedural posture. Appeal from Andrews J (Queen's Bench Division, High Court) whose order dated 12 May 2017 had declared Categories 1, 2 and 4 not privileged (Category 3 was treated differently at first instance). The appeal was heard by the Court of Appeal (Leveson P, Vos LC and McCombe LJ) and decided on 5 September 2018.

Court's reasoning and holdings.

• Litigation privilege. The court concluded that criminal prosecution was reasonably in contemplation by at least August 2011 (and arguably earlier) having regard to the whistle‑blower material, internal contemporaneous documents, advice from ENRC’s lawyers that criminal and civil proceedings were in contemplation, the SFO’s engagement and the SFO Guidelines. On the facts the dominant purpose of the interviews and the books-and-records review was to resist or avoid anticipated criminal proceedings, so those documents fell within litigation privilege. The court criticised the High Court’s reliance on authorities suggesting that documents prepared to be shown to a potential adversary cannot attract litigation privilege and emphasised that work directed to avoiding or settling reasonably contemplated litigation may be privileged.
• Legal advice privilege and Three Rivers (No. 5). The court declined to depart from the approach in Three Rivers (No. 5), viz. legal advice privilege is confined to communications between a lawyer and those authorised to seek and receive legal advice for the corporate client; whether a broader rule should be adopted was left to the Supreme Court. Because litigation privilege applied to the key categories of documents, the narrower legal advice privilege analysis became less decisive for the ultimate disposition.
• Lawyers' working papers. The court noted the established approach that working papers are protected only to the extent they would betray the tenor of legal advice, but did not need to reach a final, novel ruling on that point because litigation privilege covered the material in issue.

Outcome. Appeal allowed in part: the Court of Appeal held that the Category 1, Category 2 and (subject to two specified October 2010 emails) Category 4 documents were protected by litigation privilege; other grounds of ENRC’s appeal were dismissed and the narrower Three Rivers approach to legal advice privilege was maintained as binding.

Appeal allowed in part. The Court of Appeal held that criminal prosecution of ENRC was reasonably in contemplation by the time of the SFO’s engagement in 2011 and that the dominant purpose of the solicitors’ interviews and the books-and-records review was to resist or avoid anticipated criminal proceedings; accordingly the Court reversed the High Court declarations as to Categories 1, 2 and most of 4 and held those documents were protected by litigation privilege. The court declined to expand the scope of legal advice privilege beyond Three Rivers (No. 5), leaving any change of principle to the Supreme Court or Parliament.

Appeal from Andrews J, Queen's Bench Division, High Court (order dated 12 May 2017). The Director of the Serious Fraud Office obtained declarations in the High Court that specified categories of documents were not subject to legal professional privilege; ENRC appealed to the Court of Appeal which handed down judgment as reported at [2018] EWCA Civ 2006 (5 September 2018).