Legal Advice Privilege and Foreign Lawyers

Introduction

In this alert, we consider a recent judgment of the English High Court on legal advice privilege with respect to foreign in-house lawyers, particularly in the context of non-“Advocate” Russian in-house lawyers.

Legal Advice Privilege

Under English law, legal advice privilege applies to confidential communications between a client and their lawyer for the purpose of giving or receiving legal advice or assistance in a relevant legal context.

It is settled law that legal advice privilege (and indeed, litigation privilege) will extend to foreign lawyers provided the above conditions are met.

It is also settled law that the English courts will apply the lex fori (i.e., the law of the forum) to questions of privilege. This will be the case, for example, even if foreign law governs the claim or the relevant communications take place in a foreign jurisdiction. In other words, provided the English courts have jurisdiction over the claim, English law will govern questions of privilege.

PJSC Tatneft v Bogolyubov & others [2020] EWHC 2437 (Comm)

Background

The judgment arises from a claim brought by PJSC Tatneft (“Tatneft”) against four high-net worth individuals for their alleged involvement in a fraudulent scheme. That claim is governed by Russian law.

The judgment arises out of an application by the Second Defendant in those proceedings challenging Tatneft’s claim to privilege over certain of its internal communications. Tatneft gave standard disclosure and asserted, among other things, legal advice privilege over certain categories of documents, thus withholding those from inspection.

Tatneft confirmed in correspondence that its claim to legal advice privilege covered communications between its employees/officers and members of its internal legal department. Importantly in the context of this judgment, Tatneft also confirmed that the members of its internal legal department were qualified Russian lawyers but did not have the status of “Advocate” in Russia (explained further below).

The Second Defendant brought an application on the basis that legal advice privilege should not extend to communications with or documents generated by any in-house Russian legal advisors who are not Advocates.

The Parties’ Submissions

The Second Defendant submitted that the Court should be concerned with the “status” of the “lawyer,” not just their function. In particular, it was submitted that, under English law, legal advice privilege only applies to:

• “Professional lawyers,” i.e., legal advisers who are professionally qualified and members of professional bodies.
  
  
• In-house lawyers if the in-house lawyers are regulated and admitted to practice.
  
  
• Foreign lawyers if they are “appropriately qualified.”

The Second Defendant argued that Tatneft’s in-house lawyers did not meet the above criteria on the basis that:

• An Advocate is an independent legal advisor admitted to the Russian legal bar, and there is a register of Advocates maintained by the Ministry of Justice of the Russian Federation.
  
  
• In-house lawyers are not Advocates.
  
  
• There is, under Russian law, a legal concept of “advocate’s secrecy,” which is similar to legal professional privilege under English law and which does not apply to lawyers who are not Advocates.

Tatneft, on the other hand, submitted that the English courts have traditionally not enquired into the standards of regulation or training applied to a foreign lawyer and have recognized that legal advice privilege is not confined to barristers and solicitors, provided that the advice is sought from a “variety of lawyer.” Therefore, Tatneft submitted that, as a matter of English law, it was irrelevant to its claim for legal professional privilege that its in-house lawyers were not Advocates or that the Russian law of advocate’s secrecy did not apply. The Court concurred.

Judgment

Mrs Justice Moulder, citing Three Rivers (No 6) [2005] 1 AC 610, began by considering the rationale underpinning legal advice privilege, namely that it is in the public interest that clients can obtain legal advice and that those communications be kept confidential.

She explained that, consistent with this approach, the English Court had extended legal advice privilege to foreign lawyers. Moulder J placed particular emphasis on the judgment in R (on the application of Prudential plc and another) v Special Commissioner of Income Tax [2013] UKSC 1, which acknowledged and endorsed a broad approach to legal advice privilege applying to foreign lawyers.

She noted that both the majority opinion and dissenting opinion (by Lords Neuberger and Sumption, respectively) had adopted a functional approach to the question. Indeed, in Prudential it was noted that the law of legal advice privilege had been extended to foreign lawyers without regard to foreign national standards or regulations or standards of training or discipline, and that such standards were not amenable to the supervision of English judges. Significantly, Moulder J cited Lord Neuberger’s explanation of the extension of legal advice privilege to foreign lawyers being “based on fairness, comity and convenience.”

Moulder J concluded that the English courts are concerned rather with the “function” of the relationship between the client and foreign lawyer (i.e., protecting a party who wishes to take legal advice) and not the “status” of the foreign lawyer.

Moulder J also considered two decisions upon which the Second Defendant had sought to rely to advance an argument that legal advice privilege was limited to “professional lawyers or qualified lawyers.” One authority regarded a patent agent and the other a solicitor who had been struck off. Moulder J concluded that they had no bearing on the issue, noting that the cases were not concerned with foreign lawyers, which on the authorities have been “treated as a separate category and justifying a different approach.”

Moulder J further noted that the Second Defendant’s interpretation of legal advice privilege would in practice be problematic for a number of reasons. First, if the English Court had to conduct an investigation into particular national standards or regulations in other countries in order to determine in each case whether legal advice privilege applied, this would lead to uncertainty and inconvenience. Second, it would raise issues of comity if the Court were obliged to express views on the qualifications and regulation of foreign lawyers. Third, it would have the effect of excluding all in-house lawyers and a large proportion of other lawyers working in Russia, which would be both unfair and inconvenient. Indeed, Tatneft adduced expert evidence to the effect that around half of the representatives in Russian civil disputes, including those in Arbitrazh courts, are not Advocates and that “the workers of most international law firms operating in Russia are hired under employment contracts and do not hold advocate status”. Moulder J noted that the problematic consequences of the application of the rule advanced by the Second Defendant illustrated precisely why the English Court preferred a functional approach to the issue.

The Second Defendant had also submitted that Tatneft’s in-house lawyers should not be recognized because (a) English in-house lawyers have to be regulated and generally hold a practicing certificate and/or (b) in-house lawyers are paid employees and not independent. These points were also firmly rejected.

On the first point, Moulder J held that “once one accepts that the court will not investigate whether a foreign lawyer is regulated or registered, the inclusion of foreign in-house lawyers seems to me to follow as a matter of both logic and principle.” She noted that it would be unfair if the Court were to refuse to extend legal advice privilege to in-house lawyers in Russia on the basis that they were not regulated or qualified. Given in-house lawyers in Russia cannot be Advocates, on that basis legal advice privilege could never extend to communications with in-house legal advisers in Russia.

On the second point, Moulder J held that the assertion that in-house lawyers were not independent and were paid employees had been firmly rejected by the English Court in relation to English in-house lawyers and that there is no reason to deny the application of the privilege to foreign in-house lawyers.

Moulder J concluded that:

1. Legal advice privilege extends to communications with foreign lawyers whether or not they are “in-house” (and thus employees).
   
   
2. The English Court will not as a general matter enquire into how or why the foreign lawyer is regulated or what standards apply to the foreign lawyer under the local law; the only requirement is that they “should be acting in the capacity or function of a lawyer.”
   
   
3. There is no additional requirement that foreign lawyers be “appropriately qualified” or recognized or regulated as “professional lawyers.”

Accordingly, the Second Defendant’s application was dismissed.

Conclusion

This is an entirely welcome decision of the English High Court, which should reassure clients obtaining legal advice from their international legal advisors (whether in-house or external) that the English Court will continue to respect the confidential sanctity of their communications and documents and ensure a broad parity of treatment between communications with English and foreign legal advisors. It reaffirms and clarifies the English Court’s functional approach to legal advice privilege where applied to foreign lawyers (and, by way of extension, to foreign in-house lawyers), guided by principles of fairness, comity and convenience.

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