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SFO V ENRC: Landmark privilege decision by Court of Appeal

10 September 2018

The Court of Appeal has handed down its much anticipated decision in the Serious Fraud Office (“SFO”) v Eurasian Natural Resources Corporation Limited (“ENRC”) appeal. In a judgment that will leave many lawyers breathing a heavy sigh of relief, the Court of Appeal overturned large parts of Mrs Justice Andrews’ first instance decision.

The Court of Appeal held that a number of classes of documents produced in the course of an internal investigation were protected by litigation privilege and do not now have to be disclosed. The Court of Appeal’s decision marks a welcome, less restrictive approach to legal professional privilege protection in the context of investigations work – and has potentially paved the way for the Supreme Court to go further still.


A full summary of the background, the first instance decision and the difference between legal advice and litigation privilege can be found in this previous LS article.

In brief, the original decision related to the SFO’s criminal investigation into ENRC for bribery and other financial wrongdoing. The SFO had applied to compel ENRC to disclose various categories of documents as part of that criminal investigation.

The categories of documents which the SFO sought had been generated in the course of a separate, earlier internal ENRC investigation into reports of the wrongdoing, initiated after ENRC had received a whistleblower’s report. The categories of documents the SFO sought included:

  1. notes taken by ENRC’s external lawyers of interviews they had carried out with ENRC’s employees, former employees and suppliers; and
  2. materials generated by forensic accountants carrying out a ‘books and records’ review for ENRC with a focus on the company’s internal systems.

At first instance, Mrs Justice Andrews determined that neither of these categories of documents could be protected by litigation privilege, as:

  • litigation was not in prospect or reasonably in contemplation when they were created; and
  • the documents were not created with the sole or dominant purpose of conducting the litigation.

She also dismissed ENRC’s argument that the interview notes were protected by legal advice privilege (because, she held, the interviewees were not the ‘client’ and the notes did not contain legal advice).

ENRC appealed.

Litigation Privilege

The Court of Appeal disagreed with and overturned Mrs Justice Andrews’ narrow conclusions on litigation privilege, finding instead that both the lawyers’ interview notes and the forensic accountants’ materials were protected.

Litigation in prospect / reasonable contemplation

Thankfully, the Court of Appeal rejected Mrs Justice Andrews’ conclusion that criminal proceedings could not be in reasonable contemplation unless a prospective defendant knew enough about what the investigation was likely to unearth to appreciate that a prosecutor would be satisfied that it had enough material to convict. This conclusion had placed those wishing to investigate potential wrongdoing in an unenviable catch-22 position.

The flaw in this approach was acknowledged by the Court of Appeal, which held that “whilst a party anticipating possible prosecution will often need to make further investigations before it can say with certainty that proceedings are likely, that uncertainty, in our judgment, does not in itself prevent proceedings being in reasonable contemplation.”

This brings the law on litigation privilege in a criminal context back into line with the position on civil claims.

The Court of Appeal revisited the factual evidence, and concluded that, correctly interpreted, criminal proceedings were reasonably in prospect from when ENRC had engaged external lawyers to conduct the internal investigation, some months before the SFO had first contacted ENRC.

Sole or dominant purpose

Mrs Justice Andrews had held the dominant purpose for the generation of the two categories of documents in question was to improve ENRC’s compliance and governance systems. The Court of Appeal disagreed, noting that whilst ENRC would of course want to ensure that its business was conducted with high ethical standards, where the company faced a clear threat of criminal proceedings, the documents were brought into existence for the dominant purpose of resisting or avoiding those proceedings.

Therefore, both categories of documents were held on appeal to be protected by litigation privilege and not disclosable to the SFO.

Legal advice privilege – ripe for reform

Despite the best efforts of counsel for both ENRC and the Law Society (which intervened on the appeal), the Court of Appeal declined to revisit the decision in Three Rivers No. 5. That decision laid down a narrow definition of who the ‘client’ is for the purposes of legal advice privilege within companies or other organisations – it is only those individuals or employees within the entity who are expressly authorised to seek and receive legal advice on its behalf from the relevant lawyers. This decision has long been considered by many commentators to be overly restrictive.

The Court of Appeal noted that the decision in Three Rivers No. 5 was based on a number of 19th century authorities on privilege – decisions made when company law was not well developed and companies were generally much smaller. It considered that the restrictive outlook on who constitutes the client does not fit with today’s world of large companies and multi-national corporations. The Court of Appeal went so far as to state that the current position places such larger entities at “a less advantageous position than a smaller entity seeking such advice”. This put England and Wales “out of step with the international common law on this issue.”

The Court of Appeal indicated that it would have departed from Three Rivers No. 5 if it had considered that option had been open to it, but declined to make any express finding, stating that the position will have to be considered by the Supreme Court.


The Court of Appeal’s decision reverses what had amounted to a substantial erosion of litigation privilege. Whilst each situation will be fact-specific, litigation privilege should now typically apply where businesses anticipate possible prosecution, but need to investigate matters further to ascertain the position. In practice:

  • Before starting any investigation, it is best to discuss the matter with a lawyer to receive advice on the preservation of privilege.
  • If the business reasonably considers that the issues at hand may give rise to litigation (be it civil or criminal), and it is therefore considered that litigation privilege is likely to apply, this conclusion should be recorded early on, with reasons and in writing, so that there is an audit trail.
  • The business should, in any event, set up a dedicated team which is authorised to request and receive advice on the investigation from lawyers, recording which individuals are in that team.

On legal advice privilege, whilst the sensible and pragmatic comments made by the Court of Appeal on revising Three Rivers No. 5 are encouraging, we will have to wait for the Supreme Court to consider the question. It might get a chance to do so on this case, if the SFO seek and are granted leave to appeal to the Supreme Court; otherwise the wait will continue.

To read the judgment click here.

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