Going round the houses

The European Union Court of Justice (ECJ) ruling in Akzo Nobel Chemicals Ltd and Akcros Chemicals Ltd v Commission (Case C-550/07P) has caused much dismay among in-house counsel.

The judgment confirms that written communications between in-house counsel and their non-lawyer colleagues will not be protected by legal professional privilege for competition investigations by the EU Commission. This is in contrast to the position of external lawyers, whose communications with their clients continue to attract legal professional privilege.

While the ECJ considered it was doing no more than following the decision in AM & S Europe v Commission [1982] ECR 1575, its decision is disappointing largely because the court has missed an opportunity to adapt the law to reflect the substantial changes that have taken place in the roles and commercial importance of many in-house counsel since the AM & S ruling nearly 30 years ago. The recent ruling also removes the room for ambiguity which a number of commentators found in the AM & S judgment.

But what does this ruling mean in practice? What steps should in-house counsel take?

The good news is that this ECJ judgment makes it clear that the ruling applies only in respect of EU competition investigations. It does not alter national laws on legal professional privilege in respect of other types of dispute, or even for competition investigations by the authorities of a member state (except where the national authority is assisting the EU Commission).

This means that for all other types of dispute in the UK, internal written communications to and from in-house counsel for the purposes of providing legal advice will continue to be protected by legal professional privilege. In those cases, in-house counsel will need to continue to take the usual precautionary measures.

Where an EU Commission investigation is already under way, legal advice privilege can only be obtained for communications between external lawyers and the company (whether the individuals at the company are in-house lawyers or non-lawyer senior executives). It will therefore be vital for the company to instruct an external law firm to advise. In many cases there will be little change because most companies already instruct external legal advisers for such investigations.

The much more difficult situation for in-house counsel will be how to handle the provision of legal advice on matters which could impact on EU competition law (and therefore be the subject of a future investigation by the commission) but where no commission investigation has commenced. In each case it will be a judgement call as to whether external counsel should be involved. In-house counsel will need to assess the costs and the risks of advising the business themselves or instructing a law firm.