On 29 April 2010, European Advocate General Kokott gave her opinion in the case of Akzo Nobel Chemicals Ltd & Akcros Chemicals Ltd v European Commission. She was asked to consider whether “the protection of communications between lawyers and their clients (‘legal professional privilege’), guaranteed as a fundamental right under the law of the European Union, also extended to internal exchanges of opinions and information between the management of an undertaking and an ‘enrolled in-house lawyer’ employed by that undertaking?“

The case sprung from a search carried out by the European Commission, in its role as competition authority, of the business premises of Akzo Nobel Chemicals (Akzo) and Akcros Chemicals Ltd (Akcros). During that search, the Commission’s representatives took copies of several documents which Akzo and Akcros claimed were subject to legal professional privilege including two emails between the general manager of Akcros and an employee of that company’s in-house legal team. The employee in question was a member of the Netherlands Bar. The two companies involved brought proceedings to challenge the seizure and use of these documents on the basis that the communications were subject to legal professional privilege. They were unsuccessful at first instance and the matter is now pending appeal. The opinion of the Advocate General is not binding on the appeal court however such opinions are usually followed.

Ms Kokott’s opinion largely followed the European Court of Justice’s (ECJ) decision in AM & S v Commission [1982] ECR 1575 in which the ECJ identified two necessary criteria in order to rely on the protection afforded by legal professional privilege. First, there must be a communication in connection with the client’s rights of defence; and, second, the communication must be with an independent lawyer (i.e. a lawyer who is “not bound to the client by a relationship of employment“). The Advocate General relied heavily, when making her decision, on the presumption that an in-house lawyer was unable to deal effectively with any conflicts of interest between professional obligations and the wishes of his client (i.e. his employer). This, she stressed, was partially due to the fact that an in-house lawyer is economically dependant on the employer in a way that independent lawyers are not. She also stressed the importance of having a community-wide rule regarding legal professional privilege as different Member States treated in-house lawyers differently. She concluded that communications with enrolled in-house lawyers were not protected by legal professional privilege.

If the appeal court follows the Advocate General’s opinion then corporate entities will have to be extremely careful about the advice they seek from their in-house counsel. Such communications may not be protected by legal professional privilege in matters under the jurisdiction of the European courts.

The appeal is due to be decided later this year.  If you would like the read the Advocate General’s opinion in full please click here.