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SFO v ENRC landmark privilege case: no appeal but the story continues…

10 October 2018

The Serious Fraud Office (SFO) has confirmed that it will not appeal the Court of Appeal’s landmark ruling that documents created during an internal investigation by Eurasion Natural Resources Corporation (ENRC) were protected by litigation privilege and do not have to be disclosed to the SFO. However, the story does not end there because in a new twist, ENRC has applied for a judicial review of the SFO’s investigation into criminal allegations of corruption and financial wrongdoing by ENRC.

Internal investigations and litigation privilege

Many will be grateful that the SFO is not challenging the Court of Appeal judgment which, as we previously commented here, marks a welcome, less restrictive approach to legal professional privilege protection in the context of investigations work.

In summary, the Court of Appeal concluded that both interview notes made by ENRC’s external lawyers and materials generated by forensic accountants during an internal investigation into the corruption allegations were protected by litigation privilege. The court held that criminal proceedings were reasonably in prospect from when ENRC engaged external lawyers to conduct the internal investigation and that the documents were created for the dominant purpose of resisting or avoiding criminal proceedings.

The law on litigation privilege in a criminal context will now remain in line with the position on civil claims, at least for the time being.

A loose thread – legal advice privilege and who is the “client”?

The downside of SFO’s decision not to appeal is that a higher court will not have the opportunity (on this occasion) to revisit the current narrow definition of ‘client’ for the purposes of legal advice privilege. The controversial definition, laid down in Three Rivers No. 5, is that ‘client’ in a corporate context means only those individuals or employees within an entity who are expressly authorised to seek and receive legal advice on its behalf from the relevant lawyers.

The Court of Appeal in SFO v ENRC noted that this restrictive definition of ‘client’ does not fit with today’s world of large multi-nationals, but declined to revisit the issue. The court said, “If the ambit of Three Rivers (No. 5) is to be authoritatively decided differently from the weight of existing opinion, that decision will, in our judgment, have to be made by the Supreme Court rather than this court.”

Now that the SFO is not appealing this case, the wait for such a Supreme Court decision continues until another one comes along.

The next chapter… judicial review

The long-running story about the SFO’s investigation into ENRC is not over yet though. ENRC has apparently filed an application for judicial review in the Administrative Court, requesting that an independent law firm be appointed to investigate various concerns about suspected SFO wrongdoing in relation to the criminal investigation. We await the outcome.

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