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SFO v ENRC appeal: Privilege restored

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On 5 September 2018, the Court of Appeal partially overturned a controversial High Court decision and handed down its judgment in the case of The Director of the Serious Fraud Office v Eurasian Natural Resources Corporation Limited and the Law Society [2018] EWCA Civ 2006, which considered the scope of legal professional privilege in internal investigations.

The decision has been welcomed by businesses and the legal profession alike and will give comfort to corporations wishing to conduct an internal investigation in the aftermath of a serious incident. For more detail on the steps businesses should take to protect their position, please see our blog “SFO v ENRC Appeal: Protecting the Business”.

Background to SFO v ENRC

In 2011, following a whistle-blower report, ENRC began an internal investigation into alleged corruption and fraud in its overseas operations. The SFO opened a criminal investigation into ENRC in April 2013 and sought disclosure of various documents created by ENRC’s lawyers and accountants during the internal investigation. This included notes of interviews between the company’s lawyers and employees and materials generated as part of a ‘books and records’ review by forensic accountants. ENRC refused to supply the on the basis they were covered by LPP.

The High Court decision

On 8 May 2017, the High Court decided in the SFO’s favour, finding that none of the documents were covered by litigation privilege. In the High Court’s view, the documents had been created at too early a stage for criminal proceedings to be reasonably contemplated. The SFO had commenced an investigation, but that was not the same as a criminal prosecution. A criminal prosecution could only be reasonably contemplated once the potential defendant had sufficient knowledge of the facts to be able to say that the prosecutor would be satisfied there was a good chance of obtaining a conviction. It was stated: “a fear of prosecution on a worst case scenario is not good enough”.

Furthermore, even if a prosecution had been reasonably contemplated, none of the documents had been created with the dominant purpose of being used in such litigation, but had been produced in order to be provided to the SFO as part of their investigation with the intention of avoiding such litigation. It was also relevant, the Court held, that ENRC has always intended to show the documents to the SFO as part of promised cooperation.

In respect of Legal Advice Privilege, again this was not considered to apply. In the High Court’s view, and following the decision in Three Rivers No. 5, the interview notes were not communications between ENRC’s legal advisers and their “client” (i.e. persons in ENRC authorised to seek and obtain legal advice). Rather, they were notes of communications with employees who were essentially third party witnesses. Furthermore, the information in most of the documents was provided for the purpose of fact-finding, rather than to obtain legal advice.

The decision proved controversial.

The Court of Appeal’s decision

Following an appeal by ENRC, in which the Law Society also intervened and made submissions, the Court of Appeal almost entirely overturned the High Court’s decision, concluding that the High Court erred both in law and in its interpretation of the facts of the case.

The Court of Appeal concluded that criminal proceedings were reasonably contemplated in this case. ENRC had engaged lawyers to conduct an internal investigation and the SFO had made clear the prospect of a criminal prosecution in its correspondence at the outset. The documents were brought into existence by ENRC for the dominant purpose of resisting or avoiding these, or some other, proceedings.

The Court of Appeal also made some valuable statements of principle. Among the most important are:

  • The fact that solicitors prepare a document with the ultimate intention of showing that document to the opposing party (which was not proven in this case in any event) does not automatically deprive the document of Litigation Privilege;
  • There should be no distinction between contemplation of civil or criminal proceedings when considering Litigation Privilege; and
  • Heading off, avoiding or settling proceedings is a proper purpose within the scope of Litigation Privilege, just as advice given for the purpose of resisting or defending such contemplated proceedings is within the scope.

The Court of Appeal’s view was that this case was primarily about Litigation Privilege and the request to widen the scope of Legal Advice Privilege by revisiting the 2003 decision in Three Rivers No. 5 was said to be a matter falling to the Supreme Court. That said, towards the end of the judgment the Court of Appeal added: “if it has been open to us to depart from Three Rivers No. 5, we would have been in favour of doing so”(i.e. adopting a wider interpretation of the definition of ‘client’). For present purposes however, the position remains that Legal Advice privilege can only cover information received from the client, or in the case of a corporate entity, persons the company has authorised to seek or receive legal advice.


The decision is positive news for those facing criminal or regulatory investigation as it recognises the importance of companies being in a position to investigate without losing the protection of LPP. Companies will now have a better chance of arguing that documents created during the course of an investigation following a serious incident are covered by privilege, even where a regulator has not commenced formal action.

The Court of Appeal made clear that their decision turned on the facts of the case. Whether or not LPP is applicable in an internal investigation will be fact-specific, and corporates should instruct external counsel early and receive advice regarding the preservation of privilege.

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