• Legal Privilege in the European Union — Judgment of the Court of September 14, 2010
  • September 16, 2010 | Authors: Frederic Depoortere; James S. Venit
  • Law Firm: Skadden, Arps, Slate, Meagher & Flom LLP - Brussels Office
  • On September 14, 2010, the Court of Justice (the Court) issued its judgment in Akzo v. Commission (Case C-550/07 P, hereinafter the Judgment) dismissing an appeal brought by Akzo Nobel Chemicals Ltd. (Akzo) against a judgment of the Court of First instance (now the General Court) of September 17, 2007. The Court upheld and clarified its former AM&S ruling (see Case 155/79) holding that in-house lawyers are not protected by legal professional privilege in antitrust investigations conducted by the European Commission even if the lawyer in question is admitted to, and subject to the ethical rules of, the Bar or Law Society.

    The Facts

    In February 2003, Commission officials assisted by representatives of the UK Office of Fair Trading carried out an inspection at the premises of Akcros Chemicals Ltd. (Akcros), a UK subsidiary of Akzo. During the inspection, the Commission officials took copies of several documents, including two e-mails exchanged between Akcros' general manager and Mr. S., Akzo's coordinator for competition law. At the time, Mr. S. was enrolled as an Advocate of the Netherlands Bar and was employed by Akzo on a permanent basis as a member of its legal department.

    By decision of May 8, 2003, the Commission rejected Akzo's claim that the two e-mails should be covered by legal professional privilege. Akzo challenged this decision before the General Court, which dismissed the appeal in its judgment of September 17, 2007. Akzo subsequently appealed against that judgment to the Court.

    The Main Grounds of the Judgment

    In its AM&S ruling in 1979, the Court had held that the confidentiality of written communications between lawyers and clients should be protected at the Community level subject to two cumulative conditions (see para. 40-41 of the Judgment): 

    • the exchange with the lawyer must be connected to “the client's rights of defence;” and

    • the exchange must emanate from “independent lawyers,” that is to say “lawyers who are not bound to the client by a relationship of employment.”

    In its appeal, Akzo argued that the General Court had incorrectly interpreted the condition for legal professional privilege concerning the independent professional status of the lawyer with whom communications are exchanged (para. 30).

    In its Judgment, the Court stated that the condition of independence requires the absence of any employment relationship between the lawyer and his client, with the result that legal professional privilege does not cover exchanges within a company or group with its own in-house lawyers (para. 44). Following the opinion of Advocate General Kokott, the Court confirmed that the concept of independence of lawyers is determined (i) positively, by reference to professional ethical obligations, but also (ii) negatively, by the absence of an employment relationship with the client. According to the Court, even if the in-house lawyer is subject to certain ethical obligations as a result of his admission to the Bar or Law Society, the in-house lawyer's economic dependence upon and close ties with his employer precludes a finding that the in-house lawyer enjoys a level of professional independence comparable to that of an external lawyer (para. 49).

    The Court also concluded that this result cannot be considered a breach of the principle of equal treatment, which requires that comparable situations must not be treated differently and that different situations must not be treated in the same way unless such treatment is objectively justified. The Court concluded that it follows from the considerations cited above (i.e. para. 49) that in-house lawyers are in a fundamentally different position from external lawyers, therefore justifying a different treatment.

    The Court also considered that the legal situation in the Member States of the European Union has not evolved since the judgment in AM&S was delivered to an extent which would justify a change in the case law and recognition for in-house lawyers of the benefit of legal professional privilege (para. 76).