Function over form - The court clarifies legal advice privilege applies to in-house overseas lawyers

Function over form - The court clarifies legal advice privilege applies to in-house overseas lawyers

Function over form - The court clarifies legal advice privilege applies to in-house overseas lawyers

Communications between a client and their legal adviser are privileged from inspection by the court or any other third party, provided that they are made for the purpose of giving or receiving legal advice.

This is known as “legal advice privilege”. The idea is that clients, who are in need of legal advice, can be confident in giving full disclosure to their solicitor without worrying that they or their solicitor may be required to share this information with anyone else in the future.

The High Court in PJSC Tatneft v Bogolyubov & Others [2020] EWHC 2437 (Comm) has recently clarified when legal advice privilege applies to communications with overseas lawyers.

What is legal advice for these purposes?

Legal advice is broader than the solicitor simply explaining the law; it includes any advice relating to what a client should do in the relevant legal context. However it does not extend to any non-legal advice given by a lawyer, such as business or investment advice. The important question is whether the advice relates to the rights, liabilities, obligations or remedies of the client under the law.

However, the scope of legal advice privilege is wider than the advice itself. It can also extend to any material which evidences the substance of these communications, thereby revealing the legal advice given.

Who is a legal adviser?

The communication must be between a client and their legal adviser, which will also include any correspondence the client has with the adviser’s employees. It is clear that, for these purposes, a legal adviser includes independent practising solicitors and barristers. It also includes legal executives and licensed conveyancers who are authorised to give legal advice by their respective bodies. While it has been firmly established that in-house lawyers and overseas lawyers are included within the scope of legal advice privilege (provided the other requirements for privilege to apply are met), the position can be less clear.

In-house lawyers will often also provide general business advice and administration services to their organisations, which will not be privileged. In-house lawyers should be careful to keep communications with legal advice separate from those relating to their other functions, so as not to risk losing any privilege attaching to legal advice.

Overseas lawyers

In PJSC Tatneft, the High Court considered whether legal advice privilege applies to overseas in-house lawyers. In this case, one of the defendants, Igor Komoloisky, sought disclosure of communications between the in-house legal team at PJSC Tatneft, the claimant, and employees in the organisation. PJSC Tatneft, a Russian oil company, resisted the application, claiming legal advice privilege applied. 

Mr Komoloisky challenged this, arguing that PJSC Tatneft’s Russian in-house lawyers were not “appropriately qualified” for the purposes of legal advice privilege and, as a matter of English law, the communications did not attract legal advice privilege. He contended that, in Russia, in-house lawyers are not “advocates”, and the rules of legal privilege in Russia only apply to lawyers who have this status.

The High Court rejected Mr Komoloisky’s application, ruling:

  • When it comes to overseas lawyers, a legal adviser simply needs to be someone acting in the capacity of a lawyer.
  • It is the function of the relationship which is important and not the status of the person giving the advice.
  • There is no requirement that the individual be “appropriately qualified” and such a requirement would lead to uncertainty if the court had to examine the relevant national standards and regulations in each case.

Upon reaching this conclusion, the court held that legal advice privilege applies equally to overseas in-house lawyers, who are in the same position as lawyers in private practice.

Comment

This case illustrates that the English courts will look at the function legal advisers are carrying out rather than their qualifications or status when deciding whether legal advice privilege applies. While there are still requirements which need to be met for communications to qualify as privileged, this case clarifies the approach that will be taken when looking at overseas lawyers. This applies equally to overseas in-house lawyers and the court will not undertake an investigation into whether an overseas in-house lawyer is regulated, or even qualified, when deciding whether or not legal advice privilege applies. The decision provides some certainty for overseas parties litigating in the English courts and is helpful for those operating across jurisdictions. However, parties should still be aware that where disputes are dealt with in other jurisdictions, those courts may adopt a different approach so caution should still be exercised and local legal advice obtained.

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