A recent English High Court decision has potential implications for the protections afforded by legal privilege in Singapore to companies in civil or criminal proceedings brought by regulatory agencies.
In a recent decision that has a potentially significant impact on Singapore companies, the English courts have laid down a narrow interpretation of legal privilege under the common law in the context of investigations undertaken by companies in anticipation of regulatory investigations. Specifically, the English High Court has ruled that documents generated by a company during an internal investigation conducted in anticipation of regulatory investigations (e.g., witness statements recorded by lawyers and process review reports by forensic accountants following a review of the company’s books and accounts) are not covered by legal privilege and are liable to be disclosed in subsequent criminal proceedings.
In Director of the Serious Fraud Office v. Eurasian Natural Resources Corporation Ltd,[1] the English High Court ruled that witness statements and process review reports generated by Eurasian Natural Resources’ (ENRC)[2] internal investigations into allegations of bribery and corruption overseas were not protected by legal privilege—despite the fact that the company’s solicitors were involved in recording the witness statements. ENRC was ordered to disclose these documents in subsequent criminal proceedings brought by the United Kingdom’s white collar crime-fighting agency, the Serious Fraud Office (SFO).[3]
In this case, ENRC had hired lawyers and forensic accountants to conduct an internal investigation into the allegations, gather evidence, and review company processes. The English High Court found that at the time of this internal investigation, criminal proceedings were not reasonably contemplated. The SFO eventually applied to the High Court for production of, among other things, the witness statements recorded by the solicitors and the process review reports generated by the forensic accountants, which ENRC attempted to resist on the grounds of legal privilege.
The High Court ordered production of the documents, finding that neither legal advice privilege nor litigation privilege applied. It based its ruling, among other things, on the following:
In addition, the High Court rejected ENRC’s submission that its anticipation of a regulatory investigation by the SFO was equivalent to reasonable contemplation of criminal litigation such that litigation privilege was established.
This decision has potential implications for the protections afforded by legal privilege in Singapore to companies in civil or criminal proceedings brought by regulatory agencies. The Singapore courts have not yet been asked to examine privilege in this specific context, albeit Singapore and English law have slightly diverged and ceased to rely on identical principles with respect to legal privilege.
The decision is a well-timed reminder to companies conducting internal investigations of the need to properly structure investigations in order to differentiate between documents which are privileged and those which are not, and to ensure that privilege may be effectively claimed in response to regulator requests.
The decision also is timely given the increased use of outsourced non-legal service providers to conduct investigations. Without the proper procedures, instructions, and protocols in place, the risk that privilege will be lost when such non-legal service providers are involved may be greater.
A learning point for companies is that there is merit in utilising external law firms to take the lead (as opposed to other non-legal professionals) in conducting such investigations to enable the company to more readily make an assertion of privilege—whether for legal advice or litigation privilege. Firms anticipating regulatory investigations should consider reaching out to qualified external legal counsel to conduct internal investigations—to ensure that privilege is maintained and not inadvertently lost.