“In the event of a potential or alleged regulatory breach, an internal investigation will almost certainly be carried out by a responsible business. Allegations may relate not only to health and safety, but also product safety, food safety, trading standards matters, anti-bribery and corruption, environmental protection, or various other legal regimes, depending on the nature of the business. The resultant investigation report has a very real potential for self-incrimination in that it will usually pinpoint failings with management systems that can amount to breaches of legislation.
“A recent legal decision put into doubt the ability of a business to rely on legal professional privilege (LPP) to avoid disclosure of documents created during such investigations, including the investigation report, to a regulator. However, the much-anticipated Court of Appeal decision in Serious Fraud Office (SFO) v Eurasian Natural Resources Corp Ltd (ENRC) has restored the conventional position as to when and in what circumstances a person can assert LPP, in particular litigation privilege, in relation to an investigation into circumstances that may culminate in criminal proceedings taken by a regulator. The dominant purpose test, in the context of showing a real likelihood of a prosecution, has been put back to the pre-May 2017 position, making litigation privilege easier to assert provided that the dominant purpose can be evidenced, if challenged.
“Organisations and their lawyers (whether external or in-house) must, of course, continue to be careful when structuring and documenting any internal investigations into any potential breach to record the rationale for exerting LPP. Remembering that the evidential burden of establishing that a document is privileged is on the party claiming LPP. The instruction of lawyers at an early stage is an indicator of the rationale that a prosecution is a real likelihood and instructions from a corporate client to the lawyer should come from someone who has authority from the company to give instructions and receive the resultant advice. It has become common for regulators to request a copy of the internal Investigation Report as part of their investigation and therefore businesses should consider whether to exert LPP over the report at the outset of the investigation, remembering that LPP cannot be exerted retrospectively. Setting up an accident investigation protocol, which involves early dialogue with a lawyer, may assist businesses in deciding whether exerting LPP over the internal Investigation Report would be an appropriate safeguard, in the particular circumstances of the case.
“The Court of Appeal decision is the latest in a series of cases which have considered privilege and as such, challenges by regulators over claims that documents attract LPP cannot be ruled out. Nevertheless, the judgment of the Court of Appeal is to be welcomed, restoring some order to months of uncertainty.”
Interesting – I question in context to the following scenario can the Company claim LLP . MR X has an accident and the investigation identifies serious failures on behalf of the Company within the process, these failures being found were then identified as not being causation. However also unearths direct evidence that MR X is obstructing the investigation with different accounts of the method of failure. The evidence clearly shows serious failure on behalf of MR X and his account as well as the Company . As a result causation cannot be identified via the evidence and MR X account.… Read more »