European Court of Justice Rejects Attorney-Client Privilege for In-House Counsel

In a much anticipated decision, issued on September 14, 2010, the European Court of Justice reconfirmed that communications with in-house counsel are not privileged under European Union law (E.U.) Case C-550/07, Akzo Nobel Chemicals Ltd. & Akros Chemicals Ltd. v. European Commission. The decision firmly establishes the European rule that the attorney-client privilege does not attach to communications with an attorney who holds a position of employment with a client. Please click here for the opinion.

The case, Akzo Nobel Chemicals Ltd. & Akros Chemicals Ltd. v. European Commission, arose out of a European Commission (EC) investigation into anti-competitive practices. The EC conducted a dawn raid at the companies’ premises in the United Kingdom and seized various documents, including information gathered for the purpose of obtaining legal advice and emails between a company manager and an in-house lawyer who was a member of the Netherlands bar. On September 14, 2010, the Court of Justice affirmed the decisions of lower courts that these communications were not privileged under the rule established in AM&S Europe Ltd v. Commission (1982).1 Under E.U. law, the attorney-client privilege only exists where the lawyer is independent, and the Court of Justice held that “the requirement of independence means the absence of any employment relationship between the lawyer and his client, so that legal professional privilege does not cover exchanges within a company or group with in-house lawyers.”2 The Court reasoned that despite the professional ethical obligations of an in-house lawyer, the commercial strategies of the employer would affect the lawyer’s ability to exercise professional independence. Finally, the Court added that an in-house attorney may serve in roles other than as legal adviser, which would further lessen the in-house attorney’s independence.