Supreme Court clarifies rules on the right of in-house counsels to invoke legal professional privilege
The Supreme Court handed down a judgment today containing general observations on the right of lawyers in salaried employment who exclusively represent their employer or related legal entities (‘in-house counsels’) to invoke legal professional privilege. The Supreme Court made these observations in a judgment in a case concerning the right of foreign lawyers employed by Shell to invoke privilege.
Background of the case
In the course of a criminal investigation into bribery of a public official during the acquisition of an oilfield in Nigeria, documents and electronic data carriers were seized at Shell headquarters in The Hague on 17 and 18 February 2016. The items seized included documents that were sent or received by foreign lawyers who are (or were) employed as in-house counsels by Shell or a Shell subsidiary. None of the in-house counsels involved are Dutch nationals and none were ever registered as lawyers in the Netherlands. Shell and the in-house counsels lodged an objection with Rotterdam District Court against the seizure of documents and data that are subject to legal professional privilege.
The district court’s judgment
The district court ruled that the in-house counsels who are or were working for Shell in the Netherlands are entitled to invoke privilege only if, in accordance with article 5.12 of the Dutch Legal Profession Regulations (Verordening op de advocatuur), they and Shell have signed a ‘professional statute’ (professioneel statuut), an agreement in which Shell guarantees their independence. In regard to the in-house counsels who work or worked for Shell abroad, the district court recognised their right to invoke privilege without imposing further conditions, except in the case of a Swiss in-house counsel. This was because in Switzerland lawyers in salaried employment are not entitled to invoke privilege. The district court has not yet decided about other, more far-reaching petitions submitted by Shell and the in-house counsels.
Appeal in cassation
Shell and the in-house counsels, and the Public Prosecution Service, lodged appeals in cassation against the district court’s decision. According to Shell and the in-house counsels, the district court wrongly made the right to invoke privilege dependent on whether a professioneel statuut had been signed or on the law of the jurisdictions where the in-house counsels work or worked. In the Public Prosecution Service’s view, the in-house counsels who worked for Shell abroad were also not entitled to invoke privilege.
The advisory opinion of the Advocate General
The Advocate General took the view that the conclusion of a professioneel statuut by foreign lawyers in salaried employment who are licensed in their home jurisdiction cannot be imposed as a condition for invoking privilege in a Dutch criminal investigation. The Advocate General’s conclusion was therefore that the contested decision should be set aside.
Supreme Court judgment
The district court’s decision is an interim decision, against which no appeal in cassation lies. The parties’ appeals in cassation were therefore declared inadmissible.
However, the Supreme Court saw fit to make general observations about the right of in-house counsels to invoke privilege and about the scope of that right. Those observations lead to the conclusion that, contrary to the Advocate General’s advisory opinion, the right of in-house counsels to invoke legal professional privilege depends on compliance with the regulations of the Netherlands Bar Association and/or foreign regulations. The Supreme Court distinguishes between lawyers on the basis of their home jurisdiction and on the basis of whether they can be deemed an in-house counsel.
In its judgment, the Supreme Court provides an overview of applicable regulations, some of which have been issued by the Netherlands Bar Association (*1). The Supreme Court considers first of all that lawyers cannot be prohibited from invoking privilege solely because they are in salaried employment. However, it is necessary to demonstrate that their independence is guaranteed.
On the basis of the applicable regulations, lawyers registered in the Netherlands who exclusively represent a company with which they are in salaried employment and whose work for that company consists mainly of the practice of law (i.e. in-house counsels registered in the Netherlands) must have an agreement with their employer guaranteeing their independence. This document –a professioneel statuut – is required by article 5.12 of the Dutch Legal Profession Regulations and provides guarantees safeguarding a lawyer’s ability to practice law independently and comply with professional and practical rules governing the practice of law. In-house counsels registered with the Netherlands Bar Association may invoke legal professional privilege in relation to the work they carry out for their employer only if they have concluded such an agreement with their employer.
The same applies to the special category of ‘visiting lawyers’ (lawyers from the European Union, from states that are a party to the Agreement on the European Economic Area and from Switzerland) who work as in-house counsels in the Netherlands. With respect to the work they do for their employer, visiting lawyers meet the requirements only if they have an agreement with their employer guaranteeing their independence, i.e. either a professioneel statuut or another agreement with their employer guaranteeing their independence and concluded under the law of their home jurisdiction.
Other foreign lawyers have the right to invoke legal professional privilege only if (i) under the law of their home jurisdiction they have that right and (ii) if their work in the Netherlands is of such a nature that, were it to be performed by a Dutch lawyer, that lawyer would be entitled to invoke privilege. In-house counsels who are foreign lawyers must be able to demonstrate that they have an agreement with their employer guaranteeing their independence, as referred to above.
In-house counsels may invoke legal professional privilege only in respect to information entrusted to them in their capacity as lawyers and, therefore, in the context of the work they do as lawyers in the course of regular legal practice. In assessing whether this is the case, it is of particular importance to determine whether the work is related to pending or anticipated proceedings.
(*1) One of the bodies of the Netherlands Bar Association (Nederlandse orde van advocaten) is the board of representatives (college van afgevaardigden). The board is authorised to adopt regulations in the interests of good professional practice (section 28, subsection 1, Counsel Act (Advocatenwet)). These regulations are binding on lawyers who are registered with the Netherlands Bar Association and on ‘visiting lawyers’ (section 29, subsection 1, opening words and (a) and (b), Counsel Act).