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Akzo Nobel Chemicals and Akcros Chemicals Ltd v Commission Cases C-550/07 P Court of Justice, [2010] 5 CMLR 19 Facts ©Ariel Ezrachi, December 2012 P a g e | 32 Public Enforcement Legal Privilege In-house Counsel The Commission conducted an investigation into possible infringements of EU competition law by Akzo Nobel and Akcros Chemicals. During the investigation the Commission raided Akzo’s offices and obtained various documents in accordance with its investigation powers under Article 14(3), Regulation 17/62. Akzo claimed that some of the documents were protected by professional privilege. Some of the documents included internal communications for the purpose of obtaining external legal advice on competition matters. These were placed in sealed envelopes titled ‘Set A’. Another group of documents classified as ‘Set B’ included email correspondences between Akzo’s in house counsel (titled ‘competition law coordinator’) who was a registered attorney at the Dutch bar, and the General Manager of Akcros Chemicals. The ‘Set B’ documents were not sealed in an envelope, as the Commission was of the opinion that they did not benefit from legal privilege. Akzo claimed that both sets of documents were protected by professional privilege. Following a Commission decision, in which it indicated that it intended to read the ‘Set A’ documents the undertakings applied for interim measures seeking suspension of the operation of the decision. The president of the General Court granted a preliminary order requiring the Commission to deposit the ‘Set A’ documents at the registry of the General Court. Both the Commission and Akzo/Akcros appealed the president’s order. On appeal (Cases T-125/03 and 253/03) the General Court held that ‘In a significant number of cases, a mere cursory look by the Commission officials at the general layout, heading, title or other superficial features of the document will enable them to confirm the accuracy of the reasons invoked by the undertaking and to determine whether the document at issue was confidential, when deciding whether to put it aside. Nevertheless, on certain occasions, there would be a risk that, even with a cursory look at the document, in spite of the superficial nature of their examination, the Commission officials would gain access to information covered by legal professional privilege. That may be so, in particular, if the confidentiality of the document in question is not clear from external indications.’ (para 81) ‘An undertaking subject to an investigation under Article 14(3) of Regulation No 17 is entitled to refuse to allow the Commission officials to take even a cursory look at one or more specific documents which it claims to be covered by [legal professional privilege], provided that the undertaking considers that such a cursory look is impossible without revealing the content of those documents and that it gives the Commission officials appropriate reasons for its view.’ (para 82) ‘Where the Commission and the undertakings are not in agreement as to the confidential nature of the document, Commission officials may place a copy of the document in a sealed envelope and then remove it with a view to a subsequent resolution of the dispute. This procedure enables risks of a breach of legal professional privilege to be avoided while at the same time enabling the Commission to retain a certain control over the documents forming the subject-matter of the investigation…’ (paras 83) ‘the Court considers that the Commission forced the applicants to accept the cursory look at the disputed documents, even though… the applicants' representatives claimed… that such an examination would require the contents of those documents to be disclosed… Accordingly, the Court concludes that the Commission infringed the procedure for protection under legal professional privilege in this regard.’ (para 95) In the present case, ‘the Set A documents do not by themselves constitute written communications with an independent lawyer or an internal note reporting the content of a communication with such a lawyer. Nor do the applicants submit that those documents were prepared in order to be sent physically to an independent lawyer….’ (para 118) Preparatory documents, even if they were not exchanged with a lawyer or were not created for the purpose of being sent physically to a lawyer, may none the less be covered by legal professional privilege, provided that they were drawn up exclusively for the purpose of seeking legal advice from a lawyer in exercise of the rights of the defence. The mere fact that a document has been discussed with a lawyer is not sufficient to give it such protection. (paras 120-24) With respect to the protection afforded to communications with in house lawyers, the Court of Justice in AM&S expressly held that the protection accorded to legal professional privilege under Union law, only applies to the
P a g e | 33 extent that the lawyer is independent, that is to say, not bound to his client by a relationship of employment (paragraphs 21, 22 and 27 of the AM&S judgment). (para 166) Akzo appealed the General Court’s judgment to the Court of Justice. The Court dismissed the appeal as unfounded. In its judgment the Court considered the protection to communication with in-house lawyers. Held In AM & S Europe v Commission, the Court held that the confidentiality of written communications between lawyers and clients should be protected at Community level, subject to two cumulative conditions. [1] that the exchange with the lawyer must be connected to ‘the client’s rights of defence’ and, [2] that the exchange must emanate from ‘independent lawyers’, that is to say ‘lawyers who are not bound to the client by a relationship of employment’. (paras 40, 41) ‘As to the second condition, the Court observed... that the requirement as to the position and status as an independent lawyer, which must be fulfilled by the legal adviser from whom the written communications which may be protected emanate, is based on a conception of the lawyer’s role as collaborating in the administration of justice and as being required to provide, in full independence and in the overriding interests of that cause, such legal assistance as the client needs. The counterpart to that protection lies in the rules of professional ethics and discipline which are laid down and enforced in the general interest....’ (para 42) ‘As the Advocate General observed,... the concept of the independence of lawyers is determined not only positively, that is by reference to professional ethical obligations, but also negatively, by the absence of an employment relationship. An in-house lawyer, despite his enrolment with a Bar or Law Society... does not enjoy the same degree of independence from his employer as a lawyer working in an external law firm does in relation to his client. Consequently, an in-house lawyer is less able to deal effectively with any conflicts between his professional obligations and the aims of his client.’ (para 45) Notwithstanding the professional regime applicable to the in-house lawyer, he cannot be treated in the same way as an external lawyer, because being an employee, by its very nature, does not allow him to ignore the commercial strategies of his employer, and thereby affects his ability to exercise professional independence. An in-house lawyer therefore does not enjoy a level of professional independence equal to that of external lawyers. Being in a fundamentally different position from external lawyers, the General Court rightly held that there was no breach of the principle of equal treatment in this case. (paras 47- 59) In accordance with the principle of national procedural autonomy, in the absence of European Union rules governing the matter, it is for the domestic legal system of each Member State to lay down the detailed procedural rules governing actions for safeguarding individuals’ rights. However, in the present case, the Court is called on to decide on the legality of a decision taken by the European Commission. As the Advocate General stated in her Opinion, national law is applicable in the context of investigations conducted by the European Commission only in so far as the authorities of the Member States lend their assistance. Accordingly, neither the principle of national procedural autonomy nor the principle of conferred powers may be invoked against the powers enjoyed by the Commission in the area in question. (pars 113-120) Comment The Court of Justice upheld the General Court’s finding that under European Union law, legal professional privilege does not extend to communications with in-house lawyers. Note the position in the UK where greater protection is afforded to in-house lawyers. In Alfred Crompton Amusement Machines Ltd. v. Customs and Excise Commissioners (No. 2) [1972] 2 WLR. 835, the High Court held that in-house lawyers ‘are regarded by the law as in every respect in the same position as those who practice on their own account. The only difference is that they act for one client only, and not for several clients. They must uphold the same standards of honour and of etiquette. They are subject to the same duties to their client and to the court…’ ©Ariel Ezrachi, December 2012
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