The appeal judgment is surely also good news for South African multinational companies with an interest in the UK. South African subsidiaries with holding companies in the UK were bound by the ruling of the High Court (First Court) and can now relax as if there was never an attempt from the UK to gain access to notes made and other documents prepared during an investigation.
In the SFO case, the ENRC ran an internal investigation to establish whether there was any truth to the allegations made by a “whistle-blower” and to prepare for a potential criminal investigation. The SFO alleged that the ENRC made unjustified claims of legal privilege. The SFO also alleged that ENRC and other companies called on their external lawyers to conduct an investigation, and then interviewed witnesses and claimed privilege over the notes and documents generated during that process. The question that needed to be answered in the UK - and the same applies in South Africa - is what was the dominant purpose of the internal investigation. In the judgment of the First Court, the SFO succeeded and the court ordered that notes made by lawyers and other documents prepared during the investigation should be handed over to SFO as the documentation was not regarded as privileged.
The effect of the first judgment was that companies could no longer assume that records/notes prepared during internal interviews with its officers and employees could lawfully be withheld from a party requesting such documents. Further, the First Court ruled that litigation privilege can only protect documents which are prepared for the sole and dominant purpose of conducting litigation and cannot protect documents produced for the purposes of enabling advice to be taken in connection with anticipated litigation. Therefore, there had to be actual criminal prosecution or actual civil proceedings pending before such protection existed.
The first judgment found that a fact-finding investigation without such investigation having the dominant purpose of preparing for a pending civil or criminal matter, will not satisfy the litigation privilege requirement. The dominant purpose for the investigation must be to prepare for existing civil litigation or criminal prosecution to protect notes made by lawyers.
Fortunately, the Court of Appeal in the UK overturned the judgment and brought some sanity and clarity back into the law of privilege in the UK. The Court of Appeal reaffirmed that documents prepared and notes made by lawyers during an internal investigation are protected by litigation privilege.
The Court of Appeal stated, “It is critical that companies are not penalised for acting responsibly, and are able to instruct lawyers to conduct investigations without fear that the authorities will later be able to demand the lawyer’s entire work product”.
The judgment of the First Court had significant implications for the UK companies carrying out internal investigations and caused widespread concern. The disastrous change of the law of privilege caused by the First Judgment was of such importance that the Law Society of the UK intervened in the SFO case and said, “perversely, a lack of privilege in these cases could have made it more difficult to uncover wrong-doings, as organisations might have been less willing to investigate issues to their full extent without the protection offered by legal professional privilege”.
Privilege protection is a powerful tool and legal advisors of multinational companies should always be acquainted with the different legal principles adopted in various countries dealing with privilege. The UK judgment in the First Court above is a sound example of the necessity to be aware of how various countries deal with the law of privilege where South African entities have an interest.