From Russia with L...egal advice privilege

22 October 2020

The Commercial Court of the Queen’s Bench Division has held, in the case of PJSC Tatneft - v - (1) Gennady Bogolyubov (2) Igor Kolomoisky (3) Alexander Yaroslavsky and (4) Pavel Ovcharenko, that legal advice privilege extends to communications with foreign lawyers including foreign in-house legal teams, where they are acting in the capacity or function of a lawyer. The Court stated that there is no additional requirement for the lawyers to be "appropriately qualified" or regulated as "professional lawyers”.

Background

In this case, the second defendant sought the disclosure of communications between the claimant (a Russian company) and its in-house Russian legal team, over which the claimant had asserted legal advice privilege.

The parties’ submissions

In seeking to obtain the disclosure documents, the defendant submitted that the communications between the Company and its Russian in-house legal department did not attract LPP because in-house lawyers are not “advocates” in Russia, and the Russian equivalent of LPP, known as “advocates’ secrecy”, only applies to advocates.

Evidence pertaining to the position of lawyers in Russia, and notably the distinction between “advocates” and other lawyers who are not advocates, was provided by Mr Kirill Trukhanov, Managing Partner and Advocate of Trubor Law Firm. Mr Trukhanov confirmed that in-house lawyers are not members of the Russian Bar and their activity is not regulated by the Federal Law governing advocates. He explained that the Russian legal system has made a clear distinction that advocates’ secrecy applies to advocates, but does not apply to non-advocate in-house lawyers.

Accordingly it was submitted for the defendant that as a matter of English law, legal advice privilege could not apply to communications with, and documents generated by, the in-house lawyers of Tatneft who are not “appropriately qualified” foreign lawyers.

The claimant submitted that legal advice privilege would attach to communications between employees of Tatneft and members of its legal department in Russia, on the basis that as a matter of English law, legal advice privilege applies to advice obtained from foreign lawyers including in-house lawyers, and that the Russian law on advocates’ secrecy is therefore irrelevant.

The Court’s findings

For HHJ Moulder, the starting point for consideration of this question was the rationale for legal advice privilege, namely that it is in the public interest that clients obtain legal advice which is kept confidential (Three Rivers DC v Bank of England [2004] UKHL 48). Consistently with this rationale, legal advice privilege has been held to extend to foreign lawyers in the subsequent case of R. (on the application of Prudential Plc) v Special Commissioner of Income Tax [2013] UKSC 1, in which Lord Neuberger observed that the extension of legal advice privilege to foreign lawyers, without regard to their national standards, regulations or rules, was based on “fairness, comity and convenience”.

In her present judgment, HHJ Moulder concluded from the above that “once one accepts that the court will not investigate whether a foreign lawyer is regulated or registered, the inclusion of foreign in-house lawyers seems to [...] follow as a matter of both logic and principle”.

Conclusion

The Court held, dismissing the defendant’s application, that the only requirement in order for legal advice privilege to attach to communications with foreign lawyers (whether in-house or otherwise) is that they should be acting in the capacity or function of a lawyer. The Court would not enquire into how or why the foreign lawyer was regulated or what standards applied to the foreign lawyer under the local law, insofar as there is no additional requirement for foreign lawyers to be "appropriately qualified" or recognised or regulated as "professional lawyers".

This decision gives some welcome clarity on this issue and is good news for companies with foreign in-house legal departments.

 

Further information

If you would like to discuss any of the topics raised in this blog, please contact a member of our Dispute Resolution team or visit our web pages for more information.

 

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