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Privilege series Part 5: Aabar v Glencore – A nail in the coffin of the Shareholder Principle
Katie Allard
Our blog series on privilege considers issues encountered by practitioners across a range of dispute resolution specialities. This blog explores the applicable laws in cross-border disputes.
Cross-border disputes raise questions on which jurisdiction’s laws govern the determination of privilege. Under English law, the principle of lex fori applies: the law of the forum where the case is being heard applies. When proceedings are conducted in English courts, English law will determine whether communications are protected by privilege.
Applicable laws of privilege: lessons from the RBS case
The lex fori principle is generally thought to be well settled, but was put to the test in RBS Rights Issue Litigation. The claimants sought disclosure of notes of interviews with current and former employees of the defendant Royal Bank of Scotland (RBS) by in-house and external lawyers which were taken in the US as part of internal investigations. Amongst other reasons, RBS argued that the documents were not disclosable on the basis that:
- The court should not apply the lex fori to the issue of privilege and should instead apply the law of the place “with which the engagement or instructions, pursuant to which the documents came into existence or the communications arose, have their closest connection”. This is akin to the position in the US where the laws of jurisdiction with the ‘most significant relationship’ with the communication apply. Here, the interviews took place in the US, where RBS argued (and the judge accepted) that the communications would have attracted privilege.
- Even if privilege was governed by English law, the court should exercise its discretion to withhold inspection of the documents on the basis that they would be privileged under US law. Under US law RBS had a right to withhold inspection of the interview notes and ordering inspection would breach that right.
The High Court rejected these arguments and found that the documents were not privileged and English privilege laws should be applied. The fact that the notes would have been privileged under US law was irrelevant - adopting another jurisdiction’s rules on privilege would disrupt the public policy on which the English rules of privilege rested.
Mr Justice Hildyard accepted that the court has discretion in exceptional cases to prevent disclosure or inspection of documents. This only applies where “there are such special features as to require a different striking of the balance, as a matter of overall justice and to prevent its process itself being the cause of real and serious harm”, and the court was not persuaded that this was such a case.
Practical Scenarios: Privilege in Cross-Border Disputes
It is crucial for practitioners to remember that English courts apply English laws on privilege, even if the documents originated in or are more closely connected to another jurisdiction which has different privilege rules. Some practical examples of how privilege issues may be considered by English courts are below:
- In-house lawyer communications: In the case of PJSC Tatneft v Bogolyubov, the court was asked to consider whether: (a) communications involving the claimant (a Russian oil company) and its’ in-house lawyers and (b) documents created by its in-house lawyers, would attract privilege. Under Russian law, privilege does not apply to in-house lawyers. However, as this dispute was being litigated in the English courts, the English rules of privilege applied, which does protect communications with in-house lawyers (provided they otherwise meet the necessary tests for privilege).
- Documents obtained in foreign jurisdictions where they are not protected by privilege: In Suppipat v Siam Commercial Bank, the High Court was asked to consider whether the defendant bank could claim privilege over documents that were lawfully obtained by the claimants from third parties pursuant to subpoenas in Thailand. The English court found that the defendant was entitled to maintain privilege, even though the claimants were free under Thai law to deploy the documents in related Thai proceedings. The decision confirms that documents obtained lawfully abroad in circumstances where the foreign court does not consider them to be privileged does not necessarily mean that privilege will not apply in English proceedings.
Conclusion
The law of the forum governs the privileged status of communications. What is privileged in one jurisdiction may not be in another. If you are initiating proceedings in England, privilege laws in other connected jurisdictions are not relevant as English privilege laws apply (unless the court exercises its discretion in exceptional cases). Legal practitioners should consider the rules of privilege of the jurisdiction where proceedings are to be commenced before doing so, as this could influence choice of forum.
Further information
If you have any questions regarding this blog, please contact Lavanya Loganathan in our Dispute Resolution team.
About the author
Lavanya Loganathan is an associate in the Dispute Resolution team. She has a range of experience in complex high-value disputes, including civil fraud claims and investigations and breaches of contract. She acts for claimants and defendants, including corporate entities and individual clients in both domestic and cross-border disputes.
We welcome views and opinions about the issues raised in this blog. Should you require specific advice in relation to personal circumstances, please use the form on the contact page.
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