1. Attorney-Client Privilege in International Disputes “Groundhog Day – Episode III” Ian Meredith Partner, International Arbitration Practice Group Co-ordinator, K&L Gates LLP ABA – Moscow Dispute Resolution Conference Radisson Royal Hotel, Moscow 21 September 2012

2. 2 English Law and Practice  A General Introduction to the process of Documentary Disclosure in English Court Proceedings  What Law governs questions of Privilege in London seated International Arbitration?  What Law governs questions of Privilege in English Court Proceedings?  A Brief Guide to the General Principles of the English Law of Privilege  An Application of those principles to the Groundhog Day - Episode III scenario

3. 3 A General Introduction to the Process of Document Disclosure in English Court Proceedings  Pre-Action Disclosure  A Party’s General Duty of Disclosure – not just documents relied upon – includes those “adversely affecting your case”!  When and in what form is a Party required to make Disclosure?  “E-disclosure” in English Court Proceedings

4. 4 What Law Governs Questions of Privilege in London Seated International Arbitration?  Generally Tribunals have regard to the IBA Rules on the Taking of Evidence in International Arbitration (2010)  Article 3 sets out the standard approach to document production  Article 9(3) sets out the manner in which the Tribunal should approach the determination of the appropriate law or laws of privilege it should apply  Essentially this sets up the “closest connection” test  Swedish lawyer sending letter of advice to Russian client – likely to mean question of whether advice protected by privilege (and any question of “waiver”) will be assessed by the Tribunal under Swedish rules/laws of privilege

5. 5 What Law Governs Questions of Privilege in English Court Proceedings?  In English Court proceedings there is no “closest connection” test  The Judge applies English Law to determine whether each document attracts privilege and also to whether any privilege has been “waived”  Courts have confirmed that the question of whether under a “foreign law” a document is privileged or whether a privilege has been waived is “irrelevant” (Bourns Inc v Raychem Corp - Court of Appeal 1999)

6. 6 The Main Forms of Legal Professional Privilege Under English Law  Legal advice privilege  Litigation privilege  Common interest privilege All three create a series of challenges including the extent to which they apply to in house counsel and to “foreign” counsel (i.e. counsel not admitted to practice in England)

7. 7 Legal Advice Privilege  Unsurprisingly it is applicable to “communications” made “in confidence” between:  a “lawyer”; and  a “client”  And must be “for the purposes of the giving or securing of legal advice”  Extends to documents that record that advice

8. 8 Legal Advice Privilege  Problem areas:  Does not protect communications that are with third parties even if they were undertaken for the purpose of enabling the lawyer to advise the client  “Lawyers” includes solicitors, barristers, foreign lawyers, in-house lawyers and supervised junior team members  BUT nature of the role performed must be the provision of legal advise so care needed when applying test to in- house lawyers performing executive function or lawyers offering looser commercial advice  In large and complex organisations those that constitute the “client” can be difficult to determine – “core group” co-ordinating the obtaining of legal advice

9. 9 Litigation Privilege  Test - “litigation is in reasonable prospect”  Must be related to “litigation”  More than “mere” or “vague possibility”  Cases address “anticipated”, “apprehended”, “contemplated”, “pending” and “threatened”  Secondary test - “dominant purpose”  Protection is wider than Legal Advice Privilege as does cover communications with third parties not merely the “client”

10. 10 Common Interest Privilege  Less well developed:  Provides for protection of Legal Advice or Litigation Privilege in communications between parties with a “common interest” – examples:  Insurer/Insured  Principal/agent  Complex area – commonly subject of documented agreement

11. 11 Waiver and Exceptions  Privilege may be waived by:  Placing privileged material before the Court  Loss of confidentiality in the material  Express or implied waiver

12. 12 Waiver and Exceptions  Exceptions include:  The crime/fraud exception  When the communication is a material fact in itself  When secondary evidence may be given

13. 13 The Challenges Presented by the Scenario  On an application for a Freezing Order the applicant has a duty of “full and frank disclosure” (i.e. to tell the court about all matters that might reasonably impact upon the court’s decision whether to grant the Injunction)  Material non-disclosure is a ground for the setting aside of a Freezing Order  Any documents must be assessed for privilege under the English Law test

14. 14 The Challenges Presented by the Scenario  The scenario therefore creates a number of very real challenges, because:  Production of documents in open court constitutes publication and confidentiality is lost and any privilege is likely to be waived. An interlocutory hearing related to a Freezing Order application is not a hearing in open court  English case law is divided over the extent to which a party can produce privileged documents in an interlocutory hearing to satisfy its duty of full and frank disclosure without thereby waiving any privilege – how the privileged material has been “deployed” is often significant (Berezovsky v Abramovich [2011])

15. 15 The Challenges Presented by the Scenario  If documents that may be privileged from production in Sweden in the context of a SCC arbitration (under a Swedish law assessment) are produced in English Court proceedings (whether in open court or an interlocutory hearing) that may operate to “waive” the Swedish law privilege (the applicable test will be a Swedish law test)  If documents are held back from production but are under an English law test not privileged the failure to produce those documents may ground an application to set the Freezing Order aside under the material non-disclosure ground

16. 16 The Challenges Presented by the Scenario  Even if the documents are privileged, a failure to produce them may be a breach of the duty of full and frank disclosure  Any setting aside of a Freezing Order is likely to trigger the applicant’s cross undertaking on damages (usually supported by a bank bond)  Will securing and maintaining the Freezing Order operate as the missile that ends the dispute? If so disclosure in interlocutory proceedings without arguable waiver of privilege may be worthwhile as case will not progress to Trial in open court

17. Attorney-Client Privilege in International Disputes “Groundhog Day – Episode III” Ian Meredith Partner, International Arbitration Practice Group Co-ordinator, K&L Gates LLP ABA – Moscow Dispute Resolution Conference Radisson Royal Hotel, Moscow 21 September 2012