Confidentiality, Privilege and the Tax Adviser The Impact of European Law Philip Baker QC Paul Farmer

Outline of presentation Confidentiality and privilege in the European Convention on Human Rights - PB Confidentiality and Privilege in European Community Law – PF The position of non-lawyer Tax Advisers - PB

1) Confidentiality and Privilege in the European Convention on Human Rights

Recognition of legal professional privilege in the ECHR No express reference to LPP in the ECHR Implied recognition by the ECnHR and ECtHR on two bases – Article 6 – right to a fair trial – Article 8 – right to respect for private and family life

1 st basis: Article 6 ARTICLE 6 RIGHT TO A FAIR TRIAL 1. In the determination of his civil rights and obligations or of any criminal charge against him, everyone is entitled to a fair and public hearing …. 2. … 3. Everyone charged with a criminal offence has the following minimum rights: … (c) to defend himself in person or through legal assistance of his own choosing or, if he has not sufficient means to pay for legal assistance, to be given it free when the interests of justice so require;

1 st basis: Article 6 Limited relevance to tax: – Art. 6(3)(c) applies to criminal cases – General inapplicability of Art. 6 to tax proceedings: Ferrazzini v. Italy [2001] STC 1314 In any event, most privilege cases refer to Art. 8

2 nd basis: Article 8 ARTICLE 8 RIGHT TO RESPECT FOR PRIVATE AND FAMILY LIFE 1. Everyone has the right to respect for his private and family life, his home and his correspondence. 2. There shall be no interference by a public authority with the exercise of this right except such as is in accordance with the law and is necessary in a democratic society in the interests of national security, public safety or the economic well-being of the country, for the prevention of disorder or crime, for the protection of health or morals, or for the protection of the rights and freedoms of others.

2 nd basis: Article 8 The scope of Art. 8 Niemitz v. Germany (1992) 16 EHRR 97 – Private life – includes professional activities – Home – includes office

Recognition of LPP Campbell v. UK (1992) 15 EHRR 137: – “[46] It is clearly in the general interest that any person who wishes to consult a lawyer should be free to do so under conditions which favour full and uninhibited discussion. It is for this reason that the lawyer-client relationship is, in principle, privileged.”

Recognition of LPP Foxley v. UK (2000: Appln. No /96): – “[43] The Court notes in this connection that the lawyer-client relationship is, in principle, privileged and correspondence in that context, whatever its purpose, concerns matters of a private and confidential nature [citing Campbell].”

Analysis of Article 8 Article 8(1): – 1. Everyone has the right to respect for his private and family life, his home and his correspondence. The right is enjoyed by lawyer and client – Schönenberger and Durmaz v. Switzerland (1988) 11 EHRR 202 A qualified right – qualified by Art. 8(2)

Analysis of Article 8 Article 8(2): – 2. There shall be no interference by a public authority with the exercise of this right except such as is – in accordance with the law and – is necessary in a democratic society – in the interests of … the economic well-being of the country….

Analysis of Article 8 “in accordance with the law …” Compatibility with the rule of law – the interference must have a basis in domestic law – the law must be accessible – the interference must be foreseeable Kopp v. Switzerland (ECtHR 25 th March 1998)

Analysis of Article 8 “in the interests of … the economic well-being of the country….” – pursues a legitimate aim

Analysis of Article 8 “necessary in a democratic society” “an interference must be founded on a pressing social need and, in particular, be proportionate to the legitimate aim pursued” Schönenberger (supra.) “the implementation of the measures must be accompanied by adequate and effective safeguards which ensure minimum impairment of the right to respect for his correspondence. This is particularly so where, as in the case at issue, correspondence with the bankrupt’s legal advisers may be intercepted.”Foxley (supra.)

Analysis of Article 8 Confidential communications may be intercepted where: – There is a pressing social need – e.g. prevention of crime (e.g. if lawyer is a suspect) – The interference is not disproportionate – There are adequate safeguards E.g. Kopp – lack of supervision by an independent judge E.g. Mulders v. NL (23231/94) – supervision by Dean of the Bar Association – It is not discriminatory – Slimane-Kaïd (27019/95)

Tamosius v. UK (62002/00) S. 20C TMA 1970 Note: US attorney Complaints under Art. 8 – Warrant not restricted to named persons – Definition of LPP too narrow – Supervising counsel not independent S. 10 Police and Criminal Evidence Act

S. 10 PACE … “items subject to legal privilege” means- (a) communications between a professional legal adviser and his client or any person representing his client made in connection with the giving of legal advice to the client; (b) communications between a professional legal adviser and his client or any person representing his client or between such an adviser or his client or any such representative and any other person made in connection with or in contemplation of legal proceedings and for the purpose of such proceedings; and (c) items enclosed with or referred to in such communication and made- (i) in connection with the giving of legal advice; or (ii) in connection with or in the contemplation of legal proceedings and for the purposes of such proceedings... (2) Items held with the intention of furthering a criminal purpose are not items subject to legal privilege.”

Tamosius “It is not disputed that the search was carried out “in accordance with the law” and that it pursued the aims of the prevention of crime and disorder, as well as the economic well-being of the country. The main dispute between the parties is whether the measure can be regarded as “necessary in a democratic society” in pursuit of those aims, in particular whether it was proportionate to those aims and whether there were sufficient procedural safeguards attaching to the procedure to prevent any abuse or arbitrariness. In that context, it must be noted that the search of a lawyer’s office impinges, or threatens to impinge, on professional secrecy and may have repercussions on the proper administration of justice, and hence on the rights guaranteed by Article 6 of the Convention (see Niemietz, cited above, p. 36, § 37). “

Tamosius “The Court also recalls that the search was carried out under the supervision of counsel, whose task was to identify which documents were covered by legal professional privilege and should not be removed. … the Court notes that the counsel, nominated by the Attorney General, was under instructions to act independently from the investigation team and to give independent advice. Nor does the Court consider that the approach taken to legal professional privilege provides too narrow a protection as alleged by the applicant. Having regard to the definition of privilege in domestic law, a prohibition on removing documents in respect of which such privilege can be maintained provides a concrete safeguard against interference with professional secrecy and the administration of justice …”

Summary on ECHR Protection chiefly under Art. 8 – respect for private life Qualified right: interference must be justified In particular, must be necessary in a democratic society Lawyers’ communications are, in principle, privileged – there must be adequate safeguards Privileged communications may be intercepted to prevent crime PACE definition of privilege not too narrow

2) Confidentiality and Privilege in European Community Law

Professional privilege In what circumstances is EU law relevant? ECJ case law on legal professional privilege Enforcing human rights through EU law Can non-lawyers claim privilege through EU or human rights law?

When is EU relevant? Litigation involving Community rights Advice on Community rights

ECJ case law AM&S [1982] ECR 1575 – the communications between lawyer and client must be made for the purposes and in the interests of the client’s rights of defence – they must emanate from an independent lawyer

Enforcing human rights through EU law European Community is not a party to the European Convention But ECJ regards fundamental rights as a general principle of Community law ECJ case law now explicitly endorsed by Treaty on European Union EU Charter of Fundamental Rights

Position of non-lawyers under EU and human rights law No case law directly on the point Article 14 of Convention and general principle of equality in EU law Directive 2001/97/EC amending Directive 91/308 on money laundering

3) The Non-lawyer Tax Adviser

The Non-lawyer Tax Adviser Uncharted territory Note: width of Article 8 – all advisers and clients enjoy right to privacy and confidentiality Justification of infringements: “necessary in a democratic society” – pressing social need, proportionate, not discriminatory

Article 14 ARTICLE 14 PROHIBITION OF DISCRIMINATION The enjoyment of the rights and freedoms set forth in this Convention shall be secured without discrimination on any ground such as sex, race, colour, language, religion, political or other opinion, national or social origin, association with a national minority, property, birth or other status.

Article 14 Note: the right to privacy of two persons is involved: – The tax adviser who is treated differently if he/she is not a lawyer – The client who is treated differently if his/her adviser is not a lawyer

The Non-lawyer Tax Adviser Discrimination consists in the unjustified or disproportionate application of different treatment to objectively identical situations Is the non-lawyer adviser in an objectively identical situation to the lawyer advisor? If so, can the difference in treatment be justified; is it proportionate?

Confidentiality, Privilege and the Tax Adviser The Impact of European Law Philip Baker QC Paul Farmer