General legal information Confirmation of the denial of the benefit of professional secrecy for in-house lawyers (the Akzo ca…

By a decision of September 14th 2010 in the Akzo No-bel Chemicals Ltd v. Commission (competition law) case (C-550/07), the European Court of Justice ruled that communications between in-house lawyers (even if they are members of a national Bar) and their em-ployers are not protected by professional secrecy (as far as European institutions are concerned).

1. The “historical” case-law of the European Court of Justice

Since the AM&S case (155/79), the European Court of Justice considers (with regard to the Commission’s powers of investigation in competition matters) that the attorney privilege concerns only documents which (i) are related to the company’s “right of defence” and (ii) are exchanged with an “independent law-yer” (which means a person who is not in an employ-ment relationship).

It was however admitted by the Court that docu-ments from in-house lawyers established in or-der to seek exter-nal legal advice in the exercise of their employer’s rights of defence or documents send to independent lawyers are covered by such privilege.

2. The Akzo case

The Akzo judgement clarifies that in-house lawyers, even if they are member of a Bar or Law Society and benefit from a specific professional status in their country (especially the fact that they are subject to professional ethical obligations), are not to be consid-ered as such “independent lawyers”.

The Court of First Instance (now General Court, GC) had acknowledged in this case that communications between in-house lawyers and their employers could be privileged as long as the main purpose of the docu-ments was to seek external legal advice, but GC had refused to extend this rule to all types of communica-tions with in-house lawyers because they do not sat-isfy the condition of independence.

GC had also acknowledged that the situation of in-house lawyers had probably changed since the AM&S case, but according to the GC, it was not possible to identify a clear trend in the different member states to grant in-house lawyers the benefit of professional secrecy.

Akzo appealed the judgment of the GC, but the Court of Justice rejected all Akzo’s arguments and fully con-firmed its prior case-law by considering that in-house lawyers do not have a “degree of independence com-parable to that of an external lawyer” (§46) and “in-house lawyers are in a fundamentally different posi-tion from external lawyers” (§58).

3. A mere confirmation of the previously admitted principles – No derogation to national rules

The Akzo judgment is thus a mere confirmation of clear and previously admitted principles, but never-theless it has caused extensive comments in the legal community, probably because:
- not all companies were well informed on those prin-ciples and now undertake to review their internal policies and ways of communicating with in-house or external lawyers;
- some of them and their in-house lawyers maybe considered that the increase of legal recognition of the in-house lawyer profession in several member states had changed the overall legal environment with regard to confidentiality.

Be reminded however that the above principles only apply in the relation with EU authorities (especially the Commission in competition cases) and do not supersede national regulations which grant privilege to in-house lawyers communications in the relation with national authorities or third parties.

Specifically for Belgium, article 5 of the law dd. March 1st 2000 creating the Institute for In-House

Lawyers declares confidential all documents which contain legal advice from the in-house lawyer to the attention of his employer. A comparable rule does however not exist in Luxembourg.