Facts of the Case

Akzo was the subject of a dawn raid by the European Commission. The company informed the officials carrying out the raid that certain documents were likely to be protected by legal privilege and should not be removed (since the Commission is not permitted to review privileged documents). After much discussion, one of the EC officials briefly examined the documents, and decided that some of the documents should be put in a sealed envelope so that their status could be considered later. Copies of other documents were directly added to the Commission's file on the basis that the Commission officials did not accept that they were legally privileged.

After the raid, the Commission decided that none of the documents were protected by privilege, a contention against which Akzo appealed. The CFI's conclusions in the appeal give rise to several points of interest.

In-house Lawyers

The CFI rejected any loosening of the rule established by the Court of Justice in its AM & S judgment, pursuant to which intra-company communications with in-house lawyers are not privileged under EC law (communications with external lawyers established in a country outside the EU are also not privileged). Such communications would be privileged under UK law. It is notable that five lawyers' organisations intervened on this issue and a very wide range of arguments were brought to bear. Nevertheless, the CFI was unmoved. It should be noted that the CFI's decision here did not amount to any change of the current law: they merely confirmed the previous legal position as stated in AM & S: that communications between in-house lawyers and their clients are not regarded as legally privileged for the purposes of EC investigations.

Scope of Privilege

The CFI then considered the scope of privilege as it applies to particular documents. AM & S and subsequent cases have established that written communications with external lawyers, and internal notes which solely report legal advice from external lawyers, are privileged. The CFI found that in addition an internal company document is covered if it is drawn up "exclusively for the purpose of seeking legal advice from a lawyer [who must be an external lawyer not bound to the client by a relationship of employment] in exercise of the rights of the defence" (even if not subsequently exchanged with that lawyer or not created for the purpose of being sent physically to a lawyer). This arguably reflects an extension of privilege to cover any preparatory documents which fit the criteria above.

Procedure during Dawn Raids

The CFI also considered the procedure to be followed during a raid. Where there is a dispute, the company must provide the Commission with evidence which demonstrates that a document is privileged. However, in doing this, a company is not bound to reveal its contents. A company is entitled to refuse to allow the Commission to take "even a cursory look" at a document, provided that the company considers that this is impossible without revealing the content and that it gives the Commission appropriate reasons for this view. However, where the Commission considers that privilege may nevertheless not apply, it may place a copy of the document in a sealed envelope, so that the issue can be determined later. Further, the CFI held that if the Commission then decides that the document is not privileged, and there remains a dispute, it is not entitled to read the document until the time limit for bringing an appeal before the CFI has expired. There are potential fines to discourage companies from claiming privilege as a delaying tactic against the Commission.

Outcomes / Perspective

Most of the points of decision in Akzo do not change the underlying law at all, just confirm it as it previously was. Furthermore, it does not alter the English law on privilege, but is only applicable in the wider European context. However, companies should always be vigilant against the potential loss of privilege and its damaging consequences.

Editor’s Note: Akzo is appealing the judgment and lodged its appeal on 8 December 2007. The full case references are: Joined Cases T-125/03 and T-253/03, Akzo Nobel Chemicals and Ackros Chemicals v Commission (not yet reported) (Akzo), actions brought on 11 April and 4 July 2003 (OJ 2003 C146/42 and OJ 2003 C239/20.

Appeal: Case C-550/07 P – Akzo Nobel Chemicals Ltd and Akcros Chemicals Ltd v Commission. Appeal lodged on 8 December 2007 (OJ 2008 C37/19 of 9 February 2008).