Confidentiality of In-House Counsel’s Communications in the European Union: A Lack of Harmonized Approach Leading to Differing Outcomes

March 23, 2015

A recent ruling by the Belgian Supreme Court exemplifies the divergent protection granted to in-house counsel communications during dawn raids and competition investigations more generally.  In its ruling in the Belgacom case, the Belgian Supreme Court upheld most of the findings made by the Brussels Court of Appeal, including that of confidentiality attached to registered in-house counsel’s communications. This judgment has been warmly received by in-house counsel, whose legal communications with their employers will be fully protected against disclosure in the context of antitrust proceedings initiated by the Belgian Competition Authority (BCA) – in the same way as advice from outside counsel is protected.

However, under well-established case-law of the European Courts (in particular, Akzo Nobel (C-550/07 P), see our publication here), the same communications do not benefit from the legal professional privilege in the context of investigations by the European Commission (EC).  The Belgian judgment illustrates the conflicting outcomes and standards faced by in-house counsel depending on whether EU or national law applies to the inspection.

The Belgacom Case: Background

In May 2010, Mobistar and KPN Belgium filed a complaint with the BCA alleging that Belgacom (now Proximus) abused its dominant position on the broadband access market in Belgium.  The BCA then raided Belgacom’s premises, and seized several digital documents, including internal emails with in-house counsel.  Belgacom claimed that those emails were covered by legal professional privilege.  However, the BCA rejected this claim.  As a result, Belgacom lodged an appeal before the Court of Appeal of Brussels.

In its appeal, Belgacom argued that the internal emails exchanged with in-house counsel were privileged on the basis of Article 5 of the Belgian Law of March 1,2000 which set up an institute of in-house counsels.  Article 5 provides in particular that an in-house counsel’s communications with its employer are confidential.  Hence, the BCA was not entitled to seize those emails.  In defense, the BCA submitted that, in accordance with EU case-law, no such privilege could apply in relation to those emails.

The EU Position on the Confidentiality of In-House Counsel’s Communications

The BCA’s defense was based on Akzo Nobel (C-550/07 P), in which the EU Court of Justice (CoJ) ruled on the issue of the confidentiality of in-house counsel’s communications.  During a dawn raid, the EC seized a number of emails exchanged between Akcros’ general manager and Akzo’s in-house counsel, who was a member of the Netherlands Bar and employed by Akzo on a permanent basis.  Throughout the investigation the companies claimed – without success – that these emails were privileged.

In its judgment, the CoJ recalled that, in the framework of EU investigations, the confidentiality of written communications between lawyers and clients is subject to two cumulative conditions:

  • The communication must be connected to the client’s rights of defense; and
  • The exchange must emanate from independent lawyers, that is to say, “lawyers who are not bound to the client by a relationship of employment.

This second condition clearly rules out the protection, at EU level, of the confidentiality of correspondence with in-house counsel.  However – and the BCA might have missed this part of the Akzo judgment – the CoJ also recognized that this rule does not apply to investigations conducted at national level by a National Competition Authority (NCA).  This would, in particular, relate to investigations where either the NCA acts on its own or on behalf of the EC or a national competition authority.  In those cases, NCAs should be bound by their national applicable rules that protect the confidentiality of correspondence with in-house counsel.

The Good News

In light of the above, the Court of Appeal of Brussels, then upheld by the Belgian Supreme Court, took the view that the national rules on confidentiality of in-house counsel communications applied in the Belgacom case.  Thus, the emails exchanged with in-house counsel were confidential and should not have been seized by the BCA.  As a result, the Court ordered the BCA to delete these emails from the record.

Take-Away Messages for Companies Operating in Member States that Protect In-House Counsels’ Communications

The scope of the Belgian ruling is limited to national investigations.  Hence, conflicting standards will continue to apply for quite some time: a document prepared by an in-house counsel will not be protected in certain investigations – namely, EC investigations – but may be afforded protection in other investigations – namely, national investigation (if national rules protect the confidentiality of these documents).  The result is a lack of certainty for in-house counsel operating in EU Member States.  Therefore, when advising their companies, they should prepare for the worst case scenario – i.e. an EC investigation where no confidentiality would be recognized in relation to these documents.

The Belgian Supreme Court decision is, however, good news for registered in-house counsel operating in Belgium, in that their communications will be protected in the course of investigations by the BCA, no matter what applicable regime is at EU level.  In Akzo, the CoJ recognized that the regimes in the Member States varied.  Perhaps this recent development may fuel the debate in favor of a more harmonized approach that would take account of the critical role that in-house counsel play in ensuring that companies comply with antitrust rules.