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DSFO v ENRC: The English court clarifies and restates the law on privilege in internal investigations

  • Hong Kong
  • Litigation and dispute management


On 8 May 2017, the English High Court, Queen’s Bench Division, issued judgment in The Director of the Serious Fraud Office v Eurasian Natural Resources Corporation Ltd (DSFO v ENRC). The decision articulates important principles on privilege in documents created in the context of internal and regulatory investigations. 

ENRC had commenced an internal investigation into allegations of criminal conduct within the corporation. ENRC communicated with the SFO with transparency throughout the internal investigation and agreed to provide documents, until the SFO subsequently opened a criminal investigation and sought to compel disclosure of materials created in the course of ENRC’s internal investigation. ENRC sought to withhold the disclosure of those materials on grounds of privilege but was unsuccessful.

4 points you need to know:

  • Under English law, legal advice privilege (LAP) does not generally cover communications (e.g. interviews) undertaken as part of a fact-finding investigation with the employees of an instructing corporation, unless (i) those employees are authorised by the corporation to seek and receive legal advice and can be defined as “the client” to whom LAP attaches, or (ii) such communications contain legal advice;
  • Notes taken by lawyers of what they have been told by witnesses are not privileged documents, unless the contents of the documents would betray the tenor of the legal advice.
  • The reasonable contemplation of a criminal investigation does not necessarily equate to the reasonable contemplation of a prosecution. For litigation privilege to apply, a person anticipating a criminal investigation should also contemplate that prosecution is likely, rather than just possible. This must be considered on a case by case basis; and
  • In applying the “dominant purpose” test for litigation privilege, there is a difference between a document created for the dominant purpose of conducting litigation as opposed to avoiding litigation. Litigation privilege does not extend to materials created in order to obtain legal advice as to how best to avoid contemplated litigation.


  • The case is under appeal - This case has been hotly debated within the legal community. In practice, it is rare that interviewees are within the narrowly defined group of employees who are defined as the “client” under English law. In addition, the principles in respect of the moment in time when litigation can be said to be in reasonable contemplation, and the distinction between “conducting” and “avoiding” litigation, is likely to further restrict the application of LAP.
  • Limitation on the scope of LAP – The ENRC judgment reaffirms the recent RBS Rights Issue judgment from December 2016 which decided that the "client" for the purposes of LAP is limited to those persons authorised by the company to obtain and receive legal advice, and does not extend to those who merely possess information that the lawyers require. In the ENRC case, the individuals interviewed by the lawyers were not employees of ENRC but its subsidiaries, third party contractors/suppliers and affiliated companies and were clearly not the “client”. The Judge clarified that in the context of a large corporation the person directly instructing a lawyer (e.g. the in-house counsel) may not be the same person as those within the corporation who want to receive the advice but that person would still be considered a "client" for privilege to apply.
  • Limitation on the scope of Litigation Privilege – Fact finding investigations are not coved by privilege unless (i) objectively, adversarial litigation is in reasonable contemplation by the corporate (as opposed to a “mere apprehension” of litigation being in prospect); and (ii) the dominant purpose for the creation of internal investigation documents is for conducting or advising on actual or anticipated litigation. While each case is to be considered on its own facts, what happened in this case may be of useful reference:
    • ENRC was in a self-reporting process, but this did not impact the existence of litigation privilege. However, ENRC was found to have been contemplating a civil settlement or the avoidance of litigation, rather than to defend potential or anticipated litigation; and the dominant purpose for the creation of various documents was for the former purposes not the latter. This is probably the most controversial aspect of the judgment;
    • the evidence upon which ENRC relied to show that litigation was in reasonable contemplation, was weak. It was alleged that senior individuals did not provide direct witness evidence to avoid prejudicing their positions in criminal proceedings which may be brought against them by the SFO in due course. However, the Judge was not convinced by this reasoning; and
    • ENRC had agreed to share information with the SFO and provide them with a report relating to its internal investigation, and offered full transparency throughout its communications with the SFO during its internal investigations. Understandably, to then assert litigation privilege over documents created in the internal investigations was always going to be difficult.  
    • ENRC’s mandate to its lawyers to undertake an investigation and then advise on its potential liability had been severed, in that one firm was instructed to conduct a fact finding investigation and another was instructed to provide legal advice. Had the retainer been drafted requiring the lawyers not just to investigate the facts, but to also advise on all consequential aspects, then arguably the claim for privilege would have been stronger as the duty to fact find and advise are inextricably linked.


  • There is simply no single or universal step that will allow a corporate to claim privilege over communications created in the context of internal investigations. The best safeguard to preserve the ability to assert privilege remains to engage external counsel as early as possible to ensure appropriate thought is given to the purpose and scope of all internal investigations against the specific factual circumstances.
  • In particular, while the “client” approach to LAP laid out in the case of Three Rivers is not adopted in all jurisdictions, if an investigation may have a cross-border element, especially involving the UK, the scope of privilege should be carefully and early assessed.
  • Regulators will likely be wary of firms structuring investigations in novel ways simply to preserve a possible claim for privilege if that is likely to impact of the integrity of that necessary investigation. As ever, a risk-based approach is likely needed.
  • ENRC are applying for permission to appeal to the Court of Appeal. If the appeal goes ahead (unlike in the RBS case where an appeal’s utility fell away), the higher court may provide more guidance on the application of the principles which can be drawn from both judgments, and hopefully reinforce the importance of both LAP and litigation privilege.  

You can access the full judgment here.