In 2010 the European Court of Justice (ECJ) rendered a major decision that has since been the subject of extensive discussions (Akzo Nobel Chemicals Ltd and Akcros Chemicals Ltd v. European Commission). In 2003, the European Commission (EC) raided the offices of Akzo Nobel and one of its subsidiaries, Akcros, following suspicions of breach of European competition laws. The EC seized a significant quantity of materials, including communications exchanged between one of the company’s in-house counsel (a Dutch attorney practicing in the Netherlands, where the offices were located) and his business clients.

Akzo Nobel quickly claimed that the communications were privileged and brought the case before the ECJ, which reaffirmed the long-standing European position that in-house counsel communications are not protected under legal privilege. According to the ECJ, the grounds for maintaining this position mainly focus on the fact that any in-house counsel employed by an organization lacks the necessary independence to benefit from legal privilege.

This decision has been highly criticized for a number of reasons, including that it discredits the integrity of in-house counsel by assuming that the employment relationship they share with their employer prevents them from maintaining the independence necessary to perform their duties. Whereas legal privilege was established to ensure the full and frank exchange of information between a lawyer and his client, the ECJ decision undoubtedly encourages corporate clients to withhold information from their in-house counsel.

For these reasons, many North American legal professionals raised concerns over the practical impact of this decision. Looking back a few years later, were these concerns justified?

One preeminent concern raised by North American legal professionals was the scope of the decision. Because the case directly involved an investigation by the European Commission, some scholars, including members of the Association of Corporate Counsel, hoped that the decision would be restricted to European competition law. However, the arguments given to support the decision did not expressly refer to that particular area of law. In fact, the wording was rather broad and deemed to apply to any corporate legal privilege issue brought before the ECJ.

Recent decisions indeed support the fact that the ECJ wishes to set a general principle in which in-house counsel cannot benefit from legal privilege. In Prezes Urzdu Komunikacji Elektronicznej and Republic of Poland v. European Commission the chairman of the Electronic Communications Office of Poland was seeking to annul a European Commission decision ordering the office to withdraw two measures incompatible with European Directives. The application for annulment was prepared and signed by two lawyers who were, at that time, in-house counsel for the Electronic Communications Office. In 2010 the General Court found that the application was inadmissible since the “employment relationship linking [the two in-house counsel to the office] is not compatible with the representation of the applicant before the Court.” The office appealed the decision before the ECJ, which nonetheless stated that a lawyer’s role, according to the member states’ legal tradition, is “to provide, in full independence and in the overriding interests of [the] cause, such legal assistance as the client needs,” and that “the requirement of independence of a lawyer implies that there must be no employment relationship between the lawyer and his client.”

The court’s findings, once again, did not leave much room for interpretation; the arguments were  generic and undoubtedly chosen to affirm a standard rule. Consequently, some started to wonder whether communications exchanged between U.S. in-house lawyers and their European business people could be challenged before North American courts when subject to the European Commission’s investigations. This question was based on the assumption that since the EC could easily request access to the communications, the “reasonable expectations of privacy” element of legal privilege could now be missing. Though this concern seems a bit excessive, given the U.S. courts’ interpretation of the client’s—and not the lawyer’s—reasonable expectation of privacy, it reveals the degree of uncertainty to which U.S. and Canadian corporate counsel are currently exposed. This uncertainty is not surprising given the longstanding importance of legal privilege in a North American legal culture and jurisprudence.

However, one should bear in mind that even though the Akzo and the Prezes Urzdu Komunikacji Elektronicznej decisions seem to reach far beyond European competition law, they relate to European Union law only. National laws of each of the EU member states trump EU law when the matter falls under their jurisdiction.

Moreover, a strong legal privilege is the natural counterweight to the extensive and expansive discovery rules that exist in the U.S. and Canada. The fact that legal privilege does not exist per se in some European countries (such as France and Italy) can be explained by the non-existence of such discovery rules. For example, in France, a party chooses to disclose information to other parties at its own discretion, based on whether or not the party considers the information relevant. In this way, the need for a robust legal privilege is minimized, thereby lowering the risk of exposure of sensitive attorney-client communications North American companies may face in their European operations.

As such, when dealing with the EU, U.S and Canadian in-house counsel should adopt a pragmatic approach, assessing first, the conditions under which legal privilege could be claimed, and second, whether the absence of such privilege will have significant consequences on the case’s outcome. Based on this approach, the ECJ’s position is truly unfortunate: when the ECJ claims it is the voice of the EU Member States, its decisions toward legal privilege only show that it does not really consider the roots that would justify tailoring its approaches.