The High Court has recently held that a forensic report prepared as part of an internal investigation was not protected by litigation privilege. In The State of Qatar v Banque Havilland  EWHC 2172 (Comm), David Edwards QC ordered the report and associated working papers within the defendant’s control to be disclosed on the basis that:
- The Bank had not shown that it faced “adversarial” litigation when the report was commissioned.
- The “dominant purpose” of preparing the report was not for use in any such adversarial litigation (the judge considered that the most likely dominant purpose was to establish the facts in order to respond to questions from the Luxembourg regulator).
The report was prepared by a third party forensic provider for the Bank. The forensic provider was investigating the creation of a presentation leaked to the press.
A party asserting litigation privilege must show that the dominant purpose of the communication in question related to adversarial litigation that is in progress or reasonably in contemplation (see further here).
Factors undermining the assertion that litigation was reasonably in contemplation
- Although the judge found that the Bank believed that the issue “could have significant legal, regulatory and legal consequences”, he considered that something “more concrete” in terms of contemporaneous evidence was needed to show adversarial litigation was in contemplation.
- Internal emails described discussions with the Luxembourg regulator as friendly (which undermined the argument that adversarial litigation from the regulator was contemplated).
- There was no evidence that the Bank contemplated a claim from Qatar (despite the fact that a litigation hold notice had been received from Qatar’s lawyers during the period in which the report was being prepared).
Factors undermining the arguments as to dominant purpose
- The Bank chose to independently instruct the forensic firm almost immediately and prior to instructing lawyers. The fact that the instruction was later documented formally through a law firm “with the aim of improving the prospect of a successful claim for privilege” was not enough.
- In the Bank’s instructions to both the firm producing the report, and its lawyers, there was nothing suggesting a clear litigation purpose to their work.
- The judge considered that the primary purpose of the report was likely to have been to enable the Bank to respond to queries from the Luxembourg regulator.
- It is crucial to control non-privileged communications during the first few days of an investigation (the judge went through in detail these communications to assess the status of the alleged anticipated proceedings and the purpose of the forensic investigation report).
- Detailed contemporaneous written advice as to the anticipated litigation is of significant assistance if the company wants to preserve its ability to claim privilege. In ENRC, written advice from external counsel setting out the anticipated litigation was a powerful factor in establishing that such litigation was reasonably in prospect.
- The fact that service providers are instructed via lawyers will not in itself lend privilege to the work of the service provider. Great care should be taken with the engagement terms of lawyers and other service providers to ensure that they reflect the context of the services and the litigation in prospect (where applicable). These documents should be kept under review on an ongoing basis as the investigation develops.
The authors would like to thank Jamie Brazier, trainee, for his contribution to this blog post.