On 7 October 2019, the District Court of Rotterdam (the Court) ruled that in-house counsel who are admitted to a non-Dutch bar can revoke attorney-client privilege when independence from their employer is not sufficiently safeguarded. The case involved the confiscation of information by the Dutch public prosecutor during a search at a major oil and gas company (the Company) in connection with an investigation on alleged bribery in Nigeria. The seized information was, according to the Company, covered by privilege of 15 in-house counsel lawyers who are all admitted to foreign bar associations.
An important distinction
The Court made a clear distinction between the legal requirements applying to expatriate lawyers employed in the Netherlands, and expatriate lawyers employed abroad:
- In-house counsel admitted to a foreign bar and employed in the Netherlands: foreign in-house counsel working in the Netherlands are subject to the rules of professional conduct that are applicable to Dutch lawyers. Based on these rules (Verordening op de praktijkuitoefening in dienstbetrekking (until 1 January 2015) and Verordening op de praktijkuitoefening (from 1 January 2015 onwards)) a lawyer can claim privilege if the employer and the lawyer have signed a professional charter (or statute) that safeguards their independent position in the company. If such charter does not exist, the lawyer has no guarantees for its independent practice and is not entitled to invoke the right of non-disclosure.
- In-house counsel admitted to a foreign bar and employed abroad: With regards to expatriate in-house counsel who are employed outside the Netherlands, the Court stipulated that the laws of the country of the employer’s establishment will apply.
In this case, the Court observed that no signed charter was submitted to the Court, and therefore independence of the in-house lawyers could not be proven. The Court further considered the fact that the Company’s Head of Legal Department was a member of the Executive Committee, which put into question the independence of the Legal Department’s position and consequently that of the in-house counsel working in that department. In other words, in-house counsel employed abroad could not be regarded as confidential third-parties as their independence was insufficiently guaranteed.
While the ruling is subject to appeal, this is an important reminder for companies to take the required actions to secure the independence of their in-house counsel, including by ensuring that a professional charter is in place as a way to guarantee legal privilege.
This decision has a wider impact on many international corporations in the Netherlands. As expressed by our Amsterdam partner Sharon Oded on Global Investigations Review (GIR), “It goes into the broader discussion about the global trend of challenging privilege and the way authorities sometimes compromise privilege around the world. Companies are sometimes expected by enforcement authorities to give up their privilege to show that they are cooperating, but this all may have adverse consequences on the way companies would seek legal advice and act in investigations.”
Specifically, with respect to in-house counsel admitted to a foreign bar and employed in the Netherlands, companies may need to consider whether the independence of their in-house counsel is guaranteed in practice, taking into account their roles and responsibilities within the organisation.
As regards in-house counsel admitted to a foreign bar and employed abroad, special attention should be paid not only to local requirements, but also to jurisdictions in which in-house counsel’s rights to revoke legal privilege are not acknowledged altogether.
(This article was written with great assistance from Britt van Breda, Associate)