Author: Nicola Sharp
12 October 2020
3 min read
Nicola Sharp of Rahman Ravelli details the case of PJSC Tatneft v Bogolyubov and Others  and the significance of the protection it offers communications made by non-UK lawyers.
The High Court has ruled that the communications of foreign lawyers are protected by legal professional privilege.
Mrs Justice Moulder ruled in PJSC Tatneft v Bogolyubov and Others  EWHC 2437 (Comm) – a dispute between a Russian oil company and Ukrainian businessmen - that legal privilege should apply to communications of foreign lawyers; regardless of their legal qualifications, their professional registration status or whether they work at a firm or in-house.
In the judgement, Moulder J said: “The only requirement in order for legal advice privilege to attach is that they should be acting in the capacity or function of a lawyer.
“It is not necessary or relevant to consider the training and experience of an individual foreign lawyer in order for legal advice privilege to apply in the case of a foreign lawyer.”
The ruling came after a lawyer representing a defendant in the case - Ukrainian oligarch Igor Komoloisky - argued that the in-house lawyers for oil company Tatneft in Russia were not protected by privilege in the UK because they are not admitted to the Russian bar.
Tatneft had accused Komoloisky and three other businessmen of being involved in a scheme to embezzle the proceeds of a $294.2 million oil sale that Tatneft made to Ukrainian oil company UTN in 2009. Tatneft claimed that the four businessmen, who allegedly owned UTN at the time, forced it to make the payment via companies controlled by them and then moved the funds into offshore bank accounts before declaring the companies bankrupt; depriving Tatneft of payment for the oil sale.
Moulder J’s decision last month means that Tatneft does not have to disclose to the defendants communications made by its legal department. Tatneft had argued there was no precedent for the court to enquire into the standards of regulation or the training of a foreign lawyer, and that legal privilege should apply to anyone acting as a lawyer in a foreign jurisdiction.
It was held that the starting point for considering whether legal advice privilege (LAP) applies is that clients, in the public interest, can obtain legal advice and such communications should be confidential (as per Lord Scott in Three Rivers (No 6)  1 AC 610). According to Moulder J, it follows that LAP extends to foreign lawyers based on “fairness, comity and convenience” without regard to the foreign lawyers’ local standards, regulations or rules on privilege (as in R (on the application of Prudential plc and another) v Special Commissioner of Income Tax  UKSC 1).
In order to avoid uncertainty, the relevant consideration with regard to foreign lawyers is the “function” of the relationship, rather than the “status” of the lawyer, and the courts will not look at the training of and regulations governing the foreign lawyer (as in Prudential and Re Duncan  2 WLR 1479). In assessing the function of the relationship, the only test to apply is whether the queried material relates to client-lawyer communications; with lawyers acting in their professional capacity in connection with providing legal advice (Prudential).
The court, “as a matter of both logic and principle”, did not apply different rules to foreign in-house lawyers in considering R (Jet2.com Ltd) v Civil Aviation Authority  EWCA Civ 35, with the judge noting that LAP also applies to communications with an in-house lawyer. The court would, therefore, not investigate whether a foreign in-house lawyer is regulated or registered, as they are "in the same position as those who practise on their own account", as per Lord Denning in Alfred Crompton Amusement Machines Ltd v Customs and Excise Comrs (No 2)  2 QB 102.
It has long been established in English law that LAP applies to the provision of advice from foreign lawyers. However, the judgement in this latest case has helpfully confirmed the extent of this principle in its application to the advice from foreign in-house lawyers. In order to satisfy the underlying rationale and the public interest of being able to obtain confidential advice from lawyers, the scope of LAP, therefore, covers communications from any type of foreign legal adviser, regardless of where the lawyer is based or their role, and without any consideration of their particular national standards or regulations.
Nicola is known for her fraud, civil recovery and business crime expertise, her experience of leading the largest financial disputes and multinational investigations and her skills in devising preventative measures and conducting internal investigations for corporates.