The European Court of First Instance (CFI), the EU's second highest court, ruled Sept. 17 that communications with in-house lawyers are not protected by legal professional privilege.

With the decision, the court rejected a claim from Akzo Nobel Chemicals over the European Commission's seizure and review of documents the company said should be subject to attorney-client privilege. The Commission took the documents (memorandum drafts concerning outside counsel and e-mails with an in-house lawyer) during its 2003 investigation into alleged anti-competitive practices of Akzo Nobel.

The CFI backed the Commission, finding that Europe's high court, the European Court of Justice, “expressly excluded communications with in-house lawyers … from protection under [legal professional privilege].” The Court of Justice previously extended privilege to “independent lawyers,” defined as “one not bound to his client by a relationship of employment.”

In its opinion, the CFI laid out the process of handling potentially privileged information during investigations, in which the Commission is allowed a “cursory look” at documents to determine if they should be subject to legal professional privilege. The decision, the court said, can generally be made by quickly glancing at “superficial features of the document,” such as layout, heading or title.

The subject of an investigation has the right to deny this “cursory look.” The CFI acknowledged that the Commission “committed various irregularities” in its investigation, notably forcing Akzo Nobel to allow it a cursory look at certain materials. As a result, the court ordered the Commission to cover two-fifths of both sides' legal costs.

In a statement from Akzo Nobel, the company said, “This ruling has no bearing on any substantive pending cases involving Akzo Nobel and therefore has no financial or other substantive impact on Akzo Nobel. Akzo Nobel is studying the court's ruling and will issue a response in due course should it be deemed appropriate.”

The European Court of First Instance (CFI), the EU's second highest court, ruled Sept. 17 that communications with in-house lawyers are not protected by legal professional privilege.

With the decision, the court rejected a claim from Akzo Nobel Chemicals over the European Commission's seizure and review of documents the company said should be subject to attorney-client privilege. The Commission took the documents (memorandum drafts concerning outside counsel and e-mails with an in-house lawyer) during its 2003 investigation into alleged anti-competitive practices of Akzo Nobel.

The CFI backed the Commission, finding that Europe's high court, the European Court of Justice, “expressly excluded communications with in-house lawyers … from protection under [legal professional privilege].” The Court of Justice previously extended privilege to “independent lawyers,” defined as “one not bound to his client by a relationship of employment.”

In its opinion, the CFI laid out the process of handling potentially privileged information during investigations, in which the Commission is allowed a “cursory look” at documents to determine if they should be subject to legal professional privilege. The decision, the court said, can generally be made by quickly glancing at “superficial features of the document,” such as layout, heading or title.

The subject of an investigation has the right to deny this “cursory look.” The CFI acknowledged that the Commission “committed various irregularities” in its investigation, notably forcing Akzo Nobel to allow it a cursory look at certain materials. As a result, the court ordered the Commission to cover two-fifths of both sides' legal costs.

In a statement from Akzo Nobel, the company said, “This ruling has no bearing on any substantive pending cases involving Akzo Nobel and therefore has no financial or other substantive impact on Akzo Nobel. Akzo Nobel is studying the court's ruling and will issue a response in due course should it be deemed appropriate.”