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General Antitrust

How The Belgacom Ruling Will Impact Attorney Privilege In EU

Donald W. Hawthorne and Timothy Hirsch, Law360, March 25, 2013.

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The Brussels Court of Appeal held that communications between a company (Belgacom Group) and its in-house counsel were entitled to the protection of the attorney-client privilege under Belgian law, and therefore were not subject to production to the Belgian Competition Authority (“BCA”), which had obtained them in a dawn raid. [1]

Why It Matters

The Belgian Court declined to follow the Akzo ruling of the European Court of Justice, which generally precludes in-house counsel from asserting privilege in the context of European proceedings. The decision represents an important rebuke to Akzo’s presumption that in-house counsels are insufficiently independent to enjoy the attorney-client and related privileges. While it is too soon to predict the demise of Akzo, Belgacom has immediate implications for companies who maintain in-house counsel in Belgium, as litigation subject to Belgian law and dawn raids conducted by the BCA (including while assisting the European Commission) will be subject to the Belgacom ruling.

Akzo, Belgacom and the Attorney-Client Privilege in Europe

While the privileged status of legal advice provided by in-house counsel is well established in U.S. law, the issue is less clear-cut in Europe, where the scope of the attorney-client privilege for in-house counsel communications varies from jurisdiction to jurisdiction, and — to the consternation of counsel on both sides of the Atlantic — is in many cases not recognized at all. At the level of EU institutions, the scope of the attorney-client privilege is not defined by treaty and has been developed by case law. In the leading 1983 case of Australia Mining & Smelting Europe Ltd. v. Commission (“AM&S”), [2] the ECJ held that the attorney-client privilege applies in EU proceedings, but only where communications (1) are made for the purposes of the client’s right of defense, and (2) emanate from “independent lawyers,” not “bound to the client by a relationship of employment.”

AM&S left open the question of whether the second prong of its test effectively denied privilege to the communications of in-house counsel. That uncertainty was resolved on Sept. 14, 2010. In Akzo Nobel Chemicals Ltd v. Commission, [3] the ECJ reaffirmed AM&S, and held that in-house counsel are not sufficiently independent from their employers to be entitled to the privilege. The ECJ’s Akzo ruling, however, is not directly applicable to the proceedings of member states, some of which (such as the U.K.) extend privilege to the communications of in-house counsel. This principle was confirmed by the Brussels Court’s Belgacom ruling, which expressly declined to follow Akzo’s reasoning and confirmed the existence of privilege for in-house attorney communications under Belgian law.

The Belgacom case has its roots in 2010 complaints of anti-competitive conduct lodged by rival telecom operators against the incumbent operator, Belgacom SA/NV (Belgacom). In October 2010, the BCA conducted inspections at Belgacom’s premises and seized numerous documents, including communications to and from Belgacom’s in-house counsel. When Belgian authorities stated their intention to treat such communications as unprotected by privilege, Belgacom sued the BCA before the Brussels Court of Appeal. In a pronouncement of Belgian law not limited to the antitrust context, the Brussels Court ruled that communications to or from in-house counsel, requesting or containing legal advice, are protected by privilege.

The court based its decision on the law establishing the Belgian institute of in-house counsel, the IBJ/IJE; Article 5 of that law provides that the legal advice of in-house counsel is confidential. Additionally, the court relied on Article 8 of the European Convention of Human Rights and Article 7 of the EU Charter of Fundamental Rights, holding that legal advice provided by in-house counsel is protected by the right to privacy provided for in those articles — and thereby implicitly suggesting that principles of EU law might be in some tension with Akzo.

Practical Consequences

Belgacom means that Belgium, like the U.S. and U.K., has, at the level of national law, embraced the principle that in-house counsel communications are entitled to the same privileges enjoyed by outside counsel communications. This is the law of Belgium, and will have immediate implications for any litigation subject to Belgian law. Belgacom is not limited to the antitrust context in which it arose, and applies generally to litigation subject to Belgian law; however, in virtue of the court’s reasoning, the privilege recognized by Belgacom may not extend beyond counsels who are members of the IBJ/IJE.

The implications for EU law are more subtle. Akzo remains the law at the EU level, and the European Commission will no doubt continue to rely on Akzo to seize and use legal documents drafted by in-house counsel. Belgacom does not mean that the EU will enforce with any less vigor Akzo’s rule that in-house counsel communications are not entitled to privilege. However, the Brussels Court stated that its ruling in Belgacom applies even when the BCA is investigating on behalf of the European Commission (as has often been the case for proceedings in Belgium).

Thus, in any future proceedings in Belgium where the privilege of in-house communications is at issue, it will be vital to promptly determine whether the investigating staff consists of Belgian or EU officials, in order to determine whether the use of in-house counsel documents can be successfully opposed. It remains to be seen whether the Belgacom ruling will lead to changes in enforcement procedures or regulatory arbitrage between authorities that have differing abilities to require production of in-house attorney communications. More broadly, it may be hoped that Belgacom will further stimulate debate around harmonization of the privilege, and the validity of the assumptions underlying the Akzo rule.

The opinions expressed are those of the authors and do not necessarily reflect the views of the firm, its clients, or Portfolio Media Inc., or any of its or their respective affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice.

Footnotes

[1Case 2011/MR/3-Belgacom, 5 March 2013, Brussels Court of Appeal, 18th Chamber.

[2Case 155/79 [1983].

[3Case C-550/07 P [2010].

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