Legal professional privilege (“LPP”) under EU law protects certain communications between (external) lawyers and clients from being disclosed to and used by the competition authorities. If documents are seized from companies in an investigation, the question arises as to whether they are (partially) protected by the LPP – or by legal privilege under German law. At European level, the ECJ has repeatedly dealt with the scope of the LPP in the past – most recently in the preliminary ruling procedure in the Ordre des avocats du barreau de Luxembourg (“OABL”)1 case.
In 2022, the ECJ made a decisive change of direction regarding the derivation and scope of the LPP and further clarified this in its most recent judgement at the end of last year in the OABL case. The OABL case concerned the question of whether the LPP precluded the Luxembourg tax authorities from ordering a Luxembourg law firm to provide documents relating to its corporate law advice to a Spanish client.
The impact of the now established ECJ case law is far-reaching: Before the decision in Orde van Vlaamse Balies2, only correspondence in connection with the defense in proceedings by an independent lawyer was protected by the LPP. The ECJ has now abandoned this restrictive interpretation, stating that all legal advice is protected in terms of content and existence, regardless of a specific defense activity and the area of law concerned.
According to the ECJ, people who consult a lawyer can, apart from exceptional cases, reasonably trust that their communication will remain confidential.
In the 1982 AM&S3 case the ECJ provided its initial judgement on the requirements for the LPP, ruling the LPP to cover:
The ECJ upheld this precedent in the Akzo Nobel4 case in 2010, nearly 30 years later. It specified the second requirement of the independence of lawyers to be denied if there was an employment relationship between the lawyer and their client including the case of in-house lawyers.5 While the ECJ did not elaborate on the first requirement, it did not contradict it either.
The turnaround did not come until 2022 in a case concerning tax law. The ECJ made a notable shift in its approach by basing the LPP on the right to respect for private life under Art. 7 of the Charter of Fundamental Rights of the European Union (“CFR”). This marked a shift, as the ECJ had previously derived the LPP from the right to a fair trial as outlined in Art. 47 para. 2 and 48 para. 2 CFR. This also led to the LPP’s restriction to defense activities in the context of proceedings, as Art. 47 para. 2 and 48 para. 2 CFR are considered to be “fundamental procedural rights”.
By expanding the scope of protection outlined in Art. 7 CFR to respect for private life, the need for the procedural context no longer applies.
The ECJ has now continued along this path in the OABL case. The judgement addresses the question of whether the judgement in the Orde van Vlaamse Balies case is confined to tax law or should be extended to other areas of law. From the authors’ perspective, this question was already to be answered in the affirmative due to the general reasoning of the judgement from 2022, but now there is final clarity. The ECJ states that “whatever the area of law to which it relates, legal advice given by a lawyer enjoys the strengthened protection guaranteed by Article 7 of the Charter to communications between lawyers and their clients.”6 Corresponding communication in competition law advice thus also falls under the protective effect of the (extended) LPP.
In comparison to the LPP under EU law, the German attorney-client privilege falls much shorter: It only covers documents written by external lawyers in the context of a specific client relationship in connection with the defense and advice in ongoing proceedings.
In the light of the case law of the ECJ it is questionable to what extent the narrower understanding of the scope of German legal privilege can continue to apply. According to Art. 51 para. 1 CFR, the principles developed by the ECJ must be observed even in the case of more restrictive national regulations, at least to the extent that Art. 101 and 102 TFEU are (also) applied, which is frequently the case in investigations by the FCO, Art. 3 para. 1 Regulation 1/2003.
In case of purely national contexts, diverging national regulations currently result in different treatment of identical situations. This situation contradicts the Community law principle of the uniformity of the legal system and the principle of subsidiarity, according to which Community law takes precedence in cases of doubt. The ECN+ Directive7 has “europeanized” national competition procedural law, which makes it difficult to justify such divergent protective guarantees without a factual basis. However, a final judicial or legislative clarification in this context is still pending. The long-awaited ECtHR judgement in the Jones Day8 case did not provide the hoped-for clarification – although it became clear that Art. 8 ECHR, which is identical in wording to Art. 7 CFR, must be taken into account when interpreting national provisions. Nevertheless, the ECtHR did not provide a definitive answer on the extent to which this can justify a transfer of the principles of the LPP to German legal privilege.
The fact that the ECJ comprehensively extends the protection of the LPP under EU law to the existence and content of legal advice provided by lawyers across all areas of law, without there having to be a connection to a specific defence activity, is to be welcomed. Consequently, protection of lawyers’ correspondence is considerably strengthened, provided that EU competition law is applicable. However, it is unfortunate that the level of protection in Germany outside pending competition proceedings falls short compared to the EU level. In view of the fundamental rights derived from the LPP, the question arises as to whether this discrepancy is still tenable. Clarification by the ECJ or the German legislator is desirable.
This publication is intended to highlight issues. It is not intended to be comprehensive nor to provide legal advice. Any liability which might arise from the reliance on the information is excluded.
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