PJSC Tatneft v Gennady Bogolyubov

JurisdictionEngland & Wales
CourtQueen's Bench Division (Commercial Court)
JudgeMrs Justice Moulder
Judgment Date11 Sep 2020
Neutral Citation[2020] EWHC 2437 (Comm)
Docket NumberCase No: CL-2016-000172

[2020] EWHC 2437 (Comm)

IN THE HIGH COURT OF JUSTICE

BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES

COMMERCIAL COURT (QBD)

Royal Courts of Justice, Rolls Building

Fetter Lane, London, EC4A 1NL

Before:

Mrs Justice Moulder

Case No: CL-2016-000172

Between:
PJSC Tatneft
Claimant
and
(1) Gennady Bogolyubov
(2) Igor Komoloisky
(3) Alexander Yaroslavsky
(4) Pavel Ovcharenko
Defendants

David Railton QC, Henry King QC, David Davies, James Sheehan and Nicolas Damnjanovic (instructed by Debevoise & Plimpton LLP) for the Claimant

Ewan McQuater QC, Matthew Parker and Nathaniel Bird (instructed by Enyo Law LLP) for the First Defendant

Mark Howard QC, Ruth den Besten and Tom Ford (instructed by Fieldfisher LLP) for the Second Defendant

Kenneth MacLean QC and Owain Draper (instructed by Mischcon de Reya LLP) for the Third Defendant

Marcus Staff (instructed by Sherrards Solicitors) for the Fourth Defendant

Hearing dates: 27 and 28 July 2020

Approved Judgment

I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.

THE HONOURABLE Mrs Justice Moulder

Mrs Justice Moulder Mrs Justice Moulder
1

This is the reserved judgment of the court on the issue of whether legal advice privilege is properly claimed by the claimant (“Tatneft”) in relation to communications with members of its in-house legal department.

2

The issue is one of a number of issues raised by an application by the second defendant made on 29 May 2020, the other issues having been resolved by consent or determined by the court in the course of the pre-trial review hearing held on 27 and 28 July 2020.

3

The pre-trial review including submissions on this issue was held remotely in light of the current pandemic but the court had the benefit of both written and oral submissions from counsel for the second defendant and the claimant.

Evidence

4

The application was supported by the second witness statement of Mr James Lewis, partner at Fieldfisher LLP, acting for the second defendant, and dated 29 May 2020 and a third witness statement dated 10 July 2020.

5

In response the claimant had submitted a witness statement from Mr Kevin Lloyd, a partner of Debevoise & Plimpton LLP, acting for the claimant, dated 26 May 2020.

6

In addition the parties had obtained evidence as to the position of lawyers in Russia notably the distinction between “Advocates” and other lawyers who are not Advocates. Memoranda from Mr Kirill Trukhanov, Managing Partner and Advocate, of Trubor Law Firm for the second defendant and a memorandum dated 26 June 2020 from Associate Professor Alexandr Yagelnitskiy for the claimant were exhibited to the respective witness statements.

Background

7

I do not propose to set out the factual background or the broader claim in these proceedings as it is in my view unnecessary in order to address the issues which the court now has to determine.

8

The only matter of relevance is that standard disclosure has taken place and the claimant made a disclosure statement dated 11 September 2019 (“Tatneft Disclosure Statement”) and asserted the following claim to legal advice privilege:

“(1) Original and copy correspondence and other communications and documents passing either directly or indirectly between the Claimant and its legal advisers (including but not limited to advice, notes of telephone conversations and meetings, Instructions to Counsel, notes of consultations and conferences with Counsel, Counsel's written advice, drafts of any of the foregoing) all being confidential and consisting of, referring to, requesting or having been prepared for the purpose of requesting or giving legal advice and assistance.”

9

In correspondence between the respective solicitors Tatneft has confirmed that legal advice privilege is asserted over communications between employees/officers of Tatneft and members of its internal legal department.

The application

10

In its application the second defendant seeks an order:

“that the Claimant provides specific disclosure and information relating to Tatneft's compliance with its disclosure obligations in these proceedings”

11

The order is said to be sought pursuant to the requirements of CPR Part 31 and paragraphs 14.2 and 17.1 of CPR Practice Direction 51U. Paragraph 14.2 of CPR Practice Direction 51U provides that:

“A party who wishes to challenge the exercise of a right or duty to withhold disclosure or production must apply to the court by application notice supported where necessary by a witness statement.”

12

The relevant paragraph of the draft order sought (as amended) is paragraph 4 as follows:

The Claimant shall by 28 August 2020 provide inspection of all documents previously withheld on the basis of legal advice privilege: (a) containing or evidencing communications between, on the one hand, Tatneft employees/officers and, on the other hand, Ms Savelova and/or Mr Glushkov and/or members of the Tatneft in-house “Legal” department; (b) comprising documents prepared by Ms Savelova and/or Mr Glushkov and/or members of the Tatneft in-house “Legal” department.

13

In relation to paragraph 5 of the original draft order, that is no longer pursued.

14

Accordingly the only issue is whether the court should make the order sought by paragraph 4, to order disclosure of communications between Tatneft employees/officers and Ms Savelova and/or Mr Glushkov and/or members of the Tatneft in-house Legal department (and documents prepared by any of them).

The case advanced for the second defendant

15

It was submitted for the second defendant that it is for the claimant to justify its assertion of legal advice privilege: In re RBS Rights Issue Litigation [2016] EWHC 3161 (Ch) at [108].

16

It was accepted for the second defendant that it is a question of English law as the lex fori whether a document can be withheld on the basis of privilege. In his first witness statement in support of the application, the basis for the second defendant's assertion that legal advice privilege did not apply, was stated as follows (paragraph 69 Lewis 2):

“Given that advocate's secrecy does not apply to in-house lawyers, it appears that the communications with, and documents generated by, Ms Savelova and/or Mr Glushkov and/or members of the Tatneft in-house “Legal” department are not properly subject to a claim of legal advice privilege, and inspection should be ordered to be provided.”

17

In his second witness statement in support of the application the basis was expressed more widely. Mr Lewis stated that (paragraphs 24 to 27 of his third witness statement):

“24…It in fact appears from the answers given that communications with and work by such individuals are not the subject of a valid claim to legal advice privilege as a matter of English law (nor, if and insofar as relevant, as a matter of Russian law).

25 As confirmed in the Trukhanov Memo 2, in-house lawyers are not members of the Russian Bar and their activity does not fall under regulation provided under Federal Law governing advocates.

26… The Trukhanov Memo set out that there is a clear distinction between the status of a self-employed, independent and officially registered advocate, and an employed in-house lawyer. The closest concept to legal professional privilege is “advocate's secrecy” … which applies to the relationship between advocates and their clients. On this basis the Second Defendant set out in the D2 Application that it appears that communications between Tatneft's employees / officers and member of its in-house legal team are not properly subject to a claim of legal advice privilege.

27. Mr Trukhanov further confirms that the Russian legal system has made a clear distinction that its legal concept of advocates secrecy (an equivalent to the English law of privilege) applies to advocates, but does not apply to non-advocate in-house lawyers. This also applies to the Russian Court's power to order the disclosure of documents…” [emphasis added]

18

Thus the application was made on the basis that, in Russia:

i) an Advocate is an independent legal advisor who has been admitted to the Russian legal bar and that there is a register of Advocates maintained by the Ministry of Justice of the Russian Federation;

ii) In-house lawyers are not Advocates;

iii) there is a legal concept of legal professional privilege termed “advocates secrecy” which does not apply to lawyers who are not Advocates.

Accordingly it was submitted for the second defendant that as a matter of English law, legal advice privilege does not apply to communications with and documents generated by the in-house legal department of Tatneft who are not “appropriately qualified” foreign lawyers.

Tatneft's case

19

The claimant accepts that the relevant individuals are not Advocates under Russian law but submitted that as a matter of English law, legal advice privilege applies: there is an in-house legal department at Tatneft and legal advice privilege attaches to communications between employees of Tatneft and members of its legal department on the basis that as a matter of English law, legal advice privilege applies to advice obtained from foreign lawyers and that includes in-house lawyers. The Russian law of legal professional privilege (advocates' secrecy) is said to be irrelevant.

Submissions

20

It was submitted for the second defendant that under English law legal advice privilege only applies to:

i) “professional lawyers” i.e. a legal adviser who is professionally qualified and a member of a professional body: Lawrence v Campbell (1859) 4 Drew 485; R (on the application of Prudential plc and another) v Special Commissioner of Income Tax [2013] UKSC 1;

ii) in-house lawyers if the in-house lawyer is admitted to practice and regulated: Alfred Crompton Amusement Machines Ltd v Customs and Excise...

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