The Director of the Serious Fraud Office v Eurasian Natural Resources Corporation Ltd
| Jurisdiction | England & Wales |
| Judge | Mrs Justice Andrews |
| Judgment Date | 08 May 2017 |
| Neutral Citation | [2017] EWHC 1017 (QB) |
| Docket Number | Case No: HQ16X00363 |
| Court | Queen's Bench Division |
| Date | 08 May 2017 |
[2017] EWHC 1017 (QB)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
The Honourable Mrs Justice Andrews DBE
Case No: HQ16X00363
Jonathan Fisher QC, James SeganandEesvan Krishnan (instructed by Eversheds Sutherland LLP) for the Claimant
Richard Lissack QC, Tamara OppenheimerandSaaman Pourghadiri (instructed by Signature Litigation LLP) for the Defendant
Hearing dates: 6, 7, 8 and 9 February 2017
Judgment Approved
INTRODUCTION
This is a claim by the Director of the Serious Fraud Office ("SFO") for a declaration that certain documents generated during investigations undertaken between 2011 and 2013 by solicitors and forensic accountants into the activities of the Defendant ("ENRC") and its subsidiaries (collectively, "the Disputed Documents"), are not subject to legal professional privilege ("LPP").
The claim is made against the background of an ongoing criminal investigation by the SFO, which began in late April 2013, relating to the activities of ENRC, its subsidiaries, officers and employees. It followed a lengthy period of dialogue between ENRC and the SFO which commenced in August 2011, which the SFO characterises as being (or becoming by no later than the end of November 2011) engagement in a self-reporting process in accordance with the SFO's 2009 Self-Reporting Guidelines. ENRC disputes that characterisation, although there is overwhelming evidence that those who were acting on its behalf in the discussions with the SFO believed at the time that they were engaged in such a process. That belief was not shared by all those within the SFO with whom they were dealing at different times throughout that period. The divergence of approach among SFO personnel appears to have been at least partially attributable to a change in policy, referred to later in this judgment, around a year after the dialogue began.
The SFO terminated the discussions in the wake of ENRC's decision to dispense with the services of the firm of solicitors, Dechert LLP ("Dechert") which had been representing it in its dealings with the SFO, and which was also responsible for the relevant investigations.
The criminal investigation into ENRC is focused on allegations of fraud, bribery and corruption in two foreign jurisdictions, one being Kazakhstan, the other, a country in Africa. Depending on its outcome, it may (or may not) lead to one or more criminal prosecution(s). ENRC denies that it has committed any criminal offence warranting investigation and/or prosecution by the SFO. However, the question whether there is justification for the current investigation, and the merits of any future case against ENRC, or any individual or company connected with ENRC, arising out of the matters under investigation, have no bearing on the issues in this case.
As part of the investigation, the SFO has exercised its powers pursuant to s.2(3) of the Criminal Justice Act 1987 (" CJA 1987") and issued notices against various entities and individuals, including ENRC, to compel the production of documents. The SFO's powers of compulsion do not extend to documents which the recipient of the notice " would be entitled to refuse to disclose or produce on grounds of legal professional privilege in proceedings in the High Court" (see s.2(9) CJA 1987). The issue that the Court has been asked to determine is whether ENRC is entitled to resist production of the Disputed Documents (or any of them) to the SFO on grounds of LPP.
ENRC contends that the Disputed Documents are subject to litigation privilege, legal advice privilege, or both, though the primary focus of the argument has been on litigation privilege. The SFO has always accepted that if any part of a Disputed Document contains legal advice, (in the sense in which that term is defined in Three Rivers DC v Bank of England (No 6) [2004] UKHL 48, [2005] 1 AC 610) such advice may be redacted; but it disputes the generic claim to legal advice privilege.
I was told by Mr Richard Lissack QC, leading counsel for ENRC, that this is the first case in which the Court has had to consider a claim for litigation privilege against a background in which the adversarial litigation said to have been reasonably in contemplation by the party claiming privilege was criminal, rather than civil, in nature, although a scenario with certain similarities to the present was considered by Millett J in the case of Price Waterhouse (a firm) v BCCI Holdings (Luxembourg) SA and others [1992] BCLC 583. In that case, however, the documents were in the hands of a third party rather than a prospective defendant to criminal proceedings.
The Parties
The SFO is a non-Ministerial Department of State constituted under s.1(1) of the CJA 1987. Its functions include the investigation and prosecution of crimes involving serious or complex fraud (under the CJA 1987); the investigation and prosecution of cases (in both a civil and criminal capacity) involving domestic and overseas bribery and corruption (under the Bribery Act 2010); and statutory functions in relation to the recovery of proceeds of crime (under the Proceeds of Crime Act 2002).
By s.1(3) of the CJA 1987 the Director of the SFO may investigate any suspected offence which appears to him on reasonable grounds to involve serious or complex fraud. S.2 sets out the powers that may be exercised for the purposes of an investigation under s.1. These include a power to require the person under investigation, or any other person who the Director has reason to believe has relevant information, to answer questions or produce documents which appear to relate to any matter relevant to the investigation, by serving a written notice on him to do so ("a s.2 notice").
As part of such an investigation the SFO may also follow the procedure set out in s.2(4) of the CJA 1987 for obtaining a warrant from a justice of the peace, enabling a constable accompanied by a member of the SFO (or other authorised person) to enter premises to search for and seize such documents. S.2(13) to (18) prescribe criminal sanctions for impeding an SFO investigation by, for example, failing to co-operate without reasonable excuse, destroying or concealing documents, or giving false answers to questions in a s.2 notice.
ENRC is a company incorporated under the laws of England and Wales. It is part of a multinational group of companies operating in the mining and natural resources sector. Until 14 January 2014 it was a publicly limited company. Between 2007 and 2013 it was a FTSE-100 listed company. Until 2009/2010 its principal operations, carried out through its wholly-owned subsidiary Sokolov-Sarbai Mining Production Association ("SSGPO") were in Kazakhstan. In 2009/2010 it sought to diversify its operations through a series of acquisitions of companies operating in various parts of Africa.
The geographic regions in which ENRC and its subsidiaries operated, and the mining and natural resources sector in general, are widely perceived as being high risk in terms of incidence of public sector bribery and corruption. As Gross LJ observed in R (Soma Oil and Gas Ltd) v Director of the Serious Fraud Office [2016] EWHC 2471 (Admin) [2017] Crim LR 65, at [4] – [5]:
" International business operates in challenging parts of the world, geographically, politically, commercially and in terms of corporate governance. Those are the realities for a good part of the oil and gas industry…
Cognisant of those realities, Parliament has, however, prioritised combating corruption. By the Bribery Act 2010 ("the Bribery Act"), Parliament has legislated, with extra-territorial effect (s.12), making it an offence (under s.6) where a person (P) bribes a foreign public official (F) and P's intention is to influence F in his capacity as a foreign public official and obtain or retain business or an advantage in the conduct of business. S.7 of the Bribery Act provides that a commercial organisation may incur criminal liability if a person who performs services for it commits bribery on its behalf and the commercial organisation cannot prove that it had adopted adequate procedures that were designed to prevent such conduct. Both ss. 6 and 7 supplement the two main general offences of bribery under the Bribery Act, namely, bribery of another person (s.1) and being bribed (s.2)."
The self-reporting regime
The Bribery Act came into effect on 1 July 2011, though its advent was widely heralded. In anticipation of its enactment, on 30 March 2011 the SFO and the Crown Prosecution Service ("CPS") published the joint Bribery Act Guidance, supplementing the pre-existing joint Guidelines on Corporate Prosecutions, which set out the policy governing the approach taken by the authorities when deciding whether to prosecute a corporate body for a criminal offence.
There are two stages in the decision-making process; the first is to evaluate whether there is sufficient evidence to provide a realistic prospect of a conviction. If there is, the prosecutor then decides whether a prosecution will be in the public interest. One of the factors to be considered at that second stage is whether the company has self-reported. If it has, that may weigh against it being in the public interest to prosecute it; but it will not be decisive.
The 2009 Guidelines
In July 2009, two years before the Bribery Act came into effect, the SFO published a document entitled " Approach of the Serious Fraud Office to dealing with Overseas Corruption", commonly known as the "Self-Reporting Guidelines" ("the 2009 Guidelines"). This was the SFO's first attempt to set out guidance pertaining to a " system of self-reporting cases of overseas...
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