Dutch Court: no legal privilege for in-house counsel if GC is a member of management

Last month, the Rotterdam District Court ruled that fifteen in-house lawyers of an oil major working in the Netherlands, Nigeria and the UK cannot invoke legal privilege over internal communications between them and other people within the company. In its judgment the Court gave three novel decisions on legal privilege for in-house counsel that may also have an impact outside the Netherlands.

The dispute over privilege arose in the context of a Dutch Public Prosecution Service (OM) investigation into the company relating to alleged bribery in Nigeria. In the course of the investigation, the company withheld certain documents on the basis of privilege. The OM contested the company’s privilege claim and submitted the case to the Rotterdam District Court.

The Court finds that the fifteen in-house counsel in question could not be qualified as “lawyers” (advocaten) in the context of professional secrecy. The Court ruled as follows:

(i) For the foreign lawyers working in the Netherlands, the Court first rules that these lawyers are governed by the Dutch bar rules. Under Dutch case law, in-house counsel registered to the bar can (except in competition cases) claim privilege if both the employer and the lawyer have signed a professional statute guaranteeing their independent position within the company. The foreign lawyers working in the Netherlands did not sign such a statue and therefore cannot claim privilege, according to the Court.

(ii) With regard to the foreign lawyers working outside the Netherlands, the Court rules that in principle the question whether such lawyers are entitled to professional secrecy is a question which has to be decided on the basis of the rules applicable in the country in which the lawyers are working.

(iii) However, as the head of the Legal Department was a member of the company's Executive Committee, which indicates co-responsibility for rather than independence from management, the Court ruled that the whole legal department and the persons working within this department cannot claim professional secrecy.

This last decision regarding the GC is remarkable as it, in practice, has become more common for GC’s to be part of boards and/or executive committees. Hence, this could also apply to similar investigations involving in-house lawyers from large companies and result in a loss of legal privilege for the whole department. Generally information that is exchanged during contacts between in-house lawyers and external law firms is covered by legal privilege. The Court will decide on this question in this specific case at a later stage.