A recent decision made by magistrates in Rotterdam will arouse the interest of in-house lawyers working for Dutch companies both in and outside of the Netherlands.
On 7 October 2019, the District Court of Rotterdam rendered judgment in a criminal case against Shell in connection with the suspicion of bribery concerning exploitation rights of an oilfield off the Nigerian coast.
During a search by the public prosecutor's office at Shell, information was seized that, according to Shell, was covered by the legal privilege of 15 in-house lawyers. It concerned communication from and with in-house lawyers based in Nigeria, the Netherlands, the UK and the US, none of whom are admitted to the Dutch bar. The lawyers themselves claimed legal privilege, on the basis that they are admitted to the bars of their respective home countries.
The court makes a distinction between the laws and regulations that apply to expatriate lawyers working in the Netherlands, and those that apply to expatriate lawyers who work outside the Netherlands.
Lawyers not admitted to the Dutch Bar may work as a lawyer in the Netherlands and in doing so, they become subject to the professional rules that apply to lawyers in the Netherlands. Articles and regulations related to the Act on Advocates are binding on these lawyers if they perform other activities and specifically in this case, not representing the client (the employer) in court or in relation to a governmental authority.
This means that a lawyer can only practice in employment, if the employer and the lawyer have signed a professional statute that guarantees the independent position of the employed lawyer. If this statute is not in place, the guarantees provided in the Netherlands for the independent practice of the lawyer do not exist. What that means is the lawyer in question is not entitled to invoke the right of non-disclosure.
For expatriate in-house lawyers working outside the Netherlands, the laws and regulations of the country of residence apply. If the laws of that country consider the lawyer as a confidential third party, in principle, they will be entitled to invoke legal privilege.
Applied to the case at hand, the court made the following observations.
Expatriate lawyers working for Shell in the Netherlands are visiting lawyers as referred to in Article 16f of the Act on Advocates and bound by the regulations of the Netherlands Bar Association. This results in the obligation to sign the professional statute to guarantee the independence of the lawyer and to ensure that the lawyer can adhere unimpeded to the the rules governing professional ethics and conduct of the legal profession.
Neither Shell, nor its in-house lawyers in the Netherlands have submitted professional articles of association, so the guarantee for independent practice does not exist. In addition, Shell had not demonstrated that it has undertaken to respect the independent practice of its expatriate lawyers and promote the observance of the professional ethics and conduct of the legal profession.
On the contrary, the head of Shell's Legal Department is part of the firm's Executive Committee and therefore partly responsible for the general course of affairs within Shell. This jeopardizes the independent position of the Legal Department and therefore that of the expatriate in-house lawyers working within the legal department.
The examining judge is of the opinion that Shell has not sufficiently guaranteed the independence of expatriate lawyers stationed at Shell in the Netherlands; so they are not confidential third parties and they therefore, do not have independent recourse to the right of non-disclosure.
This does not exclude that the data to which the claims relate falls under a derived right of non-disclosure, because the lawyers in question have communicated with confidential third parties, whether or not external.
With regard to lawyers based outside the Netherlands who are employed by a Shell entity, it must be assumed that they can, in principle, invoke confidentiality if they are qualify as confidential third parties under the law of the country of residence.
However, in this case, because the Head of Shell's Legal Department is part of the Executive Committee, the independence of the Legal Department and the people working for it remains insufficiently guaranteed.
Therefore, in-house lawyers working outside the Netherlands cannot be regarded as confidential third parties. They do not have a right of non-disclosure in the context of the present proceedings, or to in-house lawyers based in the Netherlands.
In addition, the above does not exclude that the data to which the claims relate may fall under a derived right of non-disclosure.
Shell has now stated that the data to which the claims relate may fall under the privilege of external lawyers. The examining magistrate will have to make a decision on this and is consulting with the defense and the public prosecutor on how to proceed.
In conclusion, legal privilege applies to expatriate in-house lawyers based in the Netherlands if they and their employer have signed a professional statute, which guarantees the independent position of the employed lawyer.
The same applies to expatriate in-house lawyers based outside the Netherlands if, under the law of that country, the in-house lawyer is considered a confidential third party. In both situations, independence is key.
That independence is not guaranteed in the event that the Head of the Legal Department is part of the Executive Committee. Although the court didn't have to go into the rules for in-house lawyers in the Netherlands admitted to the Dutch bar, they are exactly the same. They, too, and their employer need to sign the professional statute.
However, even then the in-house lawyers may invoke the legal privilege in the event that it is established that they have a derived right of non-disclosure, because the lawyers in question have communicated with confidential third parties, whether in-house or in private practice.