The ECJ has recently decided on validity of obligations to inform and cooperate with competent authorities imposed on lawyers by Directive 91/308/EEC on fight against money laundering. According to the Directive, some categories of legal professions are under an obligation to inform (on their own initiative) competent authorities of any fact, which might be an indication of money laundering and to furnish those authorities, at their request, with all necessary information. In Case C-305/05 Ordre des barreaux francophones and germanophone and Others the ECJ found these obligations compatible with the protection of secrecy of communication between lawyers and their clients, known as Legal Professional Privilege (LPP).
Well, not really: the ECJ in fact did not review the directive in light of LPP; it only examined whether it was compatible with the right to a fair trial and rights of defence. As I will show in this post, these are quite different things.
In principle, two broad categories of LPP’s justifications can be distinguished: utilitarian and right-based. Within these two groups further distinctions can be identified. Eric Gippini-Fournier wrote an excellent article on this.
Utilitarian rationales stress the importance of the privilege for clients’ very ability to consult a lawyer: only if certain that the content of their consultations with a lawyer remains without disclosure can they seek lawyers’ advice. This has broader societal implications, ranging from supposed better observance of law (since lay people can become aware of applicable legal rules) to proper administration of justice. In contrast to the right-based justifications, utilitarian rationales underlie broader societal implications of the protection of privilege.
Right-based justifications (as their denomination suggest) rely on individual rights to be protected by the privilege. It does not have to be solely the right to a fair trial or defence, as the case law of the European Court of Human Rights (the ECHR) shows. This court based the protection also on the right to respect for privacy enshrined in Article 8 of the European Convention.
The distinction between various justifications is by no means academic: it will determine the scope of the privilege and possible exceptions to it. For example, if the privilege relies on the right to defence, then the communication, which is not relevant for these purposes, will be excluded. Similarly, if we take utilitarian justification contending that the protection increases better compliance with law, than the communication obtained for the purposes of circumventing applicable legal rules or avoiding sanctions can be excluded (probably contrary to a privilege based on the protection of the right to defence, for which such considerations would be immaterial).
The problem was that the referring Belgian Constitutional Court had transposed its own reading of LPP, based on the right to a fair trial and the rights of defence, to the preliminary reference sent to the ECJ. It asked whether the Directive’s obligations are compatible with these rights only and not with LPP as such.
The ECJ was urged by the parties in the main proceedings to review the Directive on a wider basis, but the Court (contrary to what AG Maduro had proposed) did not satisfy this asking. There is no place to make an analysis of the ECJ’s approach to reformulating preliminary references and responding to something else than originally asked. I would dare to say that it is arbitrary and cannot be explained on a coherent basis. Perhaps, it can be said that if the ECJ wants to reply, it replies. If not, it does not. Full stop. (On this there is quite an interesting article by Gareth Davies).
But in this case it has had considerable consequences: by limiting the scope of its answer to the right to a fair trial and rights of defence, the ECJ actually limited the scope of the privilege, without giving any consideration to the other possible rationales for the privilege, which could justify its wider scope. In a crucial part of its judgment (paras. 33 and 35) the Court contends:
it is clear from Article 2a(5) of Directive 91/308 that the obligations of information and cooperation apply to lawyers only in so far as they advise their client in the preparation or execution of certain transactions – essentially those of a financial nature or concerning real estate, as referred to in Article 2a(5)(a) of that directive – or when they act on behalf of and for their client in any financial or real estate transaction. As a rule, the nature of such activities is such that they take place in a context with no link to judicial proceedings and, consequently, those activities fall outside the scope of the right to a fair trial. Given that the requirements implied by the right to a fair trial presuppose, by definition, a link with judicial proceedings, and in view of the fact that the second subparagraph of Article 6(3) of Directive 91/308 exempts lawyers, where their activities are characterised by such a link, from the obligations of information and cooperation laid down in Article 6(1) of the directive, those requirements are respected.
Well, as far as the right to a fair trial or to defence is concerned, it may be true. However, it is a completely different question whether the obligation is compatible with legal professional privilege, if the privilege is based on another right (e.g. the right to privacy, as it is in some judgments of the Court of Human Rights, which the ECJ elegantly omitted to mention), or if it is based on utilitarian considerations, as e.g. legal privileges existing in England are (see particularly this judgment of the House of Lords).
Moreover, the judgment seems to contradict even the ECJ’s own case law concerning LPP in competition proceedings. There the privilege is certainly granted outside the confines of judicial proceedings and these are interpreted fairly widely by Community courts. Ironically, a judgment by the CFI, further clarifying this was delivered at about the same time (see this information at EU Law Blog, with links to the judgment).
I have written a case comment, which can be found here. Comments of course most welcome!
Back to main page.
Well, not really: the ECJ in fact did not review the directive in light of LPP; it only examined whether it was compatible with the right to a fair trial and rights of defence. As I will show in this post, these are quite different things.
In principle, two broad categories of LPP’s justifications can be distinguished: utilitarian and right-based. Within these two groups further distinctions can be identified. Eric Gippini-Fournier wrote an excellent article on this.
Utilitarian rationales stress the importance of the privilege for clients’ very ability to consult a lawyer: only if certain that the content of their consultations with a lawyer remains without disclosure can they seek lawyers’ advice. This has broader societal implications, ranging from supposed better observance of law (since lay people can become aware of applicable legal rules) to proper administration of justice. In contrast to the right-based justifications, utilitarian rationales underlie broader societal implications of the protection of privilege.
Right-based justifications (as their denomination suggest) rely on individual rights to be protected by the privilege. It does not have to be solely the right to a fair trial or defence, as the case law of the European Court of Human Rights (the ECHR) shows. This court based the protection also on the right to respect for privacy enshrined in Article 8 of the European Convention.
The distinction between various justifications is by no means academic: it will determine the scope of the privilege and possible exceptions to it. For example, if the privilege relies on the right to defence, then the communication, which is not relevant for these purposes, will be excluded. Similarly, if we take utilitarian justification contending that the protection increases better compliance with law, than the communication obtained for the purposes of circumventing applicable legal rules or avoiding sanctions can be excluded (probably contrary to a privilege based on the protection of the right to defence, for which such considerations would be immaterial).
The problem was that the referring Belgian Constitutional Court had transposed its own reading of LPP, based on the right to a fair trial and the rights of defence, to the preliminary reference sent to the ECJ. It asked whether the Directive’s obligations are compatible with these rights only and not with LPP as such.
The ECJ was urged by the parties in the main proceedings to review the Directive on a wider basis, but the Court (contrary to what AG Maduro had proposed) did not satisfy this asking. There is no place to make an analysis of the ECJ’s approach to reformulating preliminary references and responding to something else than originally asked. I would dare to say that it is arbitrary and cannot be explained on a coherent basis. Perhaps, it can be said that if the ECJ wants to reply, it replies. If not, it does not. Full stop. (On this there is quite an interesting article by Gareth Davies).
But in this case it has had considerable consequences: by limiting the scope of its answer to the right to a fair trial and rights of defence, the ECJ actually limited the scope of the privilege, without giving any consideration to the other possible rationales for the privilege, which could justify its wider scope. In a crucial part of its judgment (paras. 33 and 35) the Court contends:
it is clear from Article 2a(5) of Directive 91/308 that the obligations of information and cooperation apply to lawyers only in so far as they advise their client in the preparation or execution of certain transactions – essentially those of a financial nature or concerning real estate, as referred to in Article 2a(5)(a) of that directive – or when they act on behalf of and for their client in any financial or real estate transaction. As a rule, the nature of such activities is such that they take place in a context with no link to judicial proceedings and, consequently, those activities fall outside the scope of the right to a fair trial. Given that the requirements implied by the right to a fair trial presuppose, by definition, a link with judicial proceedings, and in view of the fact that the second subparagraph of Article 6(3) of Directive 91/308 exempts lawyers, where their activities are characterised by such a link, from the obligations of information and cooperation laid down in Article 6(1) of the directive, those requirements are respected.
Well, as far as the right to a fair trial or to defence is concerned, it may be true. However, it is a completely different question whether the obligation is compatible with legal professional privilege, if the privilege is based on another right (e.g. the right to privacy, as it is in some judgments of the Court of Human Rights, which the ECJ elegantly omitted to mention), or if it is based on utilitarian considerations, as e.g. legal privileges existing in England are (see particularly this judgment of the House of Lords).
Moreover, the judgment seems to contradict even the ECJ’s own case law concerning LPP in competition proceedings. There the privilege is certainly granted outside the confines of judicial proceedings and these are interpreted fairly widely by Community courts. Ironically, a judgment by the CFI, further clarifying this was delivered at about the same time (see this information at EU Law Blog, with links to the judgment).
I have written a case comment, which can be found here. Comments of course most welcome!
Back to main page.
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