On September 14, 2010, the European Court of Justice ruled that legal professional privilege (LPP) should extend only to communications with external lawyers qualified in one of the EU Member States. The ruling was handed down judgment in Case C-550/07, Akzo Nobel Chemical Ltd and Akcros Chemical Ltd v European Commission, confirming an earlier 1982 decision in the AM&S case.1  The judgment brings to an end a bid to change the legal status of advice given by in-house counsel and lays open the possibility that communications between a company and its in-house counsel can be reviewed, seized and relied upon by the European Commission in competition law investigations.


In February 2003, European Commission officials, assisted by officials of the UK Office of Fair Trading, carried out a dawn raid at Akzo's premises in Eccles, Manchester, UK.  During the inspection, Akzo claimed the protection of LPP for two emails between Akcros's General Manager and Akzo's Competition Law Coordinator, a “Mr. S,” who was enrolled as an Advocaat of the Netherlands Bar and was a permanent employee of Akzo's legal department. (Akcros at that time was a subsidiary of Akzo.)  The head of the Commission’s investigation team reviewed the documents, rejected Akzo's case and took copies of the documents. 

The Commission formally rejected Akzo's requests that the documents be returned in a decision of May 8, 2003.  Akzo appealed to the General Court, but its application was dismissed, on the basis that the communications were not with an external lawyer.  On November 30, 2007, Akzo appealed to the Court of Justice for annulment of the General Court's judgment.  On April 29, 2010, Advocate General Kokott issued her Opinion, recommending that Akzo's appeal be dismissed.  A number of parties intervened in the proceedings, including the UK, Irish, and Netherlands governments and a number of bar associations. 

The AM&S Case

In rejecting Akzo's claim in 2003, the European Commission relied on the 1982 judgment of the Court of Justice in the AM&S case.  In that case, the Court held, taking into account the common criteria and similar circumstances existing at the time in the then-Member States, that the protection of communications between lawyer and client was subject to two cumulative conditions:

  • First, the communications must be connected to the client's right of defence
  • Second, the communications must be between an independent lawyer—i.e., a lawyer who is "not bound to the client by a relationship of employment"—and a lawyer who is EU-qualified.

Akzo's Arguments and the Court's Response

Akzo's appeal invited the Court of Justice to reconsider its position from the AM&S case. 

First, Akzo argued that the existence of an employment relationship does not override the lawyer's obligations of professional conduct and discipline.  This was particularly the case with Mr. S, whose contract specifically required Akzo to respect his freedom to perform his functions independently, and which required Mr. S to comply with all the professional requirements imposed by the Netherlands Bar.  The Court rejected this argument, on the basis that the requirement of independence meant the absence of any employment relationship between lawyer and client.  Citing the Advocate General's Opinion, the Court held that "an in-house lawyer cannot, whatever guarantees he has in the exercise of his profession, be treated in the same way as an external lawyer, because he occupies the position of an employee which, by its very nature...affects his ability to exercise professional independence."2  Economic dependence on, and close ties with, the employer reduce this independence below the level enjoyed by an external lawyer.   

Akzo's second primary argument was that refusing privileged status to communications with an in-house lawyer breached the general EU principle of equal treatment, given that the professional obligations on in-house and external lawyers are the same.  The Court rejected this argument, stating that fundamental differences such as significant variations in the level of independence enjoyed by an in-house and external lawyer justified the differential treatment. 

Alternatively, Akzo argued that, even if the court upheld the AM&S principle, this principle should be reinterpreted in light of significant developments since 1982 both in the national legal systems of the specific Member States and in EU law.  The Court rejected this argument, stating that it was not possible to identify any predominant trend toward protection of in-house legal advice among the EU Member States.  Many Member States continue to exclude correspondence with in-house lawyers from the scope of LPP and do not allow in-house lawyers to be admitted to the National Bars, nor recognise them as having the same status as external lawyers.  Further, the Court found that the rules that modernised EU law in 2004 did not suggest that it was necessary to change the status of in-house lawyers.

Addressing the additional arguments put forward by Akzo, the Court found that the absence of LPP did not breach rights of defence, nor the principles of legal certainty and national procedural autonomy. 

Non-EU Lawyers

Non-EU lawyers expressed significant interest in clarifying their status during these proceedings.  However, unlike the Advocate General, the Court did not take the opportunity to comment on whether LPP applies to communications between clients and external counsel qualified in countries outside the EU.  In her Opinion, the Advocate General had taken a strong stance: "the inclusion...of lawyers from third countries would not under any circumstances be justified...."3  Nevertheless, the Court's silence on this point is a clear indication that communications between clients and external counsel who are members of a bar association or law society in a third country outside of the European Union will continue to not attract LPP.


Although widely anticipated, the judgment will come as a blow to the international business and legal communities.  Going forward, the judgment confirms the ability of the European Commission to request and review documents and advice prepared by in-house counsel—and communications with lawyers from third countries—in the course of an investigation.  Given the categorical nature of the Court of Justice's decision, this position seems unlikely to change for some time.   Companies will need to continue to take care over the manner in which sensitive in-house legal advice is sought and recorded, given that such advice cannot be shielded from regulatory oversight. 


1. Case 155/79, AM&S v. Commission [1982] ECR 1575.
2. Case C-550/07 P, judgment of September 14, 2010, at paragraph 47.
3. Opinion of Advocate General Kokott in Case C-550/07 P, April 29, 2010, at paragraph 189.