The European Court Of Justice Clarifies The Scope Of Legal Professional Privilege Under EU Law

• Jurisdiction: European Union
• Law Firm: WilmerHale
• Subject Matter: Corporate/Commercial Law, Litigation, Mediation & Arbitration, M&A/Private Equity, Corporate and Company Law, Disclosure & Electronic Discovery & Privilege, Trials & Appeals & Compensation
• Author: Mr Cormac O'Daly, Prof. Dr. Hans-Georg Kamann, Frédéric Louis, Édouard Bruc and Jeffrey Schomig
• Published date: 10 January 2023

On December 8, 2022, the European Court of Justice (ECJ), the European Union's highest court, delivered a landmark ruling in Orde van Vlaamse Balies a.o. (the Judgment) clarifying that legal professional privilege (LPP) is protected not only as part of the rights of defense but also under the right to protection of private communications.¹

From a practical standpoint, this means that, under EU law, the protection of confidentiality of attorney-client communications covers communications regarding legal advice beyond those that are related to litigation.

• Whom does this ruling affect? Companies doing business in the European Union, irrespective of whether they are headquartered there or have a European office.
• How does this case change the law? It clarifies that LPP covers legal advice generally, such as regulatory or commercial legal advice, and not only advice related to defense in a legal proceeding.

Facts of the Case

EU Directive 2011/16/EU (the Directive) requires all intermediaries involved in potentially aggressive cross-border tax planning to report relevant practices to the competent tax authorities.² This obligation also applies to attorneys, although each EU Member State may exempt attorneys ("attorney-intermediaries") from this obligation where the reporting would undermine LPP under that Member State's law. In such circumstances, the Directive requires that the attorney-intermediary notify other intermediaries or the taxpayer of their reporting obligations (the "notification obligation").

The Flemish Bar Association and other plaintiffs challenged the validity of the Belgian law implementing the Directive. They argued that the notification obligation infringes LPP because it violates the right to respect for private life and the right to a fair trial and that the obligation is not strictly necessary to ensure reporting of relevant cross-border arrangements. The Belgian Constitutional Court decided to refer questions regarding the validity of the Directive to the ECJ (using the preliminary reference procedure under EU law).

The ECJ's Grand Chamber Judgment

The ECJ, sitting in its extended composition of 15 judges, determined that the notification obligation did not infringe the right to defense or interfere with the right to a fair trial, because the obligation would arise before any litigation commenced.³ The ECJ observed, however, that the EU Charter of Fundamental Rights protects secrecy of legal advice more widely, including both the fact...