In international litigation and in lawsuits involving clients and witnesses located overseas, U.S. notions of privilege and confidentiality often confound attorneys and clients alike.
In a recent conference on cross-border investigations I attended, a lawyer from Brazil asserted that the law of privilege in his country protects the confidentiality of communications between counsel and client to the same degree as U.S. law. He said that Brazil's law absolutely forbids lawyers from revealing to third parties, including government investigators, the details of their advice to clients.
But what happens, he was asked, if the government, in an investigation, demands that the client release records of communications with counsel? Could the client equally refuse to disclose them? The response: a slightly puzzled look, and the answer: No.
Naturally, it is important to consider how a U.S. court will decide whether U.S. or foreign law applies to a discovery controversy, and whether the U.S. privilege applies to cross-border attorney-client communications. But what if the issue results in litigation or an investigation overseas? How much respect will an overseas court give to U.S. notions of the attorney-client privilege?
The attorney-client privilege in the United States is a creature of the rules of discovery and evidence. The reason its preservation is often first and foremost on the mind of a lawyer advising a client is because of the breadth of U.S. discovery. The rules, of course, may require the disclosure of "any nonprivileged matter that is relevant to any party's claim or defense."1 The all-encompassing nature of U.S. discovery creates a risk that, in the event the attorney-client privilege is not properly preserved or is waived, a party will be ordered to disclose to an adversary communications between client and counsel.
In the United States, in most instances, neither a lawyer nor a client may be required to testify, whether at trial or in a deposition, or even in an investigation, about privileged communications; nor may a lawyer or client be compelled to produce privileged communications. The privilege survives the end of the attorney-client relationship.
Outside the United States, this risk of disclosure often does not enter the mind of client or counsel, because discovery as we know it here does not exist in most other places in the world. In litigation in most overseas jurisdictions, the plaintiff and the defendant simply disclose to the other party only what they wish to disclose. In other instances, discovery is driven by the court itself. Thus, in overseas jurisdictions, there is little risk in civil litigation that a client's requests for legal advice, or counsel's responses to such requests, will be disclosed.
In a similar vein, the broad nature of U.S. discovery runs completely contrary to concepts of confidentiality in some jurisdictions. In the United States, confidentiality is a designation, not a bar to production. Parties may seek a protective order to ensure that the information contained in confidential documents is not disclosed outside of the lawsuit, and courts may impose such an order to assure that is the case, but mere confidentiality normally does not prevent the information from being disclosed.
However, in many overseas jurisdictions, a party's pre-litigation designation of information as confidential is more likely to act to protect the information from production. In Japan, for example, a document created solely for "internal use" is exempt from a court-ordered disclosure. In China, it is routine for companies to classify documents as "Top Secret," "Classified," "Confidential," or "Confidential, for Internal Use Only," with the full expectation that these documents will be absolutely immune from disclosure.
Expectations of secrecy or privacy such as these, faced with the requirement in a U.S. lawsuit to disclose even the most confidential of internal records and internal deliberations, can cause apoplexy among foreign clients.
Privilege and Confidentiality
Those who are unfamiliar with the U.S. privilege may conflate it with the duty among attorneys, in the United States and overseas, to maintain client confidences. This duty (which in the United States is a creature of the rules of ethics), while critical to protecting communications between client and counsel, only scratches the surface of the protections afforded by the U.S. attorney-client privilege.
Chinese law, for example, generally prohibits attorneys from voluntarily revealing the confidences of their client. However, the law does not prevent an attorney from disclosing the information if required by law or a court order.2 Thus, as some commentators put it with perhaps some understatement, Chinese lawyers may view the nature and scope of their fiduciary duty to clients differently than U.S. lawyers. Indeed, it is possible that a U.S. lawyer rendering advice in China could be compelled to testify regarding what they might otherwise consider confidential or privileged company information.3
In Japan, privilege and discovery in civil litigation do not exist. While current and former Bengoshi (lawyers admitted in Japan) and Gaikokuho Jimu Benjoshi (foreign law business lawyers registered in Japan) have the right and obligation under statutory law to hold in confidence secret or private information obtained during the course of their professional duties, this duty is not equivalent to the attorney-client privilege.4
In Korea, the law does not recognize an attorney-client privilege, but relies on the ethical issue of confidentiality. There, "testimonial immunity" protects attorneys from being compelled to reveal client secrets, but unlike the U.S. attorney-client privilege, this testimonial immunity may not be invoked by clients.
Under European Union (EU) law, the attorney-client privilege is created by judges and has no statutory basis.5 The European Court of Justice (ECJ) recognizes an attorney-client privilege in the specific context of antitrust investigations. According to the ECJ, the protection of written communications between client and counsel is a principle common to all EU member states.6
The general rule states that in antitrust investigations, attorney-client communications are privileged if (1) they are "made for the purposes and in the interests of the client's rights of defence" and (2) they "emanate from independent lawyers…who are not bound to the client by a relationship of employment."7 However, ECJ decisions on privilege cast doubt on whether the privilege protects client communication with in-house counsel, as those attorneys are not considered independent lawyers.8 (These ECJ decisions are expected to be binding on cases implicating EU law that are heard before national courts,9 which are responsible for ensuring that EU law is properly applied in that country.)
On a national level, in the United Kingdom (and, to a degree, in other commonwealth countries), perhaps because of the robust system of discovery that also prevails in the UK, the attorney-client privilege is quite similar to that which exists in the United States. However in civil law countries, such as Germany, France, Italy and China, there is no privilege, but only regulations on the ethical issue of confidentiality.
U.S. Courts' Approach
U.S. courts generally utilize principles of comity, or the "touching base" approach, in considering whether U.S. or foreign law applies to a discovery controversy. This approach focuses on the jurisdiction with the "predominate interest," "the place where the allegedly privileged relationship was entered into," or "the place in which that relationship was centered at the time the communication was sent."10 By way of further analysis, the Restatement of Foreign Relations Law (Restatement) §442 lists factors that a U.S. court should consider when faced with a cross-border discovery dispute.
Again, the manner in which a U.S. court will consider the issue is no longer the end of the analysis. When seeking or providing legal advice across borders, clients and attorneys alike must consider the possibility that the notions of privilege with which they are familiar under U.S. law will not protect their communications. Multinational companies must take all reasonable steps to assure that they, as the client, will be able to protect these communications against disclosure. Companies should be especially careful to segregate confidential or privileged information from individuals who do not have a need to know; to consider receiving advice orally and not by email; and to select favorable choice of law and choice of forum clauses in contracts and other agreements that may be subject to legal challenge.
At a minimum, companies and counsel must make every effort to understand the potential limits of the attorney-client privilege, and the risk of mandatory disclosure of legal advice, in the jurisdictions in which they are doing business.
Philip M. Berkowitz is a partner and U.S. cochair of Littler Mendelson's international law practice; he is based in the New York City office. Morgan Matson, an associate at the firm, assisted in the preparation of this article.
1. See Fed. R. Civ. P. 26(b)(1).
2. See L. Christensen, "A Comparison of the Duty of Confidentiality and the Attorney-Client Privilege in the U.S. and China: Developing a Rule of Law," 34 Thomas Jefferson L. Rev. 171 (2011).
3. Id., quoting R.J. Allan, "The Conflicted Duty of Chinese Lawyers: Clients Shouldn't Expect U.S. Levels of Fiduciary Duty from Local Counsel," Nat'l L.J., Sept. 1, 2008 at 13.
4. See A.H. Shionzaki, "In-House Counsel and the Attorney-Client Privilege: Japan" (2009).
5. See C. Walworth, M. Wetzler and A. Bider, "Privilege Law, its Global Application, and the Impact of New Technologies," ABA MIDYEAR CONFERENCE (Feb. 3, 2012), http://www.americanbar.org/content/dam/aba/publications/young_lawyer/attorneyclientprivlege.authcheckdam.pdf.
6. Austl. Mining & Smelting Eur. v. Comm'n, Case 155/79, 1982 E.C.R. 1575, at ¶21. See also David S. Jones, "The Privilege Stops at the Border Even if a Communication Keeps Going," South Carolina Journal of International Law and Business, Vol. 8, Issue 2, page 303 (2012).
7. Austl. Mining & Smelting Eur. v. Comm'n, Case 155/79,1982 E.C.R. 1575, at ¶21.
8. Akzo Nobel Chemicals v. European Commission, Case C-550/07 P .
9. Srl CILFIT v. Ministry of Health, Case 283/81, 1982 ECR 3415, 3431-32.
10. Gucci America v. Guess?, 2010 U.S. Dist. LEXIS 65873 (S.D.N.Y. June 29, 2010).
Philip M. Berkowitz is a shareholder and U.S. co-chair of Littler’s International Law Practice Group. He is based in the firm’s New York City office. This article is reprinted with permission from the November 29, 2013 issue of the New York Law Journal. © ALM Media Properties, LLC. Further duplication without permission is prohibited. All rights reserved.