Legal Privilege and International Arbitration Issue (2)

In reading DLA Piper’s Legal Professional Privilege Global Guide (2017),, it is absolutely mind boggling how the world’s attorney/client privilege rules are so different, with many nuances that attach to each country, such as competition investigations and dawn raids in the EU (Akzo Nobel), in-house counsel rules, professional secrecy, the English rules, the US rules, and the lack of rules in China. I tend to very much agree with the eminent Phillip Capper that privilege is an area that needs more guidance in an international arbitration context, perhaps from the Institutions themselves. As to which privilege rules apply, conflicts rules can encompass a whole myriad of factors: the seat of the arbitration, the provenance of the document, of course the citizenship of the parties, and more, including especially institutional rules. The Institutions should speak, and, as mentioned in a previous post, in an arbitration in which there is the possibility of differing privilege laws applicable, an arbitrator, in my judgment, should apply a ”most-favored nation” approach and apply the privilege law with the most protection equally to all parties.

In an application of the most-favored nation rule, the tribunal will determine which of the potentially applicable rules has the broadest privilege protections and then apply that privilege to both or all parties.  This achieves two of the most important central principles in arbitration,: fairness and protection of the expectations of both parties.  By adopting the same standard for all parties, they are treated fairly during arbitration.  Additionally, no circumstance would occur where a company believed a document would be protected by privilege, and prepared with that expectation, only to find out that it was not protected.  The ICDR rules (the international arm of the AAA) seem to prefer this approach, with Article 22 indicating that the tribunal should “giv[e] preference to the rule that provides the highest level of protection.” In addition, the well crafted note of the ICDR on the Exchange of Information (Guidelines for Arbitrators) states: “The tribunal should respect applicable rules of privilege or professional ethics and other legal impediments. When the parties, their counsel or their documents would be subject under applicable law to different rules, the tribunal should to the extent possible apply the same rule to both sides, giving preference to the rule that provides the highest level of protection.”

“To the extent possible” also might lead to some head scratching. A most-favored nation approach, perhaps, could lead to public policy or ordre publique concerns should the lack of privilege be embedded in the policy of the jurisdiction that does not recognize the privilege. I do not think France would be implicated on the ordre publique point, but China could well be and thus, any award could be vulnerable if there are public policy issues. And on the most-favored nation approach, a French party, for example, could waive the protection afforded by the tribunal and use the material should it be necessary to do so. A least-favored nation approach (no privilege for either party) might lead to a situation in which a document which was prepared under the expectation of confidentiality, would in turn not be confidential, possibly creating ethical issues in some jurisdictions (counsel being required to disclose otherwise privileged material).

 For further reading, see Rachel Reiser, Applying Privilege in International Arbitration: The Case For a Uniform Rule, Cardozo J. Conflict Resol (2012).

– Also posted on LinkedIn 13th July 2017