AM & S v COMMISSION

in Article 1 (b) of the contested decision and listed in the appendix to AM & S Europe Limited's letter of 26 March 1979 to the Commission.

3.The Court will, before the date of the hearing, draw up a report on those documents in a form which it considers appropriate so as not to prejudice its final decision; this report will be notified to the parties.

4.The applicant, the defendant and the interveners will, at the hearing, be heard on questions which will be particularized at a later date.

Luxembourg, 4 February 1981.

Registrar

President

C o n t e n t s

II. The background 1620

III. The facts of the case 1624

VII. Conclusions 1642

1619

OPINION OF MR WARNER — CASE 155/79

II — T h e b a c k g r o u n d

My Lords,

I — I n t r o d u c t o r y

Article 20 of Regulation No 17, which is headed "Professional secrecy", imposes on the Commission and the competent authorities of the Member States, their officials and other servants, an obligation not to disclose information acquired by them as a result of the application of the regulation and "of the kind covered by the obligation of professional secrecy".

The reference there to "professional secrecy" is obviously a reference to the concept known in French law for instance as "le secret professionnel", which is a wide concept in the sense that it applies not only to lawyers but to anyone whose occupation leads him to be entrusted with confidential information, e.g. members of the medical profession and government officials.

On 10 February 1978, the Member of the Commission responsible for competition policy ordered investigations to be carried out under Article 14 of Regulation No 17 into a number of undertakings in the zinc industry, which were suspected of having jointly fixed prices and conditions of sale, controlled production and shared out markets, in breach of Article 85 of the Treaty. The applicant was one of those undertakings.

It might be suggested, though no one did so in argument before us in this case, that the express reference in Article 20 to "professional secrecy" and the absence of any express reference to any such concept elsewhere in the regulation must be taken to mean that the authors of the regulation intended to exclude the application of any such concept otherwise than in the circumstances described in Article 20. That would however be, so it seems to me, a somewhat rash application of that unreliable maxim expressio unius est exclusio alterius.

The questions at issue in this case are, however, different from those that were at issue there.

The Commission and the French Government suggested on the other hand that the "legislative history" of Article 14 showed that the Council, when enacting Regulation No 17, had deliberated and rejected the idea that any concept of "professional secrecy" should apply in the context of that article. They relied, in so doing, on the rejection by the Council of amendments urged by the European Parliament to the Commission's proposal for what became Regulation No 17. As your Lordships know, I entertain grave doubt whether it is permissible to interpret a Council Regulation by reference to its "legislative history". Be that as it may, I do not think that, in this instance, an examination of the legislative history of Article 14 leads to the conclusion suggested by the Commission and the French Government.

It seems that, of the laws of the original Member States, only German law recognizes the general principle that a person may refuse to answer incriminating questions. That principle is of course recognized in English law also. It is however distinct from the principle that safeguards the confidentiality of communications between a lawyer and his client. One can understand that the Council should have wished to exclude from what is now Article 11 of the Regulation a rule that a person should not be required to answer incriminating questions, for that might have defeated the very purpose of the Article or at least rendered it largely ineffective. But one cannot, in my opinion, draw from the fact that the Council rejected the Parliament's suggestion in that respect the conclusion that the Council deliberately decided against the application of any principle protecting the confidentiality of communications between lawyer and client in the context either of Article 11 or of Article 14.

Regulation No 17 was adopted by the Council on 6 February 1962. We were told by the Commission that the absence from Article 14 of any reference to communications between lawyer and client did not seem to have given rise to any difficulty in the early years of its application. The Commission did not, however, enlarge upon that, so that we do not know how often Article 14 was invoked in those years, nor to what extent cases then occurred in which Commission officials carrying out investigations came across communications of the kind in question.

The Commission went on to tell us that, after the accession of the new Member States, the subject was raised more frequently in discussion in professional circles and short articles were published on it.

The report rests on the premise that there is a fundamental difference between the laws of the original six Member States on the one hand and the laws of Ireland and of the United Kingdom on the other hand, whilst the law of Denmark should be considered separately. But — and this thought struck me when I first read the report in 1976 — the report itself unconsciously demonstrates that that is a mistaken approach, first because of differences between the laws of "the original six" that the report brings out and secondly because of differences between the laws of England and of Scotland that the report overlooks.

The title of the Edward Report is significant. "The Professional Secret" is of course a literal translation into English of "le secret professionnel". In 1977 two members of the Legal Service of the Commission, Dr C. D. Ehlermann, its Director-General, and Dr D. Oldekop, wrote a paper for the following year's Congress of the FIDE in Copenhagen. The views they expressed in that paper were of course their personal views. They could not commit the Commission. Having regard, however, to the standing of Dr Ehlermann and Oldekop, and also to the fact that the relevant passage in their paper is comparatively short, I propose to cite it almost in full. They said this (FIDE, Copenhagen 1978, Vol. 3, pp. 11.5-11.6):

The question whether and if so, to what extent, communications between a lawyer and his client are or should be protected under Community law against discovery by the Commission constitutes a question of due process that should be mentioned in the context of a discussion dealing with the rights of defence with regard to the investigation powers of the Commission. In all of the Member States the secrecy of the relationship between a lawyer and his client enjoys legal protection against discovery by administrative authorities and even the judiciary, although within varying limits and by different methods. These limits and methods cannot be described in this paper.

In the area of Community law, the problem had been discussed during the deliberations of the European Parliament concerning the adoption of Regulation No 17/62; on the basis of the "Deringer Report", the European Parliament made a recommendation in favour of the protection of professional privilege. However, this recommendation was not adopted by the Council.

On 22 June 1978 the Commission gave its official view in answer to a question put down by Mr Cousté in the Parliament (Written Question No 63/78). The Commission's answer to that question was as follows:

"Article 14 of Council Regulation No 17/62 empowers the Commission to check and copy all correspondence and other business papers of a firm or association of firms, including papers prepared for it by outside lawyers and legal consultants, or by the Commission, wishing to act fairly, follows the rules in the competition law of certain Member States and is willing not to use as evidence of infringements of the Community competition rules any strictly legal papers. But the Commission, wishing to act fairly, follows the rules in the competition law of certain Member States and is willing not to use as evidence of infringements of the Community competition rules any strictly legal papers. When the Commission comes across such papers it does not copy them."

On 20 February 1979 three officials of the Commission (whom I will call "the inspectors") appeared at the applicant's premises at Bristol, accompanied by an official of the Office of Fair Trading, which is the "competent authority" in the United Kingdom for the purposes of Article 14. The inspectors were armed with "authorizations to investigate" issued under Article 14 (2). Those were served on the applicant's Managing Director, Mr A. T. Thomson, and the investigation proceeded on that and the following day, in the presence of two representatives of the applicant's solicitors. At the end of it the inspectors left taking with them copies of about 35 documents. They also left with Mr Thomson a written request for further documents relating to certain specified matters.

Mr Thomson responded to that request by a letter dated 26 March 1979, with which he sent to the Commission seven files of documents. He told the Commission however, in that letter, that the applicant's solicitors, during their review of the documents, had indicated that they felt that some of them were "covered by the doctrine of legal privilege". For that reason those documents were not produced. Descriptions of them were set out, in seventeen numbered paragraphs, in an appendix to the letter.

I turn back to the facts of this case.

III — T h e facts of the case

From those descriptions it seems that, at all events so far as the applicant was concerned, the original documents withheld fell broadly into four categories:

(i) solicitors' instructions to counsel,

(ii) communications between an outside solicitor and the applicant or one of its parent companies containing legal advice or requests for legal advice,

(iii) documents containing legal advice or requests for legal advice from an in-house lawyer employed by the applicant or by one of its parent companies and

(iv) communications between executives of the applicant or one of its parent companies recording legal advice or requests for legal advice.

The preamble to that Decision, after reciting the facts, continued as follows as regards the documents for which "legal privilege" was claimed:

"Community competition legislation does not provide for any protection for legal papers. However, as the Commission made clear in its reply to Written Question No 63/78 in the European Parliament, asked by Mr Cousté, the Commission 'follows the rules in the competition law of certain Member States and is willing not to use as evidence of infringements of the Community competition rules any strictly legal papers written with a view to seeking or giving opinions on points of law to be observed or relating to the preparation or planning of the defence of the firm or association of firms concerned. When the Commission comes across such papers it does not copy them'."

Mr Thomson also said in his letter that the applicant's solicitors had indicated that certain passages of documents included in the files to be sent to the Commission were of no relevance to the investigation it was conducting. Those passages had been deleted and the solicitors would shortly be sending to the Commission a statutory declaration describing the deleted passages so that it might be "satisfied" on that point.

Clearly neither the undertaking concerned nor its legal advisers can be the ultimate or only arbiter either as to questions of fact or of law, as to whether any given document is one of these kinds of documents and was written in circumstances which would justify its not being used.

On 5 April 1979 the solicitors wrote to the Commission enclosing the promised statutory declaration. Under existing Community law, and subject to review by the Court of Justice, it is for the Commission to determine whether a given document should be used or not. Therefore it is necessary for the Commission's inspector to look at the documents, and to ask questions in connection with them, as far as is necessary for the purpose of establishing whether they should be used or not.

The Commission did not follow up Mr Thomson's suggestion of discussions with the applicant's solicitors to allow the Commission's inspector to look at the documents, and to ask questions in connection with them, as far as is necessary for the purpose of establishing whether they should be regarded as protected or not.

On 25 July 1979 two of the Commission's inspectors who had carried out the earlier investigation in February attended at the applicant's premises at Bristol and served the Decision. They then carried out a further investigation at those premises, which lasted until 27 July.

During the investigation it was made clear on behalf of the applicant that it was willing to produce all the documents within Article 1 (a) of the Decision, with the exception of some for which "legal privilege" was claimed, and also to produce complete copies of the documents mentioned in Article 1 (c). The inspectors took copies of some documents and asked for copies of others.

Article 1 of the Decision required the applicant to submit to an investigation at its premises at Bristol and Avonmouth and in particular to produce for examination the business records required by the Commission officials responsible for the investigation "which are in whole or in part connected with the subject of the inquiry". The Article then set out in paragraphs lettered (a), (b) and (c) three categories of business records which were "in particular" to be produced. Paragraph (a) specified the documents that were the subject of the written request made to Mr Thomson on 21 February and some others. Paragraph (b) specified "all documents for which legal privilege is claimed, as listed in the appendix to AM & S Europe Limited's letter of 26 March 1979 to the Commission". Paragraph (c) specified the complete texts of the documents from which passages had been deleted.

On 2 August 1979 the applicant's solicitors wrote to the Commission enclosing copies of the remaining documents specified in Article 1 (a) but listing some thirteen which they were withholding on the ground that they too were covered by "legal privilege". All those documents except one were eventually disclosed to the Commission.

The Commission's representatives considered however that the Commission's Decision required the production of the whole of the withheld documents to the inspectors. They conceded that, in practice, the inspectors might well need to see only part of a document to determine that it should not be used, but they considered it essential that the inspectors should have access to the entire document and that the inspectors alone should decide which parts of the document they would read in order to satisfy themselves that it should not be used.

The meeting was held at Brussels on 18 September 1979 between officials of the Commission's Directorate-General of Competition (DG IV) and of its Legal Service, on the one hand, and the applicant's counsel and solicitors on the other. It was largely abortive.

In the upshot, all that was agreed between the parties at the meeting was that the dispute between them would have to be brought before this Court by means of proceedings taken by the applicant under Article 173 of the Treaty to challenge the Commission's Decision; and that, if such proceedings were taken, the Commission would, until the Court had given judgment, refrain from imposing any fine or penalty on the applicant for failure to comply with the Decision.

Accordingly, on 4 October 1979, the applicant commenced the present action, in which it claims a declaration that Article 1 (b) of the Decision is void or, alternatively, void "insofar as it necessarily requires the disclosure to the Commission's inspector of the whole of each of the documents for which the applicants claim protection on grounds of legal confidence".

IV — T h e issues in the case

The application was framed on the footing that there was no dispute between the parties as to the existence of a principle of Community law protecting communications between lawyer and client from disclosure, and that the issue between them was only as to procedure, the question being to what extent, if at all, the Commission was entitled to look at a document in order to determine whether a claim that it was privileged from disclosure in accordance with that principle was valid.

From the outset the Commission seemed to endorse that view of the case. It began by asking for an extension of time for lodging its defence while the applicant considered a letter that it (the Commission) wrote to the applicant's solicitors on 31 October 1979. In that letter the Commission said this:

"On reconsideration, the services of the Commission consider that the proposal put forward on behalf of AM & S at the meeting on 18 September 1979 and the practice thought appropriate by the Commission may not be as different as had previously appeared to be the case. The document is to be inspected only as far as is necessary for the purpose of establishing with the appropriate degree of certainty whether it is protected or not; the extent to which it may be necessary for the inspector to see the text of the document will depend on all the circumstances. In practice it would normally be sufficient for him to see the first and last pages of the document and the headings, if any, provided that these clearly show the nature of the entire document. In cases where for any reason such a disclosure does not permit the question of protection to be determined with the appropriate degree of certainty, the inspector must have a right to see other substantial parts of the document (in addition of course to obtaining evidence outside the text of the document itself if necessary)."

Accordingly this letter is written to suggest that the documents now in question should be shown to the representative of DG IV on a basis similar to that outlined by Mr Lever. This is of course without prejudice to the legal arguments of either party in the proceedings before the Court or in any difference of opinion which may arise over whether particular documents are protected, and without prejudice to further clarification by the Commission of its intended practice.

The services of the Commission have always considered that, depending on the

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AM 4: S v COMMISSION

I hope that this letter may be a sufficient basis to enable you to meet with Commission officials again. If so, it would be useful if you had with you copies of all the documents in question.

The offer contained in that letter was misunderstood: the Law Reform Committee's 16th Report on "Privilege in Civil Proceedings" (Cmnd. 3472) and the decision of the House of Lords in Waugh v British Railways Board [1980] AC 521. (I shall discuss those authorities in a moment). The Commission concluded that "the question whether protection should be given for legal confidence, and if so how far it should be given and by what mechanism it should be controlled, are questions of policy to be decided pragmatically according to circumstances" and not questions of principle. The Commission expressed its agreement with the applicant that "the issues in this case are entirely questions of procedure". In the second part of the defence it argued in favour of a procedure "on the lines set out in" its letter of 31 October 1979.

The applicant in its reply stated "the very narrow issue that divides the parties" to be: "In order to verify claims for protection of documents under the principle of legal confidence, is the Commission entitled, as it claims, to inspect the documents for which the claim is made? Or, as the applicants claim, must the Commission take advantage of other means of verification that do not involve the Commission itself gaining knowledge of the legal confidences that are to be protected?"

The Commission's defence, apart from announcing those concessions, fell into two parts. The first part consisted of a general discussion of the question of the protection of "legal confidence" in Community law. It was there that the Commission put forward its contention, with which I have already dealt, about the protection of "legal professional privilege" or "confidentiality" or "secret professionnel" forming part of "the law" in the sense borne by that expression in Article 164 of the Treaty, and the French Government contending the contrary. Neither government, however, developed the point at all fully in its written observations. The CCBE, on the other hand, pointed out that "Questions of procedure do not arise in vacuo" and that it would be necessary for the Court, before it could decide the procedural question, to decide whether there was a principle of Community law affording, as of right, protection against disclosure of confidential communications between lawyer and client, and, if so, what its scope was. The CCBE accordingly made very full written submissions on those questions.

The Court agreed with the CCBE and invited the parties and the intervening governments to make submissions at the hearing on those questions of principle.

As respects the first issue I propose to begin by dealing with a suggestion that was tentatively put forward on behalf of the British Government, to the effect that, if the Court should hold that there was no principle of Community law of the kind for which it primarily contended, the solution might lie in holding that, in the absence of any relevant Community law, the provisions of the national law of each Member State should be applied in relation to documents found in that Member State. That solution, the British Government said, would at least secure that the expectations of those who obtained legal advice in each Member State were not disappointed: the same rights could be invoked against the Community authority as against national authorities. Moreover the adoption of that solution would act as a spur to the enactment of Community legislation on the subject. The British Government cited, as affording some support for such an approach, Case 267/78 Commission v W y [1980] ECR 31.

The French Government's first proposition is unquestionably correct. This Court, however, has never regarded the absence of an express provision as precluding it from holding that a general principle of law could affect the application of Community legislation. Were it otherwise, Community law would admit, for example, of no principle of proportionality of no protection for legitimate expectations, of no right to be heard (except where expressly provided for) and of no guarantee of fundamental human rights. The French Government referred to Case 41/69 ACF Chemie/arma v Commission [1979] 2 ECR 661, where the Court held that it could not write into Regulation No 17 a period of limitation within which the Commission must initiate proceedings against an undertaking. That case is not, however, in my opinion, in point, because there can be no general principle about the length of a limitation period, if any. The imposition of it necessarily involves a choice that can be made only by a legislative act.

Having regard to the attitudes adopted by the parties and by the other interveners, the French Government bore alone the burden of arguing that there was no principle of Community law restricting the powers of the Commission under Article 14 of Regulation No 17. In so doing the French Government relied mainly on two propositions: (i) that there was no express provision of Community law imposing such a restriction and (ii) that the relevant laws of the Member States were too disparate for there to be the existence of a general principle of the kind in question. I agree with the CCBE that, if such a principle can be distilled from them, it matters not if its conceptual origin, the methods whereby it has been developed, or even the scope of its application in detail, differ from Member State to Member State.

I have already said that I did not propose to analyse or even to summarize the contents of the Edward Report. Nor do I propose to attempt an analysis of all the further authorities that have been placed before the Court as a result of the researches undertaken by the CCBE and by counsel for the applicant since the Edward Report was written. From an examination of that wealth of material, which covers the laws of all the Member States except Greece (because the case was argued before the accession of Greece to the Community) and also the laws of some non-member States, certain obvious conclusions can be drawn:

(i) In each country the development of the law has been largely conditioned by procedural rules characteristic of the legal system of that country. In England, for instance, much of the law has been developed in the context of "general discovery" in civil proceedings. That is a procedure under which, at an interlocutory stage in a civil action, each party is required to disclose to the other all the documents in his possession, custody or power relating to matters in question in the action, whether or not such documents would be admissible in evidence. Documents covered by "legal professional privilege" are exempt from such discovery. The procedure has, I believe, no exact equivalent in the legal system of any non-common law country — not even in the Scottish system. In Belgium and France on the other hand, many of the authorities are concerned with the powers and obligations of the "juge d'instruction", particularly when carrying out a search at the professional chambers of an "avocat". The "juge d'instruction" has, as we learned in Case 267/78, no direct equivalent in many other Member States. There again, however, such incidental differences do not, in my opinion, go to the heart of the matter.

(ii) As the French Government conceded, some protection for the confidentiality of communications between lawyer and client is given by the laws of all the Member States. In every Member State the hard core of the relevant law is that a lawyer cannot be called upon to give evidence of what he has been told by his client. But everywhere the protection extends beyond that.

(iii) In all Member States the protection is afforded primarily by imposing on the lawyer an obligation not to disclose the contents of those communications. In some countries (e.g. France) a breach of that obligation by the lawyer is a criminal offence. In others (e.g. England) it is only a civil wrong. In some countries (e.g. England) the obligation is owed only to the client, so that it is extinguished if the client waives his right to performance of it. In other countries (e.g. France) the obligation is considered to be "d'ordre publique", so that waiver by the client is not enough; the lawyer retains a discretion whether or not to disclose the contents of the communication. Incidental differences such as those do not, however, in my opinion, go to the heart of the matter.

(iv) To some extent also the development of the law in each country has been conditioned by the organization of the legal profession in that country, for instance, in England by the existence of the distinctive roles of barristers and solicitors, and in France by the distinctions between "avocats plaidants", "avocats consultants", "avoués" and "notaires". Once again, such differences do not, in my opinion, go to the heart of the matter.

Here we are concerned with documents found at the premises of the client which are claimed to be, or to reproduce, communications passing between the client and his lawyer for the purpose of requesting or giving legal advice. The question is whether such documents are protected from disclosure to a public authority exercising a statutory power of search.

The point here is that the terms of reference of the Committee did not require it to examine the law of privilege generally, but only to examine its operation in civil litigation. Hence the Committee's definition of its scope in that sentence. The Committee did not thereby mean, and could not have meant, that "privilege" was no more than part of the law of evidence in civil proceedings.

Thus, in my opinion, the English authorities relied on by the Commission do not support the propositions for which it cited them.

As regards statutory powers of search, the starting point of English law, as we were reminded by the CCBE and by the British Government, is that the confidentiality of a communication between a lawyer and his client comes into existence at the time when the communication is made. The right to have that confidentiality protected arises at the same time and continues thereafter for evermore. The right may however be overridden or modified by a statute.

Some United Kingdom statutes confer powers of investigation expressly preserve the right. Such is in particular the case of Section 85 of the Fair Trading Act 1973 and Sections 3 and 7 of the Competition Act 1980. Thus, in the very field of competition law with which we are here concerned, the relevant United Kingdom statutes preserve the right as against the United Kingdom authorities.

Lastly some United Kingdom statutes are, like Regulation No 17, silent on the point. Counsel for the British Government hesitated to say that, in such a case, the presumption was that the right was preserved. There is a surprising dearth of United Kingdom judicial authority directly on that question. The only case that comes anywhere near dealing with it seems to be Frank Truman Export Ltd v Metropolitan Police Commissioner [1977] 1 QB 952, but it does not really do so. We were however referred on behalf of the applicant to the well established principle of English law that a statute is not to be interpreted as altering the common law to a greater extent than its terms provide, either expressly or by necessary implication — as we see Maxwell on the Interpretation of Statutes, 12th Ed., pp. 116 et seq. We were also referred on behalf of the applicant to cases in Canada and in New Zealand where that principle has been applied to statutes conferring powers of investigation on public authorities without saying anything about the privilege of communications between lawyer and client.

The laws of the other countries of the Community were not discussed in anything like the same detail in the argument before us. I hope that I shall not be thought to minimize their importance if I confine myself, as regards them, to referring your Lordships to the written observations of the CCBE, and in particular to the appendices thereto, and to saying that the authorities there cited seem to me, on the whole, to lend support to the CCBE's submissions. It seems at all events clear that, in no country other than France, does legislation confer on the authorities responsible for the administration of competition law powers of investigation enabling them to disregard the confidentiality of communications between lawyer and client. Indeed, had it been otherwise, it is difficult to see how Doctors Ehlermann and Oldekop could have reached the conclusions they did.

It was held by the French Conseil d'État in the Appratite case (Recueil des Arrêts du Conseil d'État, 1952, p. 512) that, although only the second paragraph of Article 15 expressly excluded the application of "le secret professionnel", it was also excluded by the first paragraph, so that M. Apraillé, an "avoué", had properly been fined for refusing to disclose confidential documents.

That decision shows of course that in France, as in England, an aptly worded statutory provision can override the confidentiality of communications between a lawyer and his client. It also shows how the Conseil d'État interpreted the particular statutory provision there in question. But it does not, so it seems to me, establish the existence of a general rule of French law that, if a statutory provision conferring a power of investigation is silent as to such communications, it automatically overrides their confidentiality.

My conclusion therefore, on this part of the case, is that the powers of the Commission under Article 14 of Regulation No 17 are exerciseable subject to the right of the undertaking under investigation to claim confidentiality for communications passing between itself and its lawyers for the purpose of seeking or giving legal advice.