Eurowatch Sourcetm Reporting on Legal and Regulatory Developments Affecting Foreign Companies Operating in the EU
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® WorldTrade Executive The International Business Information EUROWATCH SourceTM REPORTING ON LEGAL AND REGULATORY DEVELOPMENTS AFFECTING FOREIGN COMPANIES OPERATING IN THE EU September 30, 2010 Volume 22, Number 17 IN THIS ISSUE Articles No Legal Privilege Extended to In-house Lawyers The ECJ recently issued a judgment that EU–European Court of Justice Upholds Judgment: communications with in-house lawyers EU Legal Professional Privilege Does Not are not protected by legal privilege in the context of EC investigations and Extend to In-house Lawyers proceedings. The implications of this By Frances Murphy, Johannes Zöttl and Francesco Liberatore judgment are detailed. Page 3 (Jones Day)...............................................................................p. 3 EU’s Solvency II to Trigger Takeovers EU–New EU Capital Rules to Spur Insurance M&A The Solvency II capital regime aims to By Reuters.................................................................................p. 5 make insurers more financially resilient by matching capital reserves more closely to risks. However, a new study predicts EU–Round-up that smaller players may struggle to By Reuters.................................................................................p. 6 comply with the new rules and be forced to sell themselves to larger competitors. Page 5 France–Safeguard Procedure: Shareholders vs. Creditors In “LBOs” - Another Lehman Brothers’ French Safeguard Procedures Story to be Requested With Caution The safeguard procedure allows debtors By Anne Granger (Fasken Martineau).......................................p. 9 facing financial difficulties to place themselves under legal protection. While Germany–No Use of Facebook for Background in the past the courts have proven flexible in their examination of the eligibility Checks of Job Applicants in Germany requirements for safeguard procedures, By Dr. Matthias Nussbaum, LL.M. (Baker & McKenzie)..........p. 11 a recent decision by the Paris Court of Appeal severely curtailed this flexibility. Page 9 Ireland–Rattled By Ratings Agency Warnings By Reuters...............................................................................p. 12 UK’s FSA Proposes Changes to Remuneration Code United Kingdom–UK Financial Regulator Revises The Remuneration Code, introduced as a response to concern that remuneration the Remuneration Code practices may have contributed to the By Christopher Fisher, Nicholas Robertson and Bernadette global market crisis, has been significantly Daley (Mayer Brown LLP)........................................................p. 14 extended in scope and revised to take account of recent international work on remuneration principles. Significant changes are explored. Page 14 Topical Index Page 2 TOPICAL INDEX Bankruptcy: France - Safeguard Procedure: Shareholders vs. Creditors In “LBOs” - Another Lehman Brothers’ Story....................................................p. 9 On-Line Research Access to Competition Law: European Court of Justice Upholds Back Issues of Judgment: EU Legal Professional Privilege Does Not Extend to In-house Lawyers...........................................p. 3 Data Protection: No Use of Facebook for Background Checks of Job Applicants in EuroWatch Germany.......................................................................p. 11 Finance: Ireland Rattled By Ratings Agency For details, please contact Warnings..........................................................................p. 1 Jay Stanley at M&A: New EU Capital Rules to Spur Insurance M&A......................................................................................p. 5 [email protected] Remuneration: UK Financial Regulator Revises the or (978) 287-0301. Remuneration Code.......................................................p. 14 Round-up:..............................................................................p. 6 EUROWATCH® Publisher: Gary A. Brown, Esq. Managing Editor: Alyson J. Sheehan Published by WorldTrade Executive, Executive Editor: Scott P. Studebaker, Esq. a part of Thomson Reuters Production Editor: Heather J. Martel (ISSN 1063-6323) Marketing: Jon B. Martel Tel: 978-287-0301; Fax: 978-287-0302 www.wtexecutive.com Advisory Board Joan Sylvain Baughan Gareth Morgan Keller and Heckman, Brussels and Washington Taylor Wessing, London Philip Bentley, QC Giovanni Nardulli McDermott Will & Emery/Stanbrook LLP, Brussels Gianni, Origoni, Grippo & Partners, Rome Laura M. Brank, Esq. Angus Phang Dechert LLP, London and Moscow Willoughby & Partners, Oxford Alec J. Burnside Daniel J. Plaine, Esq. Linklaters, Brussels Gibson, Dunn & Crutcher, Washington, DC José A. Sanchez Dafos Douglas E. Rosenthal, Esq. DLA Piper Rudnick Gray Cary, Madrid Sonnenschein Nath & Rosenthal Donald C. Dowling, Jr. Washington, DC White & Case LLP, New York Melanie Thill-Tayara Peter L'Ecluse Salans, Paris Van Bael & Bellis, Brussels Lode Van Den Hende Gary N. Horlick, Esq. Herbert Smith, Brussels Wilmer Cutler Pickering Hale and Dorr Edurne Navarro Varona Washington, DC Uría & Menéndez, Brussels Mark Jones Maria Wolleh Norton Rose, London Mannheimer Swartling, Berlin Alexander Marquardt Kramer Levin Naftalis & Frankel, Paris Unauthorized reproduction in any form is prohibited by law. Copyright © 2010 by Thomson Reuters/WorldTrade Executive EUROWATCH® September 30, 010 EU European Court of Justice Upholds Judgment: EU Legal Professional Privilege Does Not Extend to In-house Lawyers By Frances Murphy, Johannes Zöttl and Francesco Liberatore (Jones Day) The Court of Justice of the European Union (“ECJ”) ECJ Judgment in Akzo recently issued its long-awaited judgment in Akzo The ECJ rejected Akzo’s arguments as follows: Nobel Chemicals Ltd and Akcros Chemicals LTD v European Commission (Case C-550/07 P). This case “An in-house lawyer, despite his enrollment with a Bar deals with the question of whether, in the context of or Law Society and the professional ethical obligations European Commission (“Commission”) investigations to which he is, as a result, subject, does not enjoy the and proceedings, communications with in-house lawyers same degree of independence from his employer as a are protected by legal privilege. The ECJ held that such lawyer working in an external law firm does in rela- communications are not protected. As a result of the tion to his client. Consequently, an in-house lawyer is judgment, no communications between the management less able to deal effectively with any conflicts between and employees of a company and its in-house lawyers is his professional obligations and the aims of his client.” protected from search and disclosure in EU investigations (Akzo, paragraph 45) and proceedings, including antitrust investigations and raids. The authority relied upon by the General Court in rejecting Akzo and Akcros’ challenge dates back to the Background 198 AM&S case (Case 155/79). In AM&S, the ECJ recog- During a dawn raid at the premises of two Akzo nized that the confidentiality of a written communication affiliates in the United Kingdom in a 2003 cartel matter, between lawyer and client must be protected only if (i) Commission officials copied and placed in its file two e- the communication has a connection with the exercise of mails exchanged between the general manager of Akcros the client’s right of defense, that is, it was a “communica- and a member of Akzo’s in-house legal department, who tion” made “for the purposes and interests of the client’s was admitted as a lawyer to the Netherlands Bar. Akzo rights of defense,” and (ii) it is a communication with an and Akcros brought a challenge before the General Court, independent lawyer, that is, a lawyer who is “not bound arguing that the communications were protected by to the client by a relationship of employment.” legal professional privilege and therefore that the Com- The issue considered by the ECJ in Akzo concerns mission should not be permitted to have access to them only the second of these criteria, whether privilege de- and other privileged documents (Cases T-15/03 and pends on the independence of the lawyer with whom T-53/03). The General Court dismissed this challenge communications are exchanged. The ECJ found in Akzo on the basis of an earlier ECJ ruling on the scope of legal that its position in AM&S is still correct and held that, if professional privilege. internal lawyers cannot act as independently as external lawyers, their correspondence cannot enjoy the same level of protection. Frances Murphy is a Partner in the London office of Jones Day. She has considerable competition law experience repre- senting clients in behavioral and transactional matters across EU Legal Professional Privilege and a range of markets. Frances leads the London competition National Bar Rules law practice. ([email protected]) Dr. Johannes Zöttl is Akzo also made the counter argument that in-house a Partner in the Frankfurt office of Jones Day. He represents counsel who are admitted to a Bar or Law Society in an companies in antitrust regulation before the German Federal EU Member State are subject to professional ethical obliga- Cartel Office and the European Commission, including merger tions including confidentiality rules, similarly to external reviews and antitrust enforcement actions, and in antitrust practitioners. The ECJ rejected this argument: actions for damages. ([email protected]) Francesco Liberatore is an Associate based in the firm’s London office. “the fact remains that they are not able to ensure a de- He