High Court applies English law to questions of privilege in applications under Insolvency Act 1986

In the context of joint liquidators' applications for documents "belonging to" the company or "relating to" its affairs (under sections 324 and 326 of the Insolvency Act 1986), the High Court confirmed that English law applied to determine whether documents could be withheld by the Luxembourg lawyers who were respondents to the application. Although the company was incorporated in Luxembourg, questions of professional secrecy under Luxembourg law were irrelevant save when it came to the exercise of the court's discretion whether to make an order under section 326: Re Hellas Telecommunications (Luxembourg) II SCA (Companies Court, 24 July 2013).

Under article 4(1) of the EC Regulation on Insolvency Proceedings 2000, once insolvency proceedings have been commenced, the law to be applied to those proceedings is the law of the member state in which they have been opened. Since this case was proceeding in the English court, English law applied to determine which documents were privileged.

The respondents accepted that the court was bound by precedent to reach this conclusion. Their argument was that the law should change because it is based on the mistaken premise that legal professional privilege is a procedural matter, whereas it should be seen as a substantive right following the House of Lords' decision in R v Special Commissioners (ex p Morgan Grenfell) [2002] UKHL 21. It will be interesting to see whether the respondents take this point further. Although the registrar accepted in principle that the applications should be granted, he adjourned the applications to allow the parties to cooperate in relation to various practical matters arising from the intended order.