Disputes Briefcase

Legal advice privilege

Following the Court of Appeal’s 2003 decision in Three Rivers (No 5), legal advice privilege has been widely considered to apply to communications between a lawyer and their client. The ‘client’ for these purposes is limited to those individuals within the client organisation who are responsible for seeking or obtaining legal advice. Other communications or documents, unless they evidence the content of legal advice, have been considered to fall outside the ambit of legal advice privilege, even those between individuals in the ‘client’ group.

Background

In the high-profile securities litigation against Glencore and certain former directors, Glencore withheld documents and communications between members of the ‘client’ group (i.e. not between a lawyer and client) on the basis they were privileged. The claimants sought a court order requiring production of those documents.

The decision

Picken J declined to order production of the documents, holding that legal advice privilege applies to intra-client documents sent between or created by members of the ‘client’ group for the dominant purpose of seeking legal advice.

The judge accepted Glencore’s argument that Three Rivers (No 5) related only to ‘non-client’ documents – i.e. those created by individuals outside the ‘client’ group – and was not concerned with intra-client documents. Although the disclosure order in Three Rivers (No 5) included some intra-client documents, Picken J found there had been no argument on this category and considered it wrong to treat the decision (and subsequent authorities) as authority on the point.

As a matter of principle, the judge decided there was no justification for treating intra-client documents, whose dominant purpose is to identify an issue on which the client proposes to seek legal advice or to identify facts to communicate to their lawyer for that purpose, but where the document itself is not intended to be sent to the lawyer, as not attracting privilege. Picken J considered that, given a lawyer’s working papers are “obviously” privileged, it is difficult to see why a client’s working papers should not also receive similar protection. As the judge noted:

"An example might be a client, the day before he or she is due to meet his lawyer for the first time, writing himself or herself a memorandum with notes for the meeting. Another example might be one member of the client group, who will not be attending the meeting with the lawyer, emailing another member of the client group with information or thoughts in preparation for the meeting."

The judge considered that both documents would be privileged even if they were not intended to be sent to the lawyer.

Takeaways

This is a welcome decision that broadens the range of documents potentially protected by legal advice privilege. However, as a High Court decision, it has limited precedent value, and the claimants have sought permission to appeal. Those within the ‘client’ group should continue to exercise caution when creating documents that do not meet the traditional lawyer-client communication test.

The judgment is the second landmark decision on privilege by Picken J in the proceedings. Previously, the judge held that the ‘shareholder rule’ had no principled justification and should no longer apply (see our briefing), a position which was later approved by the Privy Council in Jardine Strategic v Oasis Investments (see our July 2025 Briefcase). Securities litigation is a material and increasing risk for UK listed companies. Read more in our securities claims guide.

Background

Various salmon producers have been accused of overcharging retailers for Atlantic salmon. This overcharge was allegedly passed on to consumers in the form of increased prices. Several retailers have already commenced proceedings against the salmon producers involved. The question before the CAT in the present case was whether the claim on behalf of consumers should be certified.

Outcome

The CAT concluded that the cost-benefit analysis in this case (where the small sums returned to consumers would be “dwarfed” by the “inexplicably high” cost of the proceedings) was such that it would not be appropriate to certify the proceedings. The litigation would have principally benefited the lawyers and funders, rather than the class. Further, the PCR’s proposed charge-out rate of £300 an hour gave the appearance of a motivation beyond pursuing the interests of the class.

Rather than strike the claim out altogether, the CAT has invited the PCR to reformulate it, to see whether she can address the CAT’s concerns.

Takeaways

The reasons for the CAT’s decision are fact-specific. However, there are several potentially broader takeaways.

1. The cost-benefit analysis: The CAT will consider the potential sums available to the class, versus the potential returns available to funders and lawyers. Collective actions considered to be predominantly for the benefit of lawyers and litigation funders are unlikely to be certified.
2. Evidence: The CAT will typically expect to see evidence regarding predicted levels of take-up by the class, as well as a plan for distribution, at the certification stage.
3. Cost control: PCRs need to consider the most cost-efficient means of pursuing litigation. Where there is ongoing litigation regarding the same subject matter, the PCR should consider whether they can work with the other claimants to reduce costs. This may include sharing counsel, experts and disclosure.
4. Transparency: PCRs must include detail on success fees and other contingent fees in the cost budget. Failure to include these sums alongside other legal costs is “wrong” and potentially misleading.
5. Hourly rate for the PCR: A fee of £300 per hour is unacceptably high and could give rise to a conflict of interest. The CAT expects remuneration to be in line with levels paid for work in the public sector.

Comment

As noted in the February edition of Briefcase, the CAT is adopting an increasingly robust approach to certification. This case continues that trend. It remains to be seen whether the PCR will take up the CAT’s invitation to reformulate the claim, and what impact the Tribunal’s comments on remuneration will have on the willingness of individuals to act as PCRs in future cases.

In our April Contract Law Update we provide a round-up of recent key developments in contract law. Our Update covers:

• The High Court in Baltimore Wharf v Ballymore held that where negotiations begin under a “subject to contract” umbrella, that reservation is only removed by express agreement or necessary implication. An email merely “accepting” the terms of a subject to contract agreement was insufficient to create a binding contract. The decision is a reminder that the court will not lightly hold that a “subject to contract” reservation has been removed, even where parties are close to a fully executed agreement.
• The High Court in Visa v Luxottica held that a widely drafted definition of “settled claims” in a settlement agreement extended to future claims by companies that became associated with the claimant only after the agreement was executed. The decision underscores the importance of clearly defining the scope of releases. The court also rejected a “sharp practice” argument, holding that the principle is unlikely to apply where parties are professionally advised and have clearly considered the draft terms.
• The Court of Appeal in Tyson v GIC Re construed a “confusion clause” as a hierarchy clause, giving precedence to the terms of an earlier contract. The court held that where there is inconsistency between separate but related contracts and a hierarchy clause applies, the court will usually apply that clause rather than strain to reconcile the two. The decision highlights the importance of hierarchy clauses and of considering which terms prevail in the case of inconsistency.
• The High Court in SLB v PAK held that an obligation to provide letters of guarantee within 120 days was an innominate term and not a condition. If time is “of the essence”, the provision stipulating the time for performance is treated as a condition; otherwise, the default position is generally that a term is innominate. The decision highlights the importance of clear drafting where parties intend that a stipulation as to time be a condition, including considering the interaction between that stipulation and other contractual terms.
• The Court of Appeal in Zaha Hadid v Zaha Hadid Foundation held that an “indefinite” agreement could be terminated by either party on reasonable notice, even though the contract gave only one party express rights to terminate. The decision draws a distinction between perpetual contracts (that bind parties forever) and indefinite contracts (that may be brought to an end). Absent express terms, there is no room for an inference that a perpetual contract could be terminated on reasonable notice; by contrast, an indefinite contract necessarily empowers parties to terminate on reasonable notice.
• The Privy Council in Anheuser-Busch International v Commonwealth Brewery provided guidance on how to determine what amounts to reasonable notice for termination in the absence of an express term. The Board held that the purpose of reasonable notice is not to protect the recipient from all loss of profit resulting from termination but rather to enable the parties to achieve an orderly end to their relationship. Where a requirement of reasonable notice is implied, the length of notice that is reasonable depends on the circumstances in which notice is given, assessed by reference to a non-exhaustive list of relevant factors.

Other developments of note include:

• The High Court in Veranova Bidco v Johnson Matthey construed a clause in a SPA that limited liability for warranty breaches to claims arising from the seller’s fraud, affirming that this required the claimant to show that one or more individuals at the seller knew of matters that rendered a warranty false; that such individual(s) appreciated this knowledge was relevant; and knew (or were reckless as to whether) the warranty was falsified by this knowledge. It was not permissible to aggregate the knowledge of different individuals to fix the corporate entity with liability. Even though one of the relevant warranties was false, the claimant failed to show fraud and the claim was dismissed.
• The Court of Appeal in Logix Aero Ireland v Siam Aero Repair Company held that a third party’s fraudulent acts had broken the chain of causation between any breach of duty by the defendant and a loss suffered by a claimant. Fraudsters had intercepted and interposed themselves in emails between a buyer and seller and diverted payment to an account under control. The buyer argued that the seller's unwitting disclosure of contractual documents to the fraudsters breached a confidentiality clause and caused its loss, but the Court held that the fraud — not any breach — was the effective cause, and that the seller's actions merely provided the opportunity for, rather than caused, the loss.  

As reported in the February edition of Briefcase, the Disclosure Review Working Group conducted a survey on the effectiveness of the disclosure process in the Business and Property Courts, which underwent significant reform in 2019. The survey results indicate that although some of the changes introduced by Practice Direction 57AD have been well received (e.g. the obligations regarding known adverse documents and initial disclosure), the majority of respondents did not consider the reforms to have been a success. Respondents were particularly concerned about increased costs, burden on the courts and a lack of co-operation between parties. The preliminary view of the Working Group is that the regime should be simplified. An expanded Working Group has been assembled to look at how best to achieve this. There will be a consultation process before any changes are made.

The recently published Commercial Court Annual Report 2024-2025 highlights that matters arising from arbitration continue to make up a significant proportion (c. 30%) of claims before the Commercial Court. Of those, the majority comprised appeals on a point of law (section 69 Arbitration Act 1996) and challenges for procedural irregularity (section 68 Arbitration Act 1996), both of which have seen a steady increase in recent years. For more, see our recent article on key practical takeaways based on our experience of section 69 appeals.

Recent arbitration-related decisions from the English courts include:

• The Supreme Court in Spain v Infrastructure Services and Zimbabwe v Border Timbers held that foreign states party to the ICSID Convention cannot rely on state immunity to avoid recognition of ICSID awards against them. The Supreme Court found that Article 54 ICSID Convention constitutes a waiver of state immunity from adjudication in proceedings for enforcement of ICSID awards and the states had therefore submitted to the jurisdiction of the English courts for the purposes of section 2(2) State Immunity Act 1978.
• In the ongoing Yukos dispute, the High Court granted permission to enforce UNCITRAL arbitration awards totalling US$50bn (plus compound interest) against Russia. The decision illustrates the English courts’ pro-enforcement approach to New York Convention awards and the high bar for public policy objections to enforcement under section 103(3) Arbitration Act 1996.
• The Court of Appeal in JP Morgan Securities & Ors v VTB Bank has upheld anti-suit injunctions restraining VTB from bringing Russian proceedings in breach of London-seated LCIA arbitration agreements, finding that proceedings against a Russian JP Morgan entity sought to circumvent the application of English law, the arbitration agreements and the UK sanctions regime.
• In contrast, the Court of Appeal in FH Holding Moscow v AO UniCredit Bank & Anr has upheld a decision by the Commercial Court declining to grant an anti-suit injunction restricting banks from pursuing Russian court proceedings. The Russian proceedings concerned enforcement against assets provided as security under a mortgage agreement governed by Russian law and did not breach an Austrian VIAC arbitration agreement in a related English law facility agreement.
• In K1 v B the Court of Appeal found it lacked jurisdiction to grant permission to appeal a decision by the High Court rejecting an application to amend an existing challenge to include a ground that a party was out of time under section 68(2)(g) Arbitration Act 1996. The decision highlights the limits on appeals in section 68 challenges.
• In Gluck v Endzweig, the Court of Appeal held that notwithstanding the principle of party autonomy, a tribunal cannot be granted an open-ended power to revise its awards “at any time” as this is incompatible with the Arbitration Act 1996 and the requirement of finality of awards. Consistent with the English courts’ pro-arbitration approach, the Court of Appeal struck out the offending provisions of the clause to give effect to the parties’ agreement to arbitrate and reinstate enforcement of the award.

In institutional updates, the ICC has announced that updated ICC Arbitration Rules will enter into force on 1 June 2026. The changes “aim to enhance efficiency, clarity and usability” and ensure that ICC arbitration continues to meet user needs. The LCIA is also consulting on revisions to the LCIA Arbitration Rules and LCIA Mediation Rules. The LCIA has trailed that forthcoming revisions will focus on practical provisions to improve cost management, reduce procedural friction and give tribunals enhanced tools to deliver efficient and enforceable outcomes for parties. Stage 1 of the consultation closed earlier this month, and drafts of the revised rules will be published for a second round of consultation later in 2026.

Reforms to litigation funding were missing from the Government’s legislative programme for this session of Parliament, set out in the King’s Speech on 13 May. As we reported in the February 2026 Disputes Briefcase, the Ministry of Justice said last December that it would bring forward legislation to reverse the Supreme Court’s decision in PACCAR (allowing litigation funders once again to recover a percentage of claimants’ damages), and to introduce a new regulatory framework for litigation funding agreements. This followed the Civil Justice Council’s June 2025 report on the litigation funding sector which made far-reaching proposals for reform. The absence of any proposals in the King’s Speech may reflect the range of separate but related consultations and reviews still ongoing into class actions and to the rules governing the way solicitors bill their clients.

Since Evans v Barclays (covered in the February edition of Briefcase), there has been a rise in defendants seeking to have claims certified on an opt-in rather than an opt-out basis and, in some instances, asking the Competition Appeal Tribunal to reconsider previous rulings on certification. The class representative in Evans v Barclays is attempting to revive the claim on an opt-in basis. In Stasi v Microsoft (handed down in April), the defendants argued that the class should be bifurcated, with larger, sophisticated organisations proceeding on an opt-in basis and smaller organisations on an opt-out basis. The CAT rejected this argument on the basis that bifurcation could lead to a collapse in the funding arrangements, which would have adverse implications for access to justice. It will be interesting to see whether defendants in other collective actions have more success. The defendants in Ennis v Apple have asked the CAT to decertify the opt-out proceedings in the wake of Evans v Barclays. A hearing took place on 22 April, though a decision has not yet been handed down.  Similarly, in Rodger v Alphabet, the defendants have asked the CAT to vary the collective proceedings order previously granted on an opt-out basis. A hearing has been scheduled for 4-5 June.

Collective actions continue to keep the Court of Appeal busy. In late February, the Court of Appeal refused permission to appeal in Stephan and Hammond v Amazon. In March, the Court of Appeal upheld the CAT’s decision to refuse certification of Professor Roberts’ competition claim against six water companies, on the basis that its abuse of dominance claims were excluded by section 18(8) of the Water Industry Act 1991. In other appeal news, there will be a “rolled-up” hearing to consider whether permission to appeal should be granted in Kent v Apple. This case (covered in the November edition of Briefcase) marked the first win for claimants under the collective action regime. This rolled-up hearing will take place between November 2026 and March 2027. 

There has been a noticeable uptick in litigation concerning digital assets. The High Court in Infinni Innovations v OFMS Ltd  held that an interim injunction relating to alleged data scraping from a rival software platform should be continued, but in a modified and narrower form. In Smithers & Anor v Persons Unknown, the Commercial Court continued a freezing order against Persons Unknown in relation to cryptoassets. This case is notable for its pragmatic approach to the issue of jurisdiction, where the court took the view that there is a good arguable case that damage was sustained in the jurisdiction (one of the jurisdictional gateways for a tort claim) if the victim is resident in England and Wales. In Yuen v Fun Yung Li & Anor, handed down shortly after, the court confirmed that the tort of conversion does not apply to cryptoassets.

In recognition of the rise in disputes concerning digital assets, the UK Jurisdiction Taskforce has recently published a report on the Control of Digital Assets, which seeks to provide non-binding guidance on the evolving factual issues relating to control of digital assets. The Report has been drafted for a non-technical audience (“comprised of the judiciary and court users”) and will no doubt feature heavily in disputes where control of digital assets is in issue.

The UK Supreme Court has delivered an important judgment for taxpayers in infrastructure projects on when capital expenditure is “on the provision of plant” for the purposes of section 11 Capital Allowances Act 2001. The Supreme Court held that section 11 is to be construed narrowly with the result that expenditure on plant (in this case windfarms) did not include pre-construction expenditure by taxpayers on environmental surveys and studies, even though these were a necessary stage for preparing an environmental impact assessment to obtain the required consents prior to the windfarms being designed and built. The judgment will disappoint taxpayers involved in major infrastructure projects and adds urgency to the government’s long‑promised consultation on the tax treatment of pre‑development expenditure.  The judgment is fact-specific, however, and leaves open the possibility of some pre-development costs qualifying in certain circumstances. Read more in our blog post.

In Celestial Aviation Services Ltd v UniCredit Bank GmbH, the Supreme Court considered the impact of sanctions legislation on a bank’s payment obligations under letters of credit. The dispute arose after aircraft lessors sought payment under letters of credit issued in connection with aircraft leases to Russian airlines. UniCredit declined to pay until it received a licence from OFSI. The Supreme Court held that payment under the letters of credit was sufficiently connected to the underlying aircraft leasing arrangements to fall within Regulation 28 of the Russia Sanctions Regulations, which prohibits providing funds in connection with arrangements whose object or effect is the supply of aircraft to Russia, even though the leases pre-dated the sanctions and had already been terminated. The Supreme Court also concluded that section 44 of the Sanctions and Anti-Money Laundering Act 2018 operates as a defence to civil liability where a person acts or refrains from acting in the reasonable belief that they are complying with sanctions, shielding the bank not only from liability for the principal payment but also for associated claims such as interest and costs. Read more in our Global Investigations Bulletin - March 2026.

In Kession Capital Ltd v KVB Consultants Ltd & Ors, the Supreme Court held that an FCA-authorised principal firm was not liable under section 39 Financial Services and Markets Act 2000 for the acts of its appointed representative where the authorised representative dealt with retail clients outside the scope of the appointed representative agreement. The decision provides helpful clarification for authorised firms and emphasises the importance of clear drafting in authorised representative agreements.