The iniquity ‘exception’ to Legal Professional Privilege (Al Sadeq v Dechert LLP)

Dispute Resolution analysis: All lawyers know the principle and no doubt regularly rely on legal professional privilege (“LLP”) being a corner stone of the English legal system.  However, LLP is not apposite to protect against participation (active or passive) in the commission of fraud.  This principle has somewhat inelegantly been described as the “iniquity exception”: – inelegant because it is not an exception (strictly speaking) and rather than applying to iniquity it is applicable in all species of fraud, spanning both criminal and civil jurisdictions.

Al Sadeq v Dechert LLP [2024] EWCA Civ 28 provided the Court of Appeal with an opportunity to explore the operation and scope of the iniquity principle in the context of LLP.

The case is also a fascinating (if hotly contested) exposé of the Emirate of Ras Al Khaimah (“RAK”), one of the United Arab Emirates.  According to one of the lawyers acting for RAK and asserting LLP, RAK operated a “brutal legal system”. 

Al Sadeq v Dechert LLP and others [2024] EWCA Civ 28

What are the practical implications of this case?

The case is essential reading for all lawyers who rely on legal professional privilege as it serves as a useful cautionary tale of the risks of misunderstanding the scope of the protections that legal professional privilege provides on proper analysis.

It will be of particular interest to lawyers who are engaged in disclosure exercises where there is an assertion of LLP which is challenged based on the iniquity exception.  There is not only a detailed analysis of the relevant principles and the applicable case law but also a very practical guide as to how a disclosure exercise should be conduct (and if necessary litigated) where iniquity is alleged.

What was the background?

Between 2010 and 2014, the claimant, Mr Al Sadeq had been a senior lawyer, and then deputy CEO, engaged by a RAK owned development corporation (the “Corporation”).

During that time, according to, Sheikh Saud bin Saqr al-Qasimi who is the current ruler of RAK (the “Ruler”), the (then) CEO of the Corporation, Dr Massaad (the “CEO”), along with others (for example a Mr Quzmar) were alleged to have engaged in a conspiracy to defraud the Corporation.

The Corporation engaged the first defendant, an international law firm (allegedly) to investigate matters.  The second to fourth defendants were lawyers employed by the first defendant and engaged on the RAK file.

Contrary to this apparent position, Mr Al Sadeq’s case was that the first defendant was engaged and retained by the Ruler to build a fabricated case against the CEO and his alleged co-conspirators.  Mr Al Sadeq alleged that the motive for fabricating a case was political.  Political, in that, according to Mr Al Sadeq, the Ruler was not concerned with a putative fraud but “a political struggle with his brothers”.

The three iniquities relied upon by Mr Al Sadeq for the disclosure application were:

• The detention of Mr Al Sadeq in Dubai on 5 September 2014, his rendition to RAK, and subsequent detention there.
• The conditions in which Mr Al Sadeq was held in detention.
• A lack of access to legal representation during Mr Al Sadeq’s detention.

On 05 September 2014, Mr Al Sadeq, (then) resident in Dubai, in the United Arab Emirates (“UAE”), was apparently seized unlawfully by RAK agents and rendered unlawfully into detention in RAK.  It was common ground that Mr Al Sadeq was not held in a prison and nor was he subjected to the norms of arrest applying in either RAK or UAE.  Thus, any such rendition and subsequent detention did not appear to comply with the law of UAE or RAK; certainly, the defendants did not displace Mr Al Sadeq’s evidence that these actions were unlawful.

As the Court of Appeal recorded, one defendant made a striking contemporary note of Mr Al Sadeq’s abduction and rendition:

“There has also been disclosed a document in Ms Black’s handwriting made on 5 September

2014, the day of the arrest stating “Karam Sadeq arrested in Dubai and shipped to RAK”. The

word “shipped” is not a natural one for a lawyer to use about a process of lawful extradition.”

In the days between 05 and 10 September 2014, Mr Al Sadeq was interviewed by two of the defendant lawyers acting for the first defendant – where on his case significant pressure was placed on him to ‘co-operate’ with RAK by giving false testimony in return for better treatment or even freedom.  Significantly, Mr Al Sadeq was not interviewed by the police or any prosecuting official from RAK in that time frame.

Mr Al Sadeq is currently in a RAK prison where he has been since mid-April 2016.

However, Mr Al Sadeq contended that he had been detained unlawfully, without charge, and without access to legal advice and assistance (in breach of RAK’s own laws, international law, and human rights norms), in various extra judicial facilities between 05 September 2014 and mid-April 2016, with extended periods in solitary confinement, sometimes without access to sunlight or opportunities to exercise.

The Court of Appeal noted that if the defendants disputed Mr Al Sadeq’s case in this regard, they had had ample opportunity through their previous RAK based clients to obtain evidence to the contrary and had wholly failed to do so.  The only evidence at the interlocutory stage on this issue, and several other key factual disputes, was that of Mr Al Sadeq.  Mr Al Sadeq’s evidence was also supported by contemporaneous documents including a few emails and notes disclosed by the defendants.

One defendant lawyer noted Mr Al Sadeq was “sometimes in shackles” and at other points candidly recorded of RAK that it was a “brutal legal system”; suspects having “no access to legal advice and not charged”; and this observation was followed by “not here to talk about the rights + wrongs of legal system”.

However, perhaps most significant evidence of iniquity came from an independent expert, who had been asked to inspect the facility where Mr Al Sadeq was being held and confirm that it complied with Article 3 of the ECHR for the purposes of an Italian extradition application of an alleged co-conspirator of the CEO; the expert refused to do so.  The expert was expressly concerned about the conditions in which Mr Al Sadeq was being held.

At a minimum, the conditions of incarceration and the treatment faced by Mr Al Sadeq in RAK including his continuing lack of legal representation objectively were a cause for significant concern.

The judge at first instance refused to order the defendants to make any significant disclosure against Mr Al Sadeq’s pleaded case.  Mr Al Sadeq’s application for disclosure was predicated on the iniquity principle applying and displacing the defendants’ reliance on LLP.

In order to decide the appeal, the Court of Appeal had to consider, on first principles, the mechanics of LLP and the operation of the iniquity principle, in order to ensure a just order was made in relation to disclosure.  On each matter of significant principle, the Court of Appeal went on to consider the relevant authorities.

What did the court decide?

The Judgment of the Court of Appeal is lengthy and satisfyingly detailed.  The factual narrative is fascinating, but the legal analysis is also exceptionally well argued; the judgment repays a full and careful reading.

For current purposes, it is only possible to summarise the key principles determined as follows:

• The iniquity exception is not an exception at all; rather it is an issue of principle as to whether LLP applies at all. Therefore, it is not a matter of a discretion or a balancing exercise, it requires a determination (usually at an interlocutory stage) of whether LLP is made out in light of the evidence of iniquity.  As the Court of Appeal noted:

“It is therefore an exception in the sense of something which prevents the privilege arising in the first place, not an exception in the sense of a disapplication of existing privilege.” (para 57)

• Similarly, on proper analysis, it is the lay client (not the professional adviser) who holds the LLP and therefore logically it is not a necessary ingredient of the iniquity principle that the adviser is party to the iniquity or even aware of it. The question is rather whether the relevant retainer was in service of iniquity such that a plea of LLP should not shield the lay client’s wrongdoing.
• The Court of Appeal found that the correct test is simply whether there is a strong prima facie case which means deciding (at an interlocutory stage) on the material available whether it is more likely than not (civil balance of probabilities) that the available evidence supports a finding of the relevant iniquity.  The Court of Appeal expressed the principle in these terms:

“… the merits threshold for the iniquity exception is a balance of probabilities test: the existence of the iniquity must be more likely than not on the material available to the decision maker, whether that be the party or legal adviser determining whether to give or withhold disclosure, or the court on any application in which the issue arises; and that in an interlocutory context there is no distinction to be drawn between cases in which the iniquity is one of the issues in the proceedings and those where it is not.”

Glosses beyond that simple formulation were not appropriate.  There was no meaningful distinction between cases where the iniquity was part of the pleaded case to be determined at trial and cases where the iniquity was incidental – the test and approach remained the same.  Save that the Court of Appeal, noted that in a rare case where the iniquity was incidental to and separate from the pleaded case, the Court (subject to the overriding objective) may decide to have a trial of the fact of iniquity to be certain of whether or not to displace LLP.

• The Court of Appeal disapproved a lesser merits test with a balance of convenience (or harm) stage as applies in injunctive relief but disavowed it as too tentative an approach to the merits where such powerful competing public interests were at stake – on the one LLP and the public interest in justice being done and on the other hand, no allowing LLP to be a tool or cloak for fraud. However, the Court of Appeal expressly left open the possibility that:

“… there may exceptionally be cases which on their particular facts dictate that a balance of harm exercise may have a part to play, where such an exercise is possible.”

• The Court of Appeal found that the trial judge had not considered the evidence adequately and, in any event, had applied the wrong test. Applying the correct test to the evidence, the Court of Appeal found the three iniquities relied upon made out of the available evidence.
• On the question of the necessary connection between the iniquity and the relevant communication or document, the Court of Appeal favoured:

“… the formulation that where there is a prima facie case of iniquity which engages the exception, there is no privilege in documents and communications brought into existence as part of or in furtherance of the iniquity.”

The Court went onto emphasise that once the iniquity is established the disclosure against it should be broad enough to expose it in full; thus “part of” or “in furtherance” were strictly alternative bases.

• The Court of Appeal considered the principle Three Rivers District Council & others v Governor and Company of the Bank of England (No 5) [2003] EWCA Civ 474 [2003] QB 1556 that:

“not all communications with representatives of the client … attracted legal advice privilege, … only those which took place with employees and representatives who were specifically authorised to seek and receive the advice” (the “Three Rivers Principle”)

The Defendant contended that the Three Rivers Principle was wrong even in so far as it applied to advice-based LLP.  However, the defendants, on accepting the Court of Appeal, like the first instance Judge, were bound by Three Rivers, noted their opposition in order to seek permission to challenge the principle in the Supreme Court.  The Court of Appeal recorded the criticism both judicially and in commentary of the Three Rivers Principle and further noted that that it had not been followed in jurisdictions outside of England and Wales.

• The Claimant contended that the Three Rivers Principle should not be limited to advice privilege but should extend to litigation privilege. The Court of Appeal rejected that argument, finding that it was limited to advice privilege.
• For litigation LLP to apply the party asserting LLP need not be a party to the actual litigation ongoing or in contemplation provided the dominant purpose of the creation of the document (over which privilege is asserted) is in relation or connection to that litigation. The control mechanism for non-parties to litigation asserting LLP on a litigation basis is in the dominant purpose test and not some other or further requirement.
• Further, in a related sense, it was for the party asserting LLP to establish the fact of that privilege and to overcome if it were raised the argument that iniquity displaced LLP on the facts. In the context of litigation privilege this meant that the relying party bore the burden of establishing by evidence when the relevant litigation was in contemplation such that the dominant purpose of the relevant document or communication (applying the Three Rivers principle) was the conduct of the litigation.  However, on the facts of this case, the Court of Appeal found that issue relatively straightforward on the uncontroverted evidence of the defendants, litigation was under contemplation from the claimant’s unlawful detention and rendition to RAK on 05 September 2014.  The fact that the various corporations of RAK that were the clients of the defendants were not parties to the
• The Court of Appeal was not convinced that the claimant could show that the defendants had failed to disclose any specific class or category of document by drawing inferences but nonetheless, given the application of the defendants of the wrong legal test during the disclosure exercisel, the Court of Appeal found that the exercise would have to be completed anew.

There was a subsidiary consideration of whether to admit new material on appeal applying the well-known principle found in Ladd v Marshall [1954] 1 WLR 1489.

The Court of Appeal found the principle was not engaged because much of the material was available after hearing but before the handing down of Judgment.  The approach in Ladd will only be available if the Judge at first instance refuses to admit the new material before giving Judgment – the attempt to adduce must be made by the relying party and refused to allow it to be admitted on appeal.

Case details

• Court: Court of Appeal, Civil Division
• Judge: Lord Justice Underhill (Vice-President Of The Court Of Appeal (Civil Division)), Lord Justice Males and Lord Justice Popplewell
• Date of judgment: 24/1/2024

Article by Lauren Godfrey – first published by LexisNexis