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Practicing law in a time when information sharing technology is rapidly evolving poses significant challenges, especially with respect to an area of law that for the most part, lacks uniformity and remains fairly unpredictable—that is, evidentiary privilege in international arbitration.  The recently decided case of Harleysville Ins. Co. v. Holding Funeral Home, Inc., highlights how evolving technology may inadvertently result in the waiver of attorney client privilege under some jurisdictions’ rules.

For this reason, parties conducting business and practicing law internationally must recognize that privileged and confidential information is treated differently, depending on the jurisdiction, and more importantly, familiarize themselves with the access control features available to them when using technology to share privileged or confidential information.

Evidentiary Privilege in International Arbitration

International arbitration brings together parties, counsel and arbitrators from various nationalities and legal backgrounds, accustomed to practicing law in different legal systems according to different legal principles.  These conflicting points of view often come into play during document production in arbitration proceedings, particularly in the context of evidentiary privilege.

National arbitration statutes, like the Federal Arbitration Act, are for the most part silent regarding the existence and treatment of privilege. Similarly, at the international level there is limited guidance on the subject. While some institutional rules recognize privilege as a basis for objecting to requests for disclosure, they still provide no guidance on substantive standards or choice of law rules for evidentiary privilege.[1]

There is substantial support for the proposition that national law should govern the existence and scope of a privilege.[2] However, there is little uniformity regarding choice of law rules for privileges in international arbitration. Possible national laws that could apply include: the procedural law of the arbitration; the law governing the parties arbitration agreement; the law most closely connected to the allegedly privileged communication; or where privileges for legal advice are concerned,  the law of the place where the lawyer is qualified to practice or the client is based.[3]

Given the lack of predictability in this respect, it is important for companies conducting business internationally to familiarize themselves with national laws regarding privilege in jurisdictions that could potentially apply to their communications. Even though most national legal systems recognize the existence of privileges, there are substantial differences regarding the nature and scope of these privileges, most notably between common law and civil law jurisdictions where parties’ rights to seek disclosure vary significantly.[4] This is especially the case with respect to attorney-client privilege.

Attorney-client Privilege – Civil Law vs. Common Law

In civil law jurisdictions, the general rule is that information given to an attorney is confidential, regardless of whether the client has waived its rights concerning the confidentiality of the document or information. For civil law attorneys, professional secrecy is treated as a legal, contractual and ethical duty for the preservation of any information that counsel may have access to while representing a client. [5] Consequently, privileged information is considered to be illegal and as such cannot be submitted to a court or tribunal. In fact, several civil law jurisdictions impose penal sanctions on counsel who violate the duty to safeguard privileged information.[6]

Common law jurisdictions, on the other hand, generally view attorney-client privilege as a right that belongs to the client, which can be explicitly or impliedly waived by the client. In the United States, for example, the elements of the attorney-client privilege generally include that there be (1) a client (2) who seeks legal advice (3) from an attorney (4) in circumstances indicating that the communications between the attorney and the client are made in confidence. The attorney-client privilege is for the client to claim, and neither the client nor the attorney may be required to disclose such communications, including communications from the attorney rendering advice, as well as those from the client providing facts.

Today clients and their lawyers share confidential information digitally in novel ways.  For example, one of the most common methods of sharing information is through cloud base file sharing sites.  Little consideration has been given to how these sites may impact the privilege attached to such confidential information. However, in the United States a court recently ruled that by sharing information on an unprotected file-sharing site, a plaintiff waived attorney-client privilege and work-product protection for those materials. Harleysville Ins. Co. v. Holding Funeral Home, Inc., Case No 1:15cv00057 (W.D. Va., Feb. 9, 2017).

Are Cloud Based File Sharing Sites Akin to Public Benches?

In Harleysville a magistrate judge from the U.S. District Court for the Western District of Virginia held that an insurance company waived any claim of privilege with respect to information that had been posted to a publicly-accessible, non-password protected cloud account.

The plaintiff, Harleysville Insurance Company, sued for a declaratory judgment that it did not have to provide insurance for losses from a fire because the policyholder had intentionally burned down the property. During the investigation, a Harleysville employee used a cloud-based file sharing account to send a surveillance video of the fire scene to an investigator at the National Insurance Crime Bureau (NICB). The cloud account was accessible to anyone with the hyperlink to the account. The account was not protected with a password, nor did it restrict access for a specific period of time. Later on, Harleysville uploaded its entire investigation and claims file to the account, again without applying any type of access control. During discovery, the policyholder subpoenaed NICB for any documents related to the claim. NICB complied with the subpoena and produced the email containing the link to the cloud account. Defense counsel for the policyholder accessed the account and downloaded the entire claims file, including potentially privileged information.

In determining whether Harleysville’s inadvertent disclosure waived the attorney-client privilege, the court considered the following factors: (1) the reasonableness of the precautions to prevent inadvertent disclosures; (2) the time taken to rectify the error, (3) the scope of the discovery; (4) the extent of the disclosure; and (5) whether the party asserting the claim of privilege or protection for the communication has used its unavailability for misleading or otherwise improper or overreaching purposes in the litigation, making it unfair to allow the party to invoke confidentiality under the circumstances.

Ultimately, the court concluded that Harleysville waived any claim of attorney-client privilege with regard to the information posted on the cloud sharing site because the site was not password protected and “was available for viewing by anyone, anywhere who was connected to the internet and happened upon the site by use of the hyperlink or otherwise.” The court considered this to be “the cyber world equivalent of leaving its claims file on a bench in the public square and telling its counsel where they could find it.”

Share With Care

The Harleysville decision reinforces the importance of sharing with care in today’s digital world. As technology evolves it is up to attorneys and their clients to ensure that their employees and agents understand how the technology they use works, and more importantly, whether the technology allows unwanted access by others to privileged or confidential information.

Similarly, it is also important for parties conducting business and practicing law internationally to stay abreast of the latest developments in the privilege laws of potentially applicable jurisdictions and consider alternatives, such as the use of “claw-back agreements” by which parties provide ground rules in advance of production for each producing party to be able to retrieve inadvertently produced privileged documents without risk of waiver.[7]

[1] ICDR Rules, Arts. 20(6) and 22; IBA Rules on the Taking of Evidence, Arts. 9(2)(b), and 9(3).

[2] Gary B. Born, International Commercial Arbitration (Kluwer Law International; 2d ed., 2014) pp. 2383.

[3] Id. at 2384-85.

[4] Id. at 2377.

[5] Caroline Cavassin Klamas, Finding a Balance Between Different Standards of Privilege to Enable Predictability, Fairness and Equality in International Arbitration Revista Brasileira de Arbitragem, (Comitê Brasileiro de Arbitragem CBAr & IOB; Kluwer Law International 2015, Volume XII, Issue 45) pp. 162.

[6] Id. at 163.

[7] Born, supra note 2 at 2378.


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