17.12.2024

ECHR confirms Federal Constitutional Court in Jones Day case

A look at the evaluation of documents seized from internal investigations

The European Court of Human Rights (ECHR) has made an important decision for compliance and investigation practice, confirming the Jones Day ruling of the Federal Constitutional Court, which has gone somewhat unnoticed. This puts a preliminary end to the discussion about the protection of the results of internal investigations against confiscation. This discussion began with the confiscation of the results of Jones Day’s internal investigation on behalf of Volkswagen regarding the diesel scandal.

In the appeal proceedings, Jones Day and some of its lawyers had turned to the ECtHR because of the search of their offices. On November 21, 2024, the ECHR rejected the complaints as manifestly unfounded and therefore inadmissible. It decided that the search and the seizure of documents and data carried out by Jones Day as part of a group-wide internal investigation were lawful, even under the standards of the European Convention on Human Rights (ECHR).

Background of the search

In September 2015, Volkswagen AG (VW) had commissioned Jones Day to conduct an internal investigation in connection with the investigation proceedings in the USA regarding the diesel scandal. As a subsidiary of VW, Audi AG (Audi) allowed Jones Day to conduct investigations in its sphere, whereby, among other things, Audi employees were questioned about the allegations. However, Audi did not grant Jones Day a mandate of its own. Parts of the results of this internal investigation were subsequently orally presented by Jones Day to the Munich II Public Prosecutor’s Office with regard to the preliminary proceedings conducted by the latter against individual managers at Audi.

In March 2017, the Munich II Public Prosecutor’s Office ordered a search of the law firm’s premises in Munich. The search was in connection with fraud allegations regarding Audi’s 3.0-liter diesel engines. At that time, the Public Prosecutor’s Office was still conducting the investigation against unknown Audi executives; a secondary participation of Audi had not yet been ordered. During the search, documents and electronic data were seized that Jones Day had prepared as part of the internal investigation and that related to Audi’s 3.0 litre diesel engines. At the same time, the Braunschweig Public Prosecutor’s Office was investigating several VW employees in connection with allegations regarding VW’s 2.0-liter diesel engines and, from April 2017, also VW itself as an accessory in relation to a possible fine.

Jones Day objected to the search and the seizure of documents. After unsuccessful complaints to the Munich District Court and the Munich II Regional Court, constitutional complaints were filed in June and August 2017 by VW, Jones Day and three of Jones Day’s lawyers in person. The Federal Constitutional Court initially issued a temporary injunction ordering that the seized documents and data be withheld pending a decision on the constitutional complaints. Surprisingly,, on June 27, 2018, the Federal Constitutional Court decided not to accept the constitutional complaints for decision on the grounds of inadmissibility.

The findings from the proceedings before the German courts

The Federal Constitutional Court took a disappointingly formalistic approach and essentially ruled as follows:

• Law firms headquartered in other EU countries do not have fundamental rights. They only have limited legal protection against seizures. However, this does not apply to the law firms’ lawyers working in Germany.
• Section 97 para. 1 no. 3 of the German Code of Criminal Procedure only establishes a prohibition of seizure in the case of a mandate that exists between the person subject to professional confidentiality and the accused in the specific investigation. The common interpretation of this provision, that it requires a defence relationship with an accused, as in nos. 1 and 2, even if this is not laid out in the wording, corresponds to permissible interpretation rules and does not violate specific constitutional law.
• A position similar to that of an accused can also exist for a company. Subsidiaries are not protected by a client relationship between the parent company and the person subject to professional confidentiality.
• However, a position similar to that of an accused does not yet exist if a company merely fears that a criminal investigation will be initiated against it and therefore commissions an internal investigation. There must be objective criteria that suggest a position similar to that of an accused:
• The company does not yet have to have a formal procedural status. However, proceedings against the legal entity must ‘objectively emerge’ and, in addition, the secondary involvement must be ‘sufficiently probable’.
• It is also not necessary that criminal or administrative fine proceedings have already been initiated against a management person within the meaning of Section 30 para. 1 of the German Administrative Offences Act. However, there must be “sufficient” suspicion of a criminal offense committed by a management person.
• In the case of seizures or seizures for inspection, Section 160a of the German Code of Criminal Procedure does not apply, as otherwise the narrower regulation of Section 97 of the German Code of Criminal Procedure would be undermined.

The ECHR decision in detail

After the Federal Constitutional Court did not accept the constitutional complaints, Jones Day and its lawyers turned to the ECHR, claiming a violation of Article 8 of the European Convention on Human Rights. Art. 8 ECHR establishes the right to respect for private and family life, home and correspondence. In its judgment of November 21, 2024, the ECHR found that the search and the seizure of the documents and data did indeed constitute an interference with Art. 8 ECHR. However, the ECHR decided that the interference was justified. In its reasoning, the ECHR cited the following points:

• The seized documents and data were not protected by legal professional privilege. The search concerned documents and data of a third party outside the client-attorney relationship between Jones Day and VW – namely Audi. Although Jones Day had received and produced these documents and data on behalf of its client VW, they did not concern the client-attorney relationship as such. Furthermore, Audi itself was not affected by the investigation at the time of the search.
• When the measures were ordered, the various interests – in particular attorney-client confidentiality – were sufficiently taken into account. The Munich I Regional Court also explained in detail why the results of the internal investigation at Audi were important evidence for the investigation of the prosecution and why the Public Prosecutor’s Office could not have obtained this evidence in any other way.
• The interference was justified in view of the fact that Audi was not a client of Jones Day, the seized documents and data could not be used in the investigation by the Braunschweig Public Prosecutor’s Office and in view of the wide discretion of national courts.

What are the practical implications of the jurisprudence?

• The jurisprudence shows that in the case of group-wide internal investigations, careful consideration must be given to which of the group companies the mandate relationship is concluded with. Separate mandate relationships thus increase legal protection against seizures. In this context, the scope and limits of the mandate should also be precisely defined.
• If internal investigations are conducted by defence lawyers acting as investigators, a conflict of roles is to be expected between the need for a full and objective investigation and the defence itself. In this respect, the objectives of the internal investigation must be clearly defined in advance and, in particular, focused on issues relevant to the criminal defence.
• It is important to clarify in advance of an investigation how important it is to protect the results of the investigation from being secured or seized. Depending on the scope of the internal investigation, consideration should then be given to whether the criminal defence should be separated from the internal investigation and whether both roles should be carried out by different law firms. This was already the case in the failed draft of the Corporate Sanctions Act.