English Commercial Court revisits the ‘Shareholder Rule’ in the context of Legal Professional Privilege over company documents

In the recent judgment of Mr. Justice Picken in Aabar Holdings SARL v Glencore PLC [2024] EWHC 3046 (Comm), the English Commercial Court has re-considered the validity of the alleged ‘Shareholder Rule’, in the context of claims by companies for legal professional privilege over confidential legal documents, as against their own shareholders.

Although the Commercial Court judgment addresses the position as a matter of English law, and it may be the subject of further argument at an appellate level, the judgment is of particular interest, from an ‘offshore’ perspective, in its consideration of two recent judgments of the Court of Appeal for Bermuda, in the cases of Oasis Investments II Master Fund Ltd v Jardine Strategic Holdings [2024] CA (Bda) 7 Civ and Wang v Wong [2021] CA (Bda) 3 Civ.

Although Mr. Justice Picken did not suggest that the Bermuda cases were wrongly decided on their particular facts and circumstances, he pointed out that they were not binding on the English courts, and they were not determinative of the central legal question before him, which was whether or not the ‘Shareholder Rule’ could properly be justified on the basis of a blanket assertion that there is a ‘joint interest privilege’ between a company and its shareholders. Indeed, as the Bermuda Court of Appeal had itself noted, “the question whether joint privilege may in fact be asserted will depend on the circumstances”.

Mr. Justice Picken’s answer to the central legal question was that, in his judgment, the so-called ‘Shareholder Rule’ does not exist in English law.

This English Court judgment now provides fertile grounds for re-visiting the existence and scope of such a rule in other common law jurisdictions, including ‘offshore’ jurisdictions such as Bermuda, the British Virgin Islands, and the Cayman Islands (having regard to other local Court judgments on the topic, including Kawaley J’s Grand Court judgment in Re 58.com, Inc (unreported, FSD 275/2020 (MRHCJ), which was decided in the context of a section 238 share appraisal claim, following a corporate merger).

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Alex Potts KC

Call 2000 King's Counsel 2018

Related practice areas

Offshore