In the aftermath of the global financial crisis and growing public mistrust, the investigation and prosecution of corporate misconduct has become a renewed focus and priority globally for law enforcement agencies. This has led to a dramatic shift in the use of aggressive investigative techniques to detect and prosecute corporate wrongdoing, especially in the area of financial and market crimes, and in broadening the scope of corporate liability. Canadian and US police agencies and regulators are using (or have announced their intention to use) a broader range of aggressive investigative tools, traditionally reserved for serious criminal offences such as narcotics and organized crime offences, including wiretaps, search warrants and wired informants, to investigate and prosecute financial crimes.

The increasing use of such aggressive investigative techniques raises serious concerns regarding what use can be made of the fruits of the state investigation in parallel civil or regulatory proceedings. While the risk that criminal evidence could be used in parallel civil or regulatory proceedings is not new, the recent Supreme Court of Canada decision in Imperial Oil v Jacques (et al) has opened the door to allow private civil litigants access to state-obtained wiretap evidence at an earlier stage of a criminal proceeding, prior to any ruling on the admissibility or legality of such interceptions, and appears to have shifted the balance away from the protection of the strong privacy interests at stake and other public interest considerations.

Of concern for corporations is the prevalence of parallel class action proceedings in close proximity to external investigations of corporate misconduct and the increased risk following Imperial Oil that such evidence will be available to class counsel before its admissibility has been tested in the criminal context, notwithstanding the significant privacy rights of corporate defendants and third parties. Further, putting select and untested evidence of private conversations into the hands of private civil litigants at such an early stage allows them the benefit of extraordinary and highly intrusive state powers, creates the opportunity for unfair leverage in such proceedings and complicates the difficult strategic issues relating to managing parallel civil and criminal proceedings.

These issues are increasingly significant given other recent developments, including the commitment of Canadian law enforcement and regulatory agencies to seek expansion of the enumerated offences under the Criminal Code of Canada, for which the use of enhanced investigative tools, such as wiretaps, is permitted and the expansion of criminal and quasi-criminal investigations and prosecutions of corporate misconduct by other regulatory agencies.

Download the full article "'Untapped' – The Risk of  Wiretap Evidence Falling into the Hands of Civil Litigants" by Wendy Berman and Jonathan Wansbrough here.

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