UK: What Happens To Medicare GME Funding When A Residency Program Closes?

Last Updated: 17 September 2018
Article by Sean Curran, Kathleen Harris, Michael J. Atkinson and Maya Paunrana

On Wednesday 5 September 2018, the Court of Appeal Civil Division delivered its judgment in the much-anticipated appeal of Director of the Serious Fraud Office v Eurasian Natural Resources Corporation [2018] EWCA Civ 2006. In this important case, the Serious Fraud Office's (SFO) contention that internal investigations were not protected by legal professional privilege was successfully challenged.

The earlier ruling by the High Court (See our June 2017 UK Economic Crime Group: Enforcement Update) left companies in the position that, unless they were aware of a reason why a criminal prosecution should result from an investigation into alleged wrongdoing, litigation privilege would not protect work done during an internal investigation into whistleblowing, or the early stages of an investigation by the SFO.

Now the Court of Appeal has restored the protection of litigation privilege for companies undertaking investigations into potential criminality raised by whistleblowers, and indicated that there may be future extensions too of legal advice privilege to take account of how multinational companies operate.

Below we set out the key points of this judgment and their impact on corporate investigations.


When is litigation in reasonable contemplation?

The Court of Appeal concluded that the High Court was wrong to find that a criminal prosecution was not reasonably in prospect once the Eurasian Natural Resources Corporation (ENRC) began investigating allegations of corruption, nor once the SFO had written to ENRC explaining that it should consider whether to self-report. The Court of Appeal also held that the High Court was wrong to find that ENRC, "failed at the first hurdle" of showing that it was, "aware of circumstances which rendered litigation between it and the SFO a real likelihood, as opposed to a mere possibility".

The Court of Appeal held that (at least) at the point when the SFO began investigating ENRC there existed a real likelihood of a criminal prosecution resulting. The Court of Appeal accepted that when ENRC's lawyers instructed forensic accountants to commence its books and records review, the dominant concern was to know whether the company may have contravened anti-corruption legislation or the Companies Act—this too engaged litigation privilege.

The Court of Appeal pointed out that not every "manifestation of concern" by the SFO into a company's activities would be regarded as "adversarial litigation", but where, as in this case, the SFO repeatedly told a company that it may open a criminal investigation and that the failure to self-report could result in prosecution, then prosecution would be in reasonable contemplation.

The fact that a company needs to engage investigatory lawyers or forensic accountants before being able to know with certainty that a prosecution is likely would not prevent a prosecution from being in contemplation during that internal investigation. On this the Court of Appeal clearly stated that the finding by the High Court that litigation privilege could not attach until either: a suspect knows the full details of what is likely to be uncovered; or a decision to prosecute has been taken, was plainly incorrect.

Were the documents created for the dominant purpose of litigation?

The Court of Appeal disapproved both of the High Court's approach to the legal principles and to its application of those principles. In both a civil and criminal context legal advice given in order to avoid or to settle litigation should be as much protected by litigation privilege as advice given for the purpose of resisting or defending litigation.

The Court of Appeal found that the documents created during ENRC's lawyers' investigation were created at a time when a criminal prosecution was in reasonable contemplation, and that those documents were created for the dominant purpose of resisting or avoiding those proceedings. The fact that ENRC's lawyers indicated to the SFO that they may, in due course, disclose some of these documents to the SFO did not affect that purpose.

In this important part of the judgment, the Court of Appeal explained that the distinction drawn by the High Court between "compliance" and "governance" was an artificial one, and that ENRC's review of its books and records was still capable of feeding into the investigation being carried out by its lawyers with a view to determining how to approach reporting to the SFO, and was created for the dominant purpose of resisting or avoiding criminal proceedings.

As a result of those findings, all of the interviews conducted by ENRC's lawyers during the course of the internal investigation should be protected by litigation privilege. The same applied to the documents created by the forensic accountants instructed by ENRC's lawyers.


The Court of Appeal was unable for procedural reasons to redraw the law concerning legal advice privilege (this would require an appeal to the Supreme Court), but indicated that if it were able to it may have done so.

The Court of Appeal noted that the world in which companies operate today is not as straightforward as it was in the nineteenth century when much of the law concerning legal advice privilege developed. Multinational corporations should be allowed to seek information from employees in order to advise the parent company. Whatever the rule applied, the Court of Appeal observed, it should apply equally to all lawyer-client relationships, however large an entity the "client" may be: multinationals should not be prejudiced by their size.

Whilst this is not binding authority on this particular point, it is indicative of the views of three senior Court of Appeal judges and points to the very real prospect that, when this issue next finds its way before the Supreme Court there is scope for the narrowly-drawn doctrine of legal advice privilege being expanded to keep step with the development of the common law in other jurisdictions.

This is likely to be of interest to multinational companies where the range of personnel who are expected to seek and receive advice from the company's lawyers may be broad.


The Court of Appeal made clear (at paras 115-117) that nothing within its judgment should be read as impacting adversely on the scheme of deferred prosecutions agreements. There remains a clear public interest in prosecutors pursuing deferred prosecutions.

The Court of Appeal correctly identified the risk that depriving companies of legal professional privilege over the work done in internal investigations could cause - if such work were not protected by litigation privilege then companies may simply elect not to investigate allegations at all, which would be contrary to the overall public interest in trying to deal with alleged offending in a proportionate and reasonable manner.

Key points to take from the Court of Appeal's judgment are that:

  • Legal advice given in order to avoid or to settle litigation is protected by litigation privilege.
  • Interviews and forensic accounting work carried out at the direction of lawyers during a corporate investigation into corruption allegations are highly likely to be protected by litigation privilege.
  • To ensure future confusion is minimized, companies and their lawyers should record clearly the investigation's objectives and the investigation's parameters should be kept under review.
  • Whilst the judgment does not re-write the law concerning legal advice privilege and who a "client" can be, there was an indication that when that matter is next before the Supreme Court an extension may occur to reflect current business practices.
  • Whether to waive privilege in lawyer-led investigations and provide that material to the SFO will remain a decision to be taken by the client.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions