Court Deals With Application of Swiss Privilege Law

March 2, 2011

With the EU and many European countries taking a narrow view of the attorney-client privilege available to in-house lawyers, many nervous U.S. companies focus on choice of laws issues involving communications with overseas affiliates or employees. The bottom line in most situations is that U.S. courts usually apply U.S. privilege law to communications that “touch base” with the U.S., but generally apply a foreign country’s privilege law to communications occurring in those other countries.

In Morgan Stanley High Yield Securities, Inc. v. Jecklin, No. 2:05-cv-01364-LDG-LRL, 2011 U.S. Dist. LEXIS 6668, at *5 (D. Nev. Jan. 10, 2011), the court in an earlier order initially denied privilege protection for documents that the plaintiffs claimed to reflect purely internal Swiss communications involving a Swiss in-house lawyer – with “‘no nexus to Nevada.'” However, the court’s later in camera review disclosed that several of the documents “discuss United States law, United States attorneys, are to or from United States attorneys, or reference legal strategy with regard to legal actions within the United States.” Id. at *5-6. Other documents “are addressed to and/or from United States counsel or repeat the advice of United States counsel.” Id. at *7. For these documents, the court found that there was “an obvious nexus or ‘significant relationship’ to the United States and [that they therefore] would be protected as privileged under federal and Nevada privilege law.” Id. (citing Restatement (Second) of Conflict of Laws § 187 cmt. c (1989)).

Not many courts deal with this issue, so each decision deserves attention. Although courts disagree about the factors underlying the “touch base” test, the good news for U.S. companies is that U.S. courts will generally apply U.S. privilege law to documents generated overseas – if they have some relationship to the United States.