Legal news and trends for Canadian in-house counsel and c-suite executives
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By Henry Dinsdale and Jeff Goodman Cross-border minefield Significant international employment investigations require detailed planning. I nternal employee investigations can be tricky enough within Canada — add an international dimension, and they can become downright nasty. In his book The Lexus and the Olive Tree, Thomas L. Friedman described globalization as "enabling individuals, corporations, and nation-states to reach around the world farther, faster, deep- er, and cheaper than ever before." A consequence of that is the increasing internationalization of the employment experience. Executives of multinationals move from country to country, gaining oper- ational and cultural experiences that help them effectively manage a global company. Globalized operations divide the world, not by country, but by region, and assign executive responsibility with- out regard for borders. It is not uncom- mon for senior managers to be active in Canada one day, the United States another, and the United Kingdom next week. When circumstances demand an investigation of alleged employee mis- conduct, the most common response is to initiate the company's standard investigation protocol. But unless that protocol has been written with a view to the cross-border nature of the investiga- tion, trouble may await. We automatically seek to enshrine sensitive aspects of investigations in solicitor-client privilege. Canadian internal counsel routinely engage in tac- tical and strategic discussions during investigations that could be prejudicial if revealed. The protection of privilege is generally taken for granted — ill- advisedly as it turns out. There is a trend in Europe, for example, to nullify solicitor-client privil- ege between in-house counsel and their corporate clients. This can be seen in cases like Akzo Nobel Chemicals Ltd. and Akcros Chemicals Ltd. v. European Commission and Microsoft Corp. v. European Commission. The European Court of Justice has concluded "the requirement of independence means the absence of any employment relationship between the lawyer and his client." The court ruled that absent the necessary professional independence, no privil- ege can be invoked. Indeed, in France, in-house counsel are precluded from membership at the bar. As a result, caution should be exer- cised when using in-house counsel in a protected role in an international investigation. Sharing of investigative information, whether written or oral, as between in-house counsel across juris- dictions should be carefully considered. What you don't want to see is what John Deere's in-house counsel saw in one decision of the European Commission: "Deere and the company knew that such conduct . . . was contrary to EEC and national competition law. It was advised on this by its in-house counsel" (John Deere Ltd. v. European Commission). You also don't want to end up on the wrong end of a significant fine, or worse, in jail. Several European civil law jurisdic- tions have enacted what are referred to as "blocking statutes." These are statutes that typically make it unlawful for a person to seek to obtain information or documents for the purpose of col- lecting evidence for a foreign judicial or administrative proceeding. The French blocking statute establishes criminal sanctions of fines of up to 18,000 euros and six months in prison. In one case in 2007, a French lawyer, acting for a California client, was fined 10,000 euros for placing a telephone call to a French executive in an effort to obtain informa- tion in aid of ongoing U.S. litigation (MAAF 14 Cour de Cassation Chambre Criminelle). There are strategies to avoid breaching most blocking statutes, but expert local advice is required. Then we come to data transfer laws. Countries in all corners of the world are becoming more protective of per- sonal information and are enacting an array of data protection rules. Typically, employment investigators seek to collect all relevant data and information in one place for assessment and consideration. Data protection laws can place significant restrictions on transferring personal data about employees across borders, often including notice to and consent from the employee whose personal information is at issue; a bit of a problem in an ongoing confidential employment investigation. Prudent multinational employers anticipate these problems. They have in place data transfer protocols and col- lect and store data in a way that facili- tates rather than impedes international investigations. They have investigation protocols specifically designed for cross- border investigations. They have created and properly implemented global codes of conduct that are sensitive to cultural and legal issues. It is of course impossible to antici- pate the nuances of every investigation. Therefore, and most importantly, prudent multinationals invest the time necessary to develop a detailed investigation plan prior to the commencement of every sig- nificant international investigation. To do otherwise is to risk running blind into an unfamiliar minefield. IH Henry Dinsdale and Jeff Goodman are labour and employment law partners at Heenan Blaikie LLP in Toronto. INHOUSE JUNE 2011 • 7