Federal Constitutional Court clarifies: No general seizure protection for the results of internal investigations
How should companies deal with investigation results in the future?
In its judgement of 27 June 2018 (Ref.: 2 BvR 1780/17), the Federal Constitutional Court confirmed the legality of the seizure of documents and transcripts of witness interviews at the US law firm that conducted the internal investigation in the course of the "diesel scandal". The Munich public prosecutor's office had searched the offices of the US law firm involved in the investigation into the suspected manipulation of exhaust emissions in Audi engines and seized numerous documents, including interview transcripts and investigation reports. Volkswagen AG documents were also seized. Both Volkswagen and the US law firm initially defended themselves unsuccessfully against the seizure before ordinary courts and finally filed a constitutional complaint. In their view, the seized documents were subject to a prohibition of seizure due to the client-lawyer relationship existing between Volkswagen and the US law firm involved.
After heated discussions in case law and literature in recent years on the question of whether such documents, which are collected and/or also created by lawyers in the course of internal investigations, are protected from seizure, the BVerfG has now ruled on this question by the highest court. According to this decision, a prohibition of seizure exists in principle only for client documents of a lawyer who is mandated by an accused (natural person) in criminal proceedings to defend him. The mere fact that there is a relationship of trust between a company and its lawyers is not sufficient to prohibit the seizure of documents.
However - and this is important - according to the BVerfG, something different can apply if an investigation is actually underway against the company concerned. In Germany, there is no corporate criminal law, but there is the possibility of imposing a fine of up to €10 million on companies under the Administrative Offences Act ("OWiG") if legal representatives commit criminal offences or fail to prevent criminal offences from being committed from within the sphere of the company. This makes a so-called asset recovery possible, whereby there is no maximum limit in this respect. According to the ruling of the BVerfG, a company that is being investigated for such a fine can have a quasi-accused status. Such a status, in turn, can then lead to protection against confiscation. However, this question remained open in the case at hand because Audi had not mandated the US law firm in question, but only Volkswagen AG. However, Volkswagen was not a "quasi-accused" in the specific criminal proceedings, as they concerned Audi engines.
Decision-makers of German and foreign companies may now be faced with a dilemma in individual cases in certain constellations. On the one hand, not least since the "new citizen" decision, internal investigations are generally indispensable in order to investigate suspicions of violations of the law within the company. If a board of directors/managing director does not commission an internal investigation, there is a risk of personal liability due to violations of the so-called duty of legality. In addition, in order to be able to exonerate himself under company law, a board of directors/managing director must always be able to present a sufficient factual basis for his decisions.
It is also often indispensable for the company itself to have suspicious facts investigated by specialists. This is usually the only way to proactively approach the authorities in order to professionally disclose a suspicion or to create a proactive basis for a defence.
If one conducts internal investigations as owed, however, there is at the same time the risk that the results of such investigations, which are usually top secret and can potentially incriminate the company or individuals, will involuntarily find their way onto the desk of the public prosecutor's office. Public prosecutors are likely to feel vindicated in their actions by the BVerfG's decision.
Nevertheless, the consequence of the ruling cannot be to no longer conduct internal investigations. The resulting risks for companies and decision-makers are far too serious for that.
However, the ruling does show that important fundamental questions must be considered right from the start of an internal investigation: What is being investigated? Why is it being investigated? What potential results could come out of the investigation?
One should also carefully consider the way in which the (interim) results are to be documented. In particular, it should be avoided that results or conclusions that are still preliminary, unclear or even misleading are documented in this way. These could end up "unfiltered" with the public prosecutor's office. In addition, potentially injured companies or individuals could also gain knowledge of the results of the internal investigations by inspecting the investigation files and use them in a later damages suit.
Ultimately, the ruling proves once again how important corporate criminal law would be for Germany. Only in this way should it be possible to grant companies defendant rights, such as a ban on seizure by the "corporate defence counsel". According to the BVerfG, the current law does not allow for this.