The proceedings arose out of an alleged manipulation of sterling LIBOR by the Bank which it denied pleading the fact that there had been no findings of misconduct by the regulators in relation to sterling LIBOR.
Property Alliance Group Ltd ("PAG") sought disclosure of documents provided by the Bank to the Financial Conduct Authority ("the FCA") and communications between the Bank and the FCA which the Bank claimed were covered by Legal Professional Privilege and Without Prejudice Privilege.
Without Prejudice Privilege
The English High Court firstly held, that the public policy rule which allowed without prejudice communications be privileged in the context of court proceedings applied equally to promote the settlement of FCA investigations. Accordingly, the Bank had the right to withhold inspection of communications which were part of genuine settlement discussions between that firm and the FCA.
However, the court went on to hold that as the Bank had positively relied on the absence of any findings of misconduct by the FCA in its defence then, in those circumstances, justice demanded that the communications which led to the findings be disclosed.
Legal Professional Privilege
With regard to the privileged documents given by the Bank to the FCA the court noted that each document was shown or provided on a confidential or 'non-waiver' basis. The Court had regard to the decision of the Irish Supreme Court in Fyffes v DCCwhere it held that there may be many situations in which it is desirable or even mandatory that privileged documents be disclosed to a third party for a limited purpose. Accordingly, the Court held that RBS were entitled to maintain the claim to privilege of documents which were only shown or provided to regulators on a limited basis and despite the existence of legal rights or duties on the part of the regulators to use, act on or even publish the documents pursuant to their regulatory powers. In this case the agreements between RBS and the regulators expressly provided that privilege and confidence be maintained. Accordingly there was no waiver of privilege in those documents.
However, PAG again argued that a waiver arose due to the Bank's reliance on the decisions of the FCA in their Defence. The Court pointed out that RBS could not have it both ways - it could not on the one hand rely on absences from the regulator's findings as indicating the limits of its misconduct and yet on the other hand seek to maintain as privileged what it put to them.
It is interesting to note that the English High Court had regard to the Fyffes decision in reaching its conclusion that there was no waiver in privilege in respect of documents provided to a regulator confidentially and for a limited purpose.
The Irish High Court has also recently confirmed in Quinn v Irish Bank Resolution Corporation Limited  IEHC 315that litigation privilege applies where an individual or organisation generates a document for the dominant purpose of defending an investigation by a regulatory authority.
However, the Irish Courts have not yet been asked to decide on a case where privilege is being maintained in respect of documents provided to a regulator but that regulator's decision is being relied upon as a defence to civil proceedings.