Legal Professional Privilege in Cyprus

A taxpayer’s right of privacy and the Legal Professional Privilege (LLP) in Cyprus

In Cyprus, according to the Advocates’ Law (Cap. 2) and the Advocates Code of Conduct Regulations of 2002 (the Regulations), the legal professional privilege is recognised as a fundamental and primary right and duty.

Section 13(3) of the Advocates Code of Conduct contains the core of the legal privilege:

“Advocates must, without any time limitation, respect the secrecy of all confidential information or evidence which has come to their knowledge in the course of their professional activity.”
 

There are a number of requirements for the legal professional privilege to apply, such as:

a) There must be a client-advocate relationship and the information must be considered confidential;
b) The advocate should be admitted to the Cyprus bar;
c) The purpose of the communication must be to obtain legal advice or assistance in legal proceedings;
d) The advocate must act in that capacity at the time of communication;
e) The client must not waive the privilege.

The following activities are included in the definition:

• Appearing before any Court to conduct any proceedings on behalf of any person or Cyprus, including preparing or perusing any pleading on behalf of a client;

• Registering trademarks or patents and appearing before any administering authority for these purposes;

•  Drawing up, reviewing or amending any Memorandum or Articles of Association of a company of any form, or any application, report, statement, affidavit, decision or other document pertaining to the incorporation, registration, organisation, reorganization or dissolution of any legal entity;

• Registering ships and drawing all documents referring to the incorporation, transfer, alteration or abolition of all rights on a ship as well as appearing before the competent authority for this purpose;

• Giving opinions on all legal matters submitted to the advocate including tax and or tax planning advice;

• Drawing up or perusing any document filed in Court for administration purposes under the Administration of Estates Law.
 

LPP keeps communication between lawyers and their clients confidential. The scope of the duty of an advocate to a client includes not only a duty of confidentiality, but also a duty to act in his client’s best interests. The effect of this duty is that that an advocate may be in breach even if he discloses about his client matters which are of public record, if such disclosure would be against the interests of his client.

In every case where privilege is claimed, two competing principles must be balanced:

a) The need to disclose relevant evidence in the interests of justice, and

b) The need to sustain a climate of unimpeded communication between the advocate and his client.

This privilege surely does not extend to tax planning advice taken by accountants/auditors. In the recent English case of Prudential Plc v Special Commissioner of Income Tax, reported early in 2013, the court refused to extend the scope of LPP to tax advice given by accountants.

Also, the privilege is questionable whether it applies to in-house lawyers, in the absence of any specific Cyprus case on the matter. According to the EU legal privilege, communication between a company and its in-house counsel is not protected as confirmed by the Court of Justice in Akzo Nobel v European Commission(C-550/07).

It is important for clients to know the above when requesting a tax advice, in order to plan ahead and be aware of their rights, in the event a tax audit takes place.