Category: Insurance case law · Reviewed by Simon Temme, Account Executive · Last reviewed June 2026
House of Lords ruling clarifying the scope of legal advice privilege: communications between client and lawyer made for the dominant purpose of giving or receiving legal advice in a relevant legal context are privileged, but the privilege does not extend to all communications with non-lawyer advisers.
The case arose out of the long-running BCCI litigation. Three Rivers District Council and a large number of other depositors of Bank of Credit and Commerce International (“BCCI”) brought an action against the Bank of England, alleging the tort of misfeasance in public office in connection with the Bank of England’s supervision of BCCI before its collapse in 1991. The Bank of England had established an internal inquiry (the Bingham Inquiry) to consider matters surrounding the BCCI affair.
In preparing for the Bingham Inquiry, the Bank of England had established a small group of senior officials, known as the Bingham Inquiry Unit (BIU), to handle the Bank’s response. The BIU communicated extensively with the Bank’s solicitors (Freshfields) for advice on the preparation, presentation and content of the Bank’s evidence to the Inquiry.
In the misfeasance proceedings, the claimants sought disclosure of communications between the BIU and Freshfields and between the BIU and other Bank employees. The Bank claimed legal advice privilege over those communications.
The Court of Appeal in Three Rivers (No 5) had earlier held that, for the purposes of legal advice privilege, the “client” of a corporation is limited to those employees specifically authorised to seek and receive legal advice on the corporation’s behalf (in this case, the BIU members only). That ruling was not subject to further appeal in this case.
The Court of Appeal in the present proceedings (Three Rivers (No 6)) held that legal advice privilege did not extend to communications between Freshfields and the BIU relating to the presentation of the Bank’s case to the Bingham Inquiry, on the basis that such advice was not advice as to legal rights and obligations.
The Bank of England appealed to the House of Lords.
The principal issue before the House of Lords was the proper scope of legal advice privilege. Specifically:
(1) Whether legal advice privilege is confined to advice concerning legal rights, obligations and liabilities, or whether it extends to advice given by a lawyer in a relevant legal context including presentational advice as to how a client should put its case to an inquiry, regulator or other body.
(2) The proper application of the test in Balabel v Air India [1988] Ch 317, in particular the meaning of “legal advice” and the requirement of a “relevant legal context”.
(3) Whether the Bank’s communications with Freshfields about the Bingham Inquiry were within the scope of the privilege.
The House of Lords unanimously allowed the Bank of England’s appeal and restored the protection of legal advice privilege over the communications in question. The leading speeches were given by Lord Scott of Foscote and Lord Rodger of Earlsferry, with whom Lords Nicholls, Carswell and Brown agreed.
The House held that legal advice privilege is not confined to advice about strict legal rights and obligations. Privilege extends to communications between client and lawyer where the communication is made for the dominant purpose of obtaining or giving legal advice within a “relevant legal context”. “Legal advice” in this context includes advice on what should prudently and sensibly be done in the relevant legal context, including how a client should present its case to a regulator, inquiry or public investigation, where that advice draws on the lawyer’s expertise as a lawyer.
The Bingham Inquiry was held to be a relevant legal context. The Bank had an obvious interest in the Inquiry’s findings and their potential consequences (regulatory, reputational and litigation-related), and the advice it sought from Freshfields was lawyerly advice given in that context. The communications were therefore privileged.
The House also reaffirmed the Wheeler v Le Marchant / Three Rivers (No 5) restriction on the identity of the “client” within a corporation, though that point was not directly reopened.
The ratio is that legal advice privilege attaches to communications between client and lawyer that are made for the dominant purpose of seeking or giving legal advice, provided the advice is given in a “relevant legal context”. A “relevant legal context” exists wherever a client requires advice from a lawyer that draws on the lawyer’s professional skills, knowledge and experience as a lawyer — including advice on what to do, what to say, and how to present a case to a court, regulator, inquiry or other body where the client’s legal position may be affected.
Privilege is not limited to advice on existing or contemplated litigation, nor to advice on strict legal rights, obligations or remedies. Communications about the conduct of a regulatory inquiry, with all its potential consequences for the client’s legal position, fall within the privilege.
Three Rivers (No 6) is not, on its facts, an insurance dispute. It is included in this wiki because of its substantial practical significance for the insurance industry on two distinct lines.
First, the case is the cornerstone modern authority on legal advice privilege in English law. Insurers, brokers and their counsel routinely rely on it when asserting privilege over internal investigations, regulatory submissions to the FCA and PRA, responses to Lloyd’s market regulators, and communications with external solicitors during the handling of complex claims. The principle that privilege extends to legal advice on how to present a case to a regulator is fundamental to the way insurance businesses interact with their supervisors.
Second, the related Three Rivers (No 5) restriction on who within a corporation counts as the “client” continues to cause difficulty for in-house insurance legal teams. Documents passing between non-authorised employees (claims handlers, underwriters, finance staff) and in-house lawyers may not attract legal advice privilege, even though they would attract litigation privilege if litigation is reasonably contemplated. This has driven careful protocols within insurance groups about who is engaged in advice-seeking.
The decision is also cited in arguments about the scope of common interest privilege between insurer and insured, and in disputes over disclosure in coverage litigation, professional indemnity claims and reinsurance arbitrations. For aggregation and causation arguments — where access to underlying communications between assured and external lawyers may be highly relevant — Three Rivers (No 6) is the starting point for any privilege analysis.
By Matt Bartlett, Director, on 2026-06-06. Next review: 2026-12-06.
This entry is part of the Apex Insurance Wiki. Last reviewed by Matt Bartlett on 2026-06-06. Apex Insurance Brokers Limited, FCA FRN 724952, Companies House 07014570. Not regulated advice — consult your broker on your specific position.
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