BVerfG Jones Day: Seizure of Investigation Files

What the BVerfG Jones Day orders held

In the BVerfG Jones Day orders of 27 June 2018 (2 BvR 1405/17, 2 BvR 1780/17, 2 BvR 1562/17, 2 BvR 1287/17 and 2 BvR 1583/17), published by press release of 6 July 2018, a chamber of the Federal Constitutional Court declined to admit five constitutional complaints against the search of a law firm's Munich office and the securing of documents from an internal investigation conducted for Volkswagen AG.

The Court held that it was not objectionable under constitutional law for the criminal courts to allow prosecutors to search the office and examine the results of the internal investigation in a criminal investigation concerning Audi AG, a Volkswagen subsidiary. The protection against seizure in the Code of Criminal Procedure did not cover these documents in the circumstances of the case.

The BVerfG Jones Day decision is the leading authority on the narrow scope of legal privilege for internal investigations in Germany. Unlike in common law jurisdictions, German criminal procedure does not protect all communications between a company and its lawyers from seizure. Protection depends on the relationship of trust between the lawyer and a person accused, or in a position similar to an accused, in specific proceedings. Companies that commission internal investigations must therefore assume that interview notes, reports and collected documents can end up in the hands of prosecutors unless specific conditions are met.

Background of the case

In September 2015, in connection with a US criminal investigation into manipulated diesel emissions, Volkswagen AG instructed the US law firm in question to conduct internal investigations, provide legal advice and represent it before US authorities. The lawyers examined many documents within the group and interviewed employees, including in Germany, with lawyers from the firm's Munich office involved. Separately, the Munich II public prosecutor opened an investigation for fraud and illegal advertising concerning 3.0-litre diesel engines of Audi AG, which had not itself instructed the law firm. On 29 June 2017, regulatory fine proceedings were also opened against Audi AG.

On the prosecutor's application, the Munich Local Court ordered a search of the law firm's Munich office on 6 March 2017. During the search on 15 March 2017, numerous files and large volumes of electronic data containing the results of the internal investigation were secured. The courts upheld the securing, and complaints were unsuccessful. Volkswagen AG, the law firm and individual lawyers lodged constitutional complaints.

The reasoning of the BVerfG Jones Day orders

The Court addressed the complaints of each complainant separately. Volkswagen's complaint against the search order itself was inadmissible because its own premises had not been searched; the search affected the law firm's premises. Volkswagen's complaint against the securing of the documents was admissible, because the examination of the data affected its right to informational self-determination, but unfounded: the interference was justified.

Three points of statutory interpretation were decisive. First, the criminal courts were entitled to hold that § 160a(1) StPO, which makes investigative measures against lawyers inadmissible where they would yield information covered by the right to refuse testimony, does not apply to seizure, which is governed by the more specific rules in § 97 StPO.

Second, the courts could interpret § 97(1) no. 3 StPO as prohibiting seizure only within a relationship of trust between the lawyer and a person accused in specific proceedings. Third, the courts did not have to treat Volkswagen as being in a position similar to an accused in the Audi proceedings: the test is whether, on objective criteria, the company could become subject to investigation in those proceedings, and Volkswagen's status as a party in separate regulatory proceedings in Braunschweig concerned different offences.

Foreign firms and standing

A notable aspect of the BVerfG Jones Day orders concerns standing. The law firm was organised as a partnership under the law of the US state of Ohio. The Court held that it was not a domestic legal person within the meaning of Article 19(3) of the Basic Law and therefore could not invoke fundamental rights, as it had not shown that its principal office was located in Germany or another EU Member State.

The fact that its Munich office was affected did not change this. The individual lawyers' complaints were inadmissible because they did not show that their own rights had been violated; the professional aspect of the search concerned the firm, not the lawyers personally.

For international companies and advisers, this means that constitutional protection in Germany depends on the legal form and seat of the entity concerned. Foreign entities can still rely on procedural fundamental rights, such as the right to be heard, and on statutory protections, but their ability to bring constitutional complaints on substantive fundamental rights is limited.

Consequences for internal investigations

The decision has shaped how companies conduct internal investigations in Germany. Because protection against seizure under § 97 StPO depends on a relationship of trust with an accused, or a person in a similar position, in specific proceedings, materials created in a general compliance investigation, before the company has any formal or objectively foreseeable defence position, are vulnerable. Defence materials prepared by a company's defence counsel once the company is in a position similar to an accused are better protected, and § 148 StPO protects communications between accused persons and their defence counsel.

Practical consequences include careful documentation of the purpose of an investigation, the separation of investigation and defence functions, and caution about where and how interview records and reports are kept. Employees interviewed in internal investigations should be informed that the information may be shared with authorities, which also matters for data protection and for the fairness of interviews. Cooperation with authorities, which can reduce sanctions, has to be balanced against the risk that materials shared or seized are used against the company or individuals.

Handling searches at company and adviser premises

The case is a reminder that searches can target not only a company's own premises but also those of its advisers. Prosecutors may obtain search warrants for law firms, auditors and consultants where they expect to find evidence, subject to the protections of §§ 97 and 160a StPO for materials covered by professional confidentiality. Companies should agree with their advisers how a search would be handled: who is contacted, how privilege objections are raised on the spot, and how seized materials are sealed pending a court decision on their admissibility. Under German procedure, materials that are secured for examination (§ 110 StPO) are reviewed before formal seizure, and affected parties can apply for a court decision.

At the company's own premises, dawn raid preparedness matters as much. Staff at reception and in IT should know whom to call, that searches must not be obstructed, and that legal counsel should be present as soon as possible. Objections to the seizure of specific documents, for example defence files, should be recorded in the search protocol. Afterwards, an accurate inventory of what was taken is essential for any challenge and for assessing exposure in parallel proceedings, including civil litigation and proceedings abroad.

Cross-border investigations and parallel proceedings

The facts of the case illustrate a typical tension in cross-border investigations. A company cooperating with US authorities may be expected to share the results of its internal investigation, while German prosecutors investigating related matters can seize the same materials. Information shared with one authority may also reach claimants in civil litigation, including mass claims. Companies should therefore plan disclosure strategies across jurisdictions, consider how waivers of privilege in one country affect protection in another, and assess data protection and employment law constraints on transferring employee data abroad. Agreements with foreign authorities on the use of shared information can help, but they do not bind German prosecutors.

Later developments

The BVerfG Jones Day decision fuelled demands for legislative clarification of privilege for internal investigations. A draft Corporate Sanctions Act presented in 2020 would have introduced rules on internal investigations and their effect on sanctions, but it was not adopted. Since then, German law on corporate liability has continued to rely on the Administrative Offences Act, including corporate fines under § 30 OWiG and supervisory duty breaches under § 130 OWiG. Courts have continued to apply the restrictive approach to privilege, although the boundaries for documents created specifically for a company's defence remain the subject of debate.

In the EU context, the protection of legal professional privilege in competition investigations is governed by EU law, which excludes in-house lawyers' communications under the CJEU's case law. Companies under investigation by several authorities must therefore manage different privilege regimes in parallel.

Governance lessons for boards

For management and supervisory boards, the BVerfG Jones Day case law raises governance questions. Boards that commission investigations must weigh the benefits of a thorough fact-finding exercise, which may be required by their duty to investigate suspected misconduct, against the risk that the results become evidence against the company or its officers. The answer is rarely to avoid investigations, since failing to investigate can itself breach directors' duties and increase sanctions. Instead, boards should define the mandate in writing, decide early who instructs counsel, consider separate counsel for the company and for individuals whose interests may diverge, and set rules on reporting so that the board receives what it needs without creating unnecessary documents. Supervisory boards investigating the management board face particular conflicts and often need their own advisers.

How TRW & Co helps

We advise companies on internal investigations and on protecting sensitive materials in German criminal and regulatory proceedings. We design investigation structures that take account of the BVerfG Jones Day case law, conduct employee interviews, prepare for dawn raids and represent companies and individuals in proceedings with prosecutors and authorities. Our work connects with our internal investigations and white-collar defence practices; see also our notes on legal privilege and seizure risks, employee interviews and dawn raid preparedness. Please contact us to discuss your situation. This briefing is general information and not legal advice.