Jardine Strategic Holdings Limited v Oasis Investments II Master Fund Limited and others
Before Lord Briggs, Lord Leggatt, Lord Burrows, Lady Rose and Lord Richards
[2025] UKPC 34
Judgment July 24, 2025

The “shareholder rule”, whereby a company could not, in the course of litigation between it and its shareholders, withhold documents from inspection on the ground that the documents were covered by legal advice privilege, formed no part of the law of Bermuda and should not continue to be recognised in England and Wales.

The Judicial Committee of the Privy Council so held in allowing an appeal by the defendant company, Jardine Strategic Holdings Ltd, against the upholding by the Court of Appeal for Bermuda ([2024] CA (Bda) 7 Civ) of the decision of Chief Justice Hargun ([2023] SC (Bda) 8 Civ), in proceedings brought by the plaintiff shareholders, Oasis Investments II Master Fund Ltd and 80 others, that the company was not entitled, because of the shareholder rule, to maintain legal advice privilege in respect of certain legal advice received by its corporate group.

Martin Moore KC, Anna Scharnetzky, Andrew Blake and John Wasty for the company; Mark Howard KC, Stephen Midwinter KC, Delroy Duncan KC, Ryan Hawthorne, Matthew Watson and Laura Williamson for the plaintiffs.

LORD BRIGGS and LADY ROSE, giving the judgment of the Board, said that the defendant company was the company that was formed from the amalgamation of two companies within the Jardine Matheson corporate group. The result of the amalgamation was that all the shares in one of those companies were cancelled. The newly formed company was required to pay fair value for those cancelled shares to shareholders who voted against the proposed amalgamation.

The plaintiffs, some of those shareholders, were not satisfied with the figure that the group offered them as the fair value for their shares. The plaintiffs had triggered the statutory mechanism set out in the Bermudan Companies Act 1981 under which the court was required to determine the fair value of those shares.

The plaintiffs had issued a summons seeking an order that the defendant produce the legal advice that was given to the corporate group when it was setting the value which it offered to dissenting shareholders who had their shares cancelled. The company asserted that that advice was covered by legal professional privilege, in particular by legal advice privilege.

The plaintiffs accepted that the advice received by the pre-amalgamation companies was of a type which would ordinarily be protected by legal advice privilege from production to the other party to the litigation. But they relied on what they said was an exception to that rule which overrode privilege when the party seeking access to the documents was a shareholder in the company or at least was a shareholder at the time that the advice was sought or received.

The issue was therefore whether there was, as the plaintiffs asserted, a rule in Bermudian law that a company could not, in the course of litigation between it and shareholders or former shareholders, withhold documents from inspection on the ground that the documents were covered by legal advice privilege (the shareholder rule).

It was important to establish the boundaries of the scope of the shareholder rule for which the plaintiffs contended. First, they accepted that legal advice which was sought by the company once the litigation had started or was in contemplation was protected from inspection and was not covered by the shareholder rule. Secondly, they accepted that the shareholder rule only applied to override privilege in the context of a discovery exercise in litigation in which the company and the shareholders or former shareholders were involved.

It was common ground before the Board that there was no prior Bermudian authority on the point. The Court of Appeal for Bermuda held that the shareholder rule existed as a matter of English law and that there was no reason why it should not also apply in Bermuda.

The company’s appeal did not simply challenge the transposition of the rule into Bermudian law but argued that the shareholder rule should no longer be recognised as forming part of English law. They invited the Board, if it decided that the shareholder rule did not exist, to give a direction of the kind described in Willers v Joyce (No 2) (The Times, September 6, 2016; [2018] AC 843), namely that the domestic courts of England and Wales should treat the present decision as also representing the law of England and Wales.

Having considered the scope and importance of legal professional privilege and the history of the shareholder rule, the Board was satisfied that the shareholder rule formed no part of the law of Bermuda, and that it ought not to continue to be recognised in England and Wales either. Its only two advantages were its ancient lineage and its creation of a bright line. But its disadvantages easily outweighed those two advantages.

The rule’s original proprietary justification was wholly inconsistent with the proper analysis of a registered company as a legal person separate from its members, such that the members had no proprietary interest in the funds of the company used to pay for the advice.

Nor could the rule be justified as a form of joint interest privilege. It could not be said that there was always a community of interest between every company and its shareholders, either as a class or a fortiori individually.

Further, a solvent company had other stakeholders, such as its workforce, whose interests had to be taken into account. And the maintenance of solvency might depend upon keeping happy the company’s principal providers of finance and working capital, whose perceptions as to the best choice for the company to make between competing business objectives might be quite different from, and generally more cautious than, those of its shareholders.

Many decisions about the management and direction of a company’s business would need, or at least benefit from, candid, confidential, legal advice. A broadly based exception from legal advice privilege as between company and shareholders, founded upon a supposed joint interest between them, would discourage companies from obtaining such advice.

A narrower, more nuanced, basis for occasionally depriving a company of legal professional privilege in litigation, in which the burden would lie on a shareholder to establish a sufficient joint interest on the particular facts of the case, would lead to similar unacceptable uncertainty for directors.

It was not clear whether the current appeal formally required a Willers v Joyce direction since it was uncertain whether there was authority at the level of the Court of Appeal of England and Wales which would otherwise bind lower courts in England and Wales and so require such courts to continue to treat the shareholder rule as applicable in disclosure exercises in litigation in England and Wales.

The nearest to a binding decision of the English Court of Appeal on the shareholder rule was probably Woodhouse & Co Ltd v Woodhouse ((1914) 30 TLR 559), which was often cited as the leading authority on the rule.

But there were several others, including one in the Supreme Court, where some variant of the rule was assumed to exist, and its existence in some form was assumed in most of the relevant textbooks and academic writings, albeit not without some criticism.

No one had submitted that the common law of Bermuda was different from the common law of England and Wales in the present context. To avoid such doubts, the members of the Board, all also being Justices of the Supreme Court, were firmly of the view that the present decision should also be regarded by courts in England and Wales as abrogating the shareholder rule for the purpose of litigation in those courts, and the Board so declared.

Solicitors: Linklaters LLP; Charles Russell Speechlys LLP.