Privy Council abolishes the shareholder privilege rule – what happens next?

The circumstances in which a company can claim legal privilege against its own shareholders has been under increased scrutiny in recent months. Now, the Judicial Committee of the Privy Council has delivered a potentially fatal blow to what had previously been considered 'settled law' for the past 135 years.  

The Judicial Committee of the Privy Council’s (the Privy Council) much-anticipated decision in Jardine Strategic Holdings Limited v Oasis Investments II Master Fund Ltd and Others [2025] UKPC 34 (Jardine), which found that there was no basis for preventing a company from claiming legal advice privilege against its shareholders, marks a significant turning point in shareholder disputes. But how does this Privy Council decision out of Bermuda apply to other jurisdictions, like the Cayman Islands? 

Background

As described more fully in our earlier briefing: When can a company claim privilege against its own shareholders in the Cayman Islands?, it has historically been accepted that a company could not claim privilege against its shareholders (except in instances where documents came into existence for the dominant purpose of litigation) due to a joint interest in the legal advice being received by the company. 

There has, however, been recent divergence in judicial views on this principle, with judgments from the Cayman Islands Court in 58.com, the English Court in Aabar Holdings and the Bermudan Court in Jardine each taking different approaches.

The Privy Council’s ruling in Jardine

On 24 July 2025, the Privy Council delivered its highly anticipated ruling on the Jardine appeal from the Bermudan courts. 

By unanimously allowing Jardine's appeal and finding that there was no legal basis for the so-called 'shareholder rule', the Privy Council made a series of important findings that will have widespread impact across the common law world.    

What are the key findings from the Jardine appeal? 

• The status-based, automatic shareholder exception to privilege had always been “a rule without justification” and should no longer apply 

• The company-shareholder relationship does not fit into the established family of 'joint interest privilege' relationships 

• Allowing a broadly based shareholder privilege exception would be commercially impractical and create uncertainty for companies, especially considering the diversity of shareholders’ interests and rights, and the desirability of companies obtaining candid, confidential, legal advice 

• Adopting a fact-sensitive approach to whether a joint interest privilege should apply is impractical and inconsistent with the need for certainty as to whether privilege will apply to the taking of legal advice in advance of it being sought 

The implications for other jurisdictions 

The Privy Council made a Willers v Joyce direction, meaning that its decision should also be regarded by courts in England and Wales as abrogating the 'shareholder rule' for the purposes of litigation in those courts. This should effectively resolve the upcoming English appeal in Aabar Holdings. 

For the time being, however, the 'shareholder rule' remains good law in other common law jurisdictions, such as the Cayman Islands where the decision of 58.com had earlier confirmed its application. Though, given the highly persuasive nature of Privy Council decisions, it is likely that jurisdictions that have traditionally applied the shareholder rule will soon be asked to reassess its application in light of the Privy Council's ruling in Jardine. 

Practical takeaways for directors and shareholders 

There is no denying that the legal landscape for disclosure and privilege between companies and shareholders in litigation has been fundamentally changed.   

In the absence of the 'shareholder rule' on privilege, directors can more confidently seek confidential legal advice about the management and direction of the company's business without fear of it being disclosable to shareholders who may have opposing interests.   

Shareholders, on the other hand, will now face greater difficulty in accessing legal advice taken by companies - particularly in merger appraisal actions, such as those in Jardine and 58.com. 

The Privy Council's landmark decision to abolish the 'shareholder rule' in Bermuda and England and Wales is therefore likely to be viewed with differing levels of enthusiasm, depending on the competing interests of stakeholders. However, the certainty provided by the judgment is a welcome development in what has otherwise been a hotly debated area of law. 

Focus will now turn to how other common law jurisdictions approach this contentious principle in future cases around the world.   

How can Ogier help? 

Ogier's Dispute Resolution team are monitoring the evolving legal landscape closely and will continue to provide further updates on any future challenges to the 'shareholder rule' as they unfold. For more information on this topic, contact Shaun or Dunzelle. 

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Disclaimer

This client briefing has been prepared for clients and professional associates of Ogier. The information and expressions of opinion which it contains are not intended to be a comprehensive study or to provide legal advice and should not be treated as a substitute for specific advice concerning individual situations.

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