The ongoing dispute in Sweden centers around allegations that Ericsson withheld crucial information about alleged bribes paid to ISIS, resulting in significant investment losses for investors. The Swedish court recently ordered Ericsson to disclose an internal investigation report, rejecting the company’s claim of legal privilege. The case highlights the limits of legal privilege in securities litigation and draws parallels to U.S. legal standards, emphasizing the balance between confidentiality and transparency in both jurisdictions.
1. Developments Ericsson ISIS bribery case
Last year we reported on this case in an article/post https://www.deminor.com/en/news-insights/securities-litigation-a-growing-space-in-scandinavia/ The case was filed in the district court of Solna, Sweden in 2023. The case was initially scheduled for a main hearing in 2025, however an argument around disclosure and production of documents has led to delays.
The claimants, a group of 37 institutional investors, state they have suffered investment losses since Ericsson withheld information about potential bribes paid to the terrorist organization ISIS in Iraq, and the delayed disclosure to the market caused the share price to fall. The claim is based on the Market Abuse Regulations (MAR) of the EU, which require issuers to promptly inform the public of inside information relevant to the company. The claim argues that Ericsson violated the MAR rules by withholding crucial information about its actions in Iraq for an extended period. Ericsson had conducted an extensive internal investigation, resulting in a comprehensive 79-page report, produced in 2019. However, the company chose to keep this information concealed, failing to publish the report or its contents despite its significance. The report was shared with Ericssons US lawyers in 2019 and with their Swedish lawyers in 2022. The report allegedly contained evidence of severe compliance violations, including corruption, tax offences, and even payments to the terrorist organization ISIS in Iraq. Additionally, it was purported that Ericsson paid bribes and used an alternative transport route through ISIS-controlled territory to circumvent Iraqi customs duties, all in violation of local laws during the years 2011-2019.
The claimants requested that the court order Ericsson to release a copy of the report. Ericsson argued to its defence that the internal report is covered by legal privilege and is exempt from disclosure as it contains legal advice, regardless of whether the request for disclosure is directed at Ericsson or Ericsson's lawyers today.
In February 2025, the Solna District Court ruled in favour of the claimants and ordered Ericsson to release the report. The court stated that a party has no legitimate reason to avoid discovery by allowing a lawyer to inspect and give advice related to documents that would otherwise be subject to discovery. The court thus found that the internal report — which is clearly identified and held by Ericsson and can be assumed to be of importance as evidence in the case — should be produced. This type of interim decision is subject to appeal. Ericsson has appealed this to the 2nd instance, Svea Court of Appeal, and they were granted leave. This appeal process will take at least 1 year, after which the district court can schedule the main hearing. As things stand this will most likely happen in 2027.
2. ”The defence argument legal privilege in relation to document production in securities cases”
Legal privilege remains a fundamental defence tool in disputes, especially when sensitive communications with legal counsel are at risk of disclosure. Its proper application can significantly influence case outcomes. Companies often invoke legal privilege to prevent the disclosure of internal communications, memos, reports or advisory emails that could be damaging if revealed.
Client Confidentiality refers to the obligation of firms and their advisors to keep client information private, disclosing it only when authorized or legally required. This confidentiality fosters trust and encourages open communication, which is essential when navigating complex legal or regulatory issues.
Legal Privilege, on the other hand, provides a legal shield for communications between clients and their legal advisors. It ensures that certain communications—such as legal advice or strategy discussions—remain confidential and cannot be compelled to be disclosed in legal proceedings. For institutional investors, understanding the scope of privilege is critical, especially when dealing with internal investigations, regulatory inquiries, or litigation.
Maintaining these protections requires diligent practices, such as clear documentation of privileged communications, restricting access to sensitive information, and ensuring that legal advice is properly documented and marked as privileged.
3. U.S. Parallel
The Swedish court's ruling parallels U.S. case law in that U.S. courts are also vigilant against the misuse of legal privilege to shield otherwise discoverable documents. In the United States, the attorney-client privilege and the work product doctrine are well-established protections that can shield certain communications and documents from discovery. The attorney-client privilege protects confidential communications between a client and their attorney made for the purpose of obtaining legal advice, while the work product doctrine extends protection to materials prepared in anticipation of litigation, even if they do not involve direct communication between lawyer and client.
However, U.S. courts require that the primary purpose of the communication or document must be to seek or provide legal advice, not merely to shield otherwise discoverable information from disclosure. Simply copying a lawyer on a document or routing business records through legal counsel does not automatically render them privileged. If a document was created for business purposes and later shared with counsel, it may not be protected. Similarly, the work product doctrine does not protect documents prepared in the ordinary course of business, even if they are later reviewed by attorneys.
In particular, U.S. Supreme Court precedent makes clear that legal privilege cannot be used as a blanket shield to prevent discovery of documents simply because they have passed through the hands of legal counsel. In Hickman v. Taylor, 329 U.S. 495 (1947), the Court distinguished between the attorney-client privilege and the work product doctrine, holding that while certain materials reflecting an attorney’s mental impressions, conclusions, or legal theories are protected, the privilege does not extend to all information or documents merely because they were prepared by or for an attorney. The Court emphasized that the attorney-client privilege is limited to confidential communications made for the purpose of obtaining legal advice, and does not protect underlying facts or documents that would otherwise be discoverable. Similarly, in Upjohn Co. v. United States, 449 U.S. 383 (1981), the Court clarified that the privilege protects communications made in confidence for the purpose of obtaining legal advice, but does not shield the disclosure of underlying facts, even if those facts were communicated to an attorney. These decisions underscore that the scope of privilege is determined by the purpose and content of the communication, not merely by the involvement of legal counsel, and that courts must conduct a fact-specific inquiry to ensure that privilege is not misused to obstruct legitimate discovery.
And, indeed, the most recent Restatement (Third) of the Law Governing Lawyers provides that the attorney-client privilege protects confidential communications between a client and a lawyer made for the purpose of obtaining or providing legal assistance, but does not extend to underlying facts, preexisting documents, or communications not made in confidence. The Law Governing Lawyers
The Swedish court’s reasoning echoes this U.S. principle by emphasizing substance over form: legal privilege cannot be used as a blanket shield for documents that would otherwise be discoverable simply because they have passed through the hands of legal counsel. Both jurisdictions recognize the importance of privilege in fostering candid legal advice, but also impose limits to prevent abuse and ensure that relevant evidence is not improperly withheld from the judicial process. This alignment underscores a shared commitment to balancing the need for confidentiality in legal consultations with the fundamental principle of fair and transparent discovery in litigation.
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