Eurasian Natural Resources Corporation Ltd v Dechert LLP

JurisdictionEngland & Wales
JudgeMr Justice Waksman
Judgment Date21 December 2023
Neutral Citation[2023] EWHC 3280 (Comm)
Year2023
CourtKing's Bench Division (Commercial Court)
Docket NumberClaim No: CL-2017-000583

(“the 2017 Action”)

Between:
Eurasian Natural Resources Corporation Limited
Claimant
and
(1) Dechert LLP
(2) David Neil Gerrard
Defendants

and

The Director of the Serious Fraud Office
Third Party

(“the 2019 Action”)

And Between:
Eurasian Natural Resources Corporation Limited
Claimant
and
The Director of the Serious Fraud Office
Defendant

and

Dechert LLP David Neil Gerrard
Third and Fourth Parties

[2023] EWHC 3280 (Comm)

Before:

THE HON. Mr Justice Waksman

Claim No: CL-2017-000583

Claim No: CL-2019-000644

IN THE HIGH COURT OF JUSTICE

BUSINESS AND PROPERTY COURTS

OF ENGLAND AND WALES

COMMERCIAL COURT (KBD)

Representation:

Clare Montgomery KC, Nathan Pillow KC, Anna Boase KC, Jack Rivett and Freddie Popplewell, (instructed by Hogan Lovells International LLP, Solicitors) for the Claimants

Richard Millett KC, Michael Bools KC, Edward Harrison and Mark Belshaw (instructed by Clyde & Co LLP, Solicitors) for the First Defendant in the 2017 Action and the Third Party in the 2019 Action

Michal Hain (instructed by Charles Fussell & Co LLP, Solicitors) for the Second Defendant in the 2017 Action and the Fourth Party in the 2019 Action

Simon Colton KC, James Segan KC, Rachel Scott, Tom Richards, Joyce Arnold, George Molyneaux and Tom Lowenthal (instructed by Eversheds Sutherland (International) LLP, Solicitors) for the Third Party in the 2017 Action and the Defendants in the 2019 Action

Hearing dates: 6–9 and 13–16 March 2023

Table of Contents

INTRODUCTION

7

THE PHASE 1 JUDGMENT

7

The Claims: Dechert and Mr Gerrard

9

The Claims: the SFO

10

Findings in the Judgment: Dechert and Mr Gerrard

10

Findings in the Judgment: the SFO

11

THE PHASE 1A TRIAL

13

Introduction

13

2017 Claim Issues

14

2019 Claim Issues

15

THE PARTIES' POSITIONS IN OUTLINE

16

Further Statements of Case

16

Breaches of Duty Relied Upon by ENRC for the Purposes of its Damages Claim

17

Enrc's Claims for Losses Arising from Unnecessary Work, Unnecessary Costs and Wasted

Management Time

18

Contribution

20

The Criminal Investigation

20

Exemplary Damages

20

STRUCTURE OF THIS JUDGMENT

21

ENRC'S METHODOLOGY FOR CAUSATION AND LOSS ON THE PRIMARY CLAIMS

22

Causation Counterfactuals

22

Quantum: Unnecessary Work

23

Period up to 17 May 2012 (“the Earlier Period”)

23

Period after 17 May 2012 (“the Later Period”)

25

Quantum: Unnecessary Costs

26

Quantum: WMT

26

DECHERT'S METHODOLOGY FOR CAUSATION AND LOSS ON THE PRIMARY CLAIMS

27

Introduction

27

Causation Points

27

Quantum: Unnecessary Work

28

Earlier Period

28

Later Period

31

Quantum: Unnecessary Costs

32

Quantum: WMT

32

THE LAW

32

Assessment of Factual Causation

32

Inducement to Breach of Contract and Causation

37

Remoteness: Reasonable Foreseeability

40

The requirement of reasonable foreseeability

40

Reasonable foreseeability and knowledge of probable loss

41

Remoteness: Novus Actus Interveniens

42

Failure to Mitigate

42

Determining Quantum and the Broad Brush

42

Other Points of Law

43

FACTUAL CAUSATION AS AGAINST THE SFO GENERALLY

43

Introduction

43

The SFO'S Primary Case

44

The SFO'S Secondary Case

46

Presence of the DCs in the Counterfactual

46

The Feedback Loop

47

Prior breaches of duty on the part of Dechert

51

A Proportionate Approach by the SFO

51

Information and Materials available to the SFO in the counterfactual

52

General Conclusion on the SFO's Secondary Case

58

FACTUAL CAUSATION AS AGAINST DECHERT GENERALLY

59

FACTUAL CAUSATION: THE CHRONOLOGY

63

Introduction

63

Period 1 — 17 August – 31 December 2011

65

Period 2 — 1 January – 31 May 2012

66

Period 3 — 1 June – 30 November 2012

71

Period 4 — 1 December 2012 – 13 March 2013

80

Period 5 — 14 – 31 March 2013

84

THE CRIMINAL INVESTIGATION

88

Introduction

88

The Chronology

92

The Status and Import of the CEB and CAN

103

Introduction

103

The CAN and the Reasons Email

103

The CEB

107

Conclusion

108

Events in 2013 Prior to the 17 April Meeting

108

The 21 January Meeting

109

The Kazakhstan report

109

DC25

110

27 March meeting, the s2A Notice and Dechert's Dismissal

110

The Position of Mr Dalman

111

Dealings with Fulcrum in April

111

Conclusion.

111

Other Material

112

DCs other than the IDCs (“the Other DCs”)

112

The OMs

112

Press Articles

112

Global Witness

112

Intelligence referred to in the CEB

113

The RAID report

113

The Depel Interview

114

The other s2A interviews

114

SARs

115

The SFO'S Alternative Case on Making the CI Decision

115

Resignations

115

Addleshaw Goddard

116

Failure to produce an Africa report

116

Conclusion

117

Overall Conclusion

117

DEFENCES RAISED BY THE SFO

117

Introduction

117

The Expansion Point

119

The Workstreams Point

120

Conclusion

121

Remoteness: Novus Actus Interveniens

121

Failure to Mitigate on the Part of ENRC

121

APPROACH TO THE DETERMINATION OF QUANTUM

122

General Approach on Unnecessary Work

122

General Approach on Unnecessary Costs

123

Objection by the SFO to ENRC'S Approach on Quantum

123

SFO Objection Based on Payments by ENRC Management (UK) Limited

124

QUANTUM ANALYSIS: UNNECESSARY WORK IN THE EARLIER PERIOD ON KAZAKHSTAN AND AFRICA

127

Introduction

127

Kazakhstan — Reason 1A

128

Farm

128

Procurement

129

Iran

131

Education

132

Stripping

132

Kazakhstan — Reason 1B

133

Documentary Review, it Issues and Other Unnecessary Work (“Document Review”) — Reason 2

133

Internal — Reason 3

136

Unclear — Reason 4

138

Sanctions – (after 5 March 2012) Reason 5

139

Disproportionate Requests — Reason 7

140

Chambishi — Reason 6

140

Footnote 4

144

QUANTUM: UNNECESSARY WORK IN THE LATER PERIOD ON KAZAKHSTAN

144

QUANTUM: UNNECESSARY WORK IN THE LATER PERIOD ON AFRICA

146

Introduction

146

Africa Whistleblower

147

Camrose and Camec

147

Books and Records

149

Data Protection

149

General Bribery

149

It Issues

149

Multiple

150

Red Flags

150

Sanctions

151

QUANTUM: UNNECESSARY WORK IN THE LATER PERIOD ON BOTH

151

Data Protection

151

Enrc Raid Training

151

It Issues

151

Multiple

151

Remedial Actions

151

QUANTUM: UNNECESSARY COSTS

152

Introduction

152

Addleshaw Goddard

152

Introduction

152

AG's Secondment Costs

153

AG's Investigation Work

155

Bridge 2 (“B2”)

156

Introduction

156

FRA

159

Introduction

159

Dechert Reason 1

162

Dechert Reason 2

162

Dechert Reason 3

163

Dechert Reason 4

163

Dechert Reason 5

164

Dechert Reason 6

164

HS

165

Introduction

165

Dechert Reason 1

166

Dechert Reason 2

167

Dechert Reason 3

167

Dechert Reason 4

169

Dechert Reason 5

169

Dechert Reason 6

171

Dechert Reason 7

172

Dechert Reason 8

173

Conclusions on HS Costs

173

KPMG

173

PWC

174

The Risk Advisory Group (“Trag”)

175

WASTED MANAGEMENT TIME

176

CONTRIBUTION

180

Introduction

180

The Law

180

Apportionment

181

EXEMPLARY DAMAGES

183

CONCLUSIONS

184

INTRODUCTION

1

This case consists of two actions brought by the Claimant, Eurasian Natural Resources Corporation Limited (“ENRC”) which have been managed together for some considerable time, and which have now been tried together. In the first action (“the 2017 Action”), ENRC made claims against two Defendants. The First Defendant, Dechert LLP (“Dechert”), is a well-known firm of solicitors. The Second Defendant, Neil Gerrard, is a solicitor now retired from practice. Between 23 April 2011 and 31 December 2020, he was a Partner in Dechert. Before that, he was a Partner in DLA Piper UK LLP (“DLA”), which he joined in 1995. Where it is appropriate to refer to both defendants together, I shall refer to them as the Dechert Defendants – (“the DDs”). Later in this judgment, and in particular where I am referring to submissions made by Dechert but which are also adopted by Mr Gerrard, I shall refer simply to Dechert. The context will make clear when that is.

2

In the second action (“the 2019 Action”), ENRC brought claims against the Director of the Serious Fraud Office (“the SFO”). The SFO was joined into the 2017 Action as a third party by Dechert. Conversely, the DDs were joined into the 2019 Action as third and fourth parties by the SFO.

3

The events to which this case relates occurred principally between December 2010 and June 2013. Between 24 December 2010 and 22 April 2011, DLA was retained by ENRC, principally acting by Mr Gerrard. Between 23 April 2011 and 27 March 2013, Dechert was retained by ENRC, again, principally acting by Mr Gerrard.

4

This is my judgment following the second trial in these proceedings. This trial has been concerned with questions of causation and loss. I refer to it as “the Phase...

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