EURASIAN NATURAL RESOURCES CORPORATION LIMITED v DECHERT LLP

The duty of a firm instructed to investigate alleged corporate wrongdoing includes objectively advising on (and documenting) the risks, limits and likely consequences of engaging with prosecuting authorities; where a retained lawyer acts without authority and supplies confidential or privileged material to prosecutors, the lawyer, and anyone who knowingly receives and exploits that material, may be liable for breach of duty and for inducing that breach.

This judgment arises from two related claims brought and tried together: the first by ENRC against Dechert LLP and its principal adviser on the matter, Neil Gerrard, for breaches of contract, negligence and fiduciary duty in the conduct of internal investigations (principally in Kazakhstan and the Democratic Republic of the Congo) and in communications with the Serious Fraud Office; the second by ENRC against the Director of the Serious Fraud Office (SFO) for torts said to flow from the SFO's contacts with Mr Gerrard and receipt/use of ENRC material. The High Court (Waksman J) tried extensive documentary and oral evidence about the investigations, communications (30 disputed contacts with the SFO), three press leaks and the conduct of the SFO under its previous director. The judge reached detailed findings of fact on the evidence before him and framed the legal issues as (i) whether Dechert/Mr Gerrard committed deliberate, reckless or negligent breaches in advising, expanding and handling the investigations and in disclosures; (ii) whether SFO officers knowingly received, encouraged, assisted or induced such breaches and whether they committed misfeasance in public office; and (iii) causation, loss and limitation issues.

The principal factual matrix to the issues was an internal whistleblower letter about SSGPO (an ENRC Kazakhstan subsidiary), ENRC’s internal and external advice, the SFO’s letter of 10 August 2011, the parties’ subsequent meetings and the continuity of instructions, disclosure and document handling between 2011–2013. The judge assessed the credibility of multiple witnesses and treated the contemporaneous documents as the central evidence. He set out the Phase 1 findings required before any quantification of loss and consequential trials or hearings.

1. Disposition: ENRC's Phase 1 factual and legal issues were determined. The claim against Dechert succeeded in multiple respects; the claims against the SFO succeeded on inducement in respect of particular disputed contacts but failed on misfeasance and on other alleged SFO wrongs. Causation and quantum remain for later determination (Phase 2 / further hearing).
2. Findings against Dechert / Mr Gerrard: (a) Mr Gerrard knowingly instigated at least one press leak (the August 2011 article) and was responsible for later leaks (the March 2013 Financial Times article and the June 2013 package) and for multiple unauthorised private contacts with SFO officers; (b) he repeatedly communicated confidential and in many respects privileged material without authority; (c) he failed to record significant advice in writing; (d) he offered incorrect and, in some respects, reckless advice about the risk of "raids", the scope and shape of a self-report process and potential penalties; (e) he promoted an open-ended "running commentary" investigation strategy that materially expanded the work beyond what a reasonable specialist would have advised; (f) he failed to adopt or press for measures to protect legal professional privilege; (g) he was recklessly indifferent in a number of respects and admitted at least one reckless failure (the Depel interview non-disclosure). All those findings are set out in detail in the judgment, which explains why many of the contemporaneous choices were unreasonable or wrongful as a matter of professional conduct.
3. Findings against the SFO (inducement / misfeasance): (a) The judge identified a series of "Disputed Contacts" (DCs) between Mr Gerrard and named SFO officers. In a number of those contacts (DCs 1, 4-7, 8-11, 13, 15, 19A, 20, 23 & 24) he found that senior SFO officers (including Alderman, Gould and Thompson in different contacts) knew or were recklessly indifferent to the fact that Mr Gerrard was acting without client authority and nonetheless received, encouraged or assisted his conduct — sufficient to make out the tort of inducing a breach of contract/fiduciary duty (subject to causation and loss). (b) The judge rejected ENRC’s wider allegations that the SFO committed misfeasance in public office in respect of the Depel interview, the June 2013 material, the alleged concealment of a notebook, the website entry and other post-2011 events; no bad-faith knowledge of probable loss by those officers was established on the evidence.
4. Privilege and use of material: The Court rejected ENRC's application for sweeping declaratory relief preventing the SFO using confidential/privileged material (and removing staff who had seen that material). The judge held (following settled authorities) that he could not grant an injunction or declaration to restrain a prosecutor from using evidence lawfully obtained in a criminal investigation where admissible; the proper remedy and public interest considerations weigh against such relief.
5. Limitation and contractual caps: Dechert’s limitation arguments were rejected. The judge construed Dechert’s limitation clause and held the £3m cap did not, as a matter of construction, cover ENRC’s claim to recover the bulk of fees already paid; in any event, the cap would be unreasonable under the Unfair Contract Terms Act if it were read to bar recovery of wasted fees. The judge also held that findings of recklessness or deliberate breach fall outside the contract limit (the clause excepts fraud / reckless disregard), so the cap did not protect the firm for those deliberate/reckless breaches in any event.
6. Conclusion / orders: The judgment contains detailed findings of fact and law tailored to the issues tried (Phase 1). The court declared the primary breaches of duty by Mr Gerrard/Dechert and the inducement by the SFO officers identified above. Causation and quantum were reserved for further proceedings. Parties' rights to seek further relief, costs and consequential orders are noted for the subsequent phases.

High Court (Commercial Court) [2022] EWHC 1138 (Comm) — First instance determination of Phase 1 matters (detailed findings on alleged breaches by Dechert and selected SFO officers; causation and quantum reserved).