Eurasian Natural Resources Corporation Limited v Dechert LLP & Anor

The court determined causation and quantum issues following findings of primary liability in an earlier judgment. The judge held that (i) Dechert LLP and its partner Mr Gerrard breached duties (including unauthorised disclosures and a range of negligent and reckless acts) and (ii) the Serious Fraud Office committed a series of wrongful inducements to breach of contract in respect of a subset of disputed contacts (the "Induced DCs").

On causation the court rejected a strict "but-for" approach where successive, overlapping and concurrent wrongs combined to produce the loss, explaining that a common-sense, broad-brush assessment was appropriate. It concluded that the SFO’s wrongful contacts causally contributed to ENRC’s extra investigation work and to the decision to commence the criminal investigation. The court then applied that approach to determine which fees and third-party costs were "Necessary" and which were "Unnecessary" and allowed adjustments to ENRC’s claimed sums on a principled, case-by-case and percentage basis.

Finally the court apportioned contribution under the Civil Liability (Contribution) Act 1978: the Dechert defendants bear the greater share of responsibility while the SFO bears a significant but lesser share. An application to re-open the earlier Phase 1 findings on the March 2013 leak was refused and exemplary damages claimed against the SFO were rejected.

The case comprises two linked High Court actions brought by ENRC: claims against (a) Dechert LLP and Mr N. Gerrard for professional breaches and wrongdoing and (b) the Director of the Serious Fraud Office for accessory torts and public law wrongs. The judge had previously decided (the Phase 1 Judgment) that Dechert and Mr Gerrard had committed numerous breaches of duty (including unauthorised disclosures to the press and to the SFO) and that the SFO, acting through senior officers, had committed a series of wrongful inducements to breaches of contract in relation to 15 disputed contacts (the IDCs).

Phase 1A (the present judgment) was a further contested hearing limited to causation and loss. ENRC sought damages for three heads: (1) Unnecessary legal fees charged by Dechert, (2) Unnecessary third‑party costs, and (3) wasted management time (WMT). ENRC said those losses flowed from the Dechert breaches and from the SFO’s inducements which operated as part of an inter‑related "feedback loop": unauthorised private disclosures to the SFO emboldened Dechert to expand work and clients relied on Dechert’s assertions about what the SFO expected.

The court framed the core issues as whether the Dechert/SFO breaches caused the extra work and costs claimed, whether the criminal investigation would have been opened but for the SFO’s misconduct, and whether ENRC had failed to mitigate. The judge rejected the argument that conventional "but for" causation must be applied mechanically; he followed authorities (including the House of Lords/Supreme Court authorities cited in the judgment) that where concurrent and successive wrongs combine a common‑sense and broad‑brush approach is required.

Applying that approach, the court found (i) the SFO’s wrongful inducements were causally effective and contributed to ENRC’s decision‑making and to the expansion of the review process, (ii) the SFO’s misconduct was an effective cause of the SFO’s decision in April 2013 to commence the criminal investigation, and (iii) ENRC had proved causation in relation to many of the line items of fees and third‑party costs. The court then analysed the invoices and activities (dividing the retainer into five chronological periods and many workstreams) and applied percentage reductions or disallowances for particular categories of work (for example document review, IT imaging, certain Africa workstreams, sanctions work after a specific date, Chambishi, etc.). Footnote rules used by ENRC and Dechert where entries combined Necessary and Unnecessary work were treated by the court as requiring pragmatic apportionment (default 50/50 split where parties could not agree).

The judge adjudicated a number of discrete provider disputes (Addleshaw Goddard, Bridge2, FRA, Herbert Smith, KPMG, PwC, TRAG and others) and applied specific percentage discounts where appropriate. He accepted ENRC’s WMT methodology in principle (with modest adjustments) and rejected SFO defences of remoteness and failure to mitigate. On contribution, the court held Dechert/Gerrard should bear the larger share of responsibility and the SFO 25% (so Dechert 75% / SFO 25% on Unnecessary Costs and WMT), while Dechert remains primarily liable for Unnecessary Work. Exemplary damages claimed from the SFO were refused. The Phase 1 judgment was not reopened on fresh material relating to the March 2013 leak.

This Phase 1A judgment determines causation and quantum issues following earlier liability findings. The court held that Dechert LLP and Mr Gerrard breached duties and that the SFO committed a series of wrongful inducements (the IDCs) which causally contributed to ENRC's expanded review work and to the SFO's decision to open a criminal investigation. The court applied a common‑sense, broad‑brush approach to causation where multiple concurrent and successive wrongs combined, adjusted ENRC’s quantum claims by disallowing or discounting workstreams and line items where work was unnecessary, and refused to re-open the Phase 1 findings on the March 2013 leak. Contribution was apportioned as just and equitable: Dechert/Gerrard 75% and the SFO 25% of liability for Unnecessary Costs and WMT, while Dechert/Gerrard are wholly liable for Unnecessary Work. Exemplary damages were refused. The court gave detailed reasons for discounting particular classes of work (document review, IT imaging, Chambishi, sanctions after 5 March 2012, and specified third‑party costs).