The Serious Fraud Office must pay some of mining giant Eurasian Natural Resources Corporation’s (ENRC) £16.9m legal costs in the latest ruling of the long-standing legal dispute over the SFO’s investigation into the Kazakh company.
Mr Justice Waksman, on the first day of the two-day hearing in the Rolls building, said the SFO ‘will pay 70%’ of the ENRC’s costs on an indemnity basis. He added that the SFO accepted ‘it has to pay 100%’ of ENRC’s costs ‘so far as phase 1a is concerned’. He ordered that would be on a standard basis.
Referring to the ‘Dechert defendants’, he said it was ‘plain that the Dechert defendants should pay costs up to and including the consequential hearing on an indemnity basis’.
He added the costs incurred after the consequential hearing through to the phase 1a trial would be paid on a standard basis and refused to grant any reduction.
In court documents, ENRC said its initial costs schedule amounted to just over £16.9m. ‘Of this sum, £14.7m was incurred down to the conclusion of the phase 1 trial and £2.2m was incurred thereafter,’ the ENRC said.
Speaking of Dechert, the judge said: 'I do not see that the Dechert defendants’ conduct in respect of the phase 1 trial itself was out of the norm. They did make an offer, it shows they were acting in a way that was reasonable, though the offer was beaten by ENRC.’
Giving reasons for not granting a reduction, the judge said: ‘Yes, an offer was made but it was made very late – five days before the trial.’
He added: ‘Points have been made on the amount of counsel, but I have ruled already that costs should be made on an indemnity basis. All parties at various stages employed large numbers of counsel.
‘I am not going to make any reduction.’
ENRC is suing international firm Dechert and Neil Gerrard, its former head of white-collar crime, for negligence. The mining company also alleges that, if not for the SFO’s breaches of duty, a criminal investigation, which was closed in 2023, would never have begun. The SFO denies this.
ENRC claims losses totalling some £21m would not have been incurred were it not for Gerrard’s ‘breach of duty induced by the Serious Fraud Office’. ENRC argues it should be compensated for fees and costs incurred for ‘unnecessary work’ carried out in consequence.
In earlier judgments, Waksman said the inducement claim against the SFO had been made out (subject to causation and loss) in respect of 15 disputed contacts, but the misfeasance claim was not made out. He also found Gerrard had leaked ENRC’s confidential information to the press and SFO in order to expand his investigation into bribery and corruption allegations.
This week’s hearing marks the end of the phase 1 and phase 1A trials. The second day of the hearing, to begin on Wednesday, will deal with phase 2 trial directions as well as an application to appeal brought by the SFO against the judge’s previous findings that the organisation was liable for ENRC’s losses.
The phase 2 trial will deal with loss.
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