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Eurasian Natural Resources Corporation Limited (“ENRC”) v (1) Dechert LLP (2) David Neil Gerrard and ENRC v The Director of the Serious Fraud Office (“SFO”)  

Mr Justice Waksman has now handed down judgment on liability in one of the top trials of 2021 which decided liability in ENRC’s claims against Dechert, David Gerrard and the Director of the SFO, Richard Alderman. The trial lasted no less than 47 days in total.

From 2011 to 2013, ENRC retained the services of Mr Gerrard who was a partner at Dechert LLP to lead an investigation into one of its subsidiaries operating in Kazakhstan. On 9 August 2011, an article appeared in The Times which exposed material which was damaging to ENRC and was based on leaked documents, including privileged material. This article brought potential corruption and wrongdoing to the attention of the SFO who then proceeded to launch an investigation into ENRC. This resulting in considerable increase in the work to be done by Dechert on behalf of ENRC as it was not limited to the Kazakhstan investigation but spanned an investigation into ENRC’s activities in Africa. Two further damaging articles appeared in the press in December 2011 and March 2013. These articles were also based on confidential leaked information.

ENRC brought two sets of proceedings against Dechert, Mr Gerrard and the SFO. The claim against Dechert and Mr Gerrard is for negligent breach of duty and the core allegation against Dechert and Mr Gerrard is that they acted recklessly without their client’s authority and against their client’s interests. In respect of the SFO, ENRC alleged that Richard Alderman (the Director of the SFO) acted in concert with Mr Gerrard and were similarly reckless as they knew that he was acting without his client’s authority and against his client’s interests. ENRC claimed that the SFO’s actions amount to the tort of inducement and misfeasance in public office.

In his judgment, Mr Justice Waksman found that Mr Gerrard had instigated all three leaks to the press and that he had engaged with Mr Alderman prior to the publication of the first article and at the very least had alerted Mr Alderman to it. Mr Gerrard was found to have negligently and recklessly breached his duty to his client on numerous occasions including giving the wrong advice and unnecessarily expanding the investigation as well as disclosing privileged material. Dechert and Mr Gerrard’s contributory negligence, limitation and limitation of liability defences were all resoundingly rejected. Mr Justice Waksman decided all of ENRC’s claims in their favour against Dechert and Mr Gerrard and he was scathing in his critique of Dechert and Mr Gerrard. A prime example is at paragraph 500 of his judgment where he remarks that Mr Gerrard’s motives were tainted by his “desire to fuel the work that needed to be done and also a separate desire to ingratiate himself with the SFO for personal reasons, unconnected with ENRC.”

Mr Alderman as the Director of the SFO was found to have tipped off Mr Gerrard about the SFO Letter that was sent to ENRC on the day it was sent thereby committing a breach of statutory duty and the tort of inducement. However, ENRC did not succeed with its claim for misfeasance in public office on the basis that the SFO were not motivated by a desire to assist Mr Gerrard generate further fees but instead had engaged in “bad faith opportunism”.

Further trials on causation and quantum will follow so watch this space…

Ruhi Sethi-Smith

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