A mining giant’s challenge to a multi-million-pound legal bill should be heard in private, the High Court has ruled.
Eurasian Natural Resources Corporation (ENRC) has applied for an order for the taxation of the bills delivered by its former solicitors, Dechert LLP.
The company had entered into a formal retainer with Dechert in April 2011 to conduct an investigation into reports from a whistleblower alleging fraud in its overseas operations.
Dechert has billed more than £16.3m, of which around two-thirds was invoiced from July 2012 to April 2013.
After that point, ENRC became concerned about the level of the fees and what it alleged to be ‘serious overcharging’.
The retainer was terminated in March 2013, but Dechert later submitted invoices for around £5.1m.
ENRC applied for an assessment of the costs under section 70 of the Solicitors Act 1974, but argued that proceedings should be private because of the confidential and sensitive information involved in the investigation.
An investigation by the Serious Fraud Office has since developed into a criminal inquiry, and the company argued that some material in Dechert’s evidence could potentially and significantly prejudice its interest in the SFO inquiry.
The application by ENRC was made within 12 months of the delivery of the bills but after the bills had been paid. Accordingly, the application falls under section 70. Dechert has accepted that there should be a detailed assessment regarding the £5.1m paid after the termination of its retainer.
However, the burden is on ENRC to show ‘special circumstances’ justifying such an assessment for the balance of about £6.6m from previous payments.
In April, Master Howarth declined ENRC’s request for the application to be heard in private but gave permission to appeal.
Over two days in July, ENRC’s legal team led by Lord Pannick QC said it was ‘in the interests of justice’ to preserve the confidentiality from any wider disclosure and thus protect the documents and information from scrutiny by the SFO.
For its part, Dechert stressed the fundamental principle that the courts should sit in public.
The Honourable Mr Justice Roth (pictured) questioned what ‘legitimate interest’ Dechert had in insisting the application should be heard in public. He said there was no question the judgment itself should be kept private but ruled there was no need for the hearing itself to be in public.
‘There is the potential for very real prejudice to ENRC if the matter were heard in public,’ said Roth. ‘That is illustrated by the declared position of ENRC that if the order below stands, it will not proceed with its application. The effective protection of ENRC’s rights therefore requires that the matter be heard in private.’
ENRC told the Financial Times it was ‘delighted’ to have won, adding: ‘Had Dechert been allowed to publicly reveal privileged client business and repeat unfounded and untrue allegations, it would have effectively destroyed the concept of confidentiality for anyone who challenged their lawyers’ fees.’
Dechert declined to comment.