CA-2025-000525 - [2025] EWCA Civ 1307

At the material times, prior to January 2014, ENRC was a public limited company and the parent of a diversified natural resources group, including extensive mining operations in Kazakhstan, the Democratic Republic of Congo and elsewhere. It had been listed on the London Stock Exchange since 12 December 2007, had become a member of the FTSE 100 on 12 March 2008, and had a peak market capitalisation of US$20 billion. The group had very extensive credit facilities with numerous financial institutions.

The SFO announced the opening of the CI on its website on 25 April 2013, stating that “[t]he focus of the investigation will be allegations of fraud, bribery and corruption relating to the activities of the company or its subsidiaries in Kazakhstan and Africa”. The same day Moody’s downgraded ENRC’s corporate family rating from Ba3 to B1 and placed that rating on review for further downgrade. Shortly afterwards Moody’s explained that the SFO’s criminal investigation and boardroom changes at ENRC were “credit negative” and that the downgrade was “in response” to those developments. In May 2014 Standard and Poor’s stated that it “viewed ENRC’s access to funding as constrained by the risks related to an ongoing [SFO] investigation”.

ENRC was de-listed from the London Stock Exchange on 25 November 2013 and ceased to be a public limited company on 16 January 2014. It is currently in the ultimate beneficial ownership of ERG SARL.

In paragraph 59 of its Particulars of Claim in the 2019 proceedings, ENRC set out its claim for “consequential loss”, alleging that the ongoing CI had damaged ENRC’s reputation and “resulted in… losses in the form of its loss of a chance to borrow funds from, or on more advantageous terms from, lenders who have declined to deal with ENRC and/or demanded increased rates of interest for the same reasons”. ENRC contended that such losses should be assessed at an inquiry as to damages after liability and other issues had been determined.

ENRC disputed its obligation to provide further particulars of its consequential loss at that stage, but on 10 January 2020 its solicitors volunteered some further information, including that, as at 31 December 2012, ENRC had borrowings of US$5.833 billion. The average interest rate that ENRC paid in relation to its borrowings increased from 5.9% in 2012 (before the CI was opened) to 7.4% in 2014 (the year after the CI opened). The increase equated to US$90 million per year. No suggestion was made that the borrowing was by entities other than ENRC.

The SFO’s solicitors responded on 13 January 2020, making the point that if specific transactions with specific lenders were not identified until a quantum trial, there was a real risk that relevant counterparties would cease to maintain their records or employees would move on, hindering the SFO’s defence.

On 13 May 2020 the Judge directed split trials, with the consequential losses being dealt with in Phase 2, including disclosure in relation to those issues. The Judge did state, however, that if there were to be further amendments to the pleadings, they should be made then and not left until later. No further amendments to the consequential loss claim in the 2019 proceedings were proposed until the applications now under consideration.

By way of the proposed amendments, ENRC seeks to claim increased borrowing costs for the period 2013-2016, totalling US$91.3m (rising to US$290m including interest). However, it now recognises that only US$12.6m (14%) of that increased borrowing cost related to loans in ENRC’s own name, the remaining US$78.7m relating to debt held at subsidiary level. In particular (i) US$35.8m (39%) related to the indebtedness of ENRC Finance Limited and ENRC NV, themselves 100%-owned holding companies below ENRC in the corporate structure; (ii) US$30.5m (33%) related to the debts of Kazakhstan subsidiaries named SSGPO JSC and TSC Kazchrome JSC, 100% and 99.56% owned by ENRC NV respectively; and (iii) the remaining US$12m (14%) was in relation to the borrowings of five other ENRC subsidiaries. ENRC was a guarantor of much of the debt held by the subsidiaries, so that it was an obligor for over 80% of the total group debt.

The amendments also sought to address the fact that certain costs and fees claimed as a result of the wrongdoings of the SFO and the Dechert defendants were in fact incurred by subsidiaries and were not recharged to ENRC. But the focus of the applications and of this appeal was on the increased borrowing costs, by far the larger claim.

As referred to above, the documents of ENRC were preserved as from 2013 as were those of the two holding companies, ENRC Finance Limited and ENRC NV. Those of the new parent company, ERG SARL, were also preserved from its incorporation in December 2014. The documents of the other borrowers in the group, however, were not subject to a litigation hold.