The conclusion of a long-running commercial fraud dispute, culminating in a £177 million interest award in ACL Netherlands v Sandelson, provides an important opportunity to reflect on how legal costs are managed in high value litigation.

While the headlines have focused on the scale of the damages, including a £700 million award made previously, the judgment also contains notable observations on the way the claim was conducted, particularly in relation to proportionality and the overall level of costs incurred.

For those involved in complex commercial disputes, the case reinforces a consistent theme, which is, legal costs are not simply a by-product of litigation, they are a central strategic issue.

How large can legal costs become in high value fraud claims?

The scale of this case was exceptional, even by the standards of commercial litigation.

The proceedings involved:

• A claim originally advanced at approximately $5 billion
• More than 1,700 pages of judgments
• Hundreds of thousands of documents
• Extensive expert and factual evidence

Against that background, it is perhaps unsurprising that the court recorded legal costs of at least £120 million for one party alone.

This level of expenditure highlights a key reality of high value disputes, that is, costs can escalate significantly where the scope of the litigation is not tightly controlled. 

What did the court say about proportionality?

A central feature of the judgment was the court’s criticism of how the claim had been pursued.

Mr Justice Hildyard noted that:

• The claim had been substantially exaggerated
• The approach taken was difficult to reconcile with proportionality
• The case could have been narrowed by reference to the sums realistically at stake

The court also observed that the claimants had pursued the litigation in a way that resulted in unnecessary complexity and cost.

These comments are significant. They underline that even in high value cases, there is an expectation that litigation will be conducted in a proportionate and disciplined way.

Why do costs escalate in complex commercial disputes?

In large-scale fraud and commercial claims, costs are often driven by a combination of factors:

• Extensive disclosure exercises involving large volumes of documents
• Multiple expert disciplines
• Detailed financial and technical analysis
• Lengthy trial preparation

Each of these elements can be justified in isolation. However, without careful oversight, they can collectively lead to costs that are difficult to defend.

This case illustrates how quickly costs can become “enormous” where there is no effective control over the scope of the litigation.

Does success guarantee recovery of costs?

One of the more important practical points is that success on liability does not automatically mean full recovery of costs.

Where a court identifies concerns around proportionality or the conduct of the claim, this can have a direct impact at detailed assessment.

The court will consider:

• Whether costs were reasonably incurred
• Whether the amount claimed is reasonable
• Whether the overall figure is proportionate

In cases where the court has already expressed concerns, there is an increased risk that significant reductions may follow.

What does this mean for litigation strategy?

The key takeaway is that costs must be managed as part of the overall litigation strategy, not addressed at the end.

In practice, this means:

• Identifying the real issues in dispute at an early stage
• Avoiding unnecessary expansion of the claim
• Controlling the use of experts and evidence
• Ensuring work undertaken is proportionate to the value and importance of the case

Where this discipline is applied, costs are far more likely to be recoverable.

Where it is not, even a successful outcome may be accompanied by criticism and reduced recovery.

Can complexity justify high costs?

Complexity is often relied upon to justify significant legal spend, particularly in fraud cases.

However, this case demonstrates that complexity alone is not enough.

The court expects parties to:

• Focus on what is genuinely in issue
• Avoid duplication and inefficiency
• Maintain a proportionate approach throughout

Where a claim becomes unnecessarily wide or burdensome, that will be reflected in the court’s approach to costs.

How ARC Costs can assist in high value disputes

At ARC Costs, we regularly advise on high value commercial and fraud-related litigation, where costs can quickly become substantial.

Our role is to ensure that costs are not only properly recorded, but also:

• Structured in a way that supports recovery
• Managed in line with proportionality principles
• Presented clearly and effectively
• Defended robustly where challenged

We assist with:

• Strategic advice on costs exposure and recoverability
• Preparation and negotiation of substantial Bills of Costs
• Drafting and responding to Points of Dispute
• Ongoing cost management throughout litigation
• Preparation for and representation at detailed assessment

In complex cases, early involvement allows us to identify risks before they become issues at assessment.

To find out more on how we can assist with costs in complex fraud and other commercial disputes, please do not hesitate to get in touch. 

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