'This is a strange case in a number of respects', said Deputy High Court Judge Sean O’ Sullivan KC in the opening of his judgment in this complex and difficult matter before the Commercial Court,[1] in which Howard Kennedy[2] acted for AMNS Middle East FZE, a joint venture between Arcelor Mittal and Nippon Steel, in a claim against LIQS Pte Ltd, a company owned by "embattled" Sanjeev Gupta's Liberty Steel group.[3]
Background
Arcelor Mittal acquired Essar Steel India and its subsidiaries in 2019 following the conclusion of contested insolvency proceedings.[4] On investigating the companies' accounts, they discovered a debt of over US$50 million, due to AMNSME from LIQS, a Liberty Group company, under a written agreement for payment of advances against future steel supplies (the "TAA").
LIQS denied AMNSME's claim to recover the monies, on the basis that an oral agreement had been made that the funds advanced under the TAA were in fact to be applied under a complex "dollarization programme", by which Liberty Group agreed to convert Essar's rupee debt to dollar debt. LIQS maintained that it was entitled to retain the monies paid by AMNSME as additional interest, to improve the interest rate above the level of interest permitted on foreign-currency debt by the Reserve Bank of India. It claimed that the oral agreement overrode the TAA, and suggested that the parties only executed the TAA to provide a cover for the payments under the dollarization agreement.
The money had been paid in different ways: some to LIQS itself, and some to other vehicle companies. The documentary record as to the basis and reason for the payments was very incomplete, but it was clear that some of the payments to third parties were made following requests for advances by LIQS, whereas others were made without any such advance request.
Ultimately, the Judge found that LIQS had not proved its alleged agreement, and that the disputed monies were recoverable, in full, on the basis of a restitutionary claim in unjust enrichment.
The case involved particular procedural and substantive challenges, and the judgment is of interest to litigators for multiple reasons.
The missing Counsel
LIQS was represented throughout the litigation by leading counsel and solicitors. However, shortly before the trial, LIQS's solicitors applied to stop acting. LIQS indicated that it would no longer participate in the proceedings or attend the trial. The reasons for this were not fully explained.
When LIQS failed to attend the trial, AMNSME applied to strike out LIQS's defence and counterclaim under CPR r. 39.3. The Judge had to consider the authorities regarding the Court's power to strike out on the failure of a party to attend trial.
Whilst the Judge was content to proceed in LIQS's absence, on the basis that LIQS was well aware of the trial and had deliberately chosen not to attend (applying Williams v Hinton [2011] EWCA Civ 1123), striking out the defence was a different matter.
First, the Judge did not consider that, even if he struck out the defence, judgment for the claim would follow. Judgment following strike out at trial is not the same as default judgment upon failure to file a defence at all, and is not available as a matter of course.
Second, the court may expect a claimant to prove its case at trial even if the defence has been struck out. The court is not required to enter judgment blindly where the claimant is present, and has prepared for trial, and may consider the merit of the claimant's claim on the available evidence (Collem v. Collem [2015] EWHC 2184 (Ch) and Payroller v. Little Panda Consultants [2020] EWHC 391 (QB)).
In support of this conclusion, the Judge made it clear that if the defendant does not attend trial and call its witnesses, or make an application to rely on their written evidence as hearsay, the contents of their witness statements will not be evidence to be considered at all. The Judge followed Williams v Hinton (supra) (per Gross LJ at [43]) rather than certain dicta in other judgments, which may be read as indicating that there might be some "evidence" before the court in the witness statements of witnesses who were not called by the party who had filed them.
In contrast, the Judge did strike out the counterclaim, in the absence of the defendant to advance that claim.
The unjust enrichment claim
The judge rejected LIQS's case that there was an agreement for the advances to be retained. However, AMNSME's entitlement to recover the monies paid required a sophisticated application of the law on unjust enrichment.
In relation to the three groups of payments (made to LIQS; made to third parties after a request by LIQS; and made to third parties without such a request in advance) the Judge separately applied the three elements of an unjust enrichment claim, namely (1) the defendant has been “enriched”; (2) the enrichment of the defendant was “unjust”; and (3) the enrichment of the defendant was “at the expense of” the claimant.
Establishing that the enrichment was unjust in each case was satisfied by the fact that the TAA had expired and no steel had been offered or supplied, such that consideration had totally failed (see Dargamo Holdings Ltd v Avonwick Holdings Ltd [2021] EWCA Civ 1149, and Barton v Morris [2023] UKSC 3). However, the enrichment of LIQS, and that it was at AMNSME's expense, were less clear.
These two elements were relatively simple to explain in relation to payments made by AMNSME to LIQS itself (by which it was unarguably enriched as required). However, the payments made to other vehicle companies (even if made at LIQS's request) did not so clearly enrich LIQS. AMNSME drew the Judge's attention to Chitty on Contracts (35th Ed.) at §33-129 and the case of Leigh v Dickeson (1884-85). However, the judge did not consider that a mere request by LIQS for the monies to be paid to a third party was sufficient, necessarily. The Court would need to go on to decide whether this amounted to enrichment on the facts.
In relation to payments made to third parties after a request from AMNSME, this was satisfied because the request was made for the payment to be made and to be treated as a payment to LIQS. Complying with that request necessarily indicated an acceptance of an enrichment of LIQS.
However, where no request was made in advance, the Judge was asked to rely upon later acknowledgments by LIQS that it owed to AMNSME the amounts paid under the TAA. Whilst it was not sufficient to say that LIQS ratified the payments, the Judge was satisfied that the acknowledgment that a debt had been created acted as sufficient demonstration that LIQS had accepted that the payments would be treated as payments to LIQS, creating a credit standing to AMNSME's account in LIQS's ledgers.
Conclusion
LIQS's failure to attend the trial presented an opportunity for the Court to consider the authorities regarding failure to attend trial, failure to call evidence and striking out.
The Judge's approach helps to confirm that the Commercial Court, confronted with this scenario, is likely to require a claimant to proceed to prove its case, even if that requires some court time to be devoted to considering the case on its merits.
In doing so, the Judge conducted a useful consideration of the law on unjust enrichment in circumstances where the enrichment is not by payments directly to the Defendant – and takes the form of payments to a third party at the request of the Defendant or in circumstances where the Court can be satisfied that the Defendant agreed that the payments were to its credit. In such cases, care is needed to prove enrichment on the facts.
[1] [2025] EWHC 150 (Comm).
[2] Duncan Bagshaw, partner, Eloise Crompton, senior associate solicitor and Ajay Fournillier, associate solicitor.
[3] Financial Times, 1 October 2021, 10 May 2022, 22 October 2023.
[4] https://www.ft.com/content/beb47378-9e67-11e9-9c06-a4640c9feebb
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