This country-specific Q&A provides an overview to Litigation laws and regulations that may occur in United Kingdom.
What are the main methods of resolving commercial disputes?
The three main methods in the UK for resolving commercial disputes are litigation, arbitration and mediation. Litigation would usually commence in the High Court in London according to the Civil Procedure Rules. Arbitration is governed by the Arbitration Act 1996 and the New York Convention. Both are adversarial processes. Mediation is a non-adversarial structured negotiation led by a neutral mediator with a view to agreeing a settlement. It is also not uncommon for parties to resolve a matter through negotiation either directly or through their legal representatives.
What are the main procedural rules governing commercial litigation?
The Civil Procedure Rules (“CPR”) govern the procedural aspects of litigation. The CPR is designed to ensure that cases are dealt with speedily and consists of rules as well as practice directions which provide further practical guidance on the rules. The CPR covers the timetabling and case management of the entire trial process, as well as specific aspects such as the service of documents, disclosure, witnesses and expert evidence, settlement offers, costs and appeals.
What is the structure and organisation of local courts dealing with commercial claims? What is the final court of appeal?
A commercial claim should be made in the High Court if it is worth more than £100,000. The trial would be heard in the presence of one judge. If the verdict is contested, either party may seek permission to appeal to the Court of Appeal where traditionally cases will be heard by a panel of three judges (although recent reforms mean that cases can be heard by two judges). The final court of appeal is the Supreme Court where normally five Justices hear an appeal, but it can be more in special cases (such as the decision on whether Parliamentary consent was necessary to invoke Article 50 and start the BREXIT process, where all 11 sitting Justices heard the case).
How long does it typically take from commencing proceedings to get to trial?
The basic timetable is dictated by the CPR, but considerable discretion is left to the Court to fix the deadlines for each stage of the process depending upon the complexity of the case. It is not uncommon to take at least 18 months to get to trial even for a relatively straightforward commercial dispute. Other cases can take much longer. Judges treat deadlines seriously and can impose sanctions on parties if they cause delays, such as costs or even striking out their case. The Shorter Trials Scheme pilot has proved popular and allows parties to get from issuing proceedings to judgment in less than a year. It is therefore worth considering this route for relatively simple claims with minimal disclosure and factual or expert evidence. Parties should, however, factor in the time for any appeals, which can be considerable as the Court of Appeal and Supreme Court are very busy.
Are hearings held in public and are documents filed at court available to the public? Are there any exceptions?
Statements of case are filed on a public register and can (in general) be searched and copied by members of the public once the parties have acknowledged service of the claim. Hearings and decisions are made in public, other than in exceptional circumstances. These include where: publicity would defeat the object of the hearing; the hearing involves matters relating to national security; the hearing involves confidential information (including information relating to personal financial matters); or publicity would damage that confidentiality or the court considers this to be necessary, in the interests of justice.
What, if any, are the relevant limitation periods?
The relevant limitation periods for different kinds of claim are set out in the Limitation Act 1980 and include a six year limitation period for claims in relation to a contract, tort, negligence or breach of trust, one year in relation to defamation and malicious falsehood and twelve years in relation to recovery of land. Time limits may be extended in certain cases, such as for latent defects or where there has been fraud or deliberate concealment. Limitation is a complex area and should always be reviewed carefully.
What, if any, are the pre-action conduct requirements in your jurisdiction and what, if any, are the consequences of non-compliance?
There are different pre-action protocols for some of the most common types of claims, such as debt claims or professional negligence claims. There is also a general Practice Direction which applies if there has been no specific pre-action protocol. It ensures that the parties have exchanged sufficient information to understand each other’s position, make decisions on how to proceed, attempt to settle issues without proceedings and support the efficient management of proceedings. Compliance with the protocols is not mandatory but the Court might take this into account when awarding costs or considering case management directions. It is therefore advisable to follow the relevant protocol whenever possible (although in some cases, such as when a limitation period is about to expire, it might be necessary to issue a claim and then engage in correspondence with the other side).
How are commercial proceedings commenced? Is service necessary and, if so, is this done by the court (or its agent) or by the parties?
Proceedings are commenced when the court issues a claim form (by stamping it with the court’s seal), as prepared and requested by the claimant. The claim form is the first ‘statement of case’ which includes the name of the court in which the claimant wants to be heard, the parties and the parties’ addresses, details of the claim and the remedy sought by the claimant. Once the claim form has been issued, the claimant must serve it on the defendant within four months, if the claim form is served within the jurisdiction (or six months if outside the jurisdiction, in which case the court’s permission may be required). Service can be effected by the Claimant or the Court (but it is advisable for a Claimant to serve itself so that it can be sure that it has been served and knows when).
How does the court determine whether it has jurisdiction over a claim?
The jurisdiction of the court will depend on whether the rules in the recast Brussels Regulation apply or the fallback position of the English common law (or other regulation for specialist matters). The recast Brussels Regulation applies to “civil and commercial” matters, and so covers most commercial disputes before the court. The court will generally have jurisdiction where the defendant is domiciled in England and Wales (subject to lis pendens or the exclusive jurisdiction of other EU courts). The court will also have jurisdiction where there is an exclusive jurisdiction clause in favour of England and Wales, or a close connection to England and Wales (e.g. if the dispute concerns land in England), or certain other connecting factors are met (such as where the defendant is domiciled in the EU and the contract in dispute was due to be performed in England or the tort took place there). Very briefly, the common law rules allow the court to take jurisdiction if the claim form is served on the defendant whist they are physically present in England and Wales, if the defendant submits to the jurisdiction voluntarily or if the court gives permission under one of the specific heads for permission (which depend upon showing a connection to England). The court retains considerable discretion under the common law to refuse jurisdiction if England is not the most appropriate forum. The position could change substantially after BREXIT depending upon what deal the UK and EU strike.
How does the court determine what law will apply to the claims?
In relation to contractual obligations, the English courts will generally apply Regulation 593/2008/EC (“Rome I”), which is in force across the EU and generally upholds the parties’ freedom to choose the applicable law. Where Rome I does not apply, common law rules prevail, which determine the proper law either through (1) the express choice of law within the contract, (2) inferring the intended law to apply and (3) the system of law with which the contract has its closest and most real connection. Regulation 864/2007/EC, or Rome II, applies to non-contractual obligations.
In what circumstances, if any, can claims be disposed of without a full trial?
The court has extensive powers of active case management, enabling it to strike out the whole or part of a statement of case which has no reasonable grounds or is likely to obstruct the just disposal of the proceedings. The court can also give summary judgment against a claimant or defendant where it determines that there is no real prospect of success and there is no other reason the case should go to trial. “Real prospect” is quite a low threshold in practice and has been interpreted to mean that the case is not fanciful.
What, if any, are the main types of interim remedies available?
The main types of interim remedies are interim injunctions, which can either require the other party to do a specific act or to refrain from doing an act. Examples are an order that a party preserves certain relevant evidence, or (in more extreme cases) allows another party to take copies of its IT systems, or “freezes” some or all of its assets (this is particular effective in cases of suspected fraud where money and other assets can be preserved until the claim is determined).
After a claim has been commenced, what written documents must (or can) the parties submit and what is the usual timetable?
The claimant must submit a particulars of claim, outlining its case. This can be served with the claim form or within 14 days after the claim form has been served. Once the defendant has been served, they have 14 days to file a defence (or 28 days, if they choose to file an acknowledgement of service first). These might (but not must) be followed by a Reply from the Claimant and a Rejoinder from the defendant, if there are further relevant points to plead. Both parties must also submit a directions questionnaire which helps the court decide which court or division is most appropriate for the case.
What, if any, are the rules for disclosure of documents? Are there any exceptions (e.g. on grounds of privilege, confidentiality or public interest)?
All documents which are or have been in the control of the client, and which harm or support its or another party’s case, must be disclosed in litigation. This includes privileged documents. However, a party can withhold privileged documents from inspection by the other side; so even though it knows about their existence through disclosure it cannot view them. Types of privilege include privilege against self-incrimination, public interest immunity, legal professional privilege, litigation privilege and common interest privilege.
How is witness evidence dealt with in commercial litigation (and, in particular, do witnesses give oral and/or written evidence and what, if any, are the rules on cross-examination)? Are depositions permitted?
Witnesses can be summoned to attend court. However, the normal procedure is for each side to produce and exchange written witness statements on which they rely well in advance of trial. These can be drafted by solicitors for the parties but should reflect the witnesses’ own words. The witness then typically confirms this evidence in person at the trial, together with any additional oral evidence, and then the other side is allowed to cross-examine the witness. Depositions are permitted in front of a judge, an examiner of the court or any other person the court appoints, but this is unusual.
Is expert evidence permitted and how is it dealt with? Is the expert appointed by the court or the parties and what duties do they owe?
Expert evidence is permitted at the court’s discretion as their primary role is to assist the court on technical matters. Experts owe a duty to those instructing them to exercise skill and care and to comply with the Civil Procedure rules and relevant code of ethics. They have an overriding duty to help the court – a duty which overrides any obligation to the person instructing them or paying them. In complex cases it is not unusual for each side to instruct their own expert on one or more issues, although the court has the power to order a single expert to be instructed jointly. Experts typically exchange written reports and then seek to agree a joint statement on points on which they agree and disagree on. They are then cross examined separately at trial or, in a more recent innovation known as “hot tubbing”, the experts will appear simultaneously and answer common questions from both counsel and the judge.
Can final and interim decisions be appealed? If so, to which court(s) and within what timescale?
Permission to appeal must be given by the court before a decision can be appealed. The application for permission to appeal can be made either to the lower court at the hearing at which the decision to be appealed was made or to the appeal court. If made to the appeal court, it must be requested in the ‘appellant’s notice’. This must be filed within 21 days to appeal to the Court of Appeal against a county court or High Court decision. Appeals to the Supreme Court must be made within 28 days.
What are the rules governing enforcement of foreign judgments?
The enforcement of foreign judgments is dependent upon where the judgment originates. The Brussels Regulation, recast Brussels Regulation and Lugano Convention govern the enforcement of the judgments originating from the European Union member states. Generally speaking, judgments given in one contracting state are freely enforceable in another contracting state with only minor administrative steps required. Common law governs other foreign judgments and requires that the foreign judgment is final and conclusive, excludes injunctions and must be decided on the merits of the case. The position could change substantially after BREXIT depending upon what deal the UK and EU strike.
Can the costs of litigation (e.g. court costs, as well as the parties’ costs of instructing lawyers, experts and other professionals) be recovered from the other side?
Generally, yes, costs are awarded to ‘indemnify’ the winning party for the cost and expenses incurred in vindicating or defending their rights. However, it is rare that the winner will be fully indemnified (a general rule of thumb is 50-70% recovery). There is a general ‘no profit’ rule that the costs awarded can never exceed the solicitor and client costs. The court will also consider the party’s conduct during trial among other things when determining costs.
What, if any, are the collective redress (e.g. class action) mechanisms?
There are various procedural mechanisms which can be used to bring a ‘group action’ in the High Court: joint claims by multiple claimants; consolidation of separate claims into one set of proceedings which can be managed together; group litigation orders (“GLOs”) where multiple individually commenced claims have common or related issues of fact or law; and representative claims where one representative acts on behalf of one or more persons with the same interest in the claim (but the “same interest” is interpreted very narrowly). There is also a much more liberal collective actions regime for competition law claims in the Competition Appeals Tribunal (“CAT”) where the CAT has a wide discretion to certify that claims can continue on behalf of, for example, victims of a cartel, on an opt-out or opt-in basis, and approve collective settlements where appropriate.
What, if any, are the mechanisms for joining third parties to ongoing proceedings and/or consolidating two sets of proceedings?
The procedures to add third parties to ongoing proceedings or to consolidate two sets of proceedings are outlined in the Civil Procedure Rules. Court approval is generally required (although Part 20 Defendants can be added without permission at the time of filing the Defence). To add parties to an ongoing trial, the court must find that it is ‘desirable’ to add the new party to resolve the matter. The test for joint claimants are that the claims can be ‘conveniently’ disposed of in the same proceedings. For a group litigation order to be made, the issues must be common or related.
Are third parties allowed to fund litigation? If so, are there any restrictions on this and can third party funders be made liable for the costs incurred by the other side?
Third party litigation funding is permitted, however it must not breach the rule against ‘maintenance and champerty’, meaning there must be no element of impropriety or corruption of justice. This is a complex and changing area. “Nuisance” claimants who “buy up” claims they have no legitimate interest in will be not permitted. Generally, litigation funders should follow the ‘Code of Conduct for Litigation Funders’ produced by the Association of Litigation Funders. Third party funders can be made liable for costs incurred by the other side. Litigation funding is becoming increasing common in class action disputes, such as cartel damages claims or securities litigation.
What, in your opinion, is the main advantage and the main disadvantage of litigating international commercial disputes?
One of the main advantages of the English court’s is their global reach. London’s status as a global commercial centre means that defendants face a heavy price if they do not obey the court’s orders as significant commercial actors can rarely afford to be unable to come to London or have assets in the jurisdiction. This makes London a popular forum for fraud cases, where the power to compel worldwide asset preservation and disclosure is key. Costs are the main disadvantage, although London is not alone in this and clients can mitigate the high costs of litigation by having up front conversations with their legal advisors about the economies of litigation and what other alternatives (such as mediation or settlement discussions, or litigating efficiently, such as through the Shorter Trials Scheme) are available.
What, in your opinion, is the most likely growth area for disputes for the next five years?
A likely growth area for disputes will be in class actions. These are more established in jurisdictions such as the US, Canada and Australia but procedures are now in place in England to make claims easier to commence and manage, and law firms and litigation funders are more adapt at gathering and funding classes. Cartel damages case and securities litigation are likely to increase.
What, in your opinion, will be the impact of technology on commercial litigation in the next five years?
Disclosure review exercises are most likely to be affected as Technology Assisted Review (TAR) gains increased recognition and other automated techniques are adopted by parties and, most importantly, the courts to sift through the vast quantities of data available. Also, automated processes, such as intelligent research tools and “smart” contracts have and will continue to take over some task previously performed by junior lawyers. This will place even greater emphasis on lawyers to focus on the specific problems faced by their clients and tailor their advice carefully in order to work as efficiently as possible.