Contributed By Signature Litigation LLP
There are three distinct legal jurisdictions within the UK. These are England and Wales, Scotland and Northern Ireland. Both England and Wales and Northern Ireland are common law jurisdictions, while Scotland has a mixed legal system which contains elements of civil law as well as common law. The UK Parliament (located in Westminster, London) has jurisdiction to legislate in Scotland, Wales and Northern Ireland in respect of certain reserved and excepted matters (for example, defence), but otherwise each of these nations has effectively been granted autonomy in respect of legislating for all other matters. The differences between the three legal jurisdictions are outside the scope of this chapter, and the following material focuses on the legal regime in England and Wales and the English courts, as this is the regime that is most commonly featured in commercial contracts.
At its most basic, the legal regime in England and Wales has three elements:
If statutory legislation has been enacted in a particular area and provides a complete answer to the point at issue, the English courts are bound to follow the statute. However, to the extent that this is not the case, the primary residual source of law is the common law, which arises as a precedent based on the reasoning of earlier judicial decisions. The English courts are primarily adversarial in nature and the parties put forward their position both by way of written submissions and oral argument.
The judiciary in England and Wales is drawn from highly qualified senior barristers, generally with decades of experience appearing in court. Salaries and pensions of the judiciary are paid by the state and once appointed as a judge, dismissal is rare. The independence and security of the judiciary are foundations of the English legal system.
Depending on the value or complexity of the case, civil proceedings at first instance are usually commenced in either a County Court or the High Court of Justice. The High Court is based at the Royal Courts of Justice in London but also has many satellite locations known as district registries across the country. The High Court has three divisions: the Family Division, the Queen's Bench Division (QBD) the Chancery Division. The Family Division has jurisdiction to hear matrimonial disputes and cases relating to children's welfare. The QBD has both a criminal and civil jurisdiction. Its civil jurisdiction hears general common law cases arising out of contract (except those cases specifically allocated to the Chancery Division) and claims in tort arising from wrongs against the person or property (including defamation, libel and trespass). It also has several specialist jurisdictions, including the Administrative Court, which deals with the validity of official decisions including those of the government, local authorities and tribunals. The Chancery Division hears civil cases, primarily business or property disputes and cases concerned with company and partnership law, trusts law, fiduciary relationships, bankruptcy and intellectual property.
Since October 2017 the work undertaken by the QBD and the Chancery Division has been rationalised by the creation of the Business and Property Courts, a specialist centre for hearing financial, business and property litigation. The Business and Property Courts, which have brought together the work of the Chancery Division and various specialist courts of the QBD, are divided into separate specialist courts or lists. Users must indicate on the claim form which court, list or sub-list should be used for the claim and choose between a list of courts. These include:
The objective of the Financial List is to ensure that cases which would benefit from being heard by judges with particular expertise in the financial markets or which raise issues of general importance to the financial markets are dealt with by judges with suitable expertise and experience.
The Financial List is currently conducting a pilot scheme, the Financial Markets Test Case Scheme, under which the court may grant declaratory relief in 'friendly actions' involving financial market issues. The aim is to provide a mechanism for the court to provide guidance on relevant financial market issues without the need for a cause of action between the parties to the proceedings.
Other specialist courts include:
As well as the courts mentioned above, there are a number of tribunals established within the jurisdiction which deal with specialist proceedings. These include the Employment Tribunal, which hears disputes concerning industrial and labour issues, and the Competition Appeals Tribunal (CAT), which decides cases concerning competition and economic regulatory issues.
Appeals from the lower courts and the tribunals are, in the main, heard by the High Court (though in certain cases appeals may be made directly to the Court of Appeal). Appeals from the High Court are heard by the Court of Appeal. The Supreme Court of the UK hears appeals from the appellate courts of England and Wales, Scotland and Northern Ireland.
Open justice is a fundamental principle of the law of England and Wales. Accordingly, it is usual for civil litigation to be conducted in public and for members of the public and the press to be free to attend and observe the proceedings. However, in specific circumstances (usually where the case concerns confidential information, national security or a need to protect children or vulnerable individuals arises) the open justice principle can be modified and the court can order that hearings be conducted in private, that names be anonymised and restrictions be imposed on reporting about the proceedings.
In keeping with the principle of open justice, the statements of case filed by the parties to a civil dispute (which are the claim form, defence and reply), are normally available to non-parties (on payment of a fee to the court) without requiring permission from the court. Any judgments or orders given in public will also usually be available to a non-party. A non-party must, however, apply to court to see any other documents from the court file. It is possible for a party to a civil dispute to apply to the court for the court file to be kept confidential to non-parties.
In civil claims allocated to the small claims track in the County Courts, any person accompanying the litigant may exercise rights of audience. Otherwise, rights of audience in the English courts are generally restricted to litigants in person, persons exercising rights granted by statute (for example, health and safety inspectors) or persons granted rights of audience by certain authorised bodies. The latter category includes:
Foreign lawyers who are entitled to practise as legal professionals in a jurisdiction other than an EU member state can (and in most cases must) be registered with the SRA as a Registered Foreign Lawyer (RFL) in order to practise law in England and Wales. This does not convert their qualification or act as a further qualification, and they still remain members of their home profession. Similarly, European lawyers must register themselves as a 'Registered European Lawyer' if they are wholly, or partly, based in the UK.
A Registered Foreign Lawyer cannot conduct litigation in their own name, but if they work for a law firm can conduct litigation under the name of their firm. Foreign lawyers are unable to appear in open court, but can appear in open chambers if supervised by a solicitor or other lawyer in the firm who is entitled to conduct the litigation.
Litigation funding (which includes any arrangement whereby a third party funds the costs associated with a party's case and in doing so shifts some of the risks associated with litigation away from the party who is receiving the funding) has seen rapid growth in England and Wales in recent years and is becoming ever more commonly accepted in litigation and arbitration proceedings. This was not always the case. Indeed until fairly recently third party funding was prohibited on public policy grounds arising from long-standing concerns that a third party might manipulate the litigation process for their own advantage. Litigation funding remains unregulated in England, though many major funders operating in the jurisdiction have signed up to the voluntary code of conduct of the Association of Litigation Funders.
Aside from the question of what economic risk a party is willing to take in relation to a dispute (including in respect of the adverse costs risk – see 2.5 Third Party Funding Costs, below), there are a number of other important considerations that should be borne in mind by clients and lawyers when considering whether a case is appropriate for litigation funding. Most importantly, it is essential to ensure that the third party funder does not control the proceedings. While the funder can be involved in making certain decisions (and should as a matter of good practice be kept up to date on developments in the case), the funder must not take or influence the decisions. Furthermore, care should be taken to ensure that the return that is due to the funder is not disproportionate to the risk that the funder would be taking in funding the proceedings.
Usually third-party funders will have a preference for funding commercial claims, as these are most likely to offer the funder opportunities to make a return for the risks involved in funding (litigation funding is generally advanced on a non-recourse basis, so the funder receives no return and loses its capital if the funded party is not successful).
Litigation funding is available to both claimants and defendants, but as a general rule of thumb third-party funders who operate in England and Wales will rarely fund defendants unless they have a substantial counterclaim. This is because the funder will usually share in the proceeds of any damages recovered.
Generally, the costs of third party funding are not recoverable from the other side in litigation. In respect of arbitral proceedings, however, the court recently refused to set aside an arbitration judgment that awarded the successful party its costs of funding on the basis that an arbitral tribunal's power to award costs is broad and not constrained by the Civil Procedure Rules.
Third-party funders are able to determine the minimum and maximum amount that they wish to fund. This is purely a commercial decision to be taken by the funder.
Funders will usually consider funding most of the costs involved in commencing and prosecuting litigation or arbitration proceedings. As well as the funded party's costs (and potentially the costs of the opponent party, for example, in circumstances where the funded party has been unsuccessful at an interim hearing), the funder might agree to pay others costs including court fees or tribunal fees and the costs involved in meeting an application for security for costs.
It is fairly common for a funded party to take out adverse costs insurance, commonly on the basis of an 'after the event' (ATE) policy, which will usually insure both the party's own costs, including disbursements, as well as the risk of having to pay the opponent's legal fees if defeated. The funder may also agree to fund the costs of the premium for such cover.
In addition to third party funding, there are two further notable schemes that allow a party to shift some of the economic risks involved in litigation onto others.
Conditional fee arrangements (CFAs), allow lawyers to share the risk of litigation or arbitration with their clients. These may be used in civil litigation in England and Wales but cannot be used in all types of cases, for example in family law proceedings. CFAs (which are regulated by the Courts and Legal Services Act 1990) are an agreement between a client and a lawyer whereby the lawyer agrees that some or all fees and expenses incurred will only be paid to the lawyer in certain circumstances, and usually only if a client wins the case – ie, a form of 'no win, no fee' agreement. Usually the lawyer will receive an uplift in fees in the event of a successful outcome; however, this uplift must be capped at 100% and must be expressed as a percentage of the lawyer's ordinary fee.
Damages Based Agreements (DBAs) are also a form of 'no win, no fee' agreement, but with a success element or 'contingency fee' that is based on the amount of damages recovered in the proceedings as opposed to the normal fees of the lawyer. DBAs have been permitted in civil litigation in England since April 2013 but are not permitted in all types of cases (for example, they are not permitted in most family law proceedings). DBAs are regulated under the Damages Based Agreement Regulations 2013, and the level of contingency fee that can be recovered by the lawyer is capped in most cases at 50% (employment tribunal matters are capped at 35% and personal injury matters at 25%). Since the DBA Regulations came into force, relatively few DBAs have been entered into, at least in part due to uncertainties regarding the DBA Regulations. In 2018, the government issued a consultation with regard to DBAs (among other things), and it seems reasonably likely that changes will be made to the DBA Regulations which may mean that DBAs become a more popular option in the future.
Currently, 'hybrid' DBAs by which a lawyer receives a reduced hourly rate plus a contingency fee (ie, a percentage of the damages recovered) in the event of success, are not permitted under the DBA Regulations. This does not prevent 'sequential hybrid' DBAs where there are different fee arrangements for different stages of the case, although it is not clear whether the lawyer is required to offset amounts received under the non-DBA funding from any contingency fee received under the DBA.
There are no formal time limits within which a party that wants funding needs to obtain it (it is quite possible to obtain funding even from a pre-action stage).
The Civil Procedure Rules contain various 'pre-action protocols' that set out the steps which the court would normally expect the parties to take before commencing proceedings.
There are currently 13 specific protocols which apply to certain types of disputes, such as clinical or professional negligence disputes. If no specific protocols apply to a particular dispute, then the parties are expected to follow the general protocols set out in the 'Practice Direction on Pre-action Conduct and Protocols'. These general protocols provide, for example, that the claimant should write to the defendant with concise details of the claim, including the basis on which the claim is made, a summary of the facts, what the claimant wants from the defendant and how any money claimed is calculated. The defendant should respond within a reasonable time (14 days in a straightforward case, and no more than three months in a very complex one) and confirm whether the claim is accepted or not, including reasons, and provide details of any counterclaim. The parties are also expected to disclose key documents relevant to the issues in dispute.
The parties are also expected to consider negotiation, or an alternative form of dispute resolution, before commencing court proceedings, and should continue to consider whether they might reach a settlement by such means throughout the proceedings.
Whilst the protocols are not mandatory, a failure to comply with them without good reason may attract sanctions. The court can take non-compliance with the pre-action protocols into account when making case management directions and orders as to costs. In deciding whether to impose sanctions, the court will consider the seriousness of any non-compliance and what level of compliance is required given the size and nature of the claim. There may of course be scenarios where compliance with the pre-action protocols is not possible, such as when seeking urgent injunctive relief or where the claim would become time-barred.
The provisions governing limitation periods under English law are set out in the Limitation Act 1980. If a claim in an English court is governed by foreign law, the limitation regime of that foreign law will apply (although English law, as the applicable procedural law, will determine on what date proceedings have been commenced for the purpose of calculating whether a claim has been brought in time). The relevant limitation period depends on the type of claim being advanced. For example, claims in relation to a breach of a simple contract and tortious claims generally (with the exception of certain specific torts such as personal injury claims) must be brought within six years. Claims in respect of a breach of an obligation under a deed must be brought within 12 years.
The limitation period begins to run from the date of the accrual of the cause of action. In contractual claims, this is the date of the breach of contract, whereas in tortious claims it is the date the damage was suffered. Time ceases to run for limitation purposes once a claim has been instituted by issuing a claim form at court.
There are certain exceptions to the general limitation periods. For example, in respect of a tortious claim involving 'latent' damage, the limitation period will be the later of six years from the accrual of the cause of action or three years from the date when the claimant knew or ought to have known the material facts regarding the loss suffered, the identity of the defendant and his or her cause of action. In addition, where an action is based on fraud and any fact relevant to the claimant's cause of action has been deliberately concealed by the defendant, the limitation period does not begin to run until the claimant has discovered the fraud or could have discovered it with reasonable diligence.
For the court to consider the impact of any limitation period, the defendant must raise the issue in its defence. If the limitation period has expired, the defendant has a complete defence to the claim.
In determining whether the English courts have jurisdiction to hear a dispute, two principal sets of rules must be considered: the European regime and common law rules.
Regulation (EU) 1215/2012 (known as the Recast Brussels Regulation) takes precedence over the common law rules where it applies. Under the Recast Brussels Regulation there is an effective hierarchy of provisions governing jurisdiction. First, there are a number of matters over which EU member states have exclusive jurisdiction, such as disputes in relation to immovable property or intellectual property rights. Next, the courts will consider whether there is a valid jurisdiction agreement between the parties. If not, an appearance by the defendant in the proceedings (by, for example, making an application other than to contest jurisdiction) will give the English court jurisdiction to hear the dispute. In the absence of these scenarios, the general rule is that a defendant should be sued in the country in which the defendant is domiciled. There are some notable exceptions to this general rule, however, whereby a defendant who is domiciled in an EU member state may alternatively be sued in the courts of another member state. These exceptions include:
If the Recast Brussels Regulation (or other European treaties) do not apply (for example if the defendant is not domiciled in the UK), the court will determine whether it has jurisdiction by applying common law rules. These rules generally provide that the court has jurisdiction where a defendant has been validly served with the proceedings within the jurisdiction, for example by way of personal service (discussed in 3.5 Rules of Service, below). However, the defendant may argue that the English court should not exercise its jurisdiction if there is a more appropriate forum (known as the doctrine of 'forum non conveniens'). The court will also have jurisdiction where the defendant otherwise submits to the jurisdiction by, for example, taking a step in the proceedings.
If the defendant cannot be served with the claim form within the jurisdiction, the claimant may obtain the court's permission to serve the claim form outside of the jurisdiction, provided the claimant shows that:
The 'jurisdictional gateways' include:
Generally court proceedings in England and Wales are commenced by the issuing of a 'claim form' at court. There are certain exceptions to this, such as bankruptcy or insolvency proceedings, which are commenced by way of a court petition.
The claimant is required to set out the names and addresses of the respective parties, a concise statement of the nature of the claim, the remedy sought and, where the claim is for money, the value claimed. The details of the claim (the 'particulars of claim') may either be part of the claim form or a distinct document to be filed at court shortly after the service of the claim form on the defendant.
In order to issue a claim form, a fee is payable which is generally determined by reference to the value of the claim (the highest fee payable is currently GBP10,000 for any claims exceeding GBP200,000).
There is an increasing drive towards electronic working throughout the court system in England and Wales. Currently, it is a requirement in cases in the Business and Property Courts in London to file documents (including the claim form) via an online portal (exceptions apply for litigants in person). It is anticipated that online filing and electronic working will expand across the court system in the coming years.
The formal process for notifying a defendant of proceedings against it is by formally serving the claim form on the defendant.
The default position is that the court serves the claim form, however, in practice, the solicitor for the claimant will usually choose to serve the claim form itself so that it has control over the timing of service. Service of the claim form on a defendant in England and Wales must be effected within four months of the issuing of the claim form.
Service of the claim form may be effected by personal service, first-class post, fax, email or by leaving the claim form at a specified address. For individuals, service should be made to their usual or last known address. In respect of companies, the address for service is their principal office or any place of business with a real connection with the dispute or their registered office. Where a defendant has instructed solicitors to accept service on its behalf, the claimant can serve the claim form on the solicitors.
If a claimant has difficulty serving a claim form on a defendant, for example, if the defendant is uncooperative and does not provide an address for service or it is otherwise not possible to determine the defendant's current address, the claimant may apply to court for either an order that service may be effected by an alternative method or an order that service be dispensed with. The court has previously allowed alternative service of the claim form by way of social media. The court will generally only dispense with service of the claim form in exceptional circumstances.
For defendants based outside the jurisdiction but within an EU member state, no permission from the court is required. However, if the defendant is not within an EU member state the claimant must first obtain the court's permission to serve the claim form outside the jurisdiction. The claimant then has six months from the date of issuing to effect service.
The general rule is that the claimant must serve the particulars of claim on the defendant within 14 days of the service of the claim form. In the Commercial Court, however, the particulars of claim must be served within 28 days of the filing of an acknowledgment of service which indicates an intention to defend the proceedings. There are certain prescribed documents that should be served along with the claim form and/or particulars of claim, including notes for the defendant on how to reply to the claim and a response pack.
It is important to note that if a defendant becomes aware that a claim form has been issued against it, the defendant may compel service of the claim form within 14 days.
For proceedings served within the jurisdiction, the defendant must generally file at court and serve on the claimant a statement of defence within 14 days of service of the particulars of claim, unless the defendant has acknowledged service of the proceedings within that timeframe, in which case the defence is due 28 days after service of the particulars of claim. In the Commercial Court, the defendant must file and serve an acknowledgement of service within 14 days of service of the claim form in any event, and then file and serve its defence 28 days after service of the particulars of claim. If the defendant does not do this, the claimant may apply to court for default judgment against the defendant.
In claims seeking to recover money and/or the delivery of goods, default judgment may be obtained without a hearing by filing a standard-form request. In respect of default judgment in non-money claims, for example where equitable relief is sought, the claimant must make an application to court and judgment may only be obtained at a hearing. Certain money claims may also require the court's permission to obtain default judgment, for example, where the claim form has been served outside the jurisdiction without permission under EU regulations or claims against vulnerable individuals.
It is open to a defendant against whom a default judgment has been entered to apply to set aside the judgment. The court will grant such an application if the defendant can show that the default judgment was wrongly granted or that the defendant has a real prospect of successfully defending the claim.
In England and Wales there are a number of means for bringing collective litigation (ie, class actions). The most common methods are the use of group litigation orders (GLOs) and claims by representative claimants. GLOs are typically used to group together several claims where there is more than one claimant and the causes of action raise common or related issues of fact or law. These claims are then managed using specific procedural rules. Representative proceedings may be brought where more than one claimant has the same interest in the claim. The claim is begun by one or more persons as a representative of all others who have the 'same interest' in the claim.
It should be noted that there are separate procedures for bringing competition law claims before the Competition Appeal Tribunal (CAT). The Consumer Rights Act 2015, which came into force on 1 October 2015, expanded the CAT's powers, including the ability to order injunctive relief.
There is no specific requirement that solicitors must provide their clients with costs estimates. However, the Code of Conduct of the Solicitors Regulation Authority, which regulates solicitors in England and Wales, provides that clients should receive the best information available about the likely overall cost of their matter, both at the time of engagement and when appropriate during the progression of their matter.
Where proceedings are subject to costs management, the court manages the costs to be incurred by the parties that are recoverable from the other side so as to promote proportionate costs. In such cases, the parties to those proceedings are required to file and serve costs budgets in a prescribed form setting out their expected costs of the proceedings through to trial. Even in proceedings which are not subject to formal costs management, the court has a general power to require a party to file and serve an estimate of their cost at any time deemed appropriate.
The Courts of England and Wales have wide ranging powers to make interim orders upon application, including in respect of injunctive relief, which either prohibits a party from performing a particular act or compels the performance of a particular act.
There are two mechanisms by which a claimant may obtain early judgment in respect of their claim without a full trial being held: default judgment and summary judgment. Default judgment is dealt with at 3.6 Failure to Respond to a Lawsuit, above. In order to obtain summary judgment, a claimant must demonstrate that the defence has no real prospect of success and there is no other reason why the case should go to trial. The summary judgment procedure is also available to a defendant to dispose of a weak or unfounded claim that lacks any prospect of success (again where there is no other reason why the case should go to trial). The court also has discretion to enter summary judgment of its own motion if the above criteria are satisfied.
Depending on the facts, there are a number of avenues by which parties might be able to dispose of a claim, or aspects of a claim, without a trial. If a defendant contends that the English courts do not have jurisdiction to hear the dispute, it must note its intention to challenge jurisdiction in its formal acknowledgement of service of the claim form. The defendant then has 14 days in which to file an application notice with evidence in support. If it the defendant takes any other steps in the proceedings it may be taken as having submitted to the jurisdiction of England and Wales.
The courts are also able to strike out the whole or part of any statement of case either upon application by one of the parties or of their own motion. In particular, the court may do this if it appears that:
Successfully obtaining either default judgment or summary judgment (discussed in 3.6 Failure to Respond to a Lawsuit and 4.2 Early Judgment Applications, respectively) would also dispose of the proceedings subject to any further hearings to quantify damages.
If the claim form has not yet been served, a claimant may join additional parties without the permission of the court provided there is a cause of action by or against each party joined.
Once the claim form has been served, the court's permission to join parties to the proceedings is required. An application to join third parties can be made by the existing parties to the proceedings or by a third party which wishes to join the proceedings.
The court will permit a party to be joined if it is desirable to add the new party so that the court can resolve all matters in dispute in the proceedings, or there is an issue involving the existing party and the new party which relates to the matter in dispute in the proceedings and it is desirable to add the new party so that the court can resolve that issue.
The court may also order any person to cease to be a party if it is not desirable for that person to be a party to the proceedings.
Once proceedings have been commenced, a defendant to a claim or counterclaim may apply for security for costs against the claimant or the counterclaimant. The purpose of the security for costs regime is to protect the defendant against the risk that it will not be able to enforce a later costs order in its favour. An order for security for costs will generally require the claimant to pay a specified sum into court or provide alternative security such as a bond or bank guarantee in respect of the defendant's costs.
The Civil Procedure Rules set out the grounds on which the court will order security for costs and include the following scenarios:
Where one of these grounds applies, the court has wide discretion as to whether to order security for costs and will consider whether it is just in the circumstances to make such an order.
It is open to the court to make a 'summary assessment' of the parties' costs at the end of the hearing of any interim application by reference to costs schedules filed and exchanged by the parties in advance of the hearing. This process includes an order as to those costs. The usual position is that the successful party is awarded at least a portion of their costs.
Alternatively, and particularly in respect of longer hearings involving higher costs, the court may direct that the costs should be determined by way of detailed assessment at the conclusion of the proceedings.
The timeframe for the court to deal with any application will be determined by the quantity and complexity of the issues to be considered. Applications on paper, which are heard without a hearing, can generally be dealt with in a shorter period. Where the application requires a hearing, the court generally requires an estimate from the parties as to how much time will be needed.
Some courts, such as the Commercial Court, publish estimates of the waiting time for application and trial hearings by reference to the length of the hearings.
The process for listing urgent applications varies between the different courts (and the relevant court guide should be consulted); however, it is generally required that an applicant should certify that the application is urgent business and give reasons for this. Urgent applications are dealt with on an expedited basis and may even be heard during court vacations.
In England and Wales, the process by which a party informs and provides to the other parties certain documents relevant to the issues in dispute is called 'disclosure'. Under English law, anything on which information of any description is recorded is potentially disclosable. Documents, telephone recordings and electronic material (such as e-mails, social media output and electronic databases), among many other things, fall within a party's disclosure obligations.
Where there is some difficulty in obtaining relevant documents from other parties to proceedings, it is possible to obtain disclosure from third parties not named as a plaintiff/claimant or defendant.
The Civil Procedure Rules allow disclosure to be ordered against non-parties to proceedings where the documents sought are likely to support the case of the applicant or adversely affect the case of one of the other parties, and disclosure is necessary to dispose fairly of the claim or to save costs.
It may also be possible to obtain disclosure from a non-party by applying to the court for a witness summons, requiring a witness to produce documents to the court and/or attend court to give evidence.
Disclosure against non-parties who are 'caught up in the wrongdoing' (whether innocently or not) can also be obtained by applying to the court for a so-called 'Norwich Pharmacal Order', which requires the third party to disclose relevant documents or information. An application for a Norwich Pharmacal Order must be supported by evidence. Depending on the circumstances (including where any proceedings have already commenced), applying for a Norwich Pharmacal Order usually involves issuing a claim form against the third party and thereafter a hearing before the court.
At the beginning of 2019, the Disclosure Pilot Scheme (DPS) was introduced in the Business and Property Courts. The DPS is one of the biggest changes to English civil litigation procedure in recent years and rather than amending the existing rules, a completely new regime for disclosure has been introduced. The rules concerning the DPS, and the rules for cases where the DPS does not apply, are set out below.
Disclosure Pilot Scheme
The DPS is a mandatory pilot scheme that is now operating (subject to limited exceptions) in the Business and Property Courts for a period of two years. The scheme introduces a new approach to the disclosure process for civil claims falling within its scope. It is intended that the DPS will promote a wholesale change of culture with respect to the disclosure process, with the aim of encouraging a proportionate approach following criticism that the disclosure process had become extremely costly and unwieldy, in particular for defendants.
Under the DPS, parties to litigation must provide limited disclosure with their statements of case (this is known as 'initial disclosure'). Additional disclosure is to be provided later in the proceedings only if it is ordered by the court (this is known as 'extended disclosure'), in which case it will be based on one of five 'disclosure models'.
The DPS has also introduced 'disclosure duties' that expressly apply to parties and their legal representatives. A person who knows that they are or may become a party to proceedings that have been commenced, or who knows that they may become a party to proceedings that may be commenced, is under the following duties to the court:
Similarly, legal representatives are under the following duties to the court:
For cases falling within the DPS, when a party serves its statement of case it must also give initial disclosure by serving an Initial Disclosure List of Documents and copies of the documents in the list. These documents should be:
A party giving initial disclosure is not obliged to undertake a search for documents beyond any search it has already undertaken for the purposes of the proceedings. Parties can agree to dispense with initial disclosure, and the court can order that it is not required.
Within 28 days of the final statement of case the parties should state, in writing, whether they are likely to request extended disclosure. If any party indicates that it is likely to request extended disclosure, the claimant must prepare and serve on the other parties a draft List of Issues for Disclosure within 42 days of the final statement of case. This list is then to be negotiated between the parties and will form part of the Disclosure Review Document (DRD), which will be used by the court when considering whether to order extended disclosure. The DRD must also set out further information relevant to disclosure, such as where documents are held, custodians, search terms, date ranges for searches, proposed use of technology and an estimate of costs.
Extended disclosure will generally take place later in proceedings (as has been the case before the DPS). The five disclosure models for extended disclosure include:
There is no presumption that a party is entitled to extended disclosure, which will only be ordered if the court is persuaded that it is appropriate to do so. Irrespective of what order for extended disclosure is made, the parties remain under an overriding duty to disclose known adverse documents.
Discovery in Cases Where the DPS Does Not Apply
Broadly, for cases that fall outside the DPS, which include proceedings in the County Courts, the regime introduced by the civil litigation reforms in April 2013 still applies. The 2013 reforms introduced a menu of disclosure options which can be used to ultimately limit the scope of disclosure.
In order to help the court reach a decision in respect of disclosure, the parties are obliged in respect of larger cases to file a disclosure report before the initial case management conference (CMC). However, it is often the case that 'standard disclosure' is ordered with little regard to the other options available, and this is one of the reasons that the revised models for disclosure were introduced in the DPS. Under 'standard disclosure' a party is required to disclose documents which adversely affect its case, adversely affect another party's case or support another party's case, and to make a reasonable search for documents which meet this standard, by reference to any such documents which are or have been in its custody, possession or control.
Disclosure is provided by parties by way of a list of documents, which is then served on all other parties to the litigation. This list identifies the disclosable documents and indicates which of these documents the party claims to be entitled to withhold for inspection (for example, because a document is privileged), which documents are no longer in its custody, possession or control, and what has happened to any documents that are no longer in its custody, possession or control. A disclosure statement signed with a statement of truth explaining the extent of the searches undertaken must accompany this list.
It is also possible for a party to apply for specific disclosure of particular documents where it suspects that the other party has not provided full disclosure. Parties and their representatives are under a positive duty to ensure that all documents which should be disclosed are disclosed. This duty is a continuing one, and any new documents relating to the case must be disclosed on an ongoing basis.
Discovery Before Proceedings Have Commenced
Under both the DPS and non-DPS regimes it is possible to apply for disclosure before proceedings have started, provided that the application is supported by evidence, the applicant and respondent are likely to be parties to subsequent proceedings, the application relates to documents which would be disclosable under standard disclosure, and that disclosure before the proceedings have been started is desirable in order to:
This is not applicable (see above).
Privilege is a fundamental legal right and a powerful tool under English law, granting parties the right to resist disclosure of confidential and potentially sensitive material in the context of arbitration, litigation and investigations. English law recognises two types of legal professional privilege: legal advice privilege and litigation privilege. Both enable a party to refuse to produce documents to which the privilege attaches to any third party (including to adversaries and the courts).
Legal advice privilege attaches to confidential communications (written or oral) between a legal adviser and their client which are for the purpose of giving or receiving legal advice. Litigation privilege attaches to confidential communications (again, written or oral) between a client or legal adviser and a third party where the dominant purpose for which the document is created is to give or receive legal advice, or collect information of evidence in connection with litigation that is in contemplation or has commenced.
The general rule is that legal professional privilege extends to in-house counsel, provided that the communication is 'legal advice' (ie, they are acting in their capacity as a lawyer and not as a business adviser). The exception to this is in investigations by the EU Commission for Competition, in connection with which communications with in-house lawyers will not be considered privileged.
Privilege does not attach to confidential communications generated by other professions (for example accountants or tax advisers).
In addition to the two types of legal advice privilege, 'without prejudice' privilege also applies to communications between parties generated as part of a genuine attempt to settle a dispute. Joint and common interest privilege may also apply to documents shared between parties in certain circumstances where legal professional privilege already arises.
Evidence, whether oral, documentary of real, may be presented to the court to prove an issue in dispute and enable the court to determine issues of fact in the proceedings. Under English law, facts must be proved by evidence except where:
Evidence is only admissible in civil proceedings if it is relevant (except where limited exceptions apply). The law on the admissibility of evidence exists in common law and legislation, but the trend in recent times has been towards a relaxation of the once rigid rules of evidence in the conduct of civil proceedings. Generally the court has a wide discretion to permit, restrict or exclude evidence in proceedings.
Evidence can be adduced either through the process of disclosure (discussed in 5.1 Discovery in Your Jurisdiction, above) or the giving of witness and/or expert evidence.
Factual witness evidence is given by way of a witness statement which must be accompanied by a statement of truth by the evidence giver. The Civil Procedure Rules provide specific requirements as to what witness statements can and cannot include. The court will also direct when such evidence should be shared between the parties. In civil proceedings, a witness statement is taken to be evidence in chief and usually a witness is not required to repeat their evidence at trial. However, a witness can be cross-examined on their evidence by the other parties and this often occupies a significant amount of the trial timetable. At the end of 2018, the Witness Evidence Working Group began a consultation process to review the current rules and practice and make recommendations for potential reform of the procedures for factual witness evidence in the Business and Property Courts. It is possible that, in the coming years, changes may be made to the process of giving factual witness evidence.
Expert evidence can only be adduced with the permission of the court. In considering whether to give permission, the court is under a duty to restrict the evidence to that which is reasonably required to resolve the proceedings. The parties must provide an estimate of the cost of the proposed expert evidence and identify the issues to be addressed by that evidence when applying for the court's permission. The evidence of an expert is provided in a written report, and a party's expert can be cross-examined on the evidence they give at trial.
English courts have the power to order a wide range of injunctive relief, whether requiring a party to perform a specified act (a mandatory injunction) or refrain from a particular act (a prohibitive injunction). The courts have wide discretion to order injunctive relief under the Civil Procedure Rules, and will generally do so when this is considered to be 'just and convenient'. Some of the more common examples of injunctive relief available include:
As to the timing of injunctive relief, it is possible to obtain injunctions during or in advance of proceedings (known as interim relief) or at trial (final relief). Final relief will be granted where a claimant establishes a legal or equitable right and the court considers it just to grant the order in the circumstances.
When determining an application for interim relief, the court will consider whether there is a serious question to be tried and, if so, will apply the 'balance of convenience' test. In applying this test the court will consider whether damages would be an adequate remedy for the application at trial. If so, the application will not usually be granted. If damages would not be an adequate remedy, the court will consider whether a 'cross-undertaking' in damages from the applicant provides adequate protection for the respondent in circumstances in which the court grants the interim relief and that relief is then held at trial to have been wrongly granted. If not, the court is unlikely to grant the relief sought.
The court will only order interim relief before a claim has been made if the matter is urgent or it is otherwise desirable to do so in the interests of justice.
The courts are usually able to deal with urgent applications quickly. The different courts in England and Wales have different procedures for dealing with urgent applications. By way of example, urgent out of hours hearings in the Commercial Court are initially dealt with by a QBD judge who may dispose of the application or make orders for the matter to come before a Commercial Court judge. In the Chancery Division, there is usually a judge available to hear urgent out of hours applications or urgent applications during the court vacation. Applications of extreme urgency may be dealt with by telephone.
Applications may be made to the court on an ex parte basis. The applicants, however, are subject to certain additional obligations, including a duty to give 'full and frank' disclosure to the court. Simply put, this means that, as the respondent is not given an opportunity to respond, the applicant is required to disclose all matters (both factual and legal) that are material to the court in deciding whether to grant the order, including those matters which are harmful to his case. As noted in 6.1 Circumstances of Injunctive Relief, above, the applicant may also be required by the court to provide a 'cross-undertaking'.
As noted in 6.1 Circumstances of Injunctive Relief, above, an applicant for an interim injunction may be required by the court to provide a cross-undertaking in damages. The court may also order that the undertaking in damages be extended to anyone other than the respondent who may suffer loss as a consequence of the order sought.
If there are doubts as to whether the applicant has sufficient resources to make good on its undertaking in damages, the court may require the applicant to 'fortify' the undertaking by paying money into the court or providing other security. When making an order for fortification the court will estimate the harm that the respondent might suffer as a result of the order sought by the applicant.
An applicant may seek an injunction restraining a party from disposing of or dealing with its assets within the jurisdiction (a 'freezing order'). The aim of a freezing order is usually to preserve an appropriate level of the respondent's assets until judgment can be obtained or enforced by a successful applicant. All types of assets can be 'frozen', including bank accounts, shares and land (although perishable items cannot), whether or not they are legally registered in the respondent's name. In determining whether to make a freezing order, the court will consider whether it is just and convenient to do so. In addition, the applicant must show that there are assets to be frozen and that there is a risk that those assets will otherwise be dissipated.
It is well established that the court also has jurisdiction to grant freezing injunctions in respect of overseas assets (a 'worldwide freezing order'). A worldwide freezing order may be sought where it is unlikely that the respondent has sufficient assets within the jurisdiction to meet the value of the applicant's claim. Even after a worldwide freezing order has been granted, the court will generally require that permission be sought before any steps are taken to enforce the order overseas.
The court may also, in certain circumstances, make a freezing order in support of foreign proceedings where it would be expedient to do so (although it will adopt a cautious approach).
There are a number of ways that injunctive relief may be obtained against third parties who are not parties to the main proceedings. For example, it is possible to extend the scope of a freezing order to assets held by third parties where those assets are held on behalf of the respondent to the main freezing order. In addition, the court may freeze assets of a third party where this is necessary to support a freezing order against a defendant. For example, the court may grant a freezing injunction against a company of which the defendant is a major shareholder.
Where a third party may be affected by the terms of a freezing order, the court will consider whether to extend any cross-undertaking in damages to protect such third parties.
A party who fails to comply with the terms of an injunction will be in 'contempt of court', ie, acting in defiance of an order of the court. There are a number of sanctions which the court may impose in such circumstances, including fines, sequestration of assets, and in the most serious cases, committing an individual to prison. A third party who has notice of the terms of an injunction and breaches those terms may also be held in contempt of court.
Trials in the English courts are adversarial and involve oral argument by the parties' advocates. Unless there is good reason for them not to be, trials will be open to the public as the court is concerned to uphold the principle of open justice. Generally, the parties are required to provide the court with a written outline of their case before trial, known as a 'skeleton argument'.
At first instance, one judge will preside over the trial and hear the evidence presented by the parties. The judge will not investigate the case. Typically, the parties' advocates will present their cases at the start of the trial by way of 'opening submissions', with the claimant's advocate usually going first.
Written witness evidence and expert evidence is filed and exchanged in advance of trial and stands as 'evidence in chief', by which it is meant that the witnesses and experts called are rarely required to repeat orally the evidence set out in their statements. At trial, the parties' advocates are given an opportunity to cross-examine the witnesses and experts for the opposition.
At the end of trial, the advocates for the claimant and defendant will summarise their respective cases by way of 'closing submissions'.
Interim applications are generally heard in public. The applicant should file and serve on the respondent an application notice with supporting evidence, including a draft of the order sought. The applicant may also be required to file a skeleton argument and a bundle of documents. The respondent may then file and serve evidence in response. At the hearing of the application, the parties' advocates make oral submissions.
The judge (or master) who hears the application will generally make an order at the end of the hearing, or shortly afterwards. However, the judge may require one of the parties to draft the order following the hearing.
Under the Civil Procedure Rules the court is required to manage cases actively, which includes setting the case timetable and giving procedural directions. As part of this, a case management conference will typically be listed early on in the proceedings (usually after statements of case have been served and before disclosure is given) in order to determine the directions necessary for the ongoing management of the proceedings. Where the proceedings are cost-managed, the court may give also directions as to costs at the case management conference. Where necessary, subsequent case management hearings may be listed to deal with ongoing procedural issues.
In complex cases, the court may order a pre-trial review hearing to take place in the run up to trial. The parties may be required to complete pre-trial checklists which will allow the court to determine if the parties have complied with all directions and, if not, establish why and what further directions may be necessary.
Generally, civil litigation cases are not determined by jury trials. However, it is open to a party to apply for a jury trial if there is a claim of false imprisonment, malicious prosecution or fraud. The court will not order a jury trial if it is of the opinion that the trial requires any prolonged examination of documents or accounts or any scientific or local investigation which cannot conveniently be made with a jury. The court also has the power to order jury trials for defamation cases, although the exercise of this power is now very exceptional.
The default position is that evidence is admissible unless there is a reason that it should be excluded (for example because it attracts legal professional privilege, as discussed in 5.4 Legal Privilege, above). In particular, hearsay evidence is admissible, albeit with specific procedural rules governing its use, including a requirement that a party seeking to rely on hearsay evidence should serve a 'hearsay notice' prior to trial. There is no rule that evidence obtained illegally or improperly must be excluded. However, the court has wide discretion as to whether to allow evidence and, in exercising that discretion, it will weigh the public interest in discouraging the conduct by which the evidence was obtained against the public interest in establishing the facts of the case.
Among the restrictions on evidence are the following:
The permission of the court is required to admit expert evidence. The party seeking to adduce expert evidence must provide an estimate of the costs of such evidence. The court order allowing expert evidence will generally give directions as to the nature of the expert evidence and set out the issues on which the expert should opine. The court will also give directions as to how the expert evidence is to be given (for example, whether there will be a single joint expert or different experts instructed by the parties). The court may also decide to appoint an expert itself, known as an 'assessor', to help the court understand certain evidence.
Where the parties instruct different experts, the experts will generally produce a report which is exchanged with the other side. The court will decide whether the reports should be exchanged sequentially or simultaneously. Often the court will require the experts to meet in order that they might produce a joint report setting out the matters on which they agree and on which they disagree. Experts are typically cross-examined at trial by the advocate of the opposing party.
Open justice is a fundamental principle of the laws of England and Wales. As such, court hearings are generally held in public. There are, however, circumstances in which the court will order hearings to be private (see 1.3 Court Filings and Proceedings, above).
Authorised transcribers can be arranged for any public hearing for a fee (this can be shared between the parties) and transcripts obtained.
Judges often intervene during oral submissions at trial to ask questions of the parties' advocates, and sometimes witnesses' experts, in order to clarify their understanding of the issues.
The Civil Procedure Rules set out time periods for many of the steps in the proceedings. These time periods, with some exceptions, can generally be extended by agreement between the parties or by an order of the court. The court may also stay the whole or part of the proceedings at any time for a range of reasons including in order to allow the parties to attempt to settle the dispute or to enforce compliance with court orders or judgments.
Cases are usually assigned a window of time by the court during which the trial hearing is listed to start. This window will be determined by the urgency of the matter and the likely length of the trial, as well as the court's availability. The parties will normally attempt to agree an estimate for how long will be needed for the trial, which will involve consideration of a range of factors including the number of witnesses and experts and the complexity and quantity of the issues to be decided.
For the period July to September 2018, the average time for a case on the multi/fast track (ie, claims above GBP10,000) to reach trial was 56.5 weeks from the issuing of the claim form.
Litigation (and arbitral) proceedings in England and Wales are usually settled by way of a contractual agreement between the parties to the dispute. Only in very limited circumstances will there be a requirement for the court to approve the settlement of proceedings, for example where a child is a party to the proceedings.
If the parties to the proceedings wish the terms of an agreed settlement to be directly enforceable by the parties as an order of the court, they will need to record the settlement in a court order. Often the parties will not, however, want the exact terms of the settlement to be known to non-parties. Where this is the case the parties are generally able (except in the limited circumstances where the court's approval is necessary to settle) to balance the desire for enforceability and confidentiality by using a 'Tomlin Order'. A Tomlin Order is a document in which the terms of the settlement are recorded in a confidential schedule rather than in the main body of the consent order, which will generally be made public.
While it is possible to use a Tomlin Order to keep the exact terms of a settlement agreement from becoming public, the fact that the parties have reached a settlement agreement will not usually be confidential, unless the court specifically grants an order that the contents of the court file are to be kept confidential to third parties, in which case non-parties are not able to see the consent order.
Where the terms of a settlement agreement have been recorded in a contract and a party breaches the terms, the counterparty may bring a new action seeking damages for breach of contract.
Alternatively, where settlement has been by way of a Tomlin Order, the non-defaulting party may apply to convert the obligations contained in the settlement agreement into a court order without the need to bring a new action.
A party seeking to avoid a settlement agreement, whether a contractual settlement or a settlement agreement annexed to a Tomlin Order, will need to commence a new action seeking either an order that the settlement agreement should be set aside or a declaration of invalidity.
In its statement of case, the claimant will have specified the legal remedies it is seeking. Most commonly, damages are the primary remedy sought and awarded by the English court. However, the court also has the power to award a variety of equitable, restitutionary and statutory remedies.
Equitable remedies are judicial remedies developed by the Chancery courts. They are awarded solely at the discretion of the court and are available where the court considers that such relief is fair to do justice between the parties. There are numerous equitable remedies, but the four that are most frequently awarded are:
Declarative relief is where the court makes a binding declaration as to the rights and obligations of the parties, issues of fact or issues of law. Specific performance is a decree by the court to compel a party to perform its contractual obligations. Rescission is the setting aside of a contract which remedy restores the parties to their original position prior to the contract being formed. If that is something which, in fact, is impossible to achieve (due to a change of circumstances) then rescission cannot be awarded. Rectification corrects a written contract to reflect the parties' contractual intention. Its main purpose is to correct mistakes made when recording agreements. As well as the above, there are other equitable remedies available where a claim concerns a breach of trust. For example, the court can order an account of profits made by a trustee as well as the tracing of an ownership interest into trust property that has been wrongly disposed of.
Restitutionary awards address the unjust enrichment of one party at the expense of the other. This remedy seeks to reverse the unjust enrichment by restoring the relevant benefit or enrichment to the claimant. In contrast, damages focus on the damage suffered by the claimant, rather than the unjust enrichment of the defendant.
Damages under English law are intended to be compensatory. In other words, they are measured by the monetary sum required to put the claimant back into the position it would have been in had the contract been properly performed (for breach of contract actions) or the position it would have been in had the wrongful act not been committed (in actions based in tort). No statutory limit on the amount of damages that a claimant can recover exists. However, it is possible for parties to contractually agree to limit the damages that can be awarded (and this agreed limit is generally enforced by the English court).
Before damages are recoverable certain requirements must be met. Generally, a claimant is required to prove that the defendant's actions caused the losses, that the losses suffered by the claimant are not too remote (in other words, the losses must be foreseeable), and that the claimant has taken reasonable steps to mitigate the losses suffered.
Parties may contractually agree that specific amounts are to be payable upon a breach of contract. Such damages are known as liquidated damages and such provisions in a contract are generally enforced by the courts. An exception to this general rule of enforcement is if the sum to be paid is to be regarded as a penalty, whereby the sum is disproportionate to the parties' interest in deterring the breach.
Punitive damages designed to punish the defendant are not recoverable in actions for breach of contract, and are only rarely available in tort cases.
Nominal damages may be ordered in cases where the claimant has suffered no recoverable loss due to the defendant's breach of contract or tort.
Under English law, both pre-judgment and post-judgment interest is available.
Pre-judgment interest is available under contract, statute and equity. Generally, the court has discretion to award pre-judgment interest on a simple basis, at a rate the court considers appropriate, and for the period between the date on which the cause of action arose and the date of judgment or date of payment (whichever is the earlier). However, this discretion may be displaced by the parties' contract if it includes specific provisions regarding interest (these are generally enforced by the court). Alternatively, the discretion may be displaced if the Late Payments of Commercial Debts (Interest) Act 1998 applies. This act adds an implied term in business-to-business contracts, giving a prescribed rate of interest (8%) on the price of goods or services, plus a fixed sum and reasonable costs of recovering the debt.
If a successful claim is brought in the High Court, interest generally accrues at a rate of 8% from the date of judgment. In the County Court, interest also generally accrues at a rate of 8% from the date of the judgment for sums of no less than GBP5,000 or where a debt falls within the scope of the Late Payments of Commercial Debts (Interest) Act 1998.
A successful party has a variety of mechanisms available to it to enforce a judgment for the payment of money. The effectiveness of these mechanisms will, however, largely depend on the assets the judgment debtor has available to satisfy the award made against it.
To enforce a judgment debt it is possible for a judgment creditor to take control of the judgment debtor's goods. This requires a writ or warrant of control which gives an enforcement officer the power to take control of and sell a judgment debtor's goods, with the proceeds going to the judgment creditor. If a judgment debtor is owed sums by third parties, the judgment creditor can seek a third party debt order, which permits a sum to be frozen and seized for the benefit of the creditor. It is also possible to obtain a 'charging order' over a judgment debtor's beneficial interest in land, securities or certain other assets. This usually prevents the judgment debtor from selling the asset without paying what is owed to the judgment creditor. An attachment of earnings order may also be obtained whereby the judgment debtor's employer makes deductions from the judgment debtor's salary. However, such orders are not common in commercial litigation matters. Lastly, a party can apply for a 'writ of sequestration' in circumstances where a person is in contempt of court for disobeying a court order (usually an injunction or an order to enforce a judgment). This allows sequestrators (ie, enforcement officers) to take control of the party's property until they have put right the contempt. Title to the property remains with the person in contempt, but the fact that their property is sequestrated puts pressure on them to comply with the court's order and to settle the judgment debt.
Enforcement of a foreign judgment in England and Wales is possible but the procedure varies depending on the country from which the judgment was obtained. At the time of writing, the UK remains an EU member state and a party to a framework of EU legislation which sets out the rules that courts in EU member states will apply to determine their jurisdiction over disputes and the framework for enforcing judgments. The following section is written on the current basis, but clearly this area of law may be significantly impacted by the UK's withdrawal from the EU as a result of 'Brexit'. The extent of this impact will depend on what arrangements (if any) are agreed between the UK and the EU.
Currently, if the foreign judgment was obtained from the courts of an EU member state, then Regulation (EU) 1215/2012 (the 'Brussels Regulation Recast') will apply. To enforce a judgment within the scope of the Regulation, a judgment creditor must obtain a prescribed certificate from the awarding court and serve both the certificate and the judgment on the judgment debtor (with a translation, if required). Following this relatively simple process, the judgment creditor may enforce the judgment as though it were an English judgment. Accordingly, the same mechanisms for enforcement set out above in 9.4 Enforcement Mechanisms of a Domestic Judgment are applicable in such circumstances.
Under the 2007 Lugano Convention, judgments of the courts of Norway, Switzerland and Iceland may generally be enforced in England. To enforce a judgment a creditor must apply to the English courts for the registration of the foreign judgment. At this stage the judgment debtor may file an appeal against registration, but the grounds to do so are limited.
Where a judgment was obtained from the courts of certain UK overseas territories or of certain Commonwealth countries, enforcement may be possible under the Foreign Judgments (Reciprocal Enforcement) Act 1933 and the Administration of Justice Act 1920. The process for enforcing a judgment under both these statutes is similar. Both require the judgment to be registered with the English courts. This process requires the judgment creditor to make an application to register the judgment whilst submitting an authenticated copy of the judgment, a certified translation and a witness statement setting out the basis upon which enforcement is sought. Once registered, there is a period of time permitted for the judgment debtor to apply to set aside the registration. This period of time is specified in the registration order and once elapsed (or if the judgment debtors' application has been rejected) the foreign judgment can be enforced as though it were an English judgment.
To enforce a judgment under the Hague Convention of Choice of Court Agreements which, at present, covers Mexico, Singapore, Montenegro, Denmark and EU countries (although EU judgments are, for the time being, enforced under the Recast Brussels Regulation) a two-step process of registration and then enforcement must be followed.
Foreign judgments from the rest of the world, or from countries which fall into one of the above regimes but do not otherwise fulfil the enforcement requirements, must be enforced as a debt. This requires the judgment creditor to commence fresh legal proceedings before the English court. Although this process can sometimes be costly and onerous, often summary judgment can be obtained early in the process on the basis that there is no proper defence to the claim.
The appeals process is determined by the seniority of the judge and the court which made the decision which is the subject of the appeal. In most cases (other than, for example, insolvency and family proceedings, for which there are different appeal routes), a decision of a district judge sitting in the County Court may be appealed to a circuit judge; a decision of a circuit judge or recorder sitting in the County Court may be appealed to a High Court judge sitting in the High Court; a decision of a master or district judge sitting in the High Court may be appealed to a High Court judge sitting in the High Court; a decision of a High Court judge sitting in the High Court may be appealed to the Court of Appeal; a decision of the Court of Appeal may be appealed to the Supreme Court.
A second appeal, ie, an appeal from a decision of the County Court or the High Court which was itself made on appeal, should be made to the Court of Appeal.
In certain circumstances, it may be possible to appeal directly to the Court of Appeal where the appeal would ordinarily be heard by a lower court. This process is known as 'leap-frogging' and occurs where the appeal raises an important point of principle or practice (or there is some other compelling reason for the Court of Appeal to hear the appeal).
Cases dealing with EU law may be appealed to the General Court of the EU and the more senior European Court of Justice. Where an appeal concerns issues of human rights, it is also possible to appeal to the European Court of Human Rights.
It should be noted that, in certain circumstances, it is possible for witnesses and non-parties to appeal a decision, for example where there are adverse findings of fact against a witness.
With some limited exceptions (such as in respect of committal orders), an applicant must obtain the permission of the court before he or she can appeal a decision. An application for permission to appeal may be made to the court which rendered the relevant decision. The applicant can also apply for permission to the higher court in which the appeal would be heard, even if permission from the lower court is refused.
The court will only give permission to appeal a decision where it is satisfied that the appeal would have a real prospect of success or there is some other compelling reason for the appeal to be heard.
It is important to note that a party that applies for permission to appeal may be required to provide security for the costs of the other side.
An application for permission to appeal from the lower court is made orally at the hearing at which the decision to be appealed is made, and the other party is invariably given the opportunity to reply. Once a party gives notice of its intention to appeal, the lower court may then choose to adjourn the hearing to give that party the opportunity to apply for permission to appeal, ie, to prepare the application and grounds of appeal as well as any skeleton argument dealing with costs, where necessary.
An application for permission to appeal to a higher court must be made in writing by way of an application notice, filed within a time period directed by the lower court or, where no direction is made, within 21 days of the decision of the lower court. The application notice should include the grounds of appeal. The respondent is required to file and serve any statement in opposition within 14 days of service of the application notice or skeleton argument, if later. The default position is that the application will be considered on paper without a hearing, although the judge considering the application has discretion to direct that an oral hearing should take place.
Appeals are limited to a review of the decision of the lower court, unless the court considers that it would be in the interests of justice to hold a rehearing or if procedural rules permit a rehearing for the particular type of appeal.
An appeal will be allowed where the decision of the lower court was wrong or unjust because of a serious procedural error or other irregularity.
A 'wrong' decision will involve an error of law, an error of fact and/or an error in the exercise of the court's discretion. In general, the appeal court will be reluctant to overturn the trial judge's findings of fact where the trial judge had an advantage over the appeal court (by, for example, hearing witness cross-examination at trial).
The appeal court will not usually consider new evidence that was not before the lower court unless it can be shown that the evidence could not have been obtained with reasonable diligence for use in the lower court proceedings or the evidence would probably have an important influence on the result of the case. These criteria will apply even more strictly on a second appeal.
The court may direct that the appeal or the permission to appeal are subject to certain conditions such as payment of security for costs by the appellant or payment into court of the judgment debt.
The appeal court has all the powers of the lower court in relation to the whole or part of an order of the lower court. Specifically, the appeal court has the ability to:
The general rule is that the successful party in the proceedings will be awarded their costs incurred in relation to those proceedings. However, the court has wide discretion to order costs as it sees fit (considered further in 11.2 Factors Considered When Awarding Costs, below). The trial judge will decide which party is responsible to pay the other's costs (if applicable) and whether those costs are to be assessed on the standard basis or the indemnity basis (this being closer to full recovery).
There are also specific rules that deal with the award of costs in certain scenarios (for example uncontested claims, enforcement proceedings and some personal injury claims).
Unless agreed between the parties, or fixed by reference to specific court rules, the court will need to assess costs. In fast-track cases, the costs assessment may be by way of summary assessment (described in 4.6 Costs of Interim Motions/Applications, above), whereby the judge will assess the costs to be paid at the end of the trial hearing. For other cases, detailed assessment is usually ordered, whereby there will be a separate hearing to determine the quantum of costs to be paid. This process is usually presided over by a specialist costs judge. A substantial portion of the costs incurred by the successful party may be recoverable after assessment, but this is unlikely to amount to a full reimbursement (even where indemnity costs have been awarded).
Where the proceedings are subject to costs management (described in 3.8 Requirement for a Cost Estimate, above), the parties are required to exchange costs budgets setting out estimated costs for each stage of the proceedings. In determining the amount of costs recoverable, the court will have regard to these costs budgets and will be unlikely to award more than the costs set out in these budgets without good reason.
The court will also have regard to the proportionality of the costs incurred by reference to:
The court has the power to impose interest on costs, including from a date earlier than the date of the costs award in order to compensate the recipient for the period between incurring their costs and receiving payment. However, the default position is that interest on an award of costs runs from the date of the order.
The default interest rate on judgment debts (including in respect of costs) in the High Court is currently 8% per annum.
There are a number of different forms of alternative dispute resolution (ADR) available in England and Wales including mediation, arbitration (discussed in 13 Arbitration, below), expert determination and early neutral evaluation.
Mediation is a flexible and confidential form of ADR and generally involves the appointment of a neutral third party who helps the parties work towards a settlement of their dispute. The parties are never under an obligation to settle and therefore mediation can be a useful precursor or complement to more formal dispute resolution methods such as litigation or arbitration.
Expert determination is usually sought where a valuation is required or where expert opinion is needed on a technical point. The process involves a binding contractual commitment between the parties to abide by the findings of the expert. This arrangement may be put in place on an ad hoc basis after a dispute has arisen, but is more commonly provided for in commercial agreements as a way to limit potential legal costs in the event of a dispute.
Early neutral evaluation involves the appointment of a neutral party, often a judge or QC, who hears submissions from the parties and gives a view as to which party is likely to be successful at trial. The process is non-binding and does not generally require a party to settle as a result of the evaluation.
The pre-action protocols set out in the Civil Procedure Rules (discussed in 3.1 Rules on Pre-action Conduct, above) note that litigation should be a last resort and require the parties to consider negotiation or an alternative form of dispute resolution before commencing court proceedings and continue to consider whether they might reach a settlement throughout the proceedings.
If a party refuses unreasonably to participate in ADR, such as mediation, the court may stay the proceedings and require the parties to participate in ADR or impose costs sanctions on the reluctant party at the end of trial. It has been held that a failure to respond to an offer to participate in ADR will generally be considered unreasonable.
For most claims, the parties are required to file directions questionnaires in advance of the first case management conference, which ask for confirmation that the legal representatives have explained to their client the need to try to settle and the possibility of costs sanctions if they refuse. The directions questionnaire also asks the party to confirm whether they wish a one month stay in order to attempt settlement.
The Civil Justice Council has recently published its final report into ADR and civil justice, which sets out 24 recommendations. Many of these recommendations are aimed at introducing methods to encourage parties to settle their disputes by way of ADR rather than litigation, although the report specifically does not recommend compulsory mediation.
There are a number of institutions based in England and Wales which promote ADR or offer a platform by which various forms of ADR can be pursued.
The London Court of International Arbitration (LCIA) offers a set of procedural rules to govern arbitral proceedings and mediation, as well as model dispute resolution clauses for parties to incorporate into their contracts. The Chartered Institute of Arbitrators offers training and professional qualifications for arbitrators and mediators.
The Centre for Effective Dispute Resolution (CEDR), a not-for-profit organisation headquartered in London, encourages the use of ADR to resolve disputes, as well as offering a range of mediation services, including mediation training and advice on negotiation and conflict management.
The Arbitration Act 1996 governs the conduct of arbitrations seated in England and Wales, although parties can contractually agree that any institutional or other rules may also apply. Additional provisions are typically recorded in a standalone arbitration agreement or within an arbitration clause of a contract.
The UNCITRAL Model Law has not been adopted in England and Wales, although the drafting of the Arbitration Act was influenced by it. The Arbitration Act is based upon three principles:
These founding principles provide parties significant autonomy to determine the composition of the tribunal, the procedural rules, and the basis upon which the tribunal is to render an award.
In principle, virtually all commercial disputes can be referred to arbitration. There are a few exceptions to this such as disputes as to breach of statutory employment rights, insolvency and criminal matters.
There are three ways in which an arbitration award can be challenged in an English court under the Arbitration Act. These are:
If a party to fails to challenge the arbitral proceedings or the award promptly or within a specified time limit, it may lose the right to object at all.
The Arbitration Act provides for the enforcement of awards made domestically as well as the recognition and enforcement of foreign arbitral awards.
Domestic arbitral awards can be enforced by summary procedure or by action on the award for failure to comply (although this latter method is rarely used in practice). An award can be enforced summarily in two ways: it can be enforced in the same manner as a judgment or order of the court, or it can be 'converted' into a court judgment. Both require the enforcing party to apply to the court for permission. If permission is granted, all methods available to enforce a court judgment can be used to enforce the award.
With regard to foreign arbitral awards, the UK is a party to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958 (the 'New York Convention'). The Arbitration Act establishes a specific regime for the enforcement of awards made in the territory of a state that is also a party to the New York Convention. To enforce such awards, parties must apply to the English court, attaching originals (or certified copies) of the arbitration agreement and the award. The parties application may be decided on paper or following an oral hearing. If enforcement is permitted, the court will make an order which will specify a period of time (typically 14 days if the other party is within the jurisdiction) for the other party to apply to set aside the order. If this period of time elapses, or once the other party's application to set aside is unsuccessful, the award may be enforced in the same way as an English judgment. There are only limited grounds upon which the English court can refuse to enforce a New York Convention award. The Arbitration Act mirrors the New York Convention in this respect.
For foreign arbitral awards that are not subject to the New York Convention, an alternative, although similar, procedure of recognition and enforcement must be followed. A key difference, however, is that the English court has greater scope to refuse to enforce the award.