Litigation 2024

Litigation in 2023

The global economy in 2023 is in a precarious position. Global growth is stalling as the combination of rising interest rates, weakening currencies and tighter monetary policies has slowed international trade. The US and Europe are teetering on the edge of recession, while China’s growth has slowed significantly. Record sovereign debt levels combined with surging food and energy prices threaten a global debt crisis. This period of financial difficulty and economic uncertainty has led to an increased appetite for litigation, as occurred in the 2008 Global Financial Crisis. The major difference to 2008 is that the global litigation landscape is also dominated by geopolitical risk: Russia and Belarus-related sanctions have impacted commercial activity across the globe, while energy and climate change regulation and tensions in the Gulf Region continue to be politically polarising issues.

Europe

Despite Brexit, London remains a popular choice for dispute resolution. It is the world’s leading centre for international dispute resolution by litigation and, equally with Singapore, by arbitration, according to the Queen Mary University of London International Arbitration Survey.

In Europe, one major change is the facilitation of collective actions. From June 2023, under the Representative Actions Directive, all EU member states are required to have at least one procedural mechanism in place for consumers to seek collective redress. Recent data shows a continuous rise in class actions being filed in Europe in recent years, with record-high numbers of class actions filed in 2022.

The UK has experienced a similar relentless growth in class actions. According to one recent survey, the total value of UK competition class actions launched in 2022 surged from GBP4 billion in 2021 to over GBP26 billion.

In Europe, a number of EU member states continue to seek to attract litigation cases that traditionally go to the English courts. France and the Netherlands have created their own specialist commercial courts where judges have experience in private international law to cater to international disputes. Germany has established English-speaking commercial courts, and Belgium and Switzerland are taking similar steps. Decisions of these commercial courts, unlike the UK, benefit from quick recognition and enforcement under the Brussels Regulation. Despite these new arrivals, the impact on the English courts that some considered would result from Brexit has not materialised: UK exports of legal services continue to grow exponentially, second in size only to the United States.

The establishment of international-facing courts in Europe follows an earlier trend in the Middle East and Asia. The Dubai International Financial Centre Courts, the Qatar International Court, the Abu Dhabi Global Market Courts and, more recently, the Singapore International Commercial Court and the China International Commercial Court all seek to attract international disputes. Cases in these courts are decided by senior judges and lawyers drawn from multiple jurisdictions (except in the China International Commercial Court, where the judges are exclusively Chinese). The establishment of international courts in the Middle East and East Asia certainly reflects the eastward shift in economic growth and opportunity. However, all these courts are ultimately modelled on the Commercial Court of England and Wales.

The USA

In the USA, many of the unilateralist and protectionist trade policies of the Trump administration have largely remained in place under the Biden administration. President Joe Biden assured Americans in his 2023 State of the Union speech that “We’re making sure the supply chain for America begins in America”. Increasing concerns about geopolitical risks, fuelled by Russia’s invasion of Ukraine, have strengthened calls for protectionism and prompted the Biden administration to take drastic steps to decouple from China, including by signing an executive order restricting US investment in Chinese hi-tech industries.

More broadly, in recent years the USA has become increasingly hostile towards international trade treaties, which commit the USA to resolving disputes by arbitration or other means of international dispute resolution. The USA has withdrawn from the Trans-Pacific Partnership (TPP) and has ruled out joining the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). It has also renegotiated trade agreements with Mexico and Canada (NAFTA) and South Korea (KORUS). Former president Donald Trump’s import tariffs and quotas also remain in place, although they are under review.

State courts in jurisdictions such as New York and California nevertheless remain attractive choices when international litigants enter into jurisdiction agreements. Where no jurisdiction agreement exists, the US Supreme Court has scaled back US courts’ power to assume jurisdiction over foreign companies in disputes that have arisen outside the USA (Goodyear Dunlop Tires Operations SA v Brown, Daimler AG v Bauman, BNSF Railway Co v Tyrrell and Bristol-Myers Squibb v Superior Court of California). The change is welcomed by foreign litigants who are anxious about the US courts exercising jurisdiction over disputes that have no connection to the USA.

In 2023, the US Supreme Court has continued its long tradition of supporting international arbitration. In Yegiazaryan v Smagin, the Supreme Court ruled that RICO (the US racketeering law) is available as a mechanism to enforce foreign arbitral awards in the US. This adds a potentially powerful tool for the enforcement of arbitral awards in the United States: it gives judgment creditors another avenue to enforce against third parties involved in racketeering, and leaves open the possibility of obtaining treble damages and recovering legal costs. In Coinbase v Bielski, the Supreme Court ruled that litigation is automatically stated during an appeal of the motion to compel arbitration, thereby protecting the benefits of arbitration as a more efficient and cheaper form of dispute resolution.

International arbitration

Despite attempts by newly formed courts to attract international business, arbitration remains the preferred form of dispute resolution for businesses operating across borders. In the recent Queen Mary University of London International Arbitration Survey, 90% of respondents chose international arbitration – on its own or with other forms of ADR – as their preferred means of dispute resolution in international contracts.

The cornerstone of international arbitration’s success is the New York Convention, ratified by 171 states, which celebrated its 65th anniversary in 2023. The Convention protects the enforcement of arbitration agreements and awards, ensuring, with rare exceptions, that arbitral awards can be enforced against award debtors. In its global reach and in its success, the New York Convention remains unparalleled in other forms of international dispute resolution.

Use of technology in dispute resolution

It is now clear that the COVID-19 pandemic will have a lasting and profound effect on the manner in which global litigation is conducted. The primary trend that emerged is the development and accelerated use of online platforms for the commencement and conduct of litigation. Post-pandemic online or remote hearings have become increasingly common, and many jurisdictions have adopted detailed protocols for the conduct of online hearings that focus on ensuring procedural fairness, efficiency, confidentiality and security.

New challenges

Two key new global challenges are the regulation of crypto-assets and environmental regulation. These are politically polarising issues. Along with a rapidly evolving regulatory landscape, an increasing number of disputes relating to crypto-assets and blockchain technologies are giving rise to complex legal challenges posed by the novel nature of the assets themselves. Climate change-related litigation also poses novel legal issues, including concerning questions of justiciability and the role of human rights law and remedies in climate change litigation. A continued, exponential rise in litigation in both areas is expected.

Cybersecurity and data disputes also continue to increase, as cyber-attacks pose an increasing threat to businesses across the globe that hold sensitive commercial information. The shift to digital working due to the COVID-19 pandemic has increased this threat. The UK’s National Cyber Security Centre reported a 400% increase in cyber-attacks across all businesses after lockdown. According to a general survey of corporate counsel, the most concerning areas of litigation faced by their organisations are cybersecurity, data protection and data privacy.

Global outlook

The global outlook for 2024 remains uncertain. The International Monetary Fund forecasts global growth to slow in 2023 and 2024 due to the long-term consequences of the pandemic, Russia’s invasion of Ukraine and protectionist policies. It now seems increasingly likely that the world is edging towards a global recession in 2024. Against this tumultuous backdrop, legal transactional work will diminish but the demand among businesses for international dispute resolution is likely to increase.