I INTRODUCTION TO THE DISPUTE RESOLUTION FRAMEWORK
i England and Wales, the United Kingdom and the EU
The United Kingdom (UK) comprises four countries – England, Northern Ireland, Scotland and Wales – which share a common (albeit uncodified) Constitution but have three separate legal systems. England and Wales share a common legal system (often referred to colloquially as ‘English law’) while Scotland and Northern Ireland each have their own independent system. The Supreme Court of the United Kingdom hears appeals from all three legal systems in civil cases in addition to cases concerning powers devolved to the Scottish, Welsh and Northern Irish executive and legislative authorities. The UK is a Member State of the European Union (EU) and, by virtue of the European Communities Act 1972, certain EU legislation and decisions have effect in the legal systems in force in the UK.2 This chapter focuses on the legal system in England and Wales only.
ii Private and public resolution
Disputes in England and Wales may be adjudicated privately (e.g., by an agreed arbitrator) or litigated publicly in the courts. Although the use of private dispute resolution mechanisms is increasing, the courts still determine the vast majority of adjudicated disputes. The courts remain the only forum in which a claim can be determined without the agreement of the other party. Private forms of dispute resolution are considered separately in Section VII, infra.
iii The structure of the courts
Depending on the financial value and nature of the dispute, a party may bring a civil claim in either the County Court or the High Court. Most non-complex civil litigation is dealt with in the County Court, through hearing centres scattered across towns and cities throughout England and Wales. Most commercial claims, and all complex litigation, are heard in the High Court, either in district registries located in provincial cities or in the Royal Courts of Justice in London. The High Court has jurisdiction to hear any civil case in England and Wales at first instance, and has an appellate jurisdiction in respect of certain matters in the courts below. The High Court is divided into three divisions, two of which are relevant for commercial disputes, namely the Queen’s Bench Division and the Chancery Division.3 Within these divisions there are a number of specialist courts or lists, including the Commercial Court, the Financial List, the Mercantile Court, the Admiralty Court, the Technology and Construction Court, the Administrative Court, the Planning Court, the Companies Court, the Bankruptcy Court, the Intellectual Property Enterprise Court and the Patents Court.
The High Court, the Crown Court (which deals with criminal cases) and the Court of Appeal are collectively known as the Senior Courts of England and Wales. The Court of Appeal hears appeals in civil cases from the High Court and, in certain circumstances, from the County Court and various tribunals.
Until 1 October 2009, the Judicial Committee of the House of Lords was the final court of appeal but, pursuant to the Constitutional Reform Act 2005, this function has been transferred to the Supreme Court, which binds all courts below. The Supreme Court will generally only hear cases that involve a point of law of general public importance.
In addition to the courts, a number of statutory tribunals have been established to hear disputes arising under the jurisdiction granted to them by the relevant legislation. The members of the tribunal will often comprise a legally qualified chairperson as well as lay members with appropriate experience. It is often possible to appeal a decision made by a tribunal to the High Court.
iv Relationship with European courts
There is no general right of appeal to the Court of Justice of the European Union (CJEU),4 although a court or tribunal in England and Wales may refer questions regarding the interpretation of the Treaty on European Union and the Treaty on the Functioning of the European Union or the validity or interpretation of acts of the EU institutions to the CJEU for a preliminary ruling. Having obtained such a ruling, the case will (often after many years’ delay) return to the referring court or tribunal, which must apply the CJEU’s ruling, together with any non-conflicting national law, to the facts before it. The court or tribunal is not required to make a reference where previous CJEU decisions have already dealt with the point or where the correct application of EU law is so obvious as to leave no scope for reasonable doubt (referred to as acte clair).
The European Court of Human Rights (ECtHR) hears cases relating to alleged violations of the European Convention on Human Rights (the Convention). The Court and the Convention are separate from the European Union and its institutions. There is no general right of appeal to the ECtHR. A claimant who alleges breaches of the Convention may apply to the ECtHR only after having exhausted his or her rights of appeal in the domestic courts; in England and Wales, this will usually mean that the claimant must have pursued a claim and all available appeals in the domestic courts pursuant to the provisions of the Human Rights Act 1998. The decisions of the ECtHR are not binding on courts in England and Wales, although Section 2 of the Human Rights Act 1998 requires domestic courts to ‘take into account’ such decisions.
II THE YEAR IN REVIEW
The past year has produced a number of important decisions by the courts as well as some significant legislative developments, many of which are likely to have lasting effect. It is not possible to review all the developments that have taken place, but the following are of particular interest.
i One Step (Support) Ltd v. Morris-Garner and another  EWCA Civ 180
Under English law, it is possible in certain circumstances for a claimant to recover damages for a breach of contract even though it has not suffered any loss. An example of this can be found in Wrotham Park Estate Co Ltd v. Parkside Homes Ltd  1 WLR 798. Wrotham Park damages represent a sum that a claimant might reasonably have demanded as compensation for allowing a defendant to breach its obligations under a contract.
In Morris-Garner, the judge at first instance awarded the claimant, One Step, Wrotham Park damages in relation to the breach of non-compete and non-solicitation covenants. On appeal, the defendants submitted that Wrotham Park damages can only be awarded where:
- a a claimant is unable to establish identifiable financial loss;
- b such damages are necessary to avoid manifest injustice; and
- c there are special circumstances that justify the grant of an exceptional remedy.
In a decision clarifying the principles behind Wrotham Park damages, the Court of Appeal dismissed the appeal and held that the overriding consideration was whether such damages are required to ‘avoid injustice in [a] particular case’. There is no requirement that a claimant must be unable to show identifiable financial loss. In addition, the question of ‘manifest injustice’ is a matter of the trial judge’s discretion. Although it is correct to describe Wrotham Park damages as the exception rather than the norm in the calculation of damages, it does not follow that exceptionality becomes the test for their availability. The proper test is deciding what justice requires.
In August, the Supreme Court allowed the defendants’ application for permission to appeal. A hearing of that appeal is expected to take place in 2017.
ii Idemnitsu Kosan Co, Ltd v. Sumitomo Corporation  EWHC 1909 (Comm)
The distinction between representations and warranties in share purchase agreements is important; for example, in relation to the remedies available for breach. Rescission is, in principle, available following the successful pleading of misrepresentation (but not a breach of warranty). In 2013, the High Court in Sycamore Bidco Ltd v. Breslin and Dawson  EWHC 3443 (Ch) provided guidance on the distinction between representations and warranties in a share purchase agreement, highlighting that:
- a the key characteristic of a representation is that a contract is entered into as a result of the representation; but
- b a warranty is included when it has already been decided to enter into the contract.
In so doing, Mann J disagreed with the decision in Invertec Ltd v. De Mol Holding BV  EWHC 2471 (Ch) – where Arnold J held that warranties can amount to representations if they are negotiated over a period of time – but failed to elaborate on the reasons for his disagreement.
In Idemnitsu Kosan Co, Ltd v. Sumitomo Corporation, Andrew Baker QC sitting as a judge of the High Court followed Mann J’s decision and affirmed the conceptual distinction between representations and warranties. He held that the act of concluding a contract on terms that include warranties does not involve the warrantor making any statement capable of being a misrepresentation. A claim in misrepresentation cannot be sustained only on the basis of the existence of a contractual warranty without an express provision stating that it is to be treated as a representation. Accordingly, parties to a share purchase agreement should be careful in their drafts to delineate representations from warranties, instead of stating that the seller ‘represents, warrants and undertakes the following’ (as is often the case). In summary, although statements made in negotiations or a draft contract might amount to a pre-contractual representation capable of being actionable in misrepresentation, contractual warranties concerning matters of fact do not amount to representations of fact.
iii MWB Business Exchange Centres Ltd v. Rock Advertising Ltd  EWCA Civ 553
In Globe Motors, Inc and others v. TRW Lucas Varity Electric Steering Ltd and another  EWCA Civ 396, the Court of Appeal made obiter comments that clauses requiring contract variations to be signed in writing did not prevent a valid variation of contractual terms by oral agreement. The Court of Appeal in MWB Business Exchange Centres endorsed this view in Globe Motors. In this case, the respondent was in arrears of licence fees and other charges under a written agreement that expressly provided that oral variation of the agreement was prohibited. Overturning the finding of the trial judge, the Court of Appeal held that the governing principle is that of party autonomy. The freedom of contract means that while the parties should be able to regulate the manner in which a contract is varied, they should equally be able to create obligations at will.
iv Third Parties (Rights Against Insurers) Act 2010
The Third Parties (Rights Against Insurers) Act 2010 came into force on 1 August 2016, replacing the Third Parties (Rights Against Insurers) Act 1930 (except in limited circumstances). The purpose of both statutes is to assist, in certain circumstances, a party that has suffered loss at the hands of an insolvent party with the benefit of liability insurance to recover sums directly from that party’s insurer. Were it not for the Acts, any monies paid by an insurer as a result of a claim on the insolvent insured’s policy would go to the insured’s estate. The claimant who had suffered the loss that occasioned the insurance payout would rank as an unsecured creditor in a distribution of that estate. The Acts allow claimants to bring direct claims against insurers.
Two key developments should be noted in the 2010 Act. First, the third party claimant no longer has to establish the insured’s liability to it (e.g., by judgment or award) as a precondition to bringing a claim against the insurer. The third party can instead bring a claim in contract against the insured and make a concurrent application for an order that the insurer pay the damages awarded. Second, a third-party claimant that believes he or she has a right of action under the Act can request information from any person reasonably believed to be capable of providing information relating to the contract of insurance. This includes:
- a the identity of the insurer;
- b the terms of the policy; and
- c any fixed charges applicable to sums paid by the insurer. This should assist third-party claimants in making informed decisions on whether or not to pursue a claim.
III COURT PROCEDURE
i Overview of court procedure
Civil procedure in England and Wales is governed by the Civil Procedure Rules (CPRs) and accompanying practice directions (PDs). These are supplemented by guides produced by different courts summarising particular procedures that apply in those courts. They do not have the force of law but courts will generally expect compliance (and may punish non-compliance with adverse costs orders). These and other sources are available online on the Ministry of Justice’s website5 and, with commentary, in The White Book published annually (with interim updates) by Sweet & Maxwell.
ii Procedure and time frames
Time frames and procedure for claims vary depending upon the court and division in which the relevant claim is issued and the nature of the claim itself; the commentary below is therefore only a general summary.
Before even commencing a claim, a claimant should ensure that one of the pre-action protocols does not apply to the type of claim being made (e.g., claims for professional negligence, defamation and judicial review have specific pre-action protocols that should be followed). Even where there is not a specific pre-action protocol,6 the claimant will be expected first to write a letter before claim to the prospective defendant setting out in detail his or her claim and allowing the defendant a reasonable period in which to respond (what is reasonable may depend on the complexity of the allegations).
Following any pre-action steps, proceedings are started (and the court is treated as seised) on the date that the claimant issues a claim form in the relevant court. The claim form must then be served on the proposed defendant or defendants within four months of issue (assuming the relevant defendant is within the jurisdiction) or within six months if the defendant is outside the jurisdiction. It can be served by a range of different methods, including handing it to the defendant in person or by post. The courts have wide discretion in this area: they have, for example, permitted service of an order to be made via the social networking site Twitter against an anonymous defendant who had impersonated the claimant’s blog on that site. The claimant must serve particulars of claim with the claim form or within 14 days of service of the claim form; the particulars set out its case, the relevant facts and basis for the claim in law as well as the remedy sought. Both the claim form and the particulars of claim must be verified by a statement of truth signed either by the claimant (or authorised signatory on behalf of the claimant where the claimant is an organisation) or the claimant’s legal representative.
Assuming the defendant intends to defend the claim and acknowledges service by the appropriate court form, his or her response is by way of the defence, to be served within 28 days of receipt of the particulars of claim (note that this timescale can vary between different courts and is in any event subject to extension by agreement between the parties or by court order). The defendant should respond in the defence to each of the allegations made in the particulars of claim by either admitting it, not admitting it or denying it (with explanation). Following service of the defence, the claimant has a right of reply in relation to any new issues or allegations raised in the defence, as well as a right to defend any counterclaim raised in the defence. The claimant’s reply should be served within 21 days of service of the defence (again, subject to extension by agreement or by court order). From this point on, it is not expected that any further statements of case will be exchanged between the parties (unless permission to do so has been granted by the court).
Following the filing of the defence, the court will send a notice of proposed allocation to the parties (CPR 26.3(1)), which will provisionally allocate the claim to a ‘track’ and require the parties to provide further information about the claim in the form of a directions questionnaire so that it can give appropriate directions as to the conduct of the proceedings and ensure that it is allocated to the correct track. The different tracks are used to ensure that the procedure adopted to trial is proportionate to the importance of the issues and amount at stake. Claims below £10,000 are generally allocated to the small-claims track and are dealt with quickly without many of the CPRs applying; for example, parties typically bear their own costs, most interim remedies are not available, there are limited disclosure obligations and witness statements are not normally exchanged before trial. Claims between £10,000 and £25,000 are generally allocated to the fast track, where the claim will still be processed quickly (trial will usually be set for a date within 30 weeks of the allocation decision) but more extensive preparation is permitted than on the small-claims track and interim remedies are available. The multi-track is reserved for the most important and high-value disputes, and the court will adopt a much more hands-on role in ensuring that the procedure adopted to trial is tailored to the requirements of the case.
For multi-track cases subject to costs management under CPR 3.13, parties will be required to complete a costs budget in the form of Precedent H. Costs management applies (subject to the discretion of the court to apply or disapply the regime) to most multi-track cases commenced on or after 1 April 2013, except for proceedings where the amount of the money claimed or value of the claim as stated on the claim form is £10 million or more. Parties subject to the regime are required to file and exchange budgets setting out estimated costs for each stage in the proceedings. These must be approved by the court and effectively cap the amount that the winning party can recover from the losing party at the end of the proceedings unless it can demonstrate a good reason for departing from the budget.
Cases on the multi-track may require one or more case management conferences (CMCs) at which the court will, usually after hearing submissions from the parties, give directions regarding the timetable for disclosure, exchange of factual witness statements and exchange of expert reports (if any), as well as indicating broadly when it expects the trial itself to be listed. For complex matters, it is not unusual for the period between the first CMC and the trial to be at least a year. Once listed, trial dates (across all tracks) are treated as set and only in exceptional circumstances will the court agree to postpone a trial.
CPR 25.1(1) contains a non-exclusive list of interim remedies available from the court including interim injunctions and declarations, orders for delivery up of goods, orders freezing property, orders for the provision of information and search orders. Interim applications may be made without notice, although the applicant is under a duty to disclose fully and fairly all material facts to the court, even if they are adverse to its case. Overseas lawyers have been encouraged to note that practitioners within this jurisdiction bear this heavy responsibility and that ill-prepared applications are to be avoided.7
iii Court reform
In 2014, the Ministry of Justice announced that between 2015 and 2020, HM Courts & Tribunals Service would oversee a series of reforms aimed at modernising and improving the efficiency of courts and tribunals. The programme will involve substantial investment in digital technology to allow cases to be managed better, with less paper and fewer delays. This will allow a reduction in the number of court buildings, so generating further savings. The digitisation process is considered below (see Section III.iii, Digitisation, infra). Other separate but complementary steps to reform and rationalise court processes are also considered directly below.
Reform of the appeals process
Secondary legislation came into force on 3 October 2016, and is intended to reduce the time it takes for cases to be heard by the Court of Appeal. The Access to Justice Act 1999 (Destination of Appeals) Order 2016 simplifies the appeals process by ensuring that, in most cases, an appeal will lie to the next highest level of judge. In particular, appeals from a decision of a district judge in the County Court will generally lie to a circuit judge in the County Court (the next most senior judicial rung), while appeals from a circuit judge will lie to the High Court. In the High Court, appeals from a master will lie to a full judge of the High Court, and appeals from a High Court judge will lie to the Court of Appeal. The Civil Procedure (Amendment No. 3) Rules 2016 revised CPR Part 52 accordingly. The new Part 52 made two other important changes:
- a the removal of the default right to renew, at an oral hearing, a failed paper application for permission to appeal to the Court of Appeal; and
- b a clarification of the test for grant of permission to appeal in second appeals such that a ‘real prospect of success’ must be shown, or there must be some other compelling reason for the second appeal to be heard.
Shorter and flexible trial schemes
Two pilot schemes, one for shorter trials, the other for flexible trials, began in courts including the Chancery Division and the Commercial Court in October 2015. The objective of the pilot schemes, which will run for three years, is to achieve more efficient trials in the context of commercial litigation. This was prompted, in part, by a recognition that comprehensive (and costly) disclosure is not always required for justice to be achieved. The Shorter Trials Scheme is open to cases that can be tried in no more than four days – this means cases in which only limited disclosure and oral evidence is required, and in practice means factually complex or multiparty claims (including fraud and dishonesty claims) are excluded. The intention is that a trial will take place within 10 months of the issue of proceedings, with judgment to follow within six weeks thereafter.
In the first case directly commenced under the Shorter Trial Scheme, National Bank of Abu Dhabi v. BP Oil International  EWHC 2892, judgment was handed down on 22 November 2016 – two weeks after a one-day hearing.
In October 2015, the High Court introduced a specialist Financial List for the determination of claims by judges with expertise in the financial markets. There are three criteria for inclusion (only one of which needs be fulfilled). A claim must either:
- a relate to banking and financial transactions where over £50 million is in issue;
- b require particular judicial expertise in the financial markets; or
- c raise issues of general importance to the financial markets: CPR Part 63A.
The Financial List initiative also includes a two-year pilot financial markets test case scheme. This permits the court to decide cases that raise issues of general importance to the financial markets, in relation to which immediately relevant authoritative English law guidance is needed even where there is no present cause of action between the parties to the proceedings.
As of October 2016, 21 cases had been placed on the Financial List, five of which have been decided. In Property Alliance Group Ltd v. Royal Bank of Scotland plc  EWHC 207 (Ch), following a contested application to transfer existing proceedings to the Financial List, the Master of the Rolls clarified that when deciding whether to transfer a case to the Financial List, CPR 30.3 and the overriding objective must be taken into account. The instant case was transferred to the Financial List even though the total value of the claim was £29 million (below the £50 million indicative threshold). This was because, in circumstances where the issues in the case were of broad significance for the market and a judgment would affect other proceedings already issued or in contemplation, it was desirable that it be dealt with by a judge of the Financial List, in order for the resulting judgment to carry appropriate weight and respect in the financial markets.
The digitisation of the courts has continued with:
- a a new electronic filing and case management system being rolled out across the courts located at the Rolls Building;
- b a proposed online court system – intended to deal with straightforward money claims of up to £25, 000 – that is the subject of consultation; and
- c the introduction of pilot programmes allowing the cross-examination of victims and witnesses of crime to be pre-recorded so as to avoid the pressure of a live hearing.
iv Class actions
The concept of class actions has been a part of English civil procedure for some time, but does not bring with it many of the characteristics that would, for example, be familiar to a US lawyer.
CPR Part 19 sets out the framework for:
- a representative actions, where one person brings (or defends) a claim as a representative of others who share the same interest in the claim;8 and
- b group litigation orders (GLOs),9 where claims brought by parties that give rise to common or related issues of fact or law are managed together.
Represented persons are not formally parties to the proceedings and are therefore not subject to disclosure obligations or liable for costs (therefore leaving the representative liable for any costs). They do not have to opt in to be represented, although they can apply to the court to opt out. By contrast, parties to claims covered by a GLO are fully fledged parties and are likely to have to pay their share of the common costs of the litigation if they lose. The Court of Appeal confirmed the High Court’s rejection of a US-style class action brought against British Airways by two flower importers who sought to bring proceedings as representatives of all direct and indirect purchasers of airfreight services affected by an alleged cartel.10 The Court upheld the first instance decision to strike out the representative element of the claim as it was not in the interest of justice to bring an action on behalf of a class of claimants so wide that it was impossible to identify members of the class before and perhaps even after judgment. This opposition to US-style class actions has been strengthened by the government’s decision to remove provisions in the Financial Services Bill (enacted as the Financial Services Act 2010), which would have extended the options for collective actions in the financial services sector.
Orders made in a representative action are binding on all represented persons and may be enforced, with the court’s permission, against any other person. Judgments issued in claims subject to a GLO are binding on every party entered on the ‘group register’ (which will have been established pursuant to the GLO).
A single claim can be selected from any set of similar claims (including those governed by a GLO) to be advanced as a test case. There are no formal rules governing test cases and it is usually the parties who decide which cases will be selected to proceed to judgment while others are stayed pending judgment in the test case. A recent example of a test case was the bank charges litigation where thousands of customers’ claims in the County Court were stayed pending the outcome of the OFT’s claim.11
Although there have been some high-profile cases involving representative actions and GLOs,12 class-action proceedings of any kind are still relatively uncommon in England and Wales, in part because of the risks of adverse costs orders against unsuccessful claimants and, more generally, the costs of commencing and maintaining proceedings. Parties are increasingly able to mitigate these risks through the increased availability of after-the-event insurance, third-party litigation funding, conditional fee agreements and damages-based contingent fee arrangements with lawyers who are willing to share the risks with their clients in return for a share of any damages (see Section III.x, infra).
Collective proceedings for breaches of competition law
Section 47B of the Competition Act 2008 came into force on 1 October 2015. It creates a genuine class action regime for the first time in the UK, allowing private individuals to seek collective redress for breaches of competition law. The regime operates in the Competition Appeal Tribunal (CAT) only. It accommodates follow-on damages claims, where a breach has already been established by a regulator, and stand-alone claims, where a claimant must prove breach itself. Claims that would raise the same, similar or related issues of fact or law may be pursued as collective proceedings; they are initiated by a representative of the class of affected persons and it is for the CAT to authorise that representative and make an order permitting the proceedings to be continued. That order will also specify whether the proceedings are to be opt-in or opt-out. This places the UK in a minority in the EU (which typically does not support ‘opt-out’ claims) and may potentially make the UK a more attractive place for large groups of claimants to commence claims.
In mid-2016, an application was made to commence a £14 billion claim against MasterCard for damages arising from the EU Commission’s 2007 decision that MasterCard’s EEA multilateral interchange fees breached Article 101(1) of the TFEU. The application was made by Walter Merricks, former Chief Ombudsman of the UK Financial Ombudsman Service, on behalf of approximately 46 million customers (on an opt-out basis). The CAT will decide in early 2017 whether the proceedings may be commenced. If this is the case, it will probably come before the CAT in 2018. This landmark lawsuit will be closely watched by the market. While it undoubtedly represents a significant departure for the UK, it remains to be seen how the procedure (which affords considerable discretion to the CAT in terms of, for example, class certification) will be applied in practice.
v Representation in proceedings
Any person who is not a child nor lacks capacity as a result of an impairment or disturbance of the mind has the right to begin and carry on civil proceedings without professional representation. The courts generally seek to accommodate litigants who represent themselves in proceedings.13
vi Service out of the jurisdiction
The court’s permission is not required for service of the claim form or other documents out of the jurisdiction where the court has jurisdiction under the Judgments Regulation (Regulation (EU) No. 1215/2012), the Lugano Convention or the Hague Convention on Choice of Court Agreements and the criteria in CPR 6.33 are met:
- a there are no proceedings between the parties concerning the same claim pending in the courts of any other Member State or Lugano Convention state; and
- b either (1) the party to be served is domiciled in either the UK or a Member State or a Lugano Convention state (Iceland, Norway or Switzerland); (2) there is a jurisdiction clause giving the English courts jurisdiction; or (3) the English courts have exclusive jurisdiction under Article 24 of the Regulation or Article 16 of the Lugano Convention; or
- c where each claim against the defendant to be served and included in the claim form is a claim that the court has power to determine under the Hague Convention, and the defendant is party to an agreement conferring exclusive jurisdiction on the English court.
Claim forms must be filed and served accompanied by a statement explaining the grounds supporting service out of the jurisdiction. CPR 6.32 makes specific provision for service without permission in Scotland or Northern Ireland.
In all other cases, an application must be made to the High Court for permission to serve a claim form on a party situated outside the jurisdiction. The applicant must establish that it has a good arguable case that the claim falls within one of the stipulated categories set out in CPR 6BPD.3.1. The categories include claims to enforce a judgment or arbitral award, or for a breach of contract committed within the jurisdiction. The applicant must also satisfy the court that England and Wales is the most appropriate jurisdiction in which to bring the proceedings (i.e., that it is forum conveniens) and that there is a serious issue to be tried.
vii Enforcement of foreign judgments
In broad terms, there are three enforcement regimes available:
- a By European Regulation or Convention – a judgment on an uncontested money claim issued by a court of a Member State and certified by it as a European enforcement order may be enforced very simply under the European Enforcement Order Regulation as though it was a judgment of the English court. Other judgments may be enforced using the procedure in the Judgments Regulation or the Lugano Convention. This involves making an application to the Queen’s Bench Division of the High Court (without notice to the defendant) for registration of the judgment. The grounds on which registration can be challenged are limited; for example, if the judgment was not enforceable in the Member State in which it was given or if one of the specific exceptions in Article 45 of the Judgments Regulation apply. The Judgments Regulation in its recast form applies to judgments in proceedings commenced on or after 10 January 2015; such judgments may be enforced more easily without application to the High Court.
- b By statute – judgments from Commonwealth countries and other countries that have reciprocal enforcement agreements with the UK may be enforced pursuant to the Administration of Justice Act 1920 and the Foreign Judgments (Reciprocal Enforcement) Act 1933 by making an application for registration to the High Court. Once registered under either Act, the judgment is enforceable as though it were a judgment of the English court.
- c At common law – judgments from all other jurisdictions (including, e.g., the United States) may be enforced at common law. This requires claimants to issue a claim in debt and then apply for summary judgment to enforce the judgment.
viii Assistance to foreign courts
The English courts will assist foreign courts to collect evidence in civil or commercial matters. Courts of EU Member States (other than Denmark) may request that the English courts take evidence on their behalf or grant permission for the requesting court to take evidence in England directly under the Taking of Evidence Regulation (Council Regulation 1206/2001/EC). The grounds for refusing the application are limited (for instance, where the witness has a right not to give evidence under English law or the law of the requesting Member State), and the court must either comply with the request or refuse to do so within 90 days.
Courts of non-EU Member States (and courts of EU Member States, if necessary) can request assistance under the Evidence (Proceedings in Other Jurisdictions) Act 1975 in relation to civil or commercial matters. Generally, the English court will exercise its discretion to assist the foreign court; however, the court will not make orders for pretrial discovery, general disclosure or require a witness to do anything he or she would not be required to do in English civil proceedings.
ix Access to court files
As a general rule, members of the public may obtain copies of statements of case, judgments or orders without the permission of the court.14 Parties or any person mentioned in a statement of case may apply to the court in advance for a pre-emptive order restricting the release of the statement of case to non-parties.
The right of access does not extend to documents attached to statements of case, witness statements, expert reports, skeleton arguments and correspondence between the court and the parties, although members of the public may obtain access with the court’s permission. The court will normally grant permission to access documents where the documents are considered to be in the public domain as a consequence of having been read out in public or treated as having been read out in public.
x Litigation funding
Historically, the common law rules against maintenance (support of litigation by a disinterested third party) and champerty (where the supporting party does so for a share of the proceeds) prevented the funding of litigation by anybody who was not party to the relevant litigation. Today, these restrictions are much narrower and third-party funding has become accepted as a feature of modern litigation.
Case law and practice are still developing in this area, but the approach of the courts has so far been to uphold such arrangements so long as they do not breach the general prohibition on containing an element of impropriety. Relevant factors include the extent to which the funder controls the litigation (e.g., whether they take strategic decisions); the nature of the relationship between the funded party and the solicitor and the extent to which the funded party can make informed decisions about the litigation (this should be a genuine and independent relationship); the amount of profit the funder stands to make (it has been held that 25 per cent may not be excessive);15 whether there is a risk of inflating damages or distorting evidence; whether the funder is regulated; and whether there is a community of interest between the funder and the funded party.
Lord Justice Jackson recommended in his final report on civil litigation costs, published on 14 January 2010, that a voluntary code should be drawn up to which all litigation funders should subscribe. The Code of Conduct for Litigation Funders was launched on 23 November 2011.16 The Code contains provisions concerning effective capital adequacy requirements, restrictions upon funders’ ability to withdraw support for ongoing litigation and restrictions on funders’ ability to influence litigation and settlement negotiations. Third-party funders may also be potentially liable for the full amount of adverse costs, subject to the agreement between the funder and the litigator. The Court of Appeal considered the basis and extent of funders’ liability to a successful opponent in Excalibur Ventures LLC v. Texas Keystone Inc and others  EWCA Civ 1144. Indemnity costs were awarded against the funded claimants on the basis that their ‘spurious’ claims had been pursued to trial despite having ‘no sound foundation in fact or law’. The Court of Appeal dealt with the issue of whether third-party funders could be made liable on the same basis an unsuccessful party. Agreeing with the trial judge that the litigation was ‘egregious’ and a ‘war of attrition’, the Court of Appeal held that a funder should ‘follow the fortunes’ of the funded party. A funder seeks to derive financial benefit from the pursuit of a claim, just as much as the funded litigant. It cannot avoid any downside that may instead arise (subject to the ‘Arkin cap’, which limits a funder’s adverse liability to the amount of its investment). In any event, in the matter of liability for indemnity costs it was not appropriate to seek to differentiate between a party to litigation and those who stand behind that party purely on that basis; that would be to misconstrue one of the tests for indemnity costs, which requires a court to consider the character of the action and its effect on the successful party (and not any other party).
With respect to lawyers’ costs, the recent introduction of ‘damages-based agreements’ (DBAs) under Section 45 of the Legal Aid, Sentencing and Punishment of Offenders Act 2012 (LASPO 2012) has made damages-based contingency fee arrangements between lawyers and their clients lawful in all civil litigation work (rather than, as was the case previously, purely in employment disputes), provided those arrangements adhere to the Damages-Based Agreements Regulations 2013 (SI 2013/609). A DBA is a type of ‘no win, no fee’ arrangement in which the client will only have to pay his or her lawyers’ costs in the event that the client receives a ‘specified financial benefit’ (generally damages from the losing side). Typically the lawyer takes a percentage of such damages. The introduction of DBAs, together with the loosening of restrictions on third-party funding, is likely to make it easier for claimants to commence and maintain proceedings, particularly in relation to class actions where there can be very many claimants and such funding options represent an opportunity to spread the funding risk.
xi Bill of costs
In October 2015, as part of the Jackson reforms, a voluntary pilot scheme was introduced with a view to establishing a new mandatory form of a bill of costs based on uniform time-recording codes. This was aimed at reducing the time and expense of drawing up the bill of costs by aligning it with the time-recording technology used in practice. It was originally intended for the new bill of costs to be rolled out at the end of the year-long pilot scheme, in April 2016. This has since been postponed to October 2017.17
IV LEGAL PRACTICE
i Conflicts of interest and information barriers
Conflicts of interest are governed by the rules contained in the Solicitors Regulation Authority’s (SRA’s) Code of Conduct 2011 (for solicitors) and the Bar Standards Board Handbook (for barristers). Generally, lawyers must refrain from acting in circumstances where there is a real or significant risk that a conflict exists between the interests of two or more different clients in either the same matter or a related matter, or where there is a conflict or a significant risk of a conflict between the lawyer’s interests and those of his or her client.
There are two exceptions to this rule whereby lawyers may be permitted to act for two or more clients despite there being an actual or significant risk of a conflict between his or her clients’ interests. The first relates to situations in which the clients have a substantially common interest in relation to the matter or a particular aspect of it, as might be the case with a non-contentious commercial transaction. The second is where the clients are competing for the same objective, which if attained by one client will be unattainable to the other (e.g., in the case of bidders competing for the same asset in a private auction).
There are, however, some preconditions which must be met before either exception can be relied on. Most significantly, all relevant issues must be drawn to the attention of clients and they must give their consent in writing. In addition, lawyers must be satisfied that it is reasonable for the firm to act in all the circumstances.
If an actual or a significant risk of conflicts of interest exists, it may be possible for an existing client to seek an injunction to prevent the lawyer from continuing to act. Further, if a lawyer is found to have continued to act where there was a real or significant risk of a conflict arising, the retainer may be considered an illegal contract, which would impact on the lawyer’s ability to recover fees or to rely on any professional indemnity insurance to respond. In addition, he or she may face disciplinary proceedings before his or her relevant professional body.
Lawyers have a duty to protect all confidential information regarding their clients’ affairs, unless disclosure is required or permitted by law or the client consents to the disclosure. In addition, a lawyer who is advising a client must make that client aware of all information material to the retainer of which the lawyer has personal knowledge. Where a lawyer’s duty of confidentiality to one client comes into conflict with the duty of disclosure to another client, the duty of confidentiality takes precedence (but this will not mean that the duty of disclosure has not been breached).
In addition, lawyers may not represent a potential client (A) in circumstances where the potential client has an interest adverse to another client (or former client) (B) and the lawyer holds confidential information regarding B that may reasonably be expected to be material to A unless the confidential information is protected by the use of safeguards and:
- a A is aware of and understands the relevant issues and gives informed consent; and
- b either B also gives informed consent and the lawyer agrees with them what safeguards will be put in place to protect the confidential information, or where the lawyer is unable to seek B’s consent, he or she puts in place common law compliant information barriers.
In most cases, a firm will be unable to proceed unless both clients consent, in writing, to the arrangement. In Marks and Spencer Group plc v. Freshfields Bruckhaus Deringer,18 the court confirmed that where a firm is unable to implement effective measures to ensure that its former client’s confidential information is protected, the former client may be granted an injunction to prevent the firm from continuing to act for the new client.
ii Money laundering, proceeds of crime and funds related to terrorism
The key money laundering offences are contained in the Proceeds of Crime Act 2002 (POCA) and the Terrorism Act 2000. These ensure that the balance of responsibility for detecting and preventing financial crime rests more than ever before on the firms participating in the UK financial markets, including law firms.
There are essentially three ‘principal’ money laundering offences. A person (including a firm, corporation or individual) commits a money laundering offence if he or she:
- a conceals, disguises, converts or transfers the proceeds of criminal conduct or of terrorist property;
- b becomes concerned in an arrangement to facilitate the acquisition, retention or control of, or to otherwise make available, the proceeds of criminal conduct or of terrorist property; or
- c acquires, possesses or uses property while knowing or suspecting it to be the proceeds of criminal conduct or of terrorist property.
There are also essentially three ‘secondary’ or third-party offences:
- d failure to disclose any of the offences (a) to (c);
- e disclosing or ‘tipping off’ that a report of suspicion of money laundering has been made to the authorities in circumstances where that disclosure might prejudice an investigation; and
- f prejudicing an investigation in relation to money laundering or terrorist financing offences.
The POCA offences in particular cast a wide net. Criminal conduct is defined as conduct that constitutes an offence in any part of the UK, or would do so if the conduct occurred in the UK. Further, its scope is not limited to offences that might be considered more serious offences with the effect that it is necessary to report relatively minor offences to the National Crime Agency. The ‘failure to disclose’ offence is subject to an objective test and will therefore be committed if a person does not actually believe that another person is engaged in money laundering but a jury later finds that he or she had reasonable grounds for knowing or suspecting such activity. Lawyers are not required to make a disclosure if the information or other matter on which their knowledge or suspicion of money laundering was based, or which gave reasonable grounds for knowledge or suspicion, came to them in privileged circumstances.
The Money Laundering Regulations 2007 (which implemented the Third Money Laundering Directive (2005/60/EC)) lay down standards that regulated persons (including law firms) must meet in relation to, among other things, client identification, employee training and record-keeping. These are designed to prevent firms from being used for money laundering. The Fourth Money Laundering Directive (2015/849) was published on 5 June 2015 and introduces a number of new requirements and obligations. The UK has until June 2017 to transpose the requirements of the Directive into national law. Consultation is currently ongoing.
iii Data protection
The processing of personal data is primarily regulated by the Data Protection Act 1998 (DPA) and certain secondary legislation made under the DPA. The DPA implements the EC Data Protection Directive (95/46/EC) into UK legislation. The General Data Protection Regulation (Regulation (EU) 2016/679) was adopted on 27 April 2016 and will enter into force on 25 May 2018 after a two-year transition period (see Section VIII, infra). Until it enters into force, the DPA remains the regime in force in the UK.
The principal elements of the DPA can be summarised as follows:
- a data controllers must give notification to the Information Commissioner in respect of their data processing activities before they can lawfully process data;
- b data controllers must comply with the eight data protection principles (the Principles); and
- c data subjects have certain rights, including to access personal data held about them, to rectify erroneous personal data and to damages for damage (and in some circumstances distress) caused by any contravention of the DPA.
The Information Commissioner’s Office (ICO) is charged with policing and enforcing the regime. The Commissioner’s enforcement powers include serving an enforcement notice requiring a data controller to comply with the relevant Principle after a specified period (failure to comply with an enforcement notice is a criminal offence) and, in the case of serious contraventions likely to cause substantial damage or distress, serving a monetary penalty notice requiring the payment of a penalty up to £500,000. Details of most enforcement actions taken by the Commissioner are also published on the ICO’s website.
Data and personal data are widely defined in the DPA such that any electronic information (and some information held in structured hard-copy filing systems) that relates to an identified or identifiable living individual is likely to be personal data. Processing is also widely defined under the DPA to include anything that can be done with or in relation to data, including obtaining, recording, holding, organising, altering, retrieving, using, disclosing, transferring and destroying data.
Access to, analysis of and disclosure of electronic information held by a client (or a third party) by legal professionals for the purposes of advising or acting on a dispute will almost always be subject to the DPA. This is because such data will usually contain the names, email addresses or other identifying information of the client’s employees or customers, or other living individuals and will therefore be personal data. It may also contain sensitive personal data, which is personal data containing information about (among other things) the data subject’s racial or ethnic origin, political opinions, religious beliefs, trade union membership, physical or mental health, sexual life or the commission or alleged commission of an offence by the data subject. Additional, more stringent conditions for processing apply in respect of sensitive personal data.
Law firms acting as data controllers and the clients who are providing them with personal data (for example, for the purpose of locating relevant documents or evidence in relation to a dispute) need to comply with the Principles. In the context of dispute resolution practice, the relevant conditions for processing personal data for the purposes of the First Principle include that the processing is necessary for the purposes of legitimate interests pursued by the data controller (in the case of non-sensitive personal data) and that the processing is necessary for the purpose of, or in connection with, any legal proceedings (including prospective legal proceedings), for the purpose of obtaining legal advice or for the purposes of establishing, exercising or defending legal rights (in the case of sensitive personal data). Even when one of those conditions is met, the client and law firm (acting as data controller) will also need to ensure that the processing is otherwise fair and that the other Principles are complied with.
The same is true for the transfer of data to and processing of data by another law firm or a legal process outsourcer (LPO) for the purposes of legal proceedings or obtaining legal advice from that firm. If that other law firm or LPO is outside the EEA, the Eighth Principle requires that adequate data protection is ensured. This may be done by limiting transfers to countries or organisations that the EC has determined provide an adequate level of protection, making the transfer in accordance with model contracts published by the EC, or by carrying out an assessment of the adequacy of protection provided by the laws of the country and by the law firm or LPO who would be receiving the data and concluding that the protection is adequate.19
The subject access rights under the DPA can be used as a means to seek relevant information for the purpose of a dispute involving a living individual. Law firms acting in a dispute with an individual and their clients may receive subject access requests by that individual for documents containing personal data relating to that individual. However, information that is subject to legal privilege is exempt from the subject access rights under the DPA.
V DOCUMENTS AND THE PROTECTION OF PRIVILEGE
Legal privilege in England and Wales is governed by the common law and entitles its holder to refuse to produce the privileged document for inspection. The recognised categories of privilege that may be claimed by a party in respect of its documents or communications are:
- a Legal advice privilege – the House of Lords confirmed in its decision in Three Rivers District Council and Others v. Governor and Company of the Bank of England (No. 6)20 that legal advice privilege protects confidential communications between a lawyer and client made for the dominant purpose of receiving or giving advice in the relevant legal context. However, the House of Lords did not interfere with the Court of Appeal’s previous ruling in Three Rivers (No. 5),21 which warned that care must be taken when identifying the ‘client’ for the purposes of legal advice privilege. Particularly in large, but potentially in any, organisations, the client may be limited to a defined group within the instructing entity with the responsibility for regular correspondence with the solicitors and not simply any employee or member of the instructing entity. The UK Supreme Court confirmed in R (on the application of Prudential Plc) v. Special Commissioner of Income Tax22 that legal advice privilege applies only to legal advice provided by members of the legal profession and not to members of other professions who give legal advice in the course of their business (such as accountants who provide tax advice).
- b Litigation privilege – litigation privilege arises only when litigation is in existence or contemplation.23 In those circumstances, any communication between a lawyer and client, or a lawyer or his or her client and a third party, is privileged if made for the dominant purpose of obtaining or giving legal advice or collecting evidence or information in relation to the litigation. Litigation privilege is wider in scope than legal advice privilege in that it may cover communications with third parties and therefore avoids the difficulties in identifying the client inherent in legal advice privilege.
- c Privilege against self-incrimination – documents that tend to incriminate or expose a person to criminal proceedings in the UK or to proceedings for the recovery of a penalty in the UK (including civil contempt) are generally protected by privilege (although the privilege is subject to statutory exceptions, especially in the context of regulatory investigations). It is sufficient if the document might tend to incriminate or so expose the person, provided the risk is apparent to the court.
- d Common interest privilege – common interest privilege arises where communications are made between parties who share a common interest in the legal advice. This will arise where parties share the same interest in litigation (or potential litigation) or in a commercial transaction to which the legal advice relates. In such cases, communications of privileged information between the parties will be privileged even if neither legal advice privilege nor litigation privilege applies.
- e Public interest immunity – this immunity applies where production of the document would be so injurious to the public interest that it ought to be withheld, even at the cost of justice in the particular litigation.24 The procedures for claiming this immunity (which in most practical respects operates as another head of privilege) are set out in CPR 31.19.
- f Without prejudice communications – any communications made in a good faith effort to settle proceedings are covered by the without prejudice privilege. However, the without prejudice rule is not absolute and evidence of without prejudice communications may be admitted in certain circumstances; for example, to determine whether the communications resulted in a concluded settlement agreement (and to interpret the terms of such an agreement)25 or whether the agreement was procured by fraud, misrepresentation or undue influence.
In Brown v. Rice26 it was reinforced that the without prejudice privilege applied to communications made during a mediation; however, on the facts, the communications were admitted as evidence to establish whether a settlement had been concluded. In Farm Assist Limited (in liquidation) v. the Secretary of State for the Environment, Food and Rural Affairs (No. 2)27 Ramsey J clarified that the without prejudice privilege was the privilege of the parties and not the mediator. On the facts of the case, the parties had waived the privilege, and so the mediator could not rely upon the privilege to resist a witness summons.
Communications between a company and its qualified in-house legal advisers are capable of being privileged, to the extent that the communication concerns the lawyer in his or her legal capacity rather than some other managerial role (for example, as company secretary).28 However, the European Court of First Instance and ECJ have ruled that such communications are not privileged in relation to Commission competition investigations.29 Communications with qualified lawyers in other jurisdictions in relation to foreign or English law may also be privileged before the English courts.30
VI PRODUCTION OF DOCUMENTS IN CIVIL LITIGATION
i Disclosure and inspection
Parties to English litigation are required to produce to their opponent and the court documents within their control upon which they rely. They are frequently also required to produce documents that tend to harm their case. A party is entitled to withhold from inspection documents that are legally privileged (but must still disclose their existence). The relatively expansive nature of document production is reflective of the ‘cards on the table’ approach that characterises English court procedure.
An order for ‘standard disclosure’ requires parties to disclose documents they hold or held that both help and harm their case and, prior to the recent Jackson reforms, it was the default option for multi-track claims. The courts must now decide what order to make for disclosure (based on the menu of options in CPR 31.5(7)) bearing in mind the overriding objective and the need to limit disclosure to that which is necessary to deal with the case justly. However, since the new rules came into force in April 2013, there has been little evidence of judges moving away from standard disclosure and tailoring disclosure orders to the particular case in question. There have been extrajudicial comments expressing hope that the menu-based approach can be used more effectively in order to reduce litigation costs in accordance with the overriding objective.31
Further, the parties are now required to:
- a file and serve a disclosure report, verified by a statement of truth, not less than 14 days before the first case management conference (CMC); and
- b discuss and seek to agree with the other party or parties a proposal for the disclosure exercise that meets the overriding objective, not less than seven days before the first CMC.
CPR 31.4 makes it clear that a ‘document’ is anything in which information is recorded. Examples of documents include, for these purposes, photographs, emails, text messages and voicemail recordings. CPR 31PD.2A.1 even extends this definition of document to cover ‘metadata’ (i.e., information about an electronic document that is not visible on its face, such as electronic records of who created the document).
CPR 31.8 provides that parties are only required to produce documents that are or have been under their control. The definition of ‘control’ includes documents that a party has or had in its possession, or has or had a right to possess, or has or had a right to inspect or copy. In Lonrho Ltd v. Shell Petroleum Co Ltd (No. 1),32 the court confirmed that a document will be considered to be in a party’s control if the party has a presently enforceable right to obtain inspection or copies of the document without the need to consult anyone else. The fact that a document may be situated outside the jurisdiction is irrelevant.
Much of the remainder of Part 31 of the CPR remains focused on standard disclosure being the default option. For example, where standard disclosure is ordered, each party is under an obligation to conduct a ‘reasonable search’ for disclosable documents.33 Factors relevant to whether a search is ‘reasonable’ are indicated at CPR 31.7, including the number of documents involved; the nature and complexity of the proceedings; the ease and expense of retrieval of any particular document; and the significance of any document that is likely to be located during the search.
The CPR and courts recognise that the disclosure of electronic documents may present unique challenges to parties because of the potential volume of material that might have to be recovered and reviewed and the technical challenges of so doing. CPR 31PD.2A sets out the procedure parties should follow in attempting to define and sensibly restrict the scope of electronic disclosure. Similar provisions are included in the Commercial Court Guide.
Searches for relevant electronic documents may include using specialist software to conduct keyword searches across computers, or even entire servers. It may also involve the restoration of backup tapes (or other electronic archives that are not readily accessible) for the purpose of conducting electronic searches for relevant material.
PD 31B was introduced with effect from 1 October 2010 and encourages the parties to complete an electronic documents questionnaire (EDQ) at an early stage of proceedings, setting out details of material held electronically that they intend to disclose. The EDQ must be supported by a statement of truth. The parties are then expected to discuss the disclosure of electronic documents, including the scope of the reasonable search for such documents and any tools and techniques that might reduce the burden and cost of the disclosure of electronic documents.
ii Predictive coding
Parties are making increasing use of information technology to assist in the review of large bodies of data. Such technology can take many forms. ‘Predictive coding’, for example, refers to the use of software to assess the likely relevance of documents to a dispute, so as to limit the time and expense incurred in conducting a reasonable search for disclosable document under CPR 31.7. In Pyrrho Investments Limited v. MWB Property Limited and others,34 Master Matthews approved the use of predictive coding to expedite the search of more than 17 million documents. Ten reasons were given, chief of which was that predictive coding allows parties to search vast amounts of electronic documents at proportionate cost. Courts have since shown an increased inclination to order the use of predictive coding over and above other search methods, such as keyword searches.35
iii Privilege lists
Document production is a two-stage process: the parties disclose the existence of relevant documents by serving on each other a list of those documents. They then provide their opponent with copies of all those documents save for those which they have some legal basis for withholding (most commonly, documents over which privilege is claimed). Even when a document is withheld from inspection, its existence must be disclosed in the relevant section of the disclosure list. Each document over which privilege is claimed should be described. In Astex Therapeutics Ltd v. AstraZeneca AB,36 the High Court ruled that a generic statement to the effect that the categories of documents referred to in the relevant section of the disclosure list are privileged is insufficient to discharge the requirement under CPR 31.10(4)(a).
VII ALTERNATIVES TO LITIGATION
i Overview of alternatives to litigation
There are a number of forms of alternative dispute resolution mechanism available in England and Wales. The glossary to the CPR defines alternative dispute resolution (ADR) as a ‘collective description of methods of resolving disputes otherwise than through the normal trial process’. ADR encompasses a variety of dispute resolution methods ranging from non-binding negotiations, in which there is no third-party involvement, to formal binding arbitral proceedings.37 ADR has achieved acceptance as it is normally conducted in private, its outcome is normally subject to agreement of the parties, confidential, and it may offer a faster and more cost-effective resolution to a dispute than traditional litigation.
The Arbitration Act 1996 (the 1996 Act) restated and aimed to improve the law in England and Wales relating to arbitration pursuant to an arbitration agreement. Certain provisions (those listed in Schedule 1 of the 1996 Act) are mandatory and have effect notwithstanding any agreement to the contrary, whereas other provisions apply only in the absence of any agreement between the parties. Key mandatory provisions include:
- a Section 9 – a party to an arbitration agreement may apply for a stay of proceedings if proceedings are brought against it in respect of a matter that, under the agreement, should be referred to arbitration. The court in which proceedings are brought shall grant a stay unless satisfied that the arbitration agreement is null and void, inoperative or incapable of being performed;
- b Section 40 – the parties are under a general duty to do all things necessary for the proper and expeditious conduct of the arbitral proceedings;
- c Section 67 – a party may apply to the court to challenge a tribunal’s substantive jurisdiction; and
- d Section 68 – a party may apply to the court to challenge an award for ‘serious irregularity’.
Section 69 of the 1996 Act permits parties to appeal to the court on a question of law arising out of an award made in the arbitral proceedings, unless they have agreed otherwise. This right to appeal will usually be excluded if the parties have agreed to arbitrate the dispute using institutional rules (see below). A party seeking leave to appeal an award must complete an arbitration claim form within 28 days of the award date stating the reasons for the appeal sought. The court will determine an application for leave to appeal without a hearing unless it appears to it that a hearing is required. On an appeal, the court has the discretion to confirm the award, vary it or set it aside in whole or in part or to remit the award to the arbitral tribunal, in whole or in part, for reconsideration in the light of the court’s determination.
Arbitration may be institutional or ad hoc. In institutional arbitration, the parties will agree to submit to an institution to administer the arbitration, applying the rules of that institution. The major institutions used in English arbitration are the Chartered Institute of Arbitrators, the International Chamber of Commerce and the London Court of International Arbitration. There are also established arbitral institutions for industry-specific arbitration, including maritime, construction and engineering, and insurance disputes.
In ad hoc arbitration, parties may agree all procedural issues themselves. The United Nations Commission on International Trade Law (UNCITRAL) procedural rules are widely used in appropriate ad hoc English arbitration.
Section 66 of the 1996 Act (another mandatory provision) governs the enforcement of foreign arbitral awards in England and Wales. It permits the enforcing party to apply to the High Court to enforce the award as if it were a judgment or order of the court to the same effect.
Where an arbitral award is made in a country (other than a country in the UK) that is a signatory to the UNCITRAL Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958 (the New York Convention), that foreign award is recognised as binding and, with the Court’s permission, may be enforced in England, Wales and Northern Ireland under Section 101 of the 1996 Act. Section 103 sets out the limited circumstances where a court must or may refuse to allow a foreign award to be enforced: for example, if the award was invalid under the governing law of the arbitration or the seat of the arbitration. If the court permits the foreign award to be enforced, the options available on enforcement will be the same as if it were a judgment of the English court.
The New York Convention applies to arbitration in England and Wales. In IPCO (Nigeria) Ltd v. Nigerian National Petroleum Corp,38 the Court of Appeal held that the terms of the 1996 Act and the New York Convention did not prevent a court, on an application for enforcement of an arbitral award, from ordering partial enforcement of that award. The Court stated that the purpose of the New York Convention was to ensure the effective and speedy enforcement of foreign arbitral awards and, consequently, where an award comprised challengeable and unchallengeable parts, it was possible for a court to order enforcement of the unchallengeable part.
In England and Wales, there are no rules obliging parties to mediate or determining how mediations are conducted or concluded. Parties are free to agree between themselves all aspects of the mediation process.
The potential benefits to parties of being able to resolve their disputes through mediation, even where normal trial processes are contemplated, continue to be recognised by the English courts. The CPR strongly encourages parties to consider mediation at several stages during litigation, including before formal proceedings commence, when the case is allocated to track and at any CMCs. The court may also impose or grant a request for a stay of proceedings pursuant to CPR 26.4 to enable the parties to attempt mediation.
The Jackson ADR Handbook was published in April 2013 following Jackson LJ’s recommendation.39 It has been endorsed by Jackson LJ, the Judicial College, the Civil Justice Council, and the Civil Mediation Council and is the authoritative guide to ADR in England and Wales.
The approach of the court in this area has frequently been to treat mediation and ADR as effectively synonymous terms. In Dunnett v. Railtrack plc,40 the court declined to order that the defeated claimant pay Railtrack’s costs because Railtrack had, unreasonably in the court’s view, refused to consider an earlier suggestion from the court to attempt ADR. In Halsey v. Milton Keynes General NHS Trust,41 the court stated that it was for the unsuccessful party at trial to demonstrate that the successful party’s costs should be reduced because of its failure to consider ADR. Relevant factors when assessing whether ADR was unreasonably refused include the nature of the dispute, the merits of the case, the relative costs of ADR to the case and whether ADR had a reasonable prospect of success. However, in PGF II SA v. OMFS Company 1 Limited,42 the Court of Appeal made it clear that parties are expected to engage with a serious invitation to participate in ADR and they may be penalised in costs if they refuse to do so. In that case, the court refused to award the defendant its costs as it had ignored an offer from the claimant to mediate.
Mediation is becoming increasingly popular in England and Wales, for disputes of all sizes. In 2008, the EU adopted Council Directive 2008/52, the Mediation Directive, which applies to all Member States when engaged in cross-border disputes within the EU. The Directive seeks to ensure that Member States facilitate mediation. This includes ensuring that local law does not prevent parties who emerge from unsuccessful mediations from being time-barred from litigation, and that settlement agreements reached in mediation are enforceable under local law.
At present, mediations and mediation services providers are not regulated by a central body, and there are no formal qualifications mediators must possess to be able to practise. In 2004, a voluntary code of conduct for mediators was introduced in EU Member States, and there is increased debate over whether a central regulatory body should be created, along with compulsory training or standardised accreditation for mediators.
iv Other forms of alternative dispute resolution
In addition to arbitration and mediation, there exists a range of other processes available to parties seeking to settle their disputes out of court. These include early neutral evaluations, a non-binding process intended to provide parties at an early stage in a dispute with an independent assessment of facts, evidence or respective legal merits; expert determinations, typically a contractually binding determination by a neutral expert of a dispute involving technical or valuation issues; and adjudication, a statutory process, mandatory for disputes arising under specified construction contracts entered into since 1 May 1998. Ultimately, private dispute resolution can take any form that the parties wish. In most cases, the procedures are non-binding and ‘without prejudice’, which allows the parties to commence or continue litigation or arbitral proceedings, if necessary.
VIII OUTLOOK AND CONCLUSIONS
There are a number of upcoming macro-level challenges to the existing state of the English legal system and its component parts, together with some substantive changes to practice and procedure.
i EU Referendum
The UK electorate’s June 2016 vote to leave the European Union may have a number of legal and practical implications. Please see Chapter 1 for an analysis of the issues as they relate to the resolution of disputes.
ii British Bill of Rights
The government plans to introduce what has been characterised as a ‘British Bill of Rights’ to replace the Human Rights Act 1998. The idea of a British Bill of Rights (though not its substantive terms) was a Conservative Party manifesto pledge at the 2015 general election. The proposal for a Bill seeks to address a concern that the Human Rights Act 1998 undermines British sovereignty. Proponents of the Bill argue that Section 2 of the Human Rights Act 1998 has been misconstrued by some British courts and that the decisions of the ECtHR have had undue influence in UK courts. The government indicated in April 2016 that proposals for a Bill of Rights would be presented ‘in due course, and we will look forward to consulting on them fully’. It is not yet clear if or how the EU referendum vote will affect the substance and the timing of these proposals.
iii Proposed economic crime offence
In May 2016, the Ministry of Justice proposed a new corporate offence of ‘failing to prevent’ corporate and economic crimes such as fraud. This is analogous to the offence of ‘failing to prevent bribery’ under Section 7 of the Bribery Act 2010 and is targeted at corporates that fail to prevent economic crimes by persons who act on their behalf. A strict liability offence, this (1) gets round the difficulties of proving corporate criminal liability on the basis of the ‘directing mind and will’ test; and (2) does away with the fiction that only directors or senior level managers can be involved in economic crimes. There has been no indication as to when the Ministry of Justice plans to commence consultation on the proposed offence.
iv Proposed reform of regulation of legal services
In September 2016, the Legal Services Board, which oversees the various regulators of legal services in England and Wales, published proposals for the reform of legal regulation. Its vision includes the creation of a single regulator accountable to Parliament, and the abolishment of all existing regulators of legal services including itself and the SRA. This will necessarily involve the repeal of the Legal Services Act 2010 and further consultation is awaited.
v Reform of the courts
In 2014, the Ministry of Justice announced that between 2015 and 2020 HM Courts & Tribunals Service would oversee a series of reforms in order to modernise and improve the efficiency of courts and tribunals. It is anticipated that the reforms will comprise an upgrade of facilities as well as the modernisation of technology. In the Autumn Statement 2015, the Chancellor of the Exchequer announced a funding package of £700 million to modernise the court estate across the country and to fully digitise services. A number of procedural reform initiatives have already been rolled out, such as the introduction of a two-year pilot for shorter and flexible trials, and the Financial List, as have initiatives aimed at digitising the courts system (see Section II, infra).
vi Incoming EU General Data Protection Regulation
The General Data Protection Regulation (Regulation (EU) 2016/679) (GDPR) was adopted on 27 April 2016 and will enter into force on 25 May 2018 after a two-year transition period. It will replace the Data Protection Directive (95/46/EC) to become the centrepiece of EU data protection legislation, and seeks to harmonise data protection legislation across EU Member States. Subject to the terms of the UK’s exit from the EU, the GDPR will replace the regime currently in force in the UK. The GDPR includes, among its more notable provisions:
- a a wider extraterritorial scope of application such that controllers outside the EU that offer goods and services to individuals within the EU are caught;
- b the introduction of new concepts and rights (e.g., accountability of data controllers, and the right of individuals to erasure of personal data) over and above the current principles;
- c provisions requiring consent to all data processing (as opposed to the processing only of sensitive data) to be ‘explicit’;
- d the introduction of a mandatory data breach notification procedure whereby controllers in breach must notify the data protection regulator of its breach without undue delay and where feasible within 72 hours; and
- e stronger sanctions for breach such as fines of up to 4 per cent of annual worldwide turnover or €20 million.
1 Damian Taylor is a partner and Smriti Sriram is an associate at Slaughter and May. The authors wish to thank Rob Brittain (professional support lawyer at Slaughter and May) and Christopher Koay (trainee at Slaughter and May) for their contribution and assistance.
2 On 23 June 2016, a referendum was held on the UK’s membership of the EU in which a majority of the UK electorate voted to leave. For consideration of the dispute resolution implications, please see Chapter 1.
3 The third division is the Family Division, which deals with matrimonial and other family-related matters.
4 Formerly the Court of Justice of the European Communities (the collective name for the Court of Justice (commonly known as the ECJ), the Court of First Instance (CFI) and the Civil Service Tribunal). Following the Treaty of Lisbon, the collective court is known as the Court of Justice of the European Union (CJEU), the ECJ remains the Court of Justice and the CFI is now known as the General Court.
5 See www.justice.gov.uk/guidance/courts-and-tribunals/courts/procedure-rules/civil/index.htm.
6 See the Pre-Action Conduct and Protocols Practice Direction at www.justice.gov.uk/courts/procedure-rules/civil/rules/pd_pre-action_conduct.
7 Lewis v. Eliades (No. 1)  EWHC 335.
8 CPR 19.6.
9 CPR 19.10–19.15.
10 Emerald Supplies Ltd v. British Airways plc  EWCA Civ 1284; (2010) 160 NLJ 1651.
11 Office of Fair Trading v. Abbey National plc and Others  UKSC 6;  3 WLR 1215.
12 See the current class actions brought by shareholders of RBS in respect of the 2008 RBS rights issue and the shareholders of Lloyd’s/HBOS in respect of alleged losses suffered as a consequence of Lloyds’ acquisition of HBOS in January 2009 and the subsequent recapitalisation of the merged entity. On 5 December 2016, RBS announced that it had settled with three of the five claimant groups in the rights issue litigation; if the remaining claimant groups continue the litigation, a trial on liability is listed to begin in March 2017. The Lloyds/HBOS case is still working its way through the High Court. See also, the Equitable Life litigation (in the House of Lords: Equitable Life Assurance Society v. Hyman  1 AC 408), where Equitable Life sponsored one defendant, Hyman, to represent around 90,000 of its policyholders to establish the correct interpretation of a life insurance policy it had issued.
13 See, for example, Nelson v. Halifax plc  EWCA Civ 1016.
14 CPR 5.4C(1).
15 Arkin v. Borchard Lines Ltd and Others  EWCA Civ 655.
16 See http://associationoflitigationfunders.com/code-of-conduct/.
17 PD 51L, paragraph 1.1A.
18  EWCA Civ 741.
19 We understand that this option (of the data controller assessing adequacy of protection) is particular to the UK data protection regime and is not available elsewhere in Europe. The ICO has published guidance on assessing adequacy: Assessing Adequacy – International transfers of personal data, 28 February 2012.
20  UKHL 48.
21  EWCA Civ 474.
22  UKSC 1.
23 It is unlikely that the privilege applies to non-adversarial situations; Re L (A Minor)  AC 16.
24 Burmah Oil Co Ltd v. Governor and Company of the Bank of England  AC 1090.
25 Oceanbulk Shipping & Trading SA v. TMT Asia Limited  UKSC 44;  3 WLR 1424.
26  EWHC 625 (Ch).
27  EWHC 1102.
28 Three Rivers (No. 6)  UKHL 48.
29 See joined cases of Cases T-125/03 and T-253/03 Akzo Nobel Chemicals Ltd and Akcros Chemicals Ltd v. Commission in the General Court and the subsequent decision of the ECJ in C-550/07 P.
30 Lawrence v. Campbell (1859) 4 Drew 485 and IBM Corp v. Phoenix International (Computers) Ltd  1 All ER 413.
31 See for example comments made by Lord Justice Jackson in his lecture on disclosure at the Law Society’s Commercial Litigation Conference (10 October 2016).
32  1 WLR 627.
33 CPR 31.7.
34  EWHC 256 (Ch).
35 Brown v. BCA Trading Ltd  EWHC 1464 (Ch).
36  EWHC 2759 (Ch).
37 Some practitioners would exclude arbitration as a form of ADR and would emphasise instead the procedural informality of ADR mechanisms. However, since an arbitration can only be commenced with the consent of the parties, it is treated here as an alternative to the formal court process.
38  2 CLC 550.
39 Available from Oxford University Press.
40  EWCA Civ 303.
41  EWCA Civ 576.
42  EWCA Civ 1288.