This country-specific Q&A provides an overview of Litigation that may occur in Guernsey.
This Q&A is part of the global guide to Litigation. For a full list of jurisdictional Q&As visit http://www.inhouselawyer.co.uk/practice-areas/litigation-second-edition/
Published June 2019
What are the main methods of resolving commercial disputes in your jurisdiction?
The main methods of resolving commercial disputes in Guernsey are the court system or Alternative Dispute Resolution (ADR).
The Royal Court of Guernsey (the Royal Court) is the established court for resolving all commercial disputes with a value higher that £10,000 (lower value disputes are dealt with in the Magistrates Court). The court process in Guernsey is adversarial in nature and the standard of proof for civil proceedings is on the balance of probabilities.
ADR can be conducted in conjunction with or separately from litigation. Mediation is a popular form of ADR. The Royal Court can recommend mediation, and often does, but it cannot compel parties to undertake it.
The law governing arbitration has been recently updated in the Arbitration (Guernsey) Law 2016, and it is anticipated that this will lead to more widespread use of arbitration in the jurisdiction.
What are the main procedural rules governing commercial litigation?
Litigation in the Royal Court is governed by the Royal Court Civil Rules 2007 (RCCR) which sets out the procedure for disputes. The RCCR are occasionally supplemented by practice directions issued by the Court.
What is the structure and organisation of local courts dealing with commercial claims? What is the final court of appeal?
There are three separate jurisdictions within the Bailiwick of Guernsey: Guernsey, Alderney and Sark. The judicial systems in Alderney and Sark are separate and outside of the scope of this note.
The Royal Court of Guernsey is formed of five divisions:
- Court of Chief Pleas;
- Full Court;
- Ordinary Court;
- Court de Plaids d’Heritage; and
- Matrimonial Cause Division.
Commercial disputes are usually heard by the Royal Court sitting as the Ordinary Court. The Ordinary Court is presided over by a single judge (either the Bailiff, Deputy Bailiff, a Lieutenant Bailiff or a Judge of the Royal Court) who may sit with Jurats. The Jurats are appointed lay members of the community who, when sitting, are the sole arbiters of fact in civil trials and have a similar role to that of jurors in proceedings in the UK.
Appeals from the Royal Court sitting as the Ordinary Court are heard in the Guernsey Court of Appeal. Final appeals lie to the Judicial Committee of the Privy Council only if leave is obtained from the Guernsey Court of Appeal or the Judicial Committee of the Privy Council and if the value of the claim exceeds £500.
How long does it typically take from commencing proceedings to get to trial?
There is no fixed timeframe in place for progression of a case from commencement of proceedings to a trial. Litigation in Guernsey is a flexible procedure in accordance with the complexity of the dispute, the approach the parties take and the workload of the Court.
It is possible for many commercial claims to reach trial in around 12 to 18 months from commencement of proceedings, but timings are very much dependent on the individual dispute.
Are hearings held in public and are documents filed at court available to the public? Are there any exceptions?
Proceedings in the Royal Court are normally held in public. Documents filed at Court can be obtained from the Court by members of the public and judgments are published on the Guernsey Legal Resources website.
In certain circumstances, the Court may order for proceedings to be heard in camera or for judgments to be anonymised if the interests of justice require it. Such orders are often made in sensitive trust proceedings to protect the identities of the parties. The Court will consider if justice can only be served if proceedings are heard in private.
What, if any, are the relevant limitation periods in your jurisdiction?
Limitation in Guernsey is known as prescription. Prescription operates to completely extinguish the right to a claim rather than simply barring access to the remedy. Prescription can be raised as a defence to any claim considered to fall outside the relevant period.
The prescription periods that are commonly relevant in commercial litigation in Guernsey are:
- contract or tort: 6 years from the date on which the breach/damage occurred;
- breach of trust: 3 years from the date of knowledge or delivery or final trust accounts; and
- realty: 20 years from the date on which the cause of action arises.
There is a customary law principle in Guernsey law called empêchment d’agir by which a party can plead that an impediment has prevented it from taking action previously. Empêchment d’agir operates to suspend time in circumstances when the prescription period would have otherwise expired. It is not used commonly in commercial proceedings and the limits of its application in modern cases is not always clear.
What, if any, are the pre-action conduct requirements in your jurisdiction and what, if any, are the consequences of non-compliance?
There are no formal pre-action requirements applicable to commercial disputes in Guernsey. Rule 1 of the RCCR provides an overriding objective for all parties engaged in litigation in the Guernsey courts and this should be considered at all stages of proceedings. It is common practice for parties to engage in pre-action correspondence with a view to dealing with any preliminary issues and narrowing areas of dispute. The court has discretion to penalise parties with adverse costs orders in relation to any unacceptable pre-action conduct.
How are commercial proceedings commenced? Is service necessary and, if so, is this done by the court (or its agent) or by the parties?
Commercial proceedings are commenced by tabling a “Cause” (details of the claim) before the Royal Court and delivering the Summons for that Cause to HM Sergeant (an agent of the Court) for service upon the other parties in the proceedings.
The prescription period will stop running at the point at which the Summons is delivered to HM Sergeant.
How does the court determine whether it has jurisdiction over a claim?
The Royal Court will respect parties’ autonomy to submit to a jurisdiction of their choice. However, if the matter involves issues which can only be decided on properly by a Guernsey Court then the Royal Court is more likely to claim jurisdiction.
How does the court determine what law will apply to the claims?
In the majority of cases, the Royal Court will respect the parties’ choice to submit to a particular governing law if expressly agreed between the parties.
In what circumstances, if any, can claims be disposed of without a full trial?
Parties to litigation can in appropriate circumstances apply to court for summary judgment or to have a claim or part of that claim struck out. Rules 18 to 24 of the RCCR govern the process for obtaining summary judgment. The Royal Court will consider whether the claimant or defendant has any real prospect of success, and if there are other compelling reasons why the claim should be disposed of at trial.
Rule 52 of the RCCR permits a party to make an application to strike out the whole or part of a party’s case on the basis that the pleading (or part thereof) discloses no reasonable grounds, is an abuse of process, for want of prosecution or where the party has failed to comply with a court order, rule or practice direction.
What, if any, are the main types of interim remedies available in your jurisdiction?
There are a variety of interim remedies available in Guernsey. The main types are:
- interim injunctions, such as:
- summary judgment and strike out (see above);
- unless orders; and
- security for costs.
- freezing injunctions;
- search orders;
- Bankers Trust orders;
- Norwich Pharmacal orders;
- anti-suit injunctions; and
- the Clameur de Haro (a Norman customary injunction affecting property).
There are also interim interlocutory remedies under Guernsey customary law which provide a form of interim execution, known as arrêts. An arrêt (of which there are various types) can take effect to freeze assets, arrest wages or to impose other remedies to improve a party’s chances that a debt will be paid. In modern commercial litigation, parties more commonly choose to apply for an appropriate injunction.
After a claim has been commenced, what written documents must (or can) the parties submit and what is the usual timetable?
When the cause is tabled before the Royal Court, the defendant must indicate whether it intends to defend the claim. The defendant then has 28 days to file its defence, although this deadline can be extended by up to 3 months by agreement between the parties or longer by order of the court.
The subsequent timetable is relatively flexible and dependant on the complexity of the claim and the commitments of the court. The relevant stages are usually:
- experts reports;
- witness statements;
- pre-trial arrangements such as trial timetable and format; and
What, if any, are the rules for disclosure of documents? Are there any exceptions (e.g. on grounds of privilege, confidentiality or public interest)?
Rules 63 to 79 of the RCCR provide the rules for disclosure. Unless the court directs or the parties otherwise agree, the usual order will be for standard disclosure. Parties have a duty to disclose documents which support or adversely affect their case and documents they intend to rely on. There are not currently any specialist rules to deal with the disclosure of electronic documents although the Court will permit the use of e-discovery in appropriate cases.
The principle of privilege is recognised in Guernsey and can be relied on to refuse inspection of disclosable documents in appropriate circumstances.
How is witness evidence dealt with in commercial litigation in your jurisdiction (and in particular, do witnesses give oral and/or written evidence and what, if any, are the rules on cross-examination)? Are depositions permitted?
Witness evidence is normally prepared in the form of written witness statements or affidavits, which will stand as evidence in chief. Witnesses commonly give oral evidence and are cross examined. Parties are permitted to re-examine their own witnesses.
Evidence can be given “à futur” (in the form of a deposition) before a Commissioner if there is a requirement to preserve evidence in circumstances where the deponent is ill, in danger of death or likely to leave the island.
Is expert evidence permitted and how is it dealt with? Is the expert appointed by the court or the parties and what duties do they owe?
Expert evidence is permitted only with the permission of the court and the expert will normally be appointed by the parties but will have an overriding duty to the court. Expert evidence is normally prepared in the form of written reports either by a single or joint expert. Experts can then be cross examined on their reports at trial. There is also scope for the joint appointment of a single expert.
The rules dealing with evidence in the Guernsey courts are covered in the Evidence in Civil Proceedings (Guernsey and Alderney) Rules 2011.
Can final and interim decisions be appealed? If so, to which court(s) and within what timescale?
Both final and interim decisions can be appealed. Appeals from the Royal Court sitting as the Ordinary Court lie to the Guernsey Court of Appeal. Parties can appeal as of right if the appeal is on a point of law or in respect of a judgment with a value greater than £200. The Guernsey Court of Appeal can also consider appeals on points of fact decided by the jurats provided that the judgment value threshold has been met.
Appeals can be made against interlocutory orders, consent orders, costs orders or judgments with a value lower than the threshold with the permission from the judge at first instance, or the Court of Appeal if the presiding judge at first instance has refused.
The party wishing to appeal must file a Notice of Appeal within one month of the decision that they are seeking to appeal. This deadline can be extended by the Court.
Further appeals above the Guernsey Court of Appeal lie to the Judicial Committee of the Privy Council, with leave from either the Guernsey Court of Appeal or the Judicial Committee of the Privy Counsel. The value of the judgment must exceed £500.
What are the rules governing enforcement of foreign judgments in your jurisdiction?
The Judgments (Reciprocal Enforcement) (Guernsey) Law 1957 deals with enforcement of foreign judgments in Guernsey. If this law is not applicable then enforcement will be carried out on the basis of common law principles and the enforcing party will need to sue on the judgment in Guernsey.
Guernsey is not a party to or subject to the following:
- the HCCH Convention of the Recognition and Enforcement of Foreign Judgments in Civil and Commercial Matters 1971;
- Regulation (EC) 4/2001 on Jurisdiction and the Recognition and Enforcement of Judgments in Civil and Commercial Matters; and
- the Lugano Convention on Jurisdiction and the Recognition and Enforcement of Judgments in Civil and Commercial Matters 2007.
Can the costs of litigation (e.g. court costs, as well as the parties’ costs of instructing lawyers, experts and other professionals) be recovered from the other side?
A successful party in litigation does not have an automatic right to recovery of their costs from the other side. However, the court has discretion to award costs and normally exercises this in accordance with the principle that costs follow the event. Costs recovered can include disbursements such as court costs, experts and other professionals’ costs.
Lawyer’s costs are usually awarded on the standard basis. The costs must have been incurred reasonably and proportionately. There is a maximum recoverable hourly rate for the costs of Guernsey Advocates.
If a party is considered to have acted in a manner which is unreasonable, scandalous, frivolous or vexatious or has otherwise abused the process of the court, the court may order make an award of indemnity costs against that party.
What, if any, are the collective redress (e.g. class action) mechanisms in your jurisdiction?
Rule 33 of the RCCR allows a person to commence or continue a claim as the representative of others with the same interest in that claim. An individual defendant is also permitted to defend a claim as a representative of the other defendants.
A judgment in a case under Rule 33 is binding on all of the other parties represented by that individual. The judgment can only be enforced by or against an unnamed party with the court’s permission.
What, if any, are the mechanism for joining third parties to ongoing proceedings and/or consolidating two sets of proceedings in your jurisdiction?
Rule 37 of the RCCR enables the court to order a party to be joined to ongoing proceedings. The court will consider whether it is just and convenient to do so for the purposes of determining an issue.
The court can order for the consolidation (crochetées) of actions under Rule 31 of the RCCR. Alternatively, the court can order for one set of proceedings to be joined if there is a common question of law or fact, or where the relief claimed in each case arises from the same transaction, or for any other reason desirable to the court.
Are third parties allowed to fund litigation? If so, are there any restrictions on this and can third party funders be made liable for the costs incurred by the other side?
Third party litigation is permitted in Guernsey proceedings if the arrangement does not conflict with the principles of champerty and unlawful maintenance. The court can make an adverse costs order against the third party funder in the event that the financed party is unsuccessful in the litigation and potential funders should be alive to this risk.
Both “before the event” and “after the event” (ATE) insurance may be used to fund Guernsey proceedings, although the premium for ATE insurance is not normally recoverable from the other party.
What is the main advantage and the main disadvantage of litigating international commercial disputes in your jurisdiction?
Following the recent US$1 billion Carlyle Capital Corporation case, Guernsey has already demonstrated that it is more than capable of dealing with even the most complex and significant international commercial cases. Perhaps the main advantage is the jurisdiction is small and flexible enough to be able to deal relatively quickly with such cases. A minor disadvantage is that those appearing in Court cases in Guernsey would be advised to travel to the Island the night before, just in case the infamous Guernsey fog descends!
What is the most likely growth area for disputes in your jurisdiction for the next 5 years?
We envisage that, in light of GDPR being introduced into local legislation by the Data Protection (Bailiwick of Guernsey) Law 2018, data protection and related regulatory disputes will start to become more common.
Will be the impact of technology on commercial litigation in your jurisdiction in the next 5 years?
Technology already has a significant impact. For example, parties are required to file electronic copies of bundles for hearings in addition to a single hard copy bundle. It is intended that at some point in the future all bundles will be lodged in electronic format only. More generally, e-discovery is becoming ever more common and is even encouraged in complex proceedings in order to reduce costs. It is anticipated these and other developments will ensure that the Royal Court and local advocates are as fully able to deal with the practical complexities of conducting complex commercial litigation as lawyers in much larger jurisdictions.