This country-specific Q&A provides an overview of Litigation that may occur in United Kingdom.
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 three main methods in the UK for resolving commercial disputes are litigation, arbitration and mediation. Litigation is ordinarily conducted in accordance with the Civil Procedure Rules (the “CPRs”). Arbitration is governed by the Arbitration Act 1996 and the New York Convention. Both are adversarial processes. Mediation is a non-adversarial structured negotiation led by a neutral mediator with a view to agreeing a settlement. It is also not uncommon for parties to resolve a matter through negotiation either directly or through their legal representatives.
What are the main procedural rules governing commercial litigation?
The Civil Procedure Rules govern the procedural aspects of litigation. The CPRs are designed to ensure that cases are dealt with justly and at proportionate costs. They contain rules but also practice directions which provide practical guidance on the conduct of litigation. The CPRs cover the timetabling and case management of the entire trial process, as well as specific aspects such as service, disclosure, witness and expert evidence, settlement, costs and appeals.
What is the structure and organisation of local courts dealing with commercial claims? What is the final court of appeal?
Depending on the value and complexity of the dispute, a civil claim can be brought in either the County Court or the High Court. Most large commercial cases (including high-value multijurisdictional cases) are heard by the Business and Property Courts of England and Wales, which is a division of the High Court. The Business and Property Courts consist of multiple divisions, including the Admiralty Court, the Business List, the Commercial Court, the Competition List and the Financial List. The Court of Appeal hears appeals from the High Court and, in certain circumstances, from the County Court and various tribunals. The final court of appeal is the Supreme Court of the United Kingdom, which was created pursuant to the Constitutional Reform Act 2005. The Supreme Court only hears cases involving a point of law of general public importance.
How long does it typically take from commencing proceedings to get to trial?
Time frames and procedures for claims vary depending upon the court and division in which the relevant claim is issued and the nature of the claim itself. As a general rule, it is not uncommon for a claim to take at least 18 months to get to trial even where it is a relatively straightforward commercial dispute. High-value multijurisdictional cases involving multiple parties often take much longer. The deadlines for different stages in the proceedings usually may be extended by parties’ agreement and/or by application to the court. However, once a trial date has been set, the court will be very reluctant to move any dates in a way that could lead to a postponement of the trial. In October 2015 the Shorter Trials Scheme was introduced in the Business and Property Courts in London. The scheme is open to cases that can be tried in no more than four days with the intention that a trial will take place within 10 months of proceedings being issued.
Are hearings held in public and are documents filed at court available to the public? Are there any exceptions?
Court hearings are held in public, other than in exceptional circumstances (including where publicity would defeat the object of the hearing or if the hearing involves matters relating to national security). As a general rule, members of the public can obtain copies of statements of case, judgments and orders without the permission of the court. Access to all other court documents (including witness statements, expert reports, skeleton arguments and correspondence between the court and the parties) may only be obtained with the court’s permission.
What, if any, are the relevant limitation periods in your jurisdiction?
Limitation periods vary depending on the nature of the claim. The basic limitation rules, which are set out in the Limitation Act 1980, include the following:
- for simple contractual claims: six years from the date of the breach of contract;
- for many tortious claims: six years from the date the damage is suffered; and
- for claims brought in respect of deeds: twelve years from the breach of the obligation contained in the deed.
For cases involving fraud, the limitation period generally does not start running until the time when the claimants discover the fraud or when they could, with reasonable diligence, have discovered it. Limitation is a complex area and should always be reviewed carefully.
What, if any, are the pre-action conduct requirements in your jurisdiction and what, if any, are the consequences of non-compliance?
There are different pre-action protocols for some of the most common types of claims, such as debt claims or professional negligence claims. There is also a general Practice Direction which applies where there is no specific pre-action protocol. These protocols and general practice direction ensure that the parties have exchanged sufficient information to understand each other’s positions, make decisions on how to proceed, attempt to settle issues without proceedings and support the efficient management of proceedings. Compliance with the protocols is not mandatory but the court might take this into account when awarding costs or considering case management directions. It is generally advisable to follow the relevant protocol whenever possible (although in some cases, such as when a limitation period is about to expire, it might be necessary to issue a claim and then engage in correspondence with the other side).
How are commercial proceedings commenced? Is service necessary and, if so, is this done by the court (or its agent) or by the parties?
Proceedings are commenced when the court issues a claim form (by stamping it with the court’s seal), as prepared and requested by the claimant. The claim form is the first ‘statement of case’ and includes the name of the court in which the claimant wants to be heard, the parties and the parties’ addresses, details of the claim and the remedy sought by the claimant. Once the claim form has been issued, the claimant must serve it on the defendant
- within four months, if the claim form is to be served within the jurisdiction, or
- within six months, if the claim form is to be served outside the jurisdiction (in which case the court’s permission may be required).
How does the court determine whether it has jurisdiction over a claim?
Two principal sets of rules determine whether the English court has jurisdiction over a civil dispute: (i) the European jurisdiction regime (including notably the Regulation 1215/2012 (the “Brussels Recast Regulation”)); and (ii) the traditional common law rules. Where the former applies, it takes precedence over the latter. The basic rule under the Brussels Recast Regulation is that a defendant should be sued in his country of domicile. However, there are certain exceptions to this rule and the English courts can also take jurisdiction pursuant to the Brussels Recast Regulation where, for example,
- the dispute is subject to an exclusive jurisdiction clause in favour of England;
- the dispute concerns land located in England;
- in contractual disputes, the obligation in question was or was supposed to be performed in England; and
- in tortious disputes, the harmful event occurred or may occur in England. In contrast, under traditional common law rules, jurisdiction is principally dependant on either (i) service of process (either within or outside of the jurisdiction); or (ii) submission to the jurisdiction by the defendant (by agreement or by appearance). Under the common law rules, the English court retains considerable discretion to decline jurisdiction over a defendant where it decides that there is a more appropriate forum to resolve the dispute. It is not yet entirely clear how Brexit will affect the legal regimes governing jurisdiction in the UK.
How does the court determine what law will apply to the claims?
The choice of law rules applicable in English courts are set out in Regulation 593/2008 (the “Rome I Regulation”) and Regulation 864/2007 (the “Rome II Regulation”). The Rome I Regulation, which applies to contractual obligations, generally upholds the parties’ freedom to choose the applicable law. In the absence of party choice, the applicable law is usually the law of the place where the party performing the service characterising the contract has his habitual residence. The Rome II Regulation, which applies to non-contractual obligations, contains a basic rule providing that the applicable law is the law of the place where the damage occurs, or is likely to occur. In circumstances where the Rome I and Rome II Regulations do not apply, the English court will apply common law choice of law rules to determine the applicable law.
In what circumstances, if any, can claims be disposed of without a full trial?
The English court has extensive powers of case management that enable it to actively manage the proceedings. Broadly, there are three types of applications that can be made to dispose of claims without a full trial. First, the court can give a summary judgment against a claimant or defendant where it considers that they have no real prospect of success and where there is no other reason the case should go to trial. “Real prospect” is quite a low threshold in practice and has been interpreted to mean that the party’s prospect of success is not fanciful. Second, the court may strike out a statement of case if it appears
- that the statement of case discloses no reasonable grounds for bringing or defending the claim;
- that the statement of case is an abuse of the court’s process or is otherwise likely to obstruct the just disposal of the proceedings; or
- that there has been a failure to comply with a rule, practice direction or court order. Third, in some circumstances, the court can give a default judgment when a defendant has not filed an acknowledgment of service of a defence within the time limits prescribed by the CPRs.
What, if any, are the main types of interim remedies available in your jurisdiction?
The main type of interim remedy is an interim injunction, which can either require a party to do a specific act (“mandatory injunction”) or to refrain from doing something (“prohibitory injunction”). Examples of interim injunctions include an order that a party preserves certain relevant evidence, or (in more extreme cases) allows another party to take copies of its IT systems, or orders “freezing” some or all of party’s assets (this is particularly effective in cases of suspected fraud where money and other assets can be preserved until the claim is determined). As a general rule, it is usually more difficult to obtain mandatory injunctions than prohibitory injunctions.
After a claim has been commenced, what written documents must (or can) the parties submit and what is the usual timetable?
The claimant must file and serve a claim form and particulars of claim. Particulars of claim can be filed and served together with the claim form or within 14 days of the claim form having been served. Once the defendant has been served, it has 14 days to file a defence (or 28 days, if it chooses to file an acknowledgement of service first). These might (but do not have to) be followed by a reply from the claimant, if they think that there are further relevant points to plead. Both parties must also file directions questionnaires which help the court manage cases more effectively (by, for example, deciding on the allocation of the case to one of the procedural tracks).
What, if any, are the rules for disclosure of documents? Are there any exceptions (e.g. on grounds of privilege, confidentiality or public interest)?
All documents which are or have been in the control of the party, and which harm or support its or another party’s case, must ordinarily be disclosed in English litigation. This includes privileged documents. However, a party can withhold privileged documents from inspection by the other side; so even though the other party knows about their existence through disclosure it cannot view them. Types of privilege include privilege against self-incrimination, public interest immunity, legal professional privilege, litigation privilege, without prejudice privilege and common interest privilege. In most civil cases the parties must file disclosure reports and seek to agree a proposal for disclosure before the first case management conference. The court will then determine the appropriate disclosure order, choosing from a “menu” of disclosure options. Since 1 January 2019, a new disclosure regime has applied in many cases in the Business and Property Courts. The main objectives of the disclosure reforms are to improve efficiency and streamline the process of disclosure.
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?
Witnesses can be summoned to attend court. However, the normal procedure is for each side to produce and exchange written witness statements on which they will rely well in advance of trial. These can be drafted by solicitors for the parties but should reflect the witnesses’ own words. The witness then typically confirms this evidence in person at the trial and, if appropriate, adds any additional oral evidence. The other side is then allowed the opportunity to cross-examine the witness to test his evidence. A party may in some circumstances apply for a court order for a person to be examined before the trial takes place. Such depositions are permitted in front of a judge, an examiner of the court or any other person the court appoints, but are in practice very rare.
Is expert evidence permitted and how is it dealt with? Is the expert appointed by the court or the parties and what duties do they owe?
Expert evidence is permitted at the court’s discretion as their primary role is to assist the court on technical matters. Experts owe a duty to those instructing them to exercise skill and care and to comply with the CPRs and relevant codes of ethics. However, their primary duty is to help the court – that duty overrides any obligation to the person instructing or paying them. In complex cases it is not unusual for each side to instruct their own expert on one or more issues, although the court has the power to order a single expert to be instructed jointly. Where each side has its own expert(s), the experts typically exchange written reports and then seek to agree a joint statement on points on which they agree and disagree. They are then cross examined separately at trial or, as part of a process known as “hot tubbing”, the experts appear simultaneously and answer common questions from both sides and the judge.
Can final and interim decisions be appealed? If so, to which court(s) and within what timescale?
Permission must be given by a court before a decision can be appealed. The application for permission to appeal can be made either to the court that gave the decision that the party wishes to appeal or to the higher court to which the party wishes to appeal. If the application is made to the higher court, it must be requested in the ‘appellant’s notice’. Unless the court otherwise orders, the ‘appellant’s notice’ must be filed within 21 days of the decision to be appealed if the appeal is to be made to the Court of Appeal or within 28 days if the appeal is to be made to the Supreme Court.
What are the rules governing enforcement of foreign judgments in your jurisdiction?
The rules for enforcement of foreign judgments vary depending on from where the judgment originates. Broadly, there are three different enforcement regimes in English law. First, judgments originating from other EU member states are normally easily enforceable pursuant to the procedure set out in EU legislation, including the Brussels Recast Regulation. This involves making an application to the High Court for registration of the judgment. The grounds on which registration can be challenged are limited (for example, if enforcement would be manifestly contrary to public policy or where the judgment was given in default of appearance). It is not yet entirely clear how Brexit will affect the application of the European enforcement regime in the UK. Second, judgments originating from Commonwealth countries (including Singapore, Nigeria and New Zealand) are often enforced pursuant to reciprocal enforcement agreements between the UK and those countries. Third, judgments originating from other countries (including notably the US) must be enforced pursuant to common law rules. This requires claimants to issue a claim in debt and then apply for a summary judgment to have it enforced. A judgment will be enforceable only if the English court deems that the foreign court had jurisdiction over the dispute. Additionally, there are various further grounds on which enforcement can be challenged (for example, if judgment was obtained by fraud or where enforcement would be contrary to public policy).
Can the costs of litigation (e.g. court costs, as well as the parties’ costs of instructing lawyers, experts and other professionals) be recovered from the other side?
Generally, costs are awarded to ‘indemnify’ the winning party for the costs and expenses they incurred while vindicating or defending their rights. However, it is rare that the winner will be fully indemnified (in practice, a general rule of thumb is 50-70% recovery). There is a general ‘no profit’ rule that the costs awarded can never exceed solicitor and client costs. When determining the level of cost awards, the court will usually consider a variety of factors (including the parties’ conduct during the proceedings).
What, if any, are the collective redress (e.g. class action) mechanisms in your jurisdiction?
There are various procedural mechanisms which can be used to bring a ‘group action’ in the High Court:
- joint claims by multiple claimants;
- consolidation of separate claims into one set of proceedings which can be managed together;
- group litigation orders (“GLOs”) where multiple individually commenced claims give rise to common or related issues of fact or law; and
- representative claims where one representative acts on behalf of one or more persons with the same interest in the claim (but the “same interest” is interpreted very narrowly). There is also a more liberal collective actions regime for competition law claims in the Competition Appeals Tribunal (“CAT”) where the CAT has a wide discretion to (i) certify collective claims brought on behalf of, for example, victims of a cartel, on an opt-out or opt-in basis; and (ii) approve collective settlements.
What, if any, are the mechanism for joining third parties to ongoing proceedings and/or consolidating two sets of proceedings in your jurisdiction?
The procedures for adding third parties to ongoing proceedings or for consolidating two sets of proceedings are outlined in the CPRs. The court’s permission is usually required for joining new parties to ongoing proceedings (although a defendants can issue a claim against a third party without the court’s permission if that claim is issued before they file their defence). In deciding whether additional parties should be added to ongoing proceedings, the court will consider whether it is ‘desirable’ to add the new party to resolve the matter. A court may order closely connected claims to be consolidated. Consolidation will be ordered only where there is a strong overlap of issues of fact or law, or where there is a risk of irreconcilable judgments.
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?
Historically, the common law rule against ‘maintenance and champerty’ largely prevented third party litigation funding in English courts. Today, these restrictions are much narrower and third party funding has become a widely accepted feature of English commercial litigation. Accordingly, the courts tend to uphold third party litigation arrangements provided that they do not contain any element of impropriety. In deciding whether there is any impropriety in the arrangement the courts look, among other things, at the extent to which the funder controls the litigation, the nature of the relationship between the funded party and the solicitor and the amount of profit the funder stands to make. Litigation funders should generally subscribe to the “Code of Conduct for Litigation Funders”, a voluntary code of conduct launched in November 2011. Litigation funding is becoming increasingly common in multi-claimant disputes, such as cartel damages claims and securities litigation.
What is the main advantage and the main disadvantage of litigating international commercial disputes in your jurisdiction?
One of the main advantages of the English courts is their global reach. London’s status as a global commercial centre means that defendants face a heavy price if they do not obey the court’s orders as significant commercial actors can rarely afford to be unable to come to London or have assets in the jurisdiction. This makes London a popular forum for fraud cases, where the power to compel worldwide asset preservation and disclosure is key. Costs are commonly considered the main disadvantage of litigating in England, although the parties can mitigate this by having up front conversations with their legal advisors about the economies of litigation and ways of limiting litigation costs (for example, by using the Shorter Trials Scheme).
What is the most likely growth area for disputes in your jurisdiction for the next 5 years?
A likely growth area for disputes will be in collective proceedings. These are very well established in other jurisdictions (notably in the US) and procedures are now in place in England to make collective claims easier to commence and manage. These legal developments have encouraged law firms and litigation funders in the market, who are becoming more adapt at gathering and funding groups of claimants. We anticipate the collective proceedings to be particularly prominent in cartel and securities litigation.
Will be the impact of technology on commercial litigation in your jurisdiction in the next 5 years?
Technology is likely to have a lasting impact on various aspects of commercial litigation in the next 5 years and beyond. In particular, the disclosure process in English courts will likely be affected as Technology Assisted Review (“TAR”) gains increased recognition. TAR allows the parties and the court to sift through vast quantities of available data in a timely and cost-efficient manner. Separately, but relatedly, it appears that automated processes, such as intelligent research tools and “smart” contracts will continue to take over certain tasks traditionally performed by junior lawyers. The automation of basic legal tasks will create an opportunity for lawyers to focus on unique problems faced by their clients; with the best advisers being able to use technology to their advantage and carefully tailor their advice to meet clients’ specific expectations.