What are the main procedural rules governing commercial litigation?
The main procedural rules are contained in the Civil Procedure Code, 1908. These serve as the default rules of procedure.
However, where a case is covered by a special enactment or is to be heard by a special court constituted under a special law, it may provide for a separate procedure. For instance, commercial disputes that fall within the ambit of the Financial Institutions (Recovery of Finance) Ordinance, 2001 follow a summary procedure that differs from the default procedure for commercial litigation given in the Civil Procedure Code, 1908.
Since civil procedure is a provincial subject, there are slight differences and variations in the rules of procedure applicable across the provinces. This note is therefore limited to the broader principles and rules that are common across all four provinces.
The main procedural rules governing commercial litigation are set out in the Code of Organisation and Civil Procedure. Commercial litigation in front of the superior courts of Malta are generally initiated by means of a sworn application to be filed by the applicant in the court registry. The sworn application would necessarily state the subject of the claim and the remedy sought by the applicant and must be confirmed on oath by the said applicant upon filing. Once the said sworn application is filed in the court registry it would be served on the respondent who would have twenty days from the date of service to file the sworn reply to defend the claim. Following the lapse of the twenty day time period, should the respondent fail to file reply he would be deemed contumacious.
Following the said preliminary written proceedings, the court hearings would proceed and the parties submit their evidence and have witnesses examined and cross-examined, either in front of the court itself or in front of a judicial assistance appointed by the court as the case may be. Following the conclusion of the evidentiary stage, the parties would proceed with making written and/or oral submissions and the Court would then proceed to adjourn the hearings for judgment.
As regards debt collection proceedings, Maltese law also provides for the possibility of filing special summary proceedings in front of the courts of Malta. Any claim for the recovery of a debt which is certain, liquid and due and not consisting in the performance of an act may be instituted by means of a sworn application whereby the applicant would request the courts to give a judgment without proceeding to trail on the basis that, to his knowledge, the respondent has no defence to his claim. The applicant filing the said sworn application must solemnly declare that in his belief there is no defence to the action in the sworn application. The said court application is then served on the respondent without delay and the court would appoint a date for hearing which shall not be earlier than fifteen days and not later than thirty days from the date of service of the sworn application on the respondent.
Commercial litigation in Singapore is mainly governed by the Supreme Court of Judicature Act (“SCJA”) the Rules of Court (“ROC”), the State Courts Act (“SCA”), the Supreme Court Practice Directions and the State Courts Practice Directions.
The main procedural rules governing commercial litigation are as follows:
- the Commercial Procedural Code No 95-FZ dated 24 July 2002 (the “Commercial Procedural Code”);
- the Federal Law No 229-FZ “On enforcement procedure” dated 2 October 2007;
- the Federal Law No 127-FZ “On insolvency (bankruptcy)” dated 26 October 2002.
Besides that, relevant Resolutions of Plenary Sessions of the Supreme Court (and of the Higher Commercial Court, currently merged into the Supreme Court) provide guidance on how those rules shall be interpreted and applied.
For procedure in litigation, the main Spanish laws are the Spanish Civil Procedure Act (or Ley 1/2000, de Enjuiciamiento Civil) and the Basic Law on the Judicial Power (or Ley Orgánica 6/1985, del Poder Judicial).
When it comes to mediation, the Spanish Civil and Commercial Mediation Law applies (or Ley 5/2012, de Mediación en asuntos civiles y mercantiles).
Arbitration is essentially governed by the Spanish Arbitration Law (or Ley 60/2003, de Arbitraje).
There are, however, a number of other laws on commercial litigation. For instance, the Law on International Judicial Cooperation in Civil Matters (or Ley 29/2015, de Cooperación Civil Internacional en materia Civil) or the Voluntary Jurisdiction Law (or Ley 15/2015, de Jurisdicción Voluntaria).
If the commercial disputes are brought before the court, the procedure is governed by the Herziend Indonesisch Reglement, - “HIR”. On the other hand, if the disputes will be resolved through arbitration, parties can mutually designate any arbitral institution to administer the arbitration. The procedural rules will be governed by the rules of the designated institution. However, if an institution or rules are not designated, the rules provided in the Indonesian Arbitration Law may be used as a reference.
The general procedural rules for commercial litigation in Germany are set forth in the Code of Civil Procedure (ZPO). Provisions governing the court’s structure and functioning are regulated in the Courts Constitution Act (GVG).
In addition, there exist a number of special statutes dealing with particular types of proceedings:
- The Family Procedure Act (FamFG), formerly Act on Non-Contentious Matters (FGG), regulates certain proceedings in company law matters (unternehmensrechtliche Verfahren).
- For disputes concerning compensations in connection with mergers or squeeze-outs, the Act on Appraisal Proceedings (SpruchG) and the FamFG govern appraisal proceedings (Spruchverfahren).
- For capital market-related disputes, the German Act on Model Case Proceedings in Disputes Regarding Capital Market Information (Kapitalanleger-Musterverfahrensgesetz/KapMuG) provides for collective redress in mass damages cases.
- Recently, the German legislature has introduced a new collective redress instrument for consumer disputes, the Musterfeststellungsklage (sec. 606 et seq. ZPO) (cf. Question 20)
Commercial law in Mexico is a matter of federal law. Commercial litigation in Mexico is governed by the Commerce Code; (Código de Comercio); when a specific rule is not provided for in the Commerce Code, the Federal Code for Civil Proceedings (Código Federal de Procedimientos Civiles) is applied supplementary. Additionally, when the rule is not sufficiently provided for, the local proceedings law becomes applicable.
The main procedural provisions for commercial litigation are included in the Greek Code of Civil Procedure (hereinafter the “GCCP”). Basic principles governing commercial proceedings in the context of the GCCP are: a) the principle of the parties’ control of the cause of action, b) the progress of the trial on the initiative of the parties having disposal over the object of the trial, c) the principle of the determination of the competent judge by the law and not by the litigant parties, d) the parties’ equality, e) the principle of publicity and f) the principle of conduction of the trial in good faith.
Commercial Litigation is governed by procedural rules provided by the Code of Civil Procedure. The claim is initiated by a summons, served upon the defendant (for matters above €4,600). The claim is brought in front of the First Instance Court. Parties have the possibility to file writings in turn until final pleadings are set by the Court. Parties may freely appeal the First Instance Court decisions within the timeframe provided by the law.
Evidence can be freely submitted in commercial matters.
Civil procedure in Hong Kong is governed by the Rules of the High Court (Cap. 4A), the Rules of the District Court (Cap. 336H) and the accompanying Practice Directions issued by the Chief Justice (collectively, the “Rules”). These Rules were substantially revised by the enactment of the Civil Justice Reform.
Commercial disputes are not regulated by special procedural laws if compared to other civil subjects. Therefore, it is necessary to distinguish which dispute resolution method was used.
In case of ordinary proceedings, the proceedings start with a writ of summons to appear at the first hearing before the Judge entitled to adjudicate ratione loci. During the first hearing, the judge checks if the appearance in court is in accordance with law and, if requested by the parties, fixes three time limits to file briefs related to means of giving or obtaining evidence, simultaneously setting the hearing for the admission of the means of evidence (oral testimony, technical expertise, etc...). Once the evidence gathering phase is completed, the judge sets a hearing in order to give the parties the possibility to specify submissions, fixing a time limit for final briefs. The judgment is provisionally enforceable, but the provisional enforceability shall be suspended by the court of appeal in case of serious and reasonable grounds (art. 283 of the Italian Code of Civil Procedure).
Arbitration has a smoother procedure and may be ritual or not; in the first case the arbitration award produces the same effects as the ordinary Judge's ruling, with the exception of enforceability, which is subordinated to a decree of the Court in whose district the arbitration seat is located; in the second case the arbitration award has the effects of a contractual determination and as such can be annulled, when the flaws provided for by the law occur, by initiating ordinary merits proceedings before the ordinary Judge.
Preventively resorting to mediation procedure is mandatory in some subjects (lease, loan, lease of business, insurance, banking and financial contracts) and constitutes a prerequisite of admissibility of the action. Should the parties reach an agreement, the record of such agreement is an enforceable title, just like a judgement or an arbitration award.
In case of assisted negotiation procedure the parties must first sign an assisted negotiation agreement, in which they set the subject of the negotiation and the deadline within which the negotiation must take place. Also in this case, the agreement record constitutes an enforceable title.
Practice and procedure in the Irish Courts is determined by references to the rules of the relevant court (please see (3) below in relation to the jurisdiction of the various courts to hear a claim).
Most commercial disputes arise within the jurisdiction of the High Court and are governed by the Rules of the Superior Courts (RSC). The RSC are amended from time to time by way of Statutory Instrument, and are published on the Irish Courts Service website in their un-consolidated form.
Procedure before the courts is also governed by Practice Directions, which complement the rules of court, and inform parties what the court expects of them with regards to practice and procedure. These practice directions are also published on the Courts Service website.
The most important source is the Swiss Code of Civil Procedure of 19 December 2008, which is part of the Swiss public law and which regulates the relationship of the court as a state body to the parties to the proceedings and the rights and obligations of the parties in the proceedings conducted by the court. Civil procedure law is in principle mandatory law and cannot be amended by party agreement. In addition to the Code of Civil Procedure, other laws regulate court proceedings, in particular the jurisdiction and organisation of courts, court fees and the amount of compensation to be paid by the losing party to the prevailing party. It should be noted here that both the court fees and the amount of the party compensation depend to a large extent on the amount in dispute.
The main procedural rules are the ones applied to the Civil procedure, which is essentially written and ruled by the Civil Procedural Code (“Código de Procedimiento Civil”, hereinafter the “CPC”), the Law Regulating the Jurisdiction of Chilean Courts or Courts Statute Code (“Código Orgánico de Tribunales”, hereinafter the “CSC”) and complementary laws. In turn, arbitration centres –such as the Mediation and Arbitration Centre of the Chilean Chambers of Commerce (hereinafter the “CAM”)- have their own procedural rules which govern proceedings under their control. Finally, Law 19,971 of International Commercial Arbitration set out some procedural rules following the UNCITRAL guidelines.
The procedural statutory legislation governing commercial litigation is almost exclusively found in the Swedish Code of Judicial Procedure (Sw. rättegångsbalken). Certain legal areas (e.g. employment law and competition law) also have specific procedural rules found in other legislation.
The main procedural rules imply the filing of a claim and summons addressed to the counterparty and allowing them a 30 day period within which to challenge the claim. This is followed by the scheduling of a preliminary hearing where the Court invites the parties with the goal of reaching a settlement or, if that is not possible, defining the subsequent terms of the process and scheduling a final hearing.
After that final hearing has occurred and all the evidence has been presented, the court makes a final ruling, which may be subject to appeal, depending on the amount due.
Federal Law number 11 of 1992 known as the Civil Procedures Law is the main law governing all civil and commercial litigation procedures. The law tackles all procedures of trials from filing claims, notifying parties, experts and their appointments and tasks, appeals, order in hearings, procedures, special and urgent applications, discontinuance, cessation and lapse of time and all other procedures.
The procedures of the Commercial Court are governed by the Civil Procedure Rules of the Shari’a Courts of 2013. Each of the specialized statutory tribunals has its own procedural rules, and where an issue is not covered by these rules the Civil Procedure Rules of the Shari’a Courts apply. Arbitration procedures are governed by the Arbitration Regulation of 2012.
The purpose of the Norwegian Dispute Act is to provide a basis for hearing civil disputes in a fair, sound, swift, efficient and confidence inspiring manner through public proceedings before independent and impartial courts. The Act shall safeguard the needs of individuals to enforce their rights and resolve their disputes, and the needs of society for respect and clarification of legal rules. In addition, the Norwegian Arbitration Act provides procedure rules for disputes that the parties have agreed to settle by arbitration.
Where a commercial claim is brought in federal court, the procedural rules governing such claims are found in the Federal Rules of Civil Procedure (the “FRCP”). Each federal district may promulgate rules to supplement, and in some instances to modify, the FRCP, and each individual judge within each district may also promulgate rules governing proceedings in his or her courtroom. State commercial claims are governed by the procedural rules of the state in which the claim is litigated.
Commercial litigation is primary governed by the following three sets of procedural rules:
- The Austrian Jurisdiction Act (“Jurisdiktionsnorm”) determines the organisation and jurisdiction of courts.
- The Austrian Code of Civil Procedure (“Zivilprozessordnung”) sets out the rules for contentious proceedings in civil courts and provides a framework for national and international arbitration.
- The Austrian Enforcement Code (“Exekutionsordnung”) determines the enforcement of judgments as well as of arbitral awards and preliminary remedies.
The Code of Civil Procedure (the “CCP”) is the main law which provides for the procedural rules governing litigation in general, and there is no special set of procedures which applies only to commercial litigation. However, the Companies Act provides for certain types of corporate litigation, such as derivative suits (Article 847) and suits to invalidate acts concerning the organisation of a company (Article 828), and serves as the procedural rules for these cases.
The Civil Procedure Rules (“CPR”) govern the procedural aspects of litigation. The CPR is designed to ensure that cases are dealt with speedily and consists of rules as well as practice directions which provide further practical guidance on the rules. The CPR covers the timetabling and case management of the entire trial process, as well as specific aspects such as the service of documents, disclosure, witnesses and expert evidence, settlement offers, costs and appeals.
The primary act governing litigation, including commercial litigation, in Denmark is the Danish Administration of Justice Act. The act which is very extensive thoroughly set out the steps throughout the litigation process and determines when and how the parties are to exchange various pleadings and the Act determines the legal effect if the parties do not adequately comply with the provisions. The act applies in both commercial and civil disputes as well as criminal cases.
In case the parties have chosen arbitration in Denmark as the dispute resolution mechanism the Danish Arbitration Act applies and determines the arbitration process. The Act was adopted in 2005 and is based on UNCITRAL Model Law on International Commercial Arbitration.
The French Code of Civil Procedure is the main set of rules which apply to commercial litigation in general. This Code contains a set of rules which are applicable to all civil and commercial proceedings in general, as well as a section which specifically deals with commercial litigation.
The procedural system for commercial litigation is mainly adversarial.
Before the Commercial Court, the procedure is oral. The parties are not compelled to file written submissions with the Court, but may do so if they wish (and most often do in practice).
Before the Commercial Court, the parties may defend themselves, but may also be assisted or represented by any person of their choice. In practice, parties are generally represented by lawyers (avocats). Representation by a lawyer is mandatory before the Court of Appeal.
In India, the Code of Civil Procedure, 1908 (Code) is the law governing the principles relating to the powers of the court, procedures, methods and manner in which the jurisdiction of the civil courts may be exercised. Similarly, the principles and procedures pertaining to evidence are governed by the Indian Evidence Act, 1872 (Evidence Act).
Aside from the above, there are a number of other statutes that may also govern the procedural rules in commercial litigation. As an example, the Commercial Courts Act has been enacted to ensure speedy disposal of commercial disputes by providing for stricter timelines for resolution of disputes.
Further, the procedure as adopted by different specialized forums/tribunals is determined by statutes under which such forums/tribunals have been created. For example, the procedure followed by the DRT is governed by the Recovery of Debts Due to Banks and Financial Institutions Act, 1993. Similarly, the procedure followed by the NCLT is determined by the Companies Act, 2013 and the rules framed thereunder.
In the case of arbitration proceedings, Section 19 of the Arbitration Act states that an arbitral tribunal is not bound by the provisions of the Code or the Evidence Act. In this regard, Section 19(2) provides that the parties are free to agree on the procedure to be followed by the arbitral tribunal in conducting its proceedings. Further, Section 19(3) provides that in the absence of any agreement between the parties on the procedure, the arbitral tribunal is free to conduct the proceedings in the manner it considers appropriate.
However, it may be noted that in practice, the tribunals in India are guided by the provisions of the Code and the Evidence Act, particularly in domestic arbitrations. In the case of international commercial arbitrations, the rules of the arbitral institution chosen by the parties or the relevant internationally accepted rules of procedure, such as the relevant Rules formulated by the International Bar Association (IBA) may be adopted by the arbitral tribunal.