Global disputes: Headed in the right direction

Economic difficulties are generating disputes on a large scale. How will the UK's new Commercial Court interact with other jurisdictions going forward? Clare Canning and Kate Elsmore report

Much time and attention has been devoted to considering the relative minutiae of the conduct of proceedings in the Commercial Court since the establishment of the Commercial Court Long Trials Working Party over two years ago. The result is the now amended Commercial Court Guide - the Admiralty and Commercial Courts Guide (8th edition, 2009), published on 18 May, 2009.

To recap, the working party was set up in January 2007, following criticism of the Commercial Court's handling of a few large-scale commercial disputes. The idea was to consider all aspects of the management of heavyweight and complex litigation in the Commercial Court. Following consideration by the working party, its recommendations were implemented in a Commercial Court pilot scheme.

Practitioners were invited to give feedback on the pilot scheme and we have since been able to debate its impact on a few occasions, for example, at two panel discussions in December 2008 and January 2009 respectively.

More recently, Lord Justice Jackson has been commissioned to undertake a comprehensive review of civil litigation costs, including litigation in the Commercial Court. It is not entirely clear how Jackson's review will interact with the work of the Commercial Court Long Trials Working Party. It is clear from Jackson's recent interim report that he considers the workings of the Commercial Court to be within his remit, although he has expressed the need for caution in changing the procedures of the Commercial Court, given its position as the "court of choice for litigants from other jurisdictions."

Many have commented that what is needed in the Commercial Court is not new rules and procedures, but a shift in culture and approach. Sir Anthony Clarke hit the nail on the head when he said successful case management "lies not simply with the provision of the right tools. It lies with the proper use of those tools." In looking at what the impediments to the effective use of the CPR have been, two main themes consistently emerge: the absence of adequate judicial resource; and the apparent unwillingness of the Court of Appeal to support attempts at first instance to find commonsense-based solutions. Will the amended Commercial Court Guide take us any nearer to the necessary culture shift?

Although the working party focused initially on procedures affecting heavy and complex cases, many of their recommendations were aimed at all cases running in the Commercial Court, and this approach is reflected in the new edition of the guide, which does not differentiate between cases in its adoption of the working party recommendations.

The majority of the working party recommendations, which were used in the Commercial Court from February 2008, have been adopted. For this reason, it is unlikely that parties to litigation in the Commercial Court will notice a great deal of difference in procedures going forward.

The list of issues (see box) caused more controversy than any other recommendation during the pilot, mainly because of the amount of time parties spent to ensure that it advanced their particular case. This was due in part to the statement in the working party recommendations that, once the list of issues had been produced, the pleadings would have only secondary importance. The Court appears to have retreated from this position: the new guide expressly states that the list "is not intended to supersede the pleadings" and that "neither party should attempt to draft the list in terms which advance one party's case over that of another". The list of issues also attracted comment because of the additional workload the proposal imposed on the judges. Government records show that, without fanfare, the number of judges sitting in the Admiralty & Commercial Courts has increased from 12 in 2007 to 17 today. This is obviously an encouraging development.

Client accountability

The working party advocated greater client involvement in and accountability for litigation. Their recommendations were intended to ensure that parties were in a better position to judge the progress of their case and be more involved in major decisions concerning the case. The first was a requirement that a senior representative of each party should sign a second statement of truth shortly before trial, effectively re-verifying the accuracy of the contents of the pleading. The second required that, at appropriate stages of the litigation, senior representatives of the parties sign a statement indicating whether alternative dispute resolution options had been considered internally and with the other side. Neither of these recommendations appear in the new edition of the guide. The judges have not explained why - it may be that they concluded there was no need to duplicate case management powers that already exist in the CPR. It is disappointing that the opportunity has not been taken to bolster the importance of accountability on the part of all parties including, particularly, the parties to litigation.

Summary judgment and strike-out powers

In encouraging the exercise of existing summary judgment and strike-out powers, the guide states that ‘active consideration' will be given at the case management conference as to whether any issues are suitable for summary determination. Although the Commercial Court guide clearly has no jurisdiction in relation to the approach taken in the Court of Appeal, it can only insist that there is now a formal requirement for active consideration at first instance. It remains to be seen whether this will be of assistance in the Court of Appeal. The progression to the Court of Appeal by judges who have participated in debating these issues in the Commercial Court can only help.

Commercial Court - jurisdiction of choice

It is striking that in most discussions of the procedures of the Commercial Court, you will find an assumption (if not always explicit) that the English judicial system, and the Commercial Court in particular, is the leading jurisdiction of choice for resolving international commercial disputes.

It is suggested that New York is its closest rival. At a time when truly global disputes on a scale not seen before are being generated by our global economic difficulties, we should stand back from the minutiae and address broader issues arising from our legal system and its interaction with the systems of other jurisdictions. For example, for most foreign litigants with a genuine dispute, the recoverability of costs is a benefit. This is an issue falling for consideration by Jackson. Similarly, the absence of a class actions structure, such as that found in the Southern District of New York, is seen as positive in most commercial parties' assessment of our system. How far can representative actions and funding arrangements go and are we at risk of undermining the quality of our system? One final example: the availability of judicial resources. Certainly, in the Commercial Court, it seems that this is moving in the right direction.

Key recommendations adopted

• Statements of case should be limited to 25 pages in length, although the Court will give permission for a longer statement of case where a party gives good reason.
• After the defence (and any reply) has been served, the parties' legal representatives must produce a list of the key issues in the case. The intention is that the parties produce one agreed list, which will be used as a tool for case management by the judges to define what factual and expert evidence is necessary and the scope of disclosure.
• The disclosure schedule, introduced by the working party in an attempt to force the parties to deal with disclosure issues at an early stage (thereby reducing time-consuming and expensive court applications for disclosure), must also be prepared at an early stage in the proceedings, after statements of case have been served. It will be used by the court considering disclosure at the first case management conference (CMC).
• With regard to the huge increase in electronic data that must be reviewed for disclosure, the guide provides for the court to consider at the first CMC whether the burden of disclosure, in terms of time, cost and business disruption, can properly be reduced (for example by use of electronic search tools and de-duplication software). Also on use of IT, we are told to expect the judge at the CMC to consider the use of IT at trial, including electronic trial bundles.
• Judges are encouraged to exercise existing summary judgment and strike-out powers in appropriate cases; the guide states that "active consideration" will be given at the CMC to whether any issues are suitable for summary determination.
• Witness statements and experts' reports must be as concise as possible. The guide states that the Court may impose a limit on their length and may restrict evidence or submissions to ensure compliance with the trial timetable.
• Skeleton arguments for use at trial are to be limited ordinarily to 50 pages in length. No limit has been placed on the time permitted for oral opening (or closing) statements. Despite working party proposals, the Judges have decided not to bring in a rule limiting the length of trials.

The guide can be accessed by clicking here.

Clare Canning is a partner and Kate Elsmore is a professional support lawyer in the litigation and dispute resolution department at Mayer Brown.