Our leadership: Evolving London’s courts for a global market

Despite post-Brexit challenges to the UK’s legal market and persistent concerns over court funding, confidence remains high among commercial practitioners of London holding its place as a top-tier global disputes centre.

In the first panel of the 2017 Commercial Litigation Summit on 3 July a prestigious line-up of jurists and practitioners assembled to discuss key developments in the commercial courts, focusing on initiatives to improve the London commercial courts and attempts to corral spiralling disclosure.

The debate at The Brewery in central London attracted over 200 delegates during the day and united some of the leading judges, barristers, litigators and general counsel (GCs) working in the City.

Kicking off the debate, Mr Justice Knowles QC began briefing delegates on this year’s Standing International Forum of Commercial Courts, which for the first time united senior judicial figures from civil courts in 26 countries. The forum, held at London’s Rolls Building, included established figures from New York, Singapore, Australia and the Middle East, as well as developing economy courts.

Knowles said that the discussions led to an agreement to create a permanent forum for the world’s commercial courts to exchange ideas focusing on three core areas: sharing best practice, fostering collaboration and helping developing economies to rapidly build high-quality courts. Knowles noted: ‘There will be a permanent secretariat, and I am proud that will be based in the Rolls Building. I hope that you see this as a good example of something positive that we can do, using our leadership in this field to good effect.’

Knowles went on to discuss the Financial List, the specialist court set up two years ago to handle complex banking and markets litigation. ‘The Financial List has had just the type of opening years we had hoped for,’ said Knowles. ‘The volume of cases is measured in the low dozens, which is what we were looking for, because we are focusing on the highest-end, market-significant cases.’

As yet the court has yet to use arguably its most touted feature – its market case procedure, though Knowles said that ‘there have been the most encouraging conversations, which show how actively that idea is in people’s minds’.

Widening the debate, Knowles highlighted the growth of arbitration-derived matters hitting the Commercial Court, with 26% of the court’s work now arbitration-related. He commented: ‘That is across the range of involvement in arbitration; it is not all appeals or challenges that are attempted against an arbitration award. Some of the heaviest-duty cases come about where there is an enforcement issue of international consequence, and it is so often to London that the parties turn for a court’s assessment in that respect.

Mr Justice Birss QC: Bringing the courts under an umbrella shows the ways they deal with different business issues

 

‘That is also possibly a sign of some of the tensions within arbitration. There are more attempts to challenge the suitability of an arbitrator or of a panel in a particular case.’

He concluded: ‘What that emphasises to me is a sense that London continues to be a jurisdiction of choice not just for litigation but for that important cross-connecting suite of litigation, arbitration and mediation.’

Knowles also highlighted the adoption of technology, with all filings in the Commercial Court and across the Rolls Building jurisdictions now electronic. ‘The use of technology does not stop there. It is a question of choice at this stage for the parties as to whether a major hearing is entirely paper-free, entirely paper-full, or somewhere in the middle. We see choices across that spectrum.’

His Honour Judge Waksman QC took up the discussion of the new Business and Property Courts, which officially launched on 4 July. Waksman commented: ‘What that does is to put all the different jurisdictions that have specialist work in different types of business case under an umbrella. It does not affect, from a jurisdictional point of view, what each of the courts do. What it does do is emphasise the different ways in which these courts deal with business matters.

‘That is particularly important not only in London but outside London too, so that the local business communities know where the place is where they can have their case tried.’

Waksman noted as well that the Mercantile Court will become known as circuit commercial courts, ‘emphasising that they are part of the Commercial Court, albeit with their own structure and appropriateness for the smaller courts’.

Picking up the debate, Simmons & Simmons partner Ed Crosse said that it will be interesting to see whether there will be a greater fluidity between the divisions and that this broader umbrella will allow cases to be more easily transferred between the courts. Crosse noted, however, that uneven IT infrastructure has hampered moves to ease pressure on London courts by transferring cases to regional tribunals.

Panel chair Lord Dyson asked the floor for views on the relatively slow take up of ENE [early neutral evaluation, where a neutral specialist with relevant knowledge is asked to evaluate the case or any particular issues in it].

‘London continues to be a jurisdiction of choice not just for litigation but for that important cross-connecting suite of litigation, arbitration and mediation.’
Mr Justice Knowles QC

‘My experience of ENE has been uniformly disastrous,’ said Michael Silverleaf QC of 11 South Square. ‘As soon as the evaluator comes down on one side or the other, the parties just get even more entrenched and it becomes much more difficult to persuade them to move forward.’

CMS disputes head Guy Pendell echoed the comments, adding: ‘There seems to be a developing move towards allowing a mediator to give a non-binding view on settlement parameters only at the conclusion of a mediation that has been unsuccessful. That seems more palatable for parties, because they have gone through a process with that individual and have developed a relationship of trust with the mediator that might not exist with a more formal ENE process.’

‘A pretty brisk timetable’

Mr Justice Birss QC took up the subject of the Shorter and Flexible Trials Scheme, a new model of fast-track dispute resolution, which is being trialled across the courts in the Rolls Building – the Business and Property Courts, the Commercial Court, the Chancery Division and the Financial List.

The scheme, which has been running for two years, will expire formally in September 2018, and has so far attracted over 30 cases. The scheme allows the parties to get a trial in a year, providing they agree that the trial itself takes no more than four days and accept a streamlined disclosure procedure.

‘The trial will be about eight months and no more from the case-management conference (CMC), which itself will be roughly six to eight weeks from the start,’ said Birss. ‘From a business point of view, the resolution of the dispute [will be] on a clear, finite and pretty brisk timetable.’

Looking at the experience, Birss commented: ‘It is a really good system for two kinds of case. One is for smaller business cases: commercial disputes of the £2m level where the cost of litigation is so high relative to the amount at stake that those cases do not get litigated, and there is a real problem of access to justice.

‘The other kind of case the scheme is very good for is what I have called the “nearly-summary judgment” cases, where you have a case which is really about construction but you know that your counterparty will try to find some supposed fact dispute to stave off the possibility of summary judgment.’

Panellist and Slaughter and May partner Damian Taylor gave delegates his experience of the court from a case his firm handled. He noted: ‘It was, essentially, just a point of construction. The contract was about five or six pages long, and everything rested on one clause of that contract. The quantum was large – about $70m – but it was straightforward because, if we were right, it was $70m. If we were wrong, the answer would be zero.’

In an upbeat assessment of the procedure Taylor said: ‘The great thing with this scheme is that I could say that it was going to be done in about a year. There was a natural cap on how much that could cost. We could get rid of all the really expensive bits, such as disclosure and the witnesses, and give a relatively firm estimate to the client.’ Taylor noted also that the model could be used for relatively substantial cases, suggesting it could have a major impact if widely adopted.

Taylor’s biggest concern is that an accelerated trials procedure will be undercut by a slower appeal regime, noting: ‘The analogy would be something like going down a superfast highway like the M6 toll road: everything is looking great, but eventually you have to filter into the normal lanes, and traffic can slow down. There is very little point getting quickly through the first procedure if it gets slowed down later on.’

‘Technology is, in time, going to be one of our friends in retaining a sensible approach to disclosure. If it is used, pricing will come down.’
Mr Justice Knowles QC

 

Commenting on the model, Crosse said: ‘The debate is about whether you manage costs through a process like cost budgeting or change the procedures and have more proactive case management and engagement by the parties. With the Shorter Trials Scheme, you get the same judge throughout the process, so there may be a greater inclination to make more prescriptive orders at the CMC stage. The other thing is that you do not have cost budgeting, so the trial judge will decide the costs summarily at the end of the case: you have to put your cost budget in before you know you have won.’

Dyson said such concerns highlighted persistent worries about an overloaded Court of Appeal, noting: ‘It is all very well having a wonderfully fast system at first instance if you do not then get stuck at the appellate stage. The real answer, I know, would be to get another ten judges in the court but that is not going to happen, at least not in the short term.’

Technology our friend

The debate rounded off on perhaps the greatest bugbear of commercial litigation, the uncontrolled expansion of disclosure in major disputes, with Crosse citing lobbying to the courts by the GC100 group of GCs at major companies. The group argued that disclosure in major cases has grown and is ‘still costing far too much’ on major cases.

The GC100 push led to a symposium that Lady Justice Gloster chaired last year on whether disclosure rules needed to be overhauled again (this happened last in 2013). Crosse noted: ‘E-disclosure has gotten out of hand, and we are not yet using technology sufficiently to address that. The e-disclosure questionnaire is sometimes used, but it is not generating the engagement that enables you to have a proper discussion about managing e-disclosure. Standard disclosure still seems to be the default order.’

The symposium led to the formation last year of a working party of around 25 barristers, litigators, judges and clients to investigate reforms. A subgroup made up of Crosse, Knowles, Chief Master Marsh and Vannina Ettori, legal counsel to the Lord Chancellor, is currently trying to draft a new part 31, the element of the civil procedure rules that governs disclosure. Noted Crosse: ‘It is accepted that the existing part 31 is not fit for purpose. It has been around for many years and is focused predominantly on paper disclosure.’

The group has pulled together a new draft model over the summer working with a group of law firms and major clients Lloyds, Barclays and Vodafone, which is intended to streamline and support more tailored levels of disclosure.

Crosse commented: ‘The disclosure-review document will provide a structure for the parties to ask themselves the right questions – how many custodians, where the data is, etc – and to think proactively about the use of technology, and how the data is going to be hosted and reviewed. I hope using this document, by the time you get to the CMC, the areas of agreement and disagreement will be very clear, and the court will have the ammunition to make different orders from the default of standard disclosure.’

Picking up the debate, Knowles conceded that judges have some way to go in terms of actively managing cases. He also predicted that improving IT will help the courts ultimately bring disclosure under control, noting: ‘Technology is, in time, going to be one of our friends in retaining a sensible approach to disclosure. Frightening though some of the disclosure packages are in terms of cost, we know, like the mobile phone, if it is really used, pricing will come down.’

Opening the debate to questions from the floor, Quinn Emanuel Urquhart & Sullivan partner Ted Greeno warned that previous attempts to overhaul civil procedure rules had repeatedly failed to deliver on costs and speed. He added: ‘We need to think about how important disclosure is to driving settlement. If you take away the blanket obligation to produce documents which are adverse to your case, you are taking away one of the main drivers of settlement in the adversarial system.’

However, Greeno agreed that technology could provide a breakthrough: ‘Technology, which is the cause of the problem, will be the solution. We will end up getting a body of data, putting it into a software package and getting a load of data out, and that will be it. We are getting there quite quickly now, but we need to be patient and not throw the baby out with the bathwater.’

It appears that while confidence is high in the quality of the London courts, nearly 20 years after the introduction of the Woolf reforms of civil procedure, an audience of hardened litigators needs persuading that our judiciary have the chops to deliver a cheaper and faster dispute resolution. LB

alex.novarese@legalease.co.uk

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