A Guide to Commercial Litigation

When commercial disputes are raised, it is important to know how to address them, whether you are a tenant or a landlord. We have outlined the process below:

Before litigation starts

The court emphasises that litigation should be the last resort, ensure that you have tried to resolve the dispute externally before taking this step.

• For some disputes, a specific pre-action protocol will apply to bring the claim to court, for example, in respect of professional negligence and defamation claims.
• If a pre-action protocol has been issued, it will require an early exchange of information and documents.
• You will still be expected to make serious attempts to resolve your dispute without recourse to the courts, so ensure that you can prove that an effort has been made.
• This will normally mean that the claimant should write a detailed letter of claim to the defendant setting out the basis of the claim and giving the defendant a reasonable time to ask for more information and to respond in detail to the claim.
• If a party is found to have acted unreasonably in attempting to settle the dispute before proceedings are started, then the courts can take this into account at a later stage when deciding which party should pay costs and the level of those costs.

Alternative dispute resolution

You are encouraged to find an alternative way of resolving your dispute, only if this is impossible, should you resort to litigation. Instead, you could consider the following:

• Arbitration: a confidential form of dispute resolution where one or more
• arbitrators decide a case rather than a court-appointed judge.
• Mediation: this is a facilitated negotiation assisted by an independent third-party mediator appointed by the parties.
• Early neutral evaluation by an independent third party, who advises on the merits of each party’s position.
• Expert determination: in which an independent expert is appointed to resolve the matter by producing a legally binding decision.
• Other forms of discussion and negotiation, like referring a complaint to an ombudsman.

Costs

Litigation can be expensive, and you should seek advice on how much court proceedings might cost. Be aware that litigation is often unpredictable, so it can be hard to estimate costs accurately without professional assistance.

• Generally, the losing party pays the winning party’s reasonable costs, although it is rare that all these costs will be recovered.
• A losing party therefore usually must pay not only their costs but also those of their opponent.
• It might be possible for you to enter into a conditional fee agreement, meaning you would pay a reduced fee or nothing if the claim is unsuccessful. However, the fees are generally higher if you meet with success and you will not be able to claim this feel from your opponent.
• It might be possible to find a third-party funder, who would agree to finance your legal costs if public policy hasn’t been compromised. This is normally in return for a share of the proceeds if the case is successful and the third-party funder could be liable for the costs of the opposing party if the claim is unsuccessful.
• Damages based agreements, or contingency agreements, are rare but fees are based on a percentage of recoveries from the litigation if they are implemented.

Insurance is sometimes available for litigation costs. There are two types of insurance available:

• ‘Before the event’ (BTE) policies: These can be taken out, usually with an annual premium, to provide cover for potential disputes in the future.
• ‘After the event’ (ATE) policies: These can alternately be taken out after the event to cover litigation costs once a dispute has arisen.
• These policies generally cover a party’s expenses as well as the risk of having to pay an opponent’s legal costs if a party is unsuccessful in the litigation.
• You will not be able to claim the insurance premiums from your opponent even if you are successful in your claim.
• In some circumstances, policies can also be obtained to cover your own solicitor’s costs. Insurance is unlikely to be available if the prospects of success are not good.

Which court suits my claim?

• In some cases, the English courts might not have jurisdiction, and your case could be taken to foreign courts.
• Large commercial cases are likely to be brought in the High Court.
• Claims with a value of more than £100,000 can generally be issued in the High Court, although if they are not complex, or are valued at less, they may be transferred to a County Court.

Preparing your case

• A claimant will issue a claim form in the relevant court office detailing the events on which the claim is based.
• This form must be served within 14 days of issue. The claim also outlines what compensatory aid you are seeking from the court, e.g. damages, an injunction and a declaration.
• The claim form must be formally delivered to the defendant within four months of the date of issue, or six months if the defendant is not in England and Wales.

Defending your case

• The defendant then has 14 days to file a defence, responding to the particulars of the claim. This extends to 18 days if they have filed an ‘acknowledgement of service’ form.
• This deadline may be extended by agreement between the parties or on application to the court. In practice, an extension is often requested.
• Due to the strict regulations, if you are served with an English claim form you must take urgent legal advice so that you do not miss the deadlines.
• If a defendant fails to acknowledge service or to file a defence within the relevant time period, the claimant can normally obtain a ‘judgment in default’, in the claimant’s favour obtained without a court application or hearing.
• It is up to the defendant to bring a counterclaim against the claimant if they have grounds to make their own claim.
• The claimant can serve a reply, responding to points raised in the defence.

What happens next?

• After service of the defence, the parties file a ‘directions questionnaire’, which gives the court information about the case, such as the number and identity of witnesses that they intend to call.
• The court then normally holds a case management conference to decide the future conduct of the case, including matters such as disclosure of documents, exchange of witness statements and expert reports.
• The court will also fix the trial date. In simple cases, the trial date may be within one year of the start of the litigation.
• More complex cases can take longer, between one to three years, to reach a final judgment, for example after all appeals have been exhausted.
• If you hope to obtain a quicker judgement, the court will give summary judgment. This means that the case does not need to go to a full trial if it considers that there is no likelihood of anyone succeeding in its claim or defence and there is no other compelling reason why the case or issue should be disposed of at trial.
• The court also has power to ‘strike out’ a party’s claim, either in whole or in part, if it is satisfied that there are no reasonable grounds for bringing or defending the claim, it is an abuse of the court process or a party has failed to comply with a rule or court order.

The Costs

• A costs budget is an estimate of the costs and includes disbursements such as barrister’s and expert’s fees, which a party intends to incur in the proceedings.
• All parties must file and exchange budgets, setting out estimated costs for each stage of the proceedings. This must occur no later than 21 clear days before the first case management conference.
• If an individual does not comply, then the party will be treated as only having filed a budget for the applicable court fee.
• Unless the parties agree on the costs budget, the Court will determine the extent to which the respective parties’ costs budgets are approved.
• At the end of the litigation, the recoverable costs of the winning party are assessed by the court in accordance with the approved budget.

Disclosure

• Disclosure is an important part of English litigation as it gives each party the chance to test the opponent’s case at an early stage.
• At least 14 days before the first case management conference, which is a hearing that discusses the conduct and timetable of the case, each party must file and serve a report with any documents of proof and verified by a statement of truth.
• This report contains where these documents can be located and how electronic documents are stored. There is a broad range of costs to retrieve them.
• The court may give a wide range of orders on disclosure. Generally, a court will order that the parties should give “standard disclosure”.
• Standard disclosure means that each party must carry out a reasonable search for documents on which it relies, documents which adversely affect its own or another party’s case and documents which support another party’s case.
• It must then give disclosure of those documents, which involves listing them and making them available for “inspection”, usually giving copies.
• Each party must set out the extent of the search it has carried out and certify that, to the best of its knowledge, it has complied with its duty of disclosure.
• Most documents should be included, only communications between a lawyer and the client are protected by this privilege. The privilege extends to advise on both what should sensibly be done and the party’s strict legal rights and obligations.
• Litigation privilege applies to communications between a lawyer and their client, or a third party, for the dominant purpose of giving or receiving legal advice in connection with litigation.
• You are not legally permitted to use documents which are disclosed by the other parties for any purpose other than the proceedings in which they are disclosed.

Witness statements

Before the trial, the parties exchange written statements containing the evidence of their witnesses. These are usually the ‘evidence in chief’ of the witness, which means that there is no need for the witness to give oral evidence. A witness is usually then cross-examined the statement at trial.

Although it is possible to rely on a witness statement as evidence at trial, a witness not being called to give oral evidence may affect the weight given by the court to that witness’s evidence. Further, the other party can apply to court for permission to call the witness to be cross-examined.

The Trial

• The skeleton argument: The parties will give the court a written outline of their case before the trial, called
• The length of the trial will depend on the complexity of the case and the number of witnesses giving evidence.
• There is one judge, who listens to all the evidence. The judge does not investigate the case but listens to the parties’ evidence and will usually also ask questions.
• Although some solicitors have the right to present cases in the High Court, the case is usually presented orally at trial by a barrister.
• In large and more complex cases, a barrister will be fully involved in drafting the court documents such as the particulars of claim. The barrister will also often represent a party at any other court hearings before the trial.
• Opening submissions: The claimant’s advocate usually starts by presenting their case. The defendant’s advocate then presents their case.
• Closing Submissions: After opening submissions, expert witnesses may also be cross-examined.
• In civil cases in England and Wales, there is no jury, save in some defamation cases. The general rule is that, at trial, witnesses of fact give oral evidence and are cross-examined.

The Judgement

• Following the trial, the judge will write their judgement and will hand it down in court, copies will be made for both parties and the public.
• The draft judgment is provided to the parties’ legal teams in advance of the delivery of the decision to allow errors to be pointed out.
• Following handing down of the judgment, there is often a further hearing where the judge hears argument as to appropriate remedies based on the judgment and makes the final order.

Appeals

• If an unsuccessful party appeals, the court only grants permission if it considers that the appeal has a real prospect of success or there is some other compelling reason for the appeal to be heard.
• The appeal courts are generally reluctant to overturn a trial judge’s findings of fact, particularly where these depend on the judge’s view of the credibility of the witnesses.
• The appellant must file an ‘appellant’s notice’ to the appeal court which requests for permission to appeal. This is made within 21 days of the date of the decision appealed against, unless the lower court has directed a different period.
• A respondent can serve a respondent’s notice and must do so if it is also seeking permission to appeal, to ask the appeal court to uphold the judge’s order for different or additional reasons.
• The respondent’s notice must be filed within 14 days of service of the appellant’s notice or, if later, of notification that the appellant has been granted permission to appeal.

Enforcement

If a claimant wins, they will get judgement in their favour. If the defendant does not pay,

the claimant can take steps to enforce the judgment. The main enforcement means are:

• The High Court can give a sheriff authority to seize and sell the debtor’s (defendant’s) property.
• Third-party debt orders, which redirect to the creditor (i.e. the claimant) funds owed to the debtor by a third party, for example, funds in the debtor’s bank account.
• Charging orders over land or securities, this gives the claimant a charge over the defendant’s property.
• Insolvency proceedings – i.e. steps taken to put a non-paying defendant company into liquidation, or bankruptcy in the case of individuals.

As explained, the process of Commercial Litigation can be costly, drawn-out and lengthy if met with disputes. Therefore, you should always seek legal advice when considering taking up matters of commercial litigation.

Should you wish to know more about the services we offer, please feel free to contact our client services department via our enquiries page, or give us a call 0203 058 3365.