You may have already read our extensive guides to the various methods of alternative dispute resolution (ADR) available and if so, you will know that mediation, adjudication and negotiation are just some of the processes we use to keep our clients out of court. However, while ADR has many advantages, sometimes businesses have no option but to commence court proceedings.
In the commercial world, unfortunately there is always a threat of court action, and legal disputes will inevitably represent a cost to your business: something it’s crucial to be aware of when running your own company.
What we’ve discovered, whilst working with multiple clients, is that many businesses don’t fully understand the process involved in bringing a case to the commercial courts, how proceedings develop or how a judge actually reaches their decision.
In light of this, we have put together this high-level guide in which we set out, step by step, the way a typical commercial dispute court case plays out in practice.
This guide will cover:
Preparing for a commercial court case: what you need to know
There are several ways businesses can end up litigating in the commercial courts (of which there are various divisions, depending on the precise nature of your dispute). Negotiation may prove fruitless; for example, it may be that one side is completely unwilling to change position – despite the costs implications of proceeding as far as having a judge decide upon the case in the arena of the court.
Or it may be the case in some instances that there is a fundamental contractual misinterpretation or disagreement that can only be settled through litigation. It’s also worth highlighting that alternative dispute resolution would not work if one side is seeking an injunction.
In these cases, the situation may lead to court proceedings, and the next few steps businesses will need to take to prepare will usually run as follows:
- The Civil Procedure Rules (CPR) set out procedures to be followed in the County Court, the High Court and the Court of Appeal. In accordance with the CPR, judges must have at the forefront of their minds the ‘overriding objective’, which is that the courts must deal with cases justly and at proportionate cost. Most commercial cases where the person bringing the case (the claimant) is only seeking monetary compensation are brought under Part 7 of the CPR.
- If you are a claimant who is bringing a claim against another party (the defendant), you should check at the outset that you have not left it too long to formally bring the case to the court’s attention by way of issuing a claim form. This is because the law imposes strict limits on how long someone has to do this (it is known as a limitation period and the time frame for this varies depending on the type of case you wish to bring). In broad terms, if the limitation period has expired, you will not normally be able to bring a case to court. If you are unsure about any aspect of these initial stages, we would strongly recommend seeking advice from an experienced business dispute solicitor.
- Importantly, a court case can’t formally begin until the details of the case have been set out to the defendant in a letter before claim. The defendant has between two and four weeks to respond – the time frame being dependent on the specifics of the claim.
- The CPR are clear that litigation should be a last resort. A range of what are known as ‘pre-action protocols’ are now in place, and it’s important to point out that the requirements of the protocols can be quite comprehensive. In any event, the protocols require the exchange of information between parties at this early stage to encourage settlement. If either of the parties involved does not follow these protocols, it is extremely likely to face sanctions in the form of negative cost orders as the case progresses. Again, it’s recommended that you obtain assistance with navigating the requirements of the protocol that’s applicable to the particular facts of your dispute, to avoid incurring any unnecessary or punitive costs or sanctions.
Initial steps in litigation
- If the pre-action discussions don’t resolve the case, then you can begin litigation by lodging a Claim Form with the court. Once the Claim Form is issued (i.e. processed by the court office), a litigation timetable comes into effect, meaning that each side has to take certain actions within clearly defined timescales.
- The next step would be to serve the Claim Form and Particulars of Claim on the defendant. The Particulars is a document that supplements the Claim Form with full details of the claim and the compensation and/or remedy being sought. This may take the form of money you wish to claim or recover, or it may additionally or alternatively include a request for the recovery of good.
As the claimant, you should take care that all time limits and formalities regarding service of the above documents are followed. This is vital because failure to observe the rules set out in the CPR could invalidate the claim.
- The defendant then serves an Acknowledgement of Service form on you by way of return. At this point, the defendant must decide their approach to the claim. They must choose whether they’re going to fully defend the action, defend part of the claim, or make their own claim in response (known in technical terms as a ‘counterclaim’).
- Details of any Defence or counterclaim must be served upon you within the prescribed time limit (usually 28 days, unless the defendant requests an extension of time for any reason).
Failure by the defendant to serve a Defence could enable you to obtain judgement in the form of obtaining the remedy you have requested at this stage, which would effectively put an end the case without anyone needing to attend future court hearings presided over by a judge.
- As the claimant, you would then have at least 14 days to serve a reply dealing with any new points in the Defence and to set out any defence you may have to a counterclaim.
Commercial court case management
- To ensure a business dispute case proceeds efficiently, a timetable formally termed ‘Directions’ is drawn up by the judge to set out when the parties should exchange evidence ahead of any final hearing. The parties may attempt to agree these directions themselves, but ultimately the judge will have the final say as to whether they approve the proposed directions or not.
- If you and the other side can’t on agree directions, you must ask the court to intervene at a Directions Hearing or Case Management Conference (often referred to as a ‘CMC’). The primary goal with the timetable is for the parties to have exchanged all relevant evidence well in advance of a trial. The notion – created in large part by TV and film courtroom dramas over the years – that a trial is all about ambushing the other side with devastating information at the last minute isn’t in any way an accurate reflection of the way the law is administered in England and Wales today. The reality is on the contrary, the courts adopt a pragmatic approach to ensure all information is disclosed as early as possible, because it ensures as far as is feasible that matters run more smoothly for everyone involved in the litigation – courts, lawyers and the parties themselves alike.
- All documentary evidence is disclosed in accordance with agreed or court-approved directions.
- All witnesses scheduled to give evidence, including those experts engaged to provide technical information in court, must provide a written statement. These are exchanged simultaneously between the parties.
- Commercial courts will take a proactive approach to case management throughout the duration of the claim to prevent cases becoming bogged down inside issues or recrimination. Additional Case Management Conferences and a Pre-Trial Review may be scheduled so that the court can keep the case on track. Any orders the court makes at this stage regarding production of documents or compliance with timescales will be rigorously enforced. Failure to comply could result in punitive costs orders and in some cases, the courts may even consider striking out the offending side’s case.
What happens at trial?
- The ability for the parties to reach settlement is open at any stage of the litigation process, but if all attempts at negotiation fail, a trial of the case will ensue.
- At the hearing of the trial, the judge will use all the documentary evidence and witness statements that have been disclosed to assist them when listening to the submissions made by both sides.
- The solicitor or barrister for each side makes an opening statement to the court outlining their position.
- The claimant presents their case first and calls all their witnesses.
- The defendant then presents their case and calls their own witnesses.
- All witnesses may be asked questions by both sides (referred to as ‘examination-in-chief’ and ‘cross- examination’).
- Each side’s lawyer then sums up the case.
- The judge then considers their judgement. Depending on the complexities involved, the written form of the judgement may not be available for at least six weeks, as an approximate estimation.
- Following judgement being given or ‘handed down’, the issue of costs will be determined.
The complexities and the financial value of litigation in the commercial courts means that the relevant parts of the CPR and accompanying pre-action protocols are inevitably quite dense to navigate. Whilst this guide will hopefully have proven helpful as a high-level overview, it’s certainly advisable to take bespoke advice from a specialist dispute resolution solicitor so as to ensure that your dispute is handled as smoothly and cost-effectively as possible.