Recent consultation papers (circulated by Mr Justice Hamblen in May 2015) propose three new initiatives to make the Rolls Building courts1 more efficient and commercial:
1. a Financial List, where complex financial cases are heard by docketed judges who have experience in resolving such cases, as well as training in financial markets;
2. an accelerated and streamlined trial procedure for straightforward commercial cases which will result in a substantive judgment within a year; and
3. the availability of a scheme which allows parties to opt into a simplified trial procedure.
The English civil justice system operates in an ever more globalised and competitive market, with international businesses seeking not only robust enforceable decisions, but also efficiently delivered ones. These proposals are therefore to be welcomed as they represent an attempt to respond to criticisms that have been levied by litigants and practitioners in recent years.
We have responded to both consultations in detail and set out below some of our observations.
1. Financial List initiative
The creation of a Financial List endeavours to lift complex financial disputes out of the general court processes and into this specialist list where cases are heard by Financial List judges (who will be Chancery Division or Commercial Court judges). Each Financial List case will be allocated one judge who will hear the dispute from start to finish.
This initiative has many attractions. Specialist judges should be able to deliver technically resilient judgments. Further, the docketing of one judge to a case should mean that interlocutory applications are dealt with more speedily with the allocated judge also having a tighter reign on case management issues that might otherwise have caused delay.
Inevitably, the efficacy of these proposals depends on their detailed implementation. We discuss below some concerns in this regard.
Definition of "Financial List claim"
The proposed definition of a "Financial List claim" is too restrictive. It currently reads:
"…any claim which:
(a) relates to loans, project finance, banking transactions, derivatives and complex financial products, financial benchmarks, capital or currency controls, bank guarantees, bonds, debt securities, private equity deals, hedge fund disputes, sovereign debt, or clearing settlement; and is: (i) for more than £50 million or equivalent; or (ii) is ordered onto the list;
or which: (b) requires particular expertise in the financial markets; or (c) raises issues of general importance to the financial markets."
The proposed GBP 50 million threshold is too high. Although a lower-value claim might be caught if it is ordered onto the List or satisfies either (b) or (c) above (ie requires particular expertise in the financial markets or raises issues of general importance to the financial markets), it would be preferable not to have to rely on a subjective test. A monetary threshold of GBP 5 million or GBP 10 million is more appropriate.
Guidance is needed as to when a claim will be ordered onto the List, so litigants can have more certainty as which list their case will sit on. It is also unclear what happens when a claim falls within the definition of a "Financial List claim" but the parties choose not to have their claims heard in that list.
Market Test Case procedure – pilot scheme
It is proposed that a Financial Market Test Case Scheme be piloted to allow issues of "general importance" to the financial markets to be heard in the Financial List where there is no dispute between the parties, but "immediately relevant authoritative English law guidance is needed".
The piloting of such a scheme will be a useful exercise to ascertain its utility and assess its processes. It may be that the procedure will be rarely used given that questions of contractual interpretation usually arise in a particular factual context, meaning there is usually the necessary 'dispute' for normal procedures to apply. Part 8 already caters for disputes where there are limited facts in dispute. Interested non-parties are also already able to apply to intervene in proceedings under existing rules, with trade bodies frequently doing so.
Under the new procedure, opposing arguments in proceedings may not always be properly aired given that there will be no actual dispute before the courts. It is proposed that, for a case to proceed under this scheme, the judge must be satisfied that the arguments of all those with opposing interests in relation to the issues in question will properly be put before the court. However, the court may be unaware of certain interests. It will, therefore, be important that such test cases are sufficiently publicised within the relevant markets. Related to this, will it be possible for interested parties (particularly those who were previously unaware of the test case) to appeal any resulting decision and what happens if the only opposing interested party does not wish to participate in proceedings?
Unnecessary complexity
It is proposed that Financial List claims will be issued in either the Chancery Registry or the Admiralty and Commercial Registry using a new Financial List claim form (which will differ depending on the registry of issue). Given that the procedure thereafter is the same and the distinction between issuing claim forms in different divisions is not always appreciated by litigants, it would be simpler to issue a Financial List claim straight into the Financial List.
Further, any new rules and guidance should be kept to a minimum and be clearly signposted in the existing rules. The proposals currently envisage the new procedure to be outlined in multiple locations (a new CPR Part, two new Practice Directions, a new Guide and new forms which will all interrelate with existing rules and the Commercial Court and Chancery Guides). This approach may confuse litigants and give rise to technical disputes (which waste costs and distract from the resolution of substantive issues).
2. Shorter and Flexible Trial Pilot Schemes
Proposals for Shorter and Flexible Trial Schemes are also aimed at facilitating the more efficient resolutions of commercial disputes. The headline proposal is that cases in the Shorter Trial Scheme will receive a judgment within one year of issue. Although the English court can already order many, if not all, of the case management measures outlined by the schemes, the packaging of these measures into 'ready-made' schemes should raise awareness of these streamlined procedures amongst litigants (and judges) and encourage greater uptake.
Shorter Trial Pilot Scheme
This scheme allows straightforward commercial disputes started in the Rolls Building courts to follow a streamlined procedure managed by docketed judges who will deliver judgment within a year of issue.
(a) Suitable cases
This scheme is aimed at relatively simple commercial disputes. The draft Practice Direction provides that it will not normally be suitable for cases involving "an allegation of fraud or dishonesty" or "that raise complex disputes of fact, which are likely to require significant disclosure and/or reliance upon extensive witness evidence in order for such issues to be resolved". There is therefore scope for parties to disagree as to whether or not a case is suitable for the scheme. Further, some confusion and delay may result if cases that are initially designated as being within the scheme later fall out of its scope (for example, if complex factual issues arise or allegations of fraud or dishonesty are made at a later stage). It will be important that a degree of flexibility is maintained so that cases are not derailed, with parties presumably having to retrace their procedural steps to comply with the usual litigation procedure (such as disclosure).
Cases where the jurisdiction of the court is challenged may not be assigned to the scheme until such a challenge has been resolved. This carve-out is to be welcomed.
(b) Length of proceedings (including appeal)
The expectation that a substantive judgment will be handed down within a year of proceedings being issued is clearly attractive. The draft Practice Direction says the Court of Appeal will "take into account the fact that a case was in the Shorter Trials Scheme when listing any appeal from such a case". It remains unclear if it is envisaged that an appeal from a Shorter Trial Scheme will be able to 'leapfrog' over other lodged appeals. If that is not the case, delays in the appeal process may undermine the central objective of resolving disputes efficiently.
(c) Disclosure
The proposals on disclosure lack clarity in two respects. First, the proposed default disclosure rule is that a party must only disclose documents on which it relies and documents the "existence and contents of which they are aware and which would fall to be disclosed under CPR 31.6(b)" (ie the not helpful documents). This leaves uncertainty as to what level of knowledge is sufficient for a party to be "aware" of a document's existence and content. Does a party have to 'know' that a particular document exists and its content or is 'mere suspicion' enough?
Secondly, it is unclear how the usual duty to search, where CPR 31.6(b) applies2 fits with this more limited disclosure obligation. Similarly, how do the proposals impact upon a party's document preservation duties (and the duties of its representative)? What happens where limited disclosure was given under the Shorter Trial Scheme, but the case is then transferred out of the scheme with standard disclosure being ordered? Now discloseable documents may have been destroyed in accordance with a party's ordinary document retention policy.
The draft Practice Direction provides that the particulars of claim should be accompanied by "a bundle of core documents on which the claimant relies but also documents on which the other side is likely to rely". This does not match the default disclosure requirement3 outlined above. By contrast, the documents that a defendant has to attach to its defence are limited to "a bundle of any additional core documents on which the defendant intends to rely". The documents that accompany the particulars of claim and defence should not go beyond the disclosure obligation and be no more onerous to a claimant than the defendant.
Flexible Trial Pilot Scheme
The proposed Flexible Trial Scheme allows parties "by agreement" to adapt court procedures to suit their case and encourages the use of simplified and expedited procedures. It contains default directions as to a streamlined process for disclosure (similar to that under the Shorter Trial Scheme), and witness and expert evidence at trial, as well as submissions at trial.
In conclusion overall, we welcome these proposed reforms and will be monitoring developments closely.
1 The Rolls Building houses the combined High Court business, property and commercial capability of the Chancery Division, the Commercial Court and the Technology and Construction Court.
2 The duty to search in CPR 31.7 applies where standard disclosure is given.
3 As noted above, the default disclosure requirement requires a party to disclose those documents on which it relies and those documents which would fall to be disclosed under CPR 31.6(b) where that party is "aware" of their existence and contents.
