Round-up of litigation and ADR procedure news for in-house lawyers (UK construction focus)

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Our latest briefing focused on UK construction disputes summarises recent changes to court procedure and news on alternative dispute resolution (ADR) processes.

Civil Procedure Rules

Update on the Disclosure Pilot

  • The mandatory Disclosure Pilot under Practice Direction 51U (PD51U) began in the Business and Property Courts (B&PCs) on 1 January 2019 and is scheduled to run for two years. You can read more about the pilot here: Disclosure Pilot in force from 1 January 2019. Since PD51U came into force, there have been a number of developments.

    Guidance on the application of the Disclosure Pilot to Part 8

    Court guidance on the Disclosure Pilot

    • Chief Master Marsh, a member of the drafting sub-committee of the Disclosure Working Group, has published guidance on the application of the Disclosure Pilot Scheme to CPR Part 8 claims: Disclosure pilot and Part 8 claims. CPR Part 8 (which provides an alternative procedure for those claims not involving substantial factual disputes) contains its own disclosure regime. Chief Master Marsh's note aims to avoid overlap with or duplication between PD51U and Part 8 and confirms that the Disclosure Pilot does not apply to Part 8 claims. However, the court will have some scope to order extended disclosure under the pilot as appropriate.
    • In UTB LLC v. Sheffield United Ltd and others [2019] EWHC 914 (Ch), the Chancellor of the High Court, Sir Geoffrey Vos, highlighted that PD 51U was intended to effect a cultural change – "it is not simply a rewrite of CPR Part 31". The judge's decision also makes clear that PD51U applies to all proceedings including those existing as at 1 January 2019 and those issued since. He emphasised that the requirements for the parties to cooperate and to act with proportionality are of the greatest importance under PD51U. The judge's conclusions and his assertion that requests for extended disclosure must not be used "as a tactic let alone a weapon in hard fought litigation" are a clear pointer of the approach to disclosure that we should expect from courts in future."
    • It is worth noting that the Commercial Court has recently granted an order for specific disclosure ostensibly under CPR Part 31 where the case in hand was subject to PD51U. As there are no transitional provisions in PD51U, the decision in Kazakhstan Kagazy plc and others v. Zhunus and others [2019] EWHC 878 (Comm) could be an indication that the courts will take a practical approach to disclosure applications relating to cases/disclosure processes already underway - where appropriate.

Extension of fixed recoverable costs in civil cases

  • The Ministry of Justice is consulting on the implementation of Sir Rupert Jackson's fixed costs proposals (as set out in his Supplemental Report on Fixed Recoverable Costs, July 2017) and the proposals to extend fixed recoverable costs in civil cases in England and Wales. In response to that consultation, which closes on 6 June 2019, the Law Society recommends that civil litigation costs should be fixed at a reasonable rate with thresholds kept under regular review, not least to keep up with process and technology changes.

Capped Costs Pilot starts in the B&PCs

  • One of Sir Rupert Jackson's proposals, a voluntary Capped Costs Pilot scheme, started on 14 January 2019 in the B&PCs in Leeds and Manchester (Chancery Division, Circuit Commercial Court and Technology and Construction Court (TCC)) and the London Circuit Commercial Court (see Practice Direction 51W). The pilot applies to claims worth up to £250,000 and will run for two years. Based on Sir Rupert Jackson's recommendations, there is an overall cap of £80,000 on recoverable costs (excluding VAT, court fees, wasted costs and the costs of enforcement). Those courts participating in the pilot will operate a Capped Costs List of those cases operating within the scheme.
  • Law and costs firms will be monitoring the Capped Costs Pilot carefully and will be watching out for the results of the government consultation with interest - particularly the consultation on whether to expand the fast track to include simple "intermediate" cases valued at between £25,000 and £100,000.

Costs budgeting

  • A new statement of costs for summary assessment (PD51X) is being piloted on a voluntary basis for two years from 1 April 2019. The new forms used in the pilot, N260A and N260B, can be accessed at the end of PD51X.
  • A new Precedent R – Budget Discussion Report became effective from 25 April 2019. It can be found in Annex C of Practice Direction 3E.

Update on the Electronic Working Pilot: application of electronic filing system widened

  • The Courts' Electronic Filing System (CE-File) has been mandatory in the Rolls Building courts since 25 April 2017. It was extended to the Queen's Bench Division in January 2019 (where it will be optional until 1 July 2019, and mandatory thereafter).
  • Electronic filing became optional for all users in regional B&PCs from 25 February 2019. From 30 April 2019, it became mandatory for court practitioners in those courts in Birmingham, Bristol, Cardiff, Leeds, Liverpool, Manchester and Newcastle. This means court practitioners must now issue all new proceedings electronically using CE-File and file electronically any new documents or submissions on cases issued electronically on or after 25 February 2019.
  • The procedure for issuing and filing documents using the CE-File can be found under Practice Direction 51O. Other guidance has been issued including for example: Frequently Asked Questions prepared by Her Majesty's Courts and Tribunal Service (HMCTS) (which supplement the CE-File system information and support advice) to provide guidance and tips on using the CE-File; Baring J's Practice Note providing guidance on procedural requirements during the transitional period (in Manchester); and Senior Master Fontaine's guidance on the electronic working pilot scheme which explains how the courts will process documents for claims, appeals and other court practices during the pilot.

Guidance on removing court bundles after hearings

  • A joint notice from HMCTS on removal of court bundles, endorsed by the Bar Council and the Law Society, has clarified a previous HMCTS notice about removing court bundles after hearings. In summary, barristers and solicitors are not responsible for removing bundles belonging to the court: responsibility for other remaining bundles will need to be agreed between the barristers and solicitors in each case. Those leaving bundles and papers containing special category (formerly sensitive) personal data unsecured or unattended in court should take note that they risk breach of personal data laws under the General Data Protection Regulation and the Data Protection Act 2018.

Ensuring claims against multiple parties are particularised adequately

  • The TCC has reminded litigating parties to plead their claims to loss and damage from multiple defendants with precision and clarity. In BAM Glory Mill Ltd v. Balicrest Ltd [2018] EWHC 3926 (TCC) (3 October 2018), the TCC refused to strike out the claimant's claim made under collateral warranties. The defendants had argued that strike-out was justified due to the lack of particulars in the claim or because it amounted to an abuse of process. The TCC found that the claim was insufficiently pleaded and ordered the claimant to specify which defendant was in breach in relation to each complaint along with the supporting facts and matters and full particularisation of the loss and damage claimed on each.

Brexit issues

Article 50 extension: exit day now 31 October 2019

  • Following the EU's agreement to extend the Article 50 notice period, the UK will now leave the EU on 31 October 2019. Consequential amendments to the European Union (Withdrawal) Act 2018 have been made under the European Union (Withdrawal) Act 2018 (Exit Day) (Amendment) (No. 2) Regulations 2019 SI 2019/859. The EU imposed certain provisos to the extension, not least that the UK must proceed with the European elections scheduled for the end of May 2019, failing which the UK will exit on 1 June 2019.

Brexit: key issues for construction

  • For more information about the effects of leaving the EU with no withdrawal agreement, email one of the Key Contacts to request our briefing note: Brexit: key issues for construction.

Brexit guidance for professionals on cross-border litigation

  • The Ministry of Justice has published Cross-border civil and commercial legal cases after Brexit: Guidance for legal professionals in the event that the UK leaves the EU without a deal. The guidance explains which rules currently govern jurisdiction and the recognition and enforcement of judgments in cross-border civil and commercial disputes (including Brussels I and the Lugano Convention of 2007) - which will be revoked in the event of a no-deal Brexit under the Civil Jurisdiction and Judgments (Amendment) (EU Exit) Regulations 2019. Transitional rules will come into effect to cover those cases started, but not completed, before exit day.

    The guidance also covers the rules relating to governing applicable law (Rome I and Rome II), the Hague Convention on choice of court agreements and transitional arrangements pending the UK's accession to the Hague Convention as an independent contracting state.

Provisions for amendments to the CPR if there is a no-deal Brexit

  • The Ministry of Justice's plans for a "no-deal" Brexit include a revision of the CPR to ensure court practice can continue smoothly in the event of a no deal. On the day the UK leaves the EU (exit day), the European Union (Withdrawal) Act 2018 will come into effect and mean that powers, processes and orders under EU instruments or treaties will no longer apply. Under the 107th Practice Development (PD) amendments (PDA107), provision has been made for references to these EU powers/processes and orders to be removed from Civil Procedure Rules (CPR) PDs on exit day. Where relevant EU instruments or treaties are retained in an amended form, PDA107 also amends such provisions. Transitional arrangements will be in place to cover court proceedings issued but not concluded before exit day.

    Specific CPR PDs that will be amended on exit day include: Service within the UK (PD6A); Service out of the Jurisdiction (PD6B); Default judgments (PD12); Disclosure Pilot Scheme for the Business and Property Courts (PD51U); and Enforcement of judgments in different jurisdictions (PD74A).

Adjudication procedure

Alternative Dispute Resolution

  • The Centre for Effective Dispute Resolution (CEDR) and The International Institute for Conflict Prevention and Resolution (CPR) have issued a collaborative report, Insights into alternative dispute resolution, on the use of alternative dispute resolution (ADR). The report shows that whilst negotiation is by far the most popular method for early dispute resolution, arbitration and mediation are often being used proactively to achieve resolution and manage conflict. However, the report also demonstrates there are areas where there may be barriers to use (for both mediation and arbitration) which will need further consideration. (See CPR and CEDR's new ADR Research.)
  • The Civil Justice Council (CJC) has published its recommendations for ADR including the creation of a judicial-ADR liaison committee which will report to the Chair of the CJC and head of the Civil Justice in England and Wales as well as professional training and a new website to act as a single source of ADR information. You can read more in our article here: ADR liaison forum proposed.
  • The Construction Industry Council has consulted on its proposals for a model mediation agreement. You can read our report in the latest edition of Construction Law here.

Arbitration

  • The International Chamber of Commerce (ICC) Commission on Arbitration and ADR recently revised its "Construction Industry Arbitrations Report: Recommended Tools and Techniques for Effective Management". You can read a summary of the report which is intended to help arbitrators with little experience of the ICC rules here: No right way to arbitrate.
  • Those responsible for appointing arbitrators may have read about US rapper, Jay-Z's, successful application for a stay of arbitration proceedings on the basis that the lack of African American arbitrators in the American Arbitration Association arbitration proceedings made him vulnerable to unconscious bias. Growing awareness of diversity issues and acknowledgement of the need to make our institutions diverse could mean such applications might become more common.
  • The International Bar Association Arb40 Sub-committee is focusing on "making modern day technology more accessible to arbitration practitioners". It has collated a list of those technological advances currently available on a website: the Technology Resources For Arbitration Practitioners. The website spotlights technology that can help practitioners throughout an arbitration. Court as well as arbitration practitioners will almost certainly find the website worth a browse.
  • The ICC Task Force on emergency arbitrator (EA) proceedings has released its findings and will be of use to parties, counsel and arbitrators who are considering whether to issue and how to manage EA proceedings. The report, Emergency Arbitrator Proceedings – ICC Arbitration and ADR Commission Report analyses the procedural and substantive issues that may arise in EA applications which enable proceedings to be commenced within as little as 24 hours of the application. The ICC hopes "to identify and examine any emerging trends and to facilitate the use of EA proceedings through increased transparency and predictability".

Court reform

  • The Judiciary has launched a Pre-Application Judicial Education programme. Aimed at improving judicial diversity, this programme will encourage lawyers from under-represented groups to apply for a judicial career and provide guidance.
  • HMCTS has launched a communications survey of those who use and work within the justice system to improve its communication with court users. The survey closes on 10 May 2019.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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Updated: May 25, 2018:

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