We provide extensive guides to the various methods of alternative dispute resolution (ADR). Mediation, adjudication and negotiation are just some of the processes we use to keep our business clients out of court. However, while ADR has many advantages, sometimes businesses have no option but to commence court proceedings. In the commercial world, there is always a threat of court action, and legal disputes inevitably represent a cost to business. But many businesses don’t fully understand the process involved in bringing a case to commercial court, how proceedings develop or how a judge actually reaches their decision.
Here 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 a number of ways businesses can end up in commercial court. Negotiation may prove fruitless for example – one side may be completely unwilling to change position. There may, in some instances, be a fundamental contractual misinterpretation or disagreement that can only be settled through litigation. Alternative dispute resolution also 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. Their overriding objective is to enable the courts to deal with cases justly. Most commercial cases where the person bringing the case (the claimant) is only seeking monetary compensation are brought under Part 7 of the CPR.
- Claimants should check at the outset that they have not left it too long to bring a case. The law imposes strict limits on how long someone has to bring a case (known as limitation periods). If the limitation has expired you will not normally be able to bring a case to court.
- A court case can’t 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 depending 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. These 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 likely to face sanctions in the form of negative cost orders as the case progresses.
Initial steps in litigation
- If the pre-action discussions don’t resolve the case, then the claimant can begin litigation by lodging a Claim Form with the court. Once the Claim Form is issued, a litigation timetable comes into effect meaning that each side has to take certain actions within clearly defined timescales.
- The claimant serves the Claim Form and Particulars of Claim on the defendant. The Particulars supplement the Claim Form with full details of the claim and the compensation being sought.
- The claimant should take care that all time limits and formalities regarding service of these documents are followed. Failure to observe the rules set out in the CPR could invalidate the claim.
- The defendant then serves an Acknowledgement of Service Form on the claimant. At this point the defendant must decide their approach to the claim. They must choose – are they going to fully defend the action? Defend part of the claim? Or make their own claim in response (a counterclaim)?
- Details of any defence or counterclaim must be served on the claimant within the prescribed time limit (usually 28 days).
- Failure by the defendant to mount a defence could enable the claimant to obtain judgement and effectively end the case.
- The claimant then has at least 14 days to serve a reply dealing with any new points in the defence and set out any defence to a counterclaim.
Commercial court case management
- To ensure a business dispute case proceeds efficiently, a timetable is drawn up to set out when the parties should exchange evidence ahead of any final hearing. The parties may attempt to agree these ‘directions’ themselves.
- If the parties can’t agree directions they must ask the court to intervene at a directions hearing or case management conference. The goal 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. On the contrary – the courts adopt a pragmatic approach to ensure all information is disclosed as early as possible.
- 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 statement. These are exchanged simultaneously between the parties.
- Commercial courts will take a proactive approach to case management throughout to prevent cases becoming bogged down in side 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 time scales will be rigorously enforced. Failure to comply could result in punitive costs orders. 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 the judge will use all the documentary evidence and witness statements that have been disclosed to assist him when listening to the submissions of 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.
- All witnesses may be asked questions by both sides (examination-in-chief and cross- examination).
- Each side’s lawyer then sums up the case.
- The judge then considers their judgement. Depending on the complexity, the written judgement may not be available for at least six weeks.
- Following judgement, the issue of costs will be determined.