The commercial litigation landscape in the UK is shifting, with the increase in high-value class actions and a decrease in freestanding commercial claims.
In the United Kingdom, commercial litigation refers to the legal practices associated with the resolving of disputes of a business with other businesses or with an individual in a commercial regard.
The UK continues to be one of the most important epicenters for commercial litigation as London continues to be the most significant centre for dispute resolution.
1. Pre-Action Stage
The parties are advised to use pre-action protocols which are to resolve disputes before taking legal action. These protocols focus on providing information before the legal settlement is done along with trying to persuade the parties to commit to an out-of-court settlement. They usually include:
- Letter of Claim: A claimant is to write detailed letters to the defendant explaining the basis of the claim along with the facts and also the remedy sought.
- Response: The participant is required to respond within a defined time whether he receives the claim or does not receive it, along with reasons for acceptance or denial of the claim.
- Alternative Dispute Resolution (ADR): Each participant in the case and the referring participants in the process are asked to explore the use of any kind of ADR, mediation, or arbitration techniques that minimise court engagement.
Attention to ADR approaches has grown, particularly with their increasing use beyond the High Court. This shift is likely the result of more mediation being employed, as well as other factors related to litigation funding.
Securing guidance from experienced legal practitioners at this juncture is crucial. Summit Law focuses on assisting businesses with pre-action protocols, ensuring legal compliance, and considering opportunities for early settlement.
2. Issuing Proceedings
In the event that pre-action negotiations achieve no results, the claimant is entitled to begin formal proceedings, which involves completing and submitting a claim form at the correct court. Which court a claimant chooses to file in is a function of the value and the complexity of the claim.
The claim form and the particulars of the claim must be served upon the defendant, who is then obliged, within some set time frame, to acknowledge service and indicate whether he intends to defend or not.
3. Statements of Case
The parties exchange comprehensive documents articulating their legal positions for their respective claims and defenses, which may include:
- Particulars of Claim: Statement of Claim, which consists of supporting facts and needed reliefs sought out by the primary claimant.
- Defence: Statement of Defense, which refutes each claim and offers counter-allegations or defenses.
- Reply: Claimants are also able to reply to the defense, most notably when new elements are introduced through the defense.
4. Case Management and Directions
Courts also have the interest of managing the efficiency of all active cases before them. A Case Management Conference (CMC) is where a court may schedule a time for other especially important resolving milestones like disclosure or statements from witnesses and even appointing experts to draft reports. This is the point where the court may also suggest the use of alternative dispute resolution mechanisms (ADR).
5. Disclosure
Both sides need to provide the relevant documents that pertain to the issue at hand. With the development of technology, processes such as disclosure, which have traditionally been done manually, are now done electronically. The degree and intricacy of disclosure can have a serious effect on the time and money needed for litigation.
6. Witness Statements and Expert Evidence
The parties prepare and exchange witness statements listing the evidence and testimonies they expect their witnesses to present during the trial. If there are issues that require expert witnesses, specialists draft reports on particular technical or specialised subjects. The incorporation of expert testimony is more common in sophisticated cases.
7. Trial
The trial is the last stage of the litigation process:
- Presentation of Evidence: Both parties get a chance to provide all the relevant evidence, including testimony and expert opinion, that supports their case.
- Cross-Examination: Witnesses will be subjected to cross-questioning by the legal practitioners from the other party.
- Closing Submissions: Each side presents a conclusive statement of their position and the legal justification for it.
Some trials take a longer time compared to others, with some having complex cases lasting up to several weeks. An example are the London Commercial Courts, which have funneled a large volume of complex high-value cases, which is extremely lucrative for law firms but puts a strain on the judicial system.
8. Judgment and Remedies
As a result of the analysis of the provided evidence and the legal arguments supplied, the judge gives a sentence which, in this case, can be:
- Damages: Financial damages were given to the plaintiff.
- Injunctions: Orders restraining a party from carrying out certain procedural actions.
- Specific Performance: Orders mandating a party to complete actions within the scope of a contract.
In 2024, the amount of commercial disputes in England’s High Court dipped to 3,380 claims which is the lowest in six years. This marks a 10% decrease compared to the previous year. The reduction is partly because litigation funders have become more conservative about funding lawsuits after a 2023 Supreme Court Ruling on how they are compensated.
9. Enforcement of Judgments
If the losing party does not voluntarily comply with the judgement, the winning party has the right to enforce the judgement and take actions such as:
- Warrants of Control: Engaging the services of bailiffs to remove and sell particular goods.
- Charging Orders: Taking charge of the property of the debtor.
- Third-Party Debt Orders: Restricting the company’s ability to access cash that they control, but which is held by other people.
Between October and December 2024, there was an increase in enforcement-related order applications with 14,000, up 5% from the same quarter in 2023.
Conclusion
The commercial litigation landscape in the UK is shifting, with the increase in high-value class actions and a decrease in freestanding commercial claims. Businesses need to understand how law and changes in legislation alongside judicial decision-making and alternatives to litigation influence the way disputes are controlled and managed.
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