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Dispute Resolution round-up - February 2021

Dispute Resolution round-up - February 2021


Welcome to the third edition of our quarterly disputes newsletter, which covers key developments in the dispute resolution sphere over the last three months or so.

With the post-Brexit transition period drawing to a close at the end of last year, and the EU and UK having agreed the shape of their future trading relationship, we finally have some clarity as to how English courts and EU courts will co-operate with each other in the new, post-Brexit world. The previous pan-European regime governing allocation of jurisdiction as between different national courts, and the recognition and enforcement of judgments in cross-border civil disputes, no longer applies to or in the UK. Instead, a different international regime, the 2005 Hague Convention, will now step in in many cases to determine which national court should hear a dispute, and whether overseas judgments should be recognised and enforced. The Hague Convention is at present relatively untried and untested, and we wait with interest to see how it will operate in practice. However, the general expectation is that in most cases, things will very largely proceed as they did before, with perhaps the odd new procedural bump built in.

On the domestic front, it is full steam ahead with new reforms to witness evidence - which have been mooted for some time - now in force as from 6 April 2021. It is to be hoped that the reforms will refocus the minds of parties to English litigation on the real purpose of a witness statement – to set out the factual evidence that the witness would give if they were giving oral evidence-in-chief at trial – and go some way to avoiding the lengthy and over-lawyered statements that the judiciary have complained of much of late.

And we have seen a lot of activity on the case law front, too. Notwithstanding Brexit, London continues to be a pre-eminent centre for international arbitrations, and we have recently seen the Supreme Court hand down two important decisions in this area, in Enka v Chubb and Halliburton v Chubb, concerning the test for determining the proper law of an arbitration agreement and an arbitrator's duty of disclosure where they are instructed on multiple overlapping matters respectively.  We have also potentially seen the first small signs of the anticipated wave of litigation which many believe will inevitably arise from the Covid-19 pandemic, with the courts starting to grapple with force majeure issues in Travelport v Wex and Fibula Air Travel v Just-Us-Air, alongside of course the Supreme Court's seminal decision in FCA v Arch concerning Business Interruption insurance coverage.  Finally, we have also seen a couple of interesting litigation funding decisions in the last few months, in Zuberi v Lexlaw and Rowe v Ingenious, as courts continual to grapple with the limits of what is acceptable practice for this relatively new industry.  All of these decisions are explored further in our "Cases" section below.

We hope that you continue to enjoy reading this round-up, whether a litigator by trade or a generalist, and whether in-house or in private practice, and that you will share it with any of your colleagues who may also find it useful. In the meantime, please stay safe.

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End of transition period ushers in new regime in civil judicial co-operation 

The end of the post-Brexit transition period has brought with it some changes to the ways in which the English courts and courts in EU member states co-operate with each other. 

Previously, the UK was part of a pan-European regime, the Recast Brussels Regulation, which governed allocation of jurisdiction as between the English courts and EU member state courts in civil proceedings with a cross-border element. That regime effectively determined which court should take jurisdiction over any given dispute, and prevented parallel proceedings before multiple different national courts. It also ensured that both the English courts and EU member state courts would recognise and enforce each others' judgments in this context, via a relatively quick and user-friendly process.

Since the end of the transition period, the previous pan-European regime has fallen away. It has been replaced by a combination of: (i) a different, less comprehensive international regime, the 2005 Hague Convention; and (ii) where the 2005 Hague Convention does not apply, the local rules in each individual jurisdiction. It is worth being aware that the 2005 Hague Convention only applies to disputes governed by exclusive jurisdiction clauses, and to any judgments arising from those disputes.

In most cases, this new patchwork of different rules should have relatively little impact on the circumstances in which the English courts will be prepared to take jurisdiction over a matter, and to recognise and enforce judgments emanating from the EU. Equally, we expect most European courts to take a relatively similar stance in most circumstances to that which they did previously. However, there are circumstances where the new regime may give rise to a slightly bumpier procedural ride, and to some increased costs.

To read more about the impact of the changes, please click here for a more detailed briefing by Jan-Jaap Baer and Alyce Lynch, Partner and Associate respectively in our Dispute Resolution department.

Civil Procedure

New rules on witness evidence imminent 

Much anticipated new rules on witness evidence in this jurisdiction, contained in a new Practice Direction 57AC (see Schedule 3 of the hyper-linked document), are now due to come into force from 6 April 2021, and to apply to witness statements concluded on or after that date.

The new rules are aimed at bringing witness statements back to their core purpose – setting out the factual evidence that a witness would give orally at trial as their evidence-in-chief – and to row back from what many members of the judiciary see as a trend towards over-lengthy, over-lawyered statements which are effectively used as vehicles for parties to put forward argument and "spin".

Amongst other changes, the new rules require witnesses to state how good their recollection is of the matters they are putting forward, and to list the documents to which they have referred or been referred for the purposes of creating the statement. They also require witnesses to sign an enhanced statement of truth, and their legal advisors to sign a new "certificate of compliance", in each case intended to focus minds on whether compliance with the rules has been achieved at the point at which the statement is completed.

Civil Justice Council launches consultation on pre-action protocols

On 27 October 2020, the Civil Justice Council ("CJC") launched a review of the pre-action protocols contained in the Civil Procedure Rules.  The purpose of the protocols is essentially to require parties to exchange enough information about their respective cases that they can understand each other's position, prior to any court proceedings being commenced, thereby increasing opportunities for early settlement and avoiding spurious litigation.  However, there have also been grumbles that the protocols can increase costs and lead to delay in matters being resolved.

The review therefore aims to determine whether the protocols are working effectively in practice, and whether any reforms to them are required.  Issues to be considered include whether the protocols should be made mandatory (which is not presently the case), and what the sanctions for non-compliance should be.

Civil Justice Council launches consultation on guideline hourly rates

On 8 January 2021, the Civil Justice Council published a draft report proposing modest upward revisions to the guideline hourly rates currently used for assessment of costs, which were last updated in 2010.  The publication of the report has triggered a short consultation period which will conclude on 31 March 2021.


New ICC Rules in force

On 1 January 2021, new ICC Rules came into force and will apply to cases filed as from that date. The new rules are relatively similar to those in force previously, but do include various useful practical changes, including provision for virtual hearings and a shift away from hard copy filings, a new requirement that certain third party funding arrangements must be disclosed, and new provisions relating to consolidation and joinder of additional parties.




Restrictions on winding-up petitions and orders extended

The temporary restrictions on the presentation of winding-up petitions, and on the making of winding-up orders, imposed by the Corporate Insolvency and Governance Act 2020 in response to the Covid-19 pandemic, have now been extended for a second time. The restrictions will now expire on 31 March 2021. The restrictions essentially prevent creditors from presenting a petition unless they have reasonable grounds to believe that the pandemic has not had a financial effect on the debtor, or that the debtor would have been unable to pay its debts in any event, notwithstanding the pandemic.


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