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Dispute Resolution round-up - October 2020

Dispute Resolution round-up - October 2020

Overview

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

The pipeline of COVID-19 related caselaw has slowed somewhat over the summer, as both courts and parties adjust to the new normal (although for those who want a recap of the key recent cases, please see this round-up prepared by our team). We have, however, seen a very important decision handed down in the last few weeks in the form of the first instance judgment in the FCA's seminal test case in the Financial List, which is aimed at providing clarity to insurers and policyholders alike as to whether certain common non-damage business interruption insurance policies have been triggered by the pandemic. Although the 156-page judgment requires careful reading, the general consensus is that it represents a victory for policyholders and the FCA. This case also represents the first time that the test claim procedure in the Financial List has been used, and it appears to have been a resounding success, moving through the various stages of the litigation quickly and efficiently to provide timely guidance to the market within a very compressed timeframe. That said, it certainly does not represent the last word on this matter and an appeal (possibly by way of a leapfrog to the Supreme Court) appears likely.

In other news, collective actions remain a hot topic as the courts in this jurisdiction seek to strike a balance between affording large groups of claimants a mechanism to obtain redress, and retaining the important link between redress awarded and actual loss suffered. This can be seen in the recent commencement of a new collective data breach action against Marriott, an area where we expect to see a lot more activity over the coming months and years. It can also be seen in the High Court's recent judgment in Jalla v Shell International Trading and Shipping Company Ltd [2020] EWHC 2211 (TCC), which could be read as the court applying the brakes somewhat to the gradual judicial expansion that has occurred in recent times of the circumstances in which a representative action (i.e. an action brought by a representative on behalf of a wider pool of claimants) may be brought.

Finally, as Brexit looms and the English courts seek to shore up their position as a global forum of choice for international disputes, this month has also seen the publication of two important sets of proposals aimed at revising the current rules in this jurisdiction relating to disclosure and witness evidence, to ensure that they remain relevant and appropriate for the modern world.

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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News

COVID-19

FCA test case concludes, but the Supreme Court beckons

On 15 September 2020, the English High Court handed down judgment in the FCA's seminal test case against eight insurers on the question of whether certain types of non-damage business interruption insurance policies cover COVID-19 related losses.

The 156-page judgment provides guidance as to how the "Disease" and "Prevention of Access/Public Authority" clauses in the 21 representative policy wordings before the court are to be construed in the context of the COVID-19 emergency and the UK government and public's response to it. While insurers and the 370,000 affected policyholders will still need to look at the judgment in detail to see how the guidance it provides applies to individual policies and claims, the FCA considers the judgment a success as the court has accepted a number of its arguments, in particular on the trigger for "Disease" coverage.

The FCA and the insurers have agreed that any appeals against the judgment (which may be a "leap-frog" appeal to the Supreme Court) are to be made expeditiously.

For further information on the background to the judgment, please read this article prepared by Anne Foster, a Consultant in our Dispute Resolution team.

Brexit

A reminder to consider dispute resolution clauses in contracts

The end of the post-Brexit transition period, 31 December 2020, is fast approaching, with no sign as yet of any agreement between the EU and the UK as to their future trading relationship. If that remains the case, then both the way in which the English and the EU courts allocate jurisdiction between themselves over cross-border disputes, and the way in which EU courts recognise and enforce English court judgments, will change as from the end of this year. This in turn has a bearing on the appropriate dispute resolution mechanism to include in any contracts with an EU element.

This short article and this longer briefing by our Dispute Resolution team contain a timely reminder of the options in this regard, and of the potential risks and benefits that each one entails.

 

Consultation on departure from retained EU caselaw

The UK government has recently announced that it is consulting on proposals to allow lower courts to diverge from EU caselaw which predates the end of the transition period. The current position is that only the Supreme Court may do so, and the proposals are therefore potentially significant for many areas of law as they could speed up the process of divergence between UK and EU law after the transition period ends.

Many legal bodies, including the Law Society and the Bar Council, oppose the proposals as they currently stand (largely, it would seem, on the basis that they will generate uncertainty), but the government does appear to be in favour of allowing this divergence to take place, and for it to be driven by private litigation rather than by requiring the government to take the initiative and legislate.

For further information on the pros and cons of the proposals, and their likely impact, please read this article produced by our DR and Commercial departments.

General

Singapore Convention on Mediation comes into force

On 12 September 2020, the Singapore Convention on Mediation, a new international convention aimed at ensuring the quick and easy enforcement of settlement agreements concluded in the course of cross-border mediations, came into force. The Convention is ultimately intended to do for mediated settlement agreements what the New York Convention has done for arbitral awards.

The Convention's impact in the short term will be limited as it has, as yet, only been ratified or approved by five states (Singapore, Fiji, Qatar, Saudi Arabia and Belarus). However, given that it has already been signed by a further 48 countries, including China and the US (although not yet the UK), its longer-term impact is likely to be considerable.

 

New collective data breach action against Marriott

Collective actions are a hot topic in this jurisdiction at present as the courts struggle to balance the need to provide meaningful redress to the large numbers of claimants impacted by, for example, a data breach, with the historic requirement to maintain a link between the damages granted and the actual loss suffered by those individuals (and a decision is expected soon from the Supreme Court in the Mastercard v Merricks litigation clarifying when collective actions should be allowed to proceed in the competition litigation sphere).

Such actions continue to be brought in the English courts at a steady pace, including most recently an action filed in the High Court against Marriott International by a technology journalist, on behalf of individuals whose personal data was exposed as a result of a breach of a guest reservation database. The Information Commissioner's Office (ICO) announced last year its intention to fine Marriott £99.2m in respect of the same breach.

The action against Marriott reflects new rights which the General Data Protection Regulation (GDPR) and the Data Protection Act 2018 granted for individuals to mandate organisations to bring claims on their behalf for compensation for both material and non-material damage. It follows hot on the heels of a similar action issued against British Airways, in which the High Court gave the go-ahead last Autumn for a Group Litigation Order enabling a collective action to proceed against the airline in relation to a data breach which it suffered in June 2018.

Civil Procedure

New LCIA arbitration rules

The London Court of International Arbitration (LCIA) has recently published a new 2020 edition of its Arbitration Rules, which came into force on 1 October 2020 and apply to any LCIA arbitration commenced on or after that date.

The new Rules include a number of procedural changes which address recent developments in good practice, including in light of the COVID-19 pandemic. The default position under the Rules is that electronic communications should be utilised, and the use of virtual hearings has also been recognised.

In addition to those changes, certain amendments have been introduced with a view to improving the efficiency and expediency of arbitral proceedings, including: (a) prescribing that the parties and tribunal shall make contact as soon as practical and no later than 21 days from receipt of notification of formation of the tribunal; (b) provisions for early determination; and (c) placing a greater emphasis on the timely delivery of awards, with a new target deadline of three months from final submissions.

Read the new rules.

 

Witness Evidence Working Group produces draft new rules

There have long been complaints from judges that the current rules in this jurisdiction relating to witness evidence require amendment, and in particular that witness statements are often "over lawyered" and/or vehicles to advocate for a party's case, and not truly representative of the witness's own voice and knowledge of events. Those complaints culminated in the setting up of a Witness Evidence Working Group (WEWG) chaired by the Chancellor of the High Court, Sir Geoffrey Vos, which released a report in December 2019 setting out recommendations for change.

Following up on those recommendations, the WEWG has recently released (on a limited basis) a new draft Practice Direction 57AC, which is intended to implement them. The new Practice Direction contains a detailed "Statement of Best Practice" as to how witness statements should be prepared. It also requires witnesses giving statements to sign a new, more detailed Statement of Truth, focusing their attention on the implications of what they are doing, and requires lawyers overseeing statements to sign a new Certificate of Compliance confirming that those statements have been prepared in accordance with the rules. Most controversially, it also imposes a new requirement for witnesses to identify within the body of their statements the documents to which they have referred or been referred while preparing it.

While the new draft Practice Direction may still be subject to change, and while there is no news as yet as to when it will be finalised and come into force, it is certainly the case that there is continued focus by the judiciary on this area, and both those assisting in the preparation of, and those giving, witness statements, would do well to bear the new requirements in mind from now on.

 

Disclosure Pilot Scheme update

A new Disclosure Pilot Scheme (DPS) came into force in the Business and Property Courts on 1 January 2019, originally for a two-year period. The DPS was the brainchild of a Disclosure Working Group chaired by Lady Justice Gloster, and its aim was to streamline and reduce the costs of disclosure in this era of vast quantities of electronic documents.

During the time that the DPS has been live, a significant amount of feedback has been garnered on it, much of it negative, with concerns that the requirements it imposes are overly complex, particularly for smaller matters, and that the frontloading of work which it entails increases, rather than decreases, overall costs.

The DPS has recently been extended for a further year, to 31 December 2021. In the meantime, the Disclosure Working Group has recently published a series of proposals aimed at making it more user friendly. These include: (i) clarifying when the new, specific obligation the scheme imposes to disclose "known adverse documents" arises; (ii) limiting the requirement it contains to serve document preservation notices on former employees; and (iii) limiting the circumstances in which "Initial Disclosure" (early disclosure of key documents relevant to the case) must be given. However, the proposals do not represent the wholesale revision of the DPS that some would like to see, and it remains to be seen what impact they will have if implemented. They will in any event not come into force until they have been considered and approved by the Civil Procedure Rules Committee, and a date for such consideration is yet to be set.

Cases

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