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Dispute Resolution round-up - October 2022


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

The focus of the last quarter has really been on a number of interesting proposed reform efforts across several areas where England and Wales is currently a global jurisdiction of choice, and is looking to remain so. From potential reform of the Arbitration Act 1996, to proposals for reform to the law on personal property aimed at providing protections and certainty to stakeholders in the crypto-token space, to interesting new proposals to embed mandatory mediation in the court process, the government, judiciary and practitioners are not standing still as they look to maintain the flexibility and forward thinking for which this jurisdiction is known.  We have also witnessed tangible changes in an area previously targeted for reform, with the disclosure pilot scheme being made permanent in the Business and Property Courts as from 1 October 2022.

In the world of case law, we continue to see interesting decisions coming through door related to crypto, ESG and competition disputes, all of which we delve into in detail 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.

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Law Commission Consultation on Arbitral Reform

The Law Commission, in September, published a consultation paper on proposed reforms to the Arbitration Act 1996 (the "Act"). The stated aim of the Law Commission is to ensure the Act remains "state of the art" and "continues to support London's world-leading role in international arbitration". The provisional conclusion of the Law Commission is that the Act works well and that no major reform is required, with only a few discrete reforms proposed to keep it "cutting edge".

One proposal is to introduce a non-mandatory provision allowing a tribunal to summarily dispose of claims or issues which are without merit. The Law Commission believes that the Act as it stands "probably" already does this, but that without an express provision some arbitrators are reluctant to adopt such a procedure for fear of court challenge.  Inclusion of an express power to adopt a summary disposal procedure should remove any doubt for arbitral tribunals. The Law Commission has asked for views on this and the appropriate threshold for summary disposal. Another proposal is for applications to the court challenging the jurisdiction of a tribunal (where a party has participated in arbitral proceedings and objected to the jurisdiction of the tribunal, and the tribunal has ruled on the question of jurisdiction in an award) to be treated as an appeal (i.e., a review of the tribunal's decision) rather than a full re-hearing. The Law Commission also proposes making explicit that where a tribunal decides that it does not have substantive jurisdiction over a dispute, it should still be able to make an award of costs.

Interestingly, the Law Commission does not propose codifying a default presumption of confidentiality in the Act, provisionally concluding that it is best left for development by the courts. Also of note is that the Law Commission does not propose imposing an express duty of independence on arbitrators in the Act. Instead, the Law Commission focuses on impartiality, proposing to codify a continuing duty on arbitrators to disclose any circumstances which might reasonably give rise to justifiable doubts as to their impartiality. 

There are also proposals to strengthen the immunity of arbitrators, to restrict the ability of parties to object to arbitral appointments on the basis of the protected characteristics listed in the Equality Act 2010 (subject to limited exceptions), and some clarifications around the circumstances in which the court can aid arbitral proceedings (including emergency arbitral proceedings).

Responses to the consultation are requested by 15 December 2022.

Read our briefing: Review of the Arbitration Act 1996: Highlights from the Law Commission's consultation paper

Government consults on mandatory mediation

In July 2022, the Ministry of Justice ("MoJ") opened a consultation on a number of changes aimed at embedding mediation more firmly within the court system in this jurisdiction.  Whilst focused on small value claims, the consultation is arguably indicative of the MoJ's intentions for much higher value litigation.

The MoJ's key proposal is that parties to defended small claims (i.e. to most defended claims valued at less than £10,000) must attend a free, mandatory mediation appointment with HM Courts and Tribunals Service ("HMCTS") at an early stage of their case, on pain of costs sanctions or the striking out of their claim or defence. The MoJ also wants to begin to lay the groundwork for mandatory mediation for higher value claims. This would require parties to be referred to external mediation providers, rather than to HMCTS. The government is therefore seeking views on how best to strengthen oversight of and maintain standards within the external mediation provider market. 

It has been apparent for some time that compulsory mediation is on the government's agenda, with the aim of enabling parties to reach quicker, more consensual resolutions to their disputes where possible, and to free up court resources for those cases where they are really needed. The consultation above follows hot on the heels of a report last year from the Civil Justice Council’s Judicial ADR Liaison Committee to the effect that compulsory mediation is both lawful and could in some circumstances be beneficial. Separately, a pilot mediation scheme has been instituted for certain types of cases (including contractual disputes with a value of up to £500,000) where permission to appeal is sought and obtained from the Court of Appeal. Mediation under the pilot scheme is voluntary, but parties may be required to justify to the Court of Appeal their decision not to attempt mediation at subsequent court hearings. It will be some time before the proposals set out in the consultation become a reality, and compulsory mediation for the largest and most complex cases is even further away, but the intended direction of travel is clear.

Hague Convention 2019 to come into force

On 29 August 2022, the 2019 Convention on the Recognition and Enforcement of Foreign Judgments in Civil or Commercial Matters (the "2019 Hague Convention") was acceded to by the EU and ratified by Ukraine. It will come into force as between all EU member states (save for Denmark) and Ukraine in September 2023. 

The 2019 Convention is an international agreement intended to smooth the process for recognition and enforcement of civil and commercial judgments as between those states which become a party to it.  It is particularly useful because it covers recognition and enforcement of such judgments in a significantly broader range of circumstances than its predecessor convention in this area, the 2005 Convention on Choice of Court Agreements (the "2005 Hague Convention").

The UK is not presently a party to the 2019 Hague Convention (although it is a party to the 2005 Hague Convention). However, should it accede to the 2019 Hague Convention, this could in the long term provide a framework (where it applies) to address the issue of reciprocal recognition and enforcement of civil and commercial judgments as between the UK and EU member states, an area where there has been no comprehensive governing regime in place since the Recast Brussels Regulation ceased to apply to and in the UK as a result of Brexit.

Disclosure Pilot Scheme becomes permanent

The disclosure pilot scheme, which has been running in the Business and Property Courts on a trial basis since 1 January 2019, has been made permanent as from 1 October 2022 as new CPR Practice Direction 57 AD. The scheme represents a relatively radical departure from the historic disclosure rules which applied before it came into being (and which continue to apply outside the Business and Property Courts context). It is intended to achieve a complete cultural overhaul in the approach to disclosure in the courts in which it applies, with a particular mind to ensuring that the costs and time spent on disclosure are proportionate in the circumstances. The innovations it has brought in include early "Initial Disclosure" at the pleadings stage, the introduction of five bespoke "Extended Disclosure" models intended to replace generalised "standard disclosure", and the introduction of issue-based disclosure against a List of Issues for Disclosure.

Although there is some anecdotal evidence that the scheme has not entirely succeeded in its objectives, and has introduced additional front loading and complexity, and therefore cost, into the disclosure process, it has been warmly welcomed by many of the judiciary and is now here to stay.

Law Commission publishes Consultation Paper on Digital Assets

On 28 July 2022, the Law Commission published a consultation paper on digital assets, which proposes various reforms to the law on personal property with the intention of providing additional protections and certainty to stakeholders in the crypto-token space.

In particular, the Law Commission has taken the opportunity to add its weight to the growing consensus that crypto-tokens ought to be treated as personal property under English law, with all the attendant protections that this affords. This is in line with the UK Jurisdiction Taskforce's 2019 statement on this topic and a number of recent interlocutory decisions in which the courts have taken the same approach.

The paper also contains a detailed analysis of how, based on the Law Commission's conception of their proprietary status, crypto-tokens may be transferred, made the subject of security and held in custody (with a consequent impact on the remedies which may exist to recover such tokens if they are misappropriated or the custodian holding them becomes insolvent). While this analysis is not authoritative, it does help to demystify some of these issues and should, therefore, provide stakeholders with confidence that English law is equipped to respond to the demands of this evolving sector.

The SRA adds it weight to the growing discourse around "SLAPPs"

The Solicitors Regulation Authority ("SRA") is the latest organisation to indicate that it is looking to curb the use of so-called Strategic Lawsuits Against Public Participation ("SLAPPs") in England and Wales. There is presently no legal or statutory definition of a SLAPP, but the term is most often used to describe a form of retaliatory litigation intended to deter freedom of expression.  The proposed intervention by the SRA follows other recently proposed interventions by both the Ministry of Justice ("MoJ") and the European Commission.    

As we noted earlier this year, the MoJ has published a Call for Evidence seeking stakeholder feedback on allegations that lawyers have used intimidatory and aggressive methods to respond to journalists, media and civil society organisations. The SRA has now joined the MoJ in considering how to address SLAPPs, having recently indicated that it is looking to introduce further guidance on certain "oppressive behaviours", which it has expressly linked to the growing focus on the use of SLAPPs in England and Wales. The Chief Executive of the SRA has stated that it will address concerns over tactics such as "making exaggerated claims of adverse consequences or sending letters using an intimidating or aggressive tone or language", including "labelling correspondence "private and confidential" and/or "without prejudice" to pressure individuals and organisations into withdrawing allegations". 

It is interesting to see these parallel efforts to address the use of SLAPPs in this jurisdiction. The MoJ's Call for Evidence indicates that it sees a potential way forward through changing existing court procedure. The SRA, in contrast, appears to be considering how to address the tactics utilised by some lawyers outside of the courtroom (e.g. in the use of correspondence). These two approaches (i.e. the "hard" approach by the MoJ and the "soft" approach by the SRA) may prove to be complementary. 

Without intervention, SLAPPs have the potential to impinge on fundamental liberties of free speech and free press. Both the MoJ and the SRA appear to be very concerned by this threat, and are working to tackle both the use of SLAPPs in court, and the use of certain litigation tactics outside of the courtroom. It remains to be seen whether the proposals can effectively be translated into the statute books, or the SRA's guidance, in a balanced way to ensure that the reforms protect legitimate speech and reporting while also preserving the right of individual and corporate actors to legitimately protect their interests by seeking court-based interventions, or through inter partes correspondence.

Read our briefing: Government Plans for Reform to Tackle Strategic Lawsuits Against Public Participation ("SLAPPs") in England and Wales

Read out briefing: The SRA adds its weight to the growing discourse around so-called "SLAPPs"

Government publishes Retained EU Law (Revocation and Reform) Bill

The government has published a new bill, the Retained EU Law (Revocation and Reform) Bill, which gives it wide-ranging powers to revoke or reform retained EU law. Retained EU law is a new category of UK law which was created primarily in order to avoid "gaps" opening up in the UK statute book following Brexit and to provide certainty; for more information, see our briefing Retained EU law: 10 key questions.

Among other things, the new Bill includes a proposal for the majority of retained EU legislation to expire at the end of 2023, unless expressly preserved in some form. It also proposes changes to the manner in which UK courts must deal with both conflicts between retained EU law and domestic law, and historic EU caselaw. Some of the changes proposed by the Bill have the potential to generate uncertainty, but the extent to which it will be amended as it progresses through Parliament, and in particular the House of Lords, remains to be seen.

Read our briefing: The Retained EU Law Bill: another Brexit cliff edge looms?


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