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Dispute Resolution round-up - September 2021

Dispute Resolution round-up - September 2021


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

This has been an interesting period for black letter law enthusiasts, with some meaty Supreme Court decisions published on matters as diverse as piercing the corporate veil, lawful act economic duress, professional negligence and the interpretation of liquidated damages clauses.  The English courts have also shown that they remain at the cutting edge of legal and technological developments, with interesting decisions at the High Court level in relation to both data breaches and cryptoassets, areas which we expect to grow significantly in future.  We are also closely watching the progress of the first ever collective proceedings to be certified in this jurisdiction by the Competition Appeal Tribunal.  All of these developments and more are covered 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.  We also hope that you are keeping well as a new school year begins, and we enter what feels like a new beginning in the workplace, too.

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Changes to Disclosure Pilot Scheme

The Disclosure Working Group ("DWG"), a group of practitioners from across the profession tasked with improving the process of disclosure in this jurisdiction, has recently published a number of amendments to the relatively new Disclosure Pilot Scheme which has been in operation in the Business and Property Courts since the start of 2019.  The amendments have not yet received formal Civil Procedure Rule Committee or ministerial approval (save for an extension of the Scheme's end date to 31 December 2022).  However, they are expected to come into effect on 1 October 2021 in substantially the same form that they are in now.  In advance of that date, the DWG has advised parties to take them into account in the conduct of their cases and to consider whether they should propose to their judge (by agreement) that they should nonetheless be applied.

The changes are largely intended to address criticisms of the Scheme put forward by practitioners since it came into force in 2019 to the effect that it has not always generated the costs and efficiency savings that were one of its primary aims, and has in fact in some cases even increased costs.  They include: (i) a new, more streamlined disclosure process for most claims worth less than £500,000; (ii) recognition that multi-party claims require a more bespoke approach to disclosure than was previously provided for under the Scheme; (iii) more party autonomy to agree changes to procedure and deadlines without the involvement of the court; and (iv) various other small adjustments intended to make the Scheme more efficient and effective.

The aim of the Scheme was very much to make disclosure in this jurisdiction a less expensive and more efficient process in an era where vast quantities of electronic documents regularly need to be sifted for relevance in large commercial cases, and even parties in smaller cases face a considerable disclosure burden.  It has been clear from the outset that adjustments will be needed as the Scheme progresses and it becomes clearer how it is working in practice. The hope is that these amendments will bring the Scheme closer to meeting its aims.

EU formally withholds consent for the UK to accede to the Lugano Convention

Since the UK left the European Union on 31 January 2020, and the subsequent transition period came to an end on 31 December 2020, there has been no comprehensive reciprocal regime in place to determine how the English courts and EU member state courts should allocate jurisdiction between themselves over civil and commercial cases with a cross-border element.  Equally, there has been no comprehensive regime in place to determine when English courts should recognise and enforce civil and commercial judgments of EU member state courts, and vice versa.  Many practitioners had hoped that this situation would be resolved by the UK re-joining the 2007 Lugano Convention (the "Lugano Convention"), an international agreement which currently applies between EU member states and certain ETFA member states, and which governs these areas.  However, in a move which some will see as political, on the 4 May 2021 the European Commission recommended that the UK's application to join the Lugano Convention should be rejected, on the basis that the Lugano Convention is intended to support the Single Market of which the UK is no longer a part.  The Commission has subsequently deposited a Note Verbale dated 22 June 2021 with the Swiss Federal Council in its capacity as Depositary of the Lugano Convention, confirming that the EU "is not in a position to give its consent to invite the United Kingdom to accede to the Lugano Convention".  Although the European Council (i.e. the EU member states themselves) could theoretically decide to ignore the Commission's recommendation and nonetheless approve the UK's application, the Note Verbale would suggest that it has no intention of doing so.  For now at least, the UK's application to join the Lugano Convention would therefore appear to be dead in the water.

A step towards EU accession to the Hague Judgments Convention

An international treaty known as the 2019 Hague Judgments Convention (the "2019 Convention") may in the longer term provide at least a partial solution to the current lack of a comprehensive reciprocal regime between the UK and EU member states in relation to the recognition and enforcement of each other's civil and commercial judgments, described above.  If both the UK and the EU accede to the 2019 Convention, the process for recognition and enforcement of civil and commercial judgments of EU member state courts in the UK, and the process for recognition and enforcement of civil and commercial judgments of the English courts in EU member states, will be significantly streamlined and improved.  Although neither are yet signatories, encouragingly, on 16 July 2021, the European Commission adopted a proposal for the EU to accede to the 2019 Convention, which the European Council and European Parliament will then have to approve before EU accession can take place. 

Civil Justice Council report on mandatory ADR

In June 2021 the Civil Justice Council's Alternative Dispute Resolution ("ADR") Working Group published an interesting report which considers two key questions: (i) whether parties can lawfully be compelled to participate in ADR in this jurisdiction; and (ii) if so, whether and in what circumstances such compulsion might be desirable.  For these purposes, ADR meant any dispute resolution technique in which the parties are assisted in exploring settlement by a third party, whether an agent external to the court process (e.g. a mediator) or a judge playing a non-adjudicative role.  Types of ADR considered included typical face-to-face mediations, short-form telephone mediations, techniques where a third party gives a non-binding appraisal of what the outcome of the dispute is likely to be (such as Early Neutral Evaluation) and a range of possible novel online processes.

The report concludes that ADR can lawfully be made compulsory in this jurisdiction.  On the question of whether and when compulsion might be desirable, the report recognises that further detailed work is needed.  However, it does envisage a greater role in future for compulsory judge-led ADR processes, which are already in use in some contexts e.g. the Family Division, and which appear to be relatively effective.  It also considers that compulsory mediation should be considered in some contexts – where appropriate in short, affordable formats.  Whether the undoubted benefits of ADR can be preserved when it is made compulsory remains to be seen.


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