UK: Commercial Court Modernisation - is Business Entitled to Expect Public Investment in the Courts?

Last Updated: 7 August 2002

Consultation has recently closed on a Paper issued by the Court Service Department seeking views on the proposals for modernisation of the commercial courts. Whilst suggestions for improving facilities have been welcomed, concerns have been expressed over how these improvements will be financed and also on a proposed hike in commercial court fees.

Since 1895 the Commercial Court has enjoyed a pre-eminent reputation for high calibre Judges and the fair and efficient handling of complex domestic and international commercial disputes. It has also played an important part in developing a system of commercial law which is favoured worldwide. Both the business community and the Government owe it a considerable debt.

Despite the distinction of its judges and its staff, however, the Commercial Court is in real danger of lagging behind the needs of the business community it was designed to serve. The problem lies in the lack of dedicated facilities and the changing nature of the disputes upon which the court rules. The Lord Chancellor has recognised the need for an overhaul, commissioning Cap Gemini Ernst & Young (CGEY) in November 2000 to establish the business case for restructuring the Commercial, Admiralty, Patents, and Technology & Construction Courts. The CGEY Report, published in February 2001, recommended the consolidation of facilities for the four specialist commercial courts (either by refurbishment or constructing new buildings) and the integration of their operations and resource management.

In March 2001 Lord Irvine announced that he would "take forward plans to enhance the court with modern IT and video-conferencing facilities" and "examine the potential to house [the commercial courts] in a single building". These plans have met with enthusiastic support from users and practitioners. Likewise, the apparent abandonment of the suggestion that the specialist jurisdictions of the four courts should be merged has resulted in widespread relief.

As everyone recognises, the commercial courts’ infrastructure needs improvement. Accommodation ranges from the dull basement of the Royal Courts of Justice to the cramped rooms in St Dunstan’s House – recently described as a public disgrace by one Commercial Court Judge. So restricted is the provision of consulting facilities that it is difficult to advise clients in privacy, or even to obtain a mobile telephone signal. Conducting trials in courts which are too small to accommodate the documents and the participants, let alone members of the public, gives a poor impression and detracts from the underlying quality of the courts’ service. Developing IT also presents obstacles, due both to the narrow range of facilities available and to their incompatibility with the architecture of the courtroom.

The pooling of resources as proposed by CGEY should result in economies of scale. Investment in accommodation and IT support will solve many of the problems with the service offered to users, and provide long-overdue improvements in working conditions for the judiciary and court staff. Those on the commercial bench are already paid considerably less (in real terms) than they were a century ago and the disparity between judicial and private practice earnings has also increased significantly: it is unreasonable, if the commercial courts are to attract and retain the highest quality judiciary, to expect them to tolerate Dickensian infrastructure.

Whilst these problems have been recognised, the financing of the proposed modernisation in London remains uncertain. Practitioners and judges clearly favour purpose-built premises. But the Government has still to commit funds. In its spending review announced on 15 July 2002, the Government announced that an additional £600 million in funding allocated to legal services over the next four years will be focused on reform of the criminal justice system, leading to concerns that reforms of the civil courts including, in particular, modernisation of the Commercial Court will be sidelined. It is unclear whether the project would attract private finance.

Once the courts have been restructured, CGEY controversially suggest that they should pay their way by charging for access either by dramatically increasing flat fees on commencement of litigation or by introducing a daily hearing rate of £2,100. Neither alternative is appropriate: as most disputes settle before trial, increases in flat fees will subsidise intransigent litigators or those engaged in high-value disputes which, inevitably, are less likely to compromise. A significant daily use rate would increase the costs of commercial litigation, which have already risen due to the 1999 Civil Justice reforms. This amounts to a further tax on the business community and cuts across the need, identified by CGEY themselves, to reduce the cost of litigation. It may also be open to challenge under Article 6 of the Human Rights Act 1998. Furthermore, there is a risk that imposing such a fee would discourage the choice of English law and English courts by foreign businesses.

Legal services directly contributed over £850 million to Britain’s invisible earnings in 1999, and indirectly contributed much more to the international success of the City and to the Exchequer. London has the judges, and the lawyers, to continue to provide a first class dispute resolution service to the international business community and further to enhance the reputation of English law abroad. Public investment in the infrastructure now will amply repay itself in the years to come.

The Consultation Paper issued by the Court Service Department sought views on six key areas:
  1. CGEY's recommendation that courts dealing with matters relating to business be merged (in particular, the Commercial Court, the Admiralty Court, and the Technology & Construction Court). The Court Service Department does not favour this approach of merging the jurisdictions of the courts but sought comments on this issue.
  2. 2.New accommodation for the commercial courts, accepting the CGEY Report recommendation that there should be purpose-built accommodation and seeking views on the requirements of that new accommodation.
  3. Plans to improve IT support for the courts.
  4. Options for changing administrative support arrangements.
  5. The impact of increasing commercial court fees.
  6. Whether marketing the commercial courts was appropriate and, if so, the sort of marketing that would be appropriate.

© Herbert Smith 2002

The content of this article does not constitute legal advice and should not be relied on as such. Specific advice should be sought about your specific circumstances.

For more information on this or other Herbert Smith publications, please email us.

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