UK: Litigation And Dispute Resolution - A New Regime, A New Culture And New Opportunities

Last Updated: 20 March 1999

Litigation and Dispute Resolution - A new regime, a new culture and new opportunities

The current Civil Justice Reforms are intended to be the biggest shake-up of civil litigation procedure this century

The Government is embarking on an extensive programme to reform our entire judicial system. The reforms, contained in the Access to Justice Bill 1998 and "Modernising Justice" White Paper, will change the way both criminal and civil justice are conducted. The reforms are intended to embrace the availability, procedures and financing of litigation.

At the heart of the changes to civil justice will be a completely new set of court rules. These will not just make changes to the mechanics of the way in which civil litigation is conducted. They will dramatically affect the whole culture of dispute resolution - creating new opportunities and risks, while acknowledging that disputes are a part of commercial life and that the court system should endeavour to make it as straightforward as possible to bring and enforce claims and to resolve disputes.

The Government considers that the existing system causes unnecessary delays and is too expensive. The blame for these perceived failings is said to lie with litigants and their lawyers, while the courts have been accused of failing to control the conduct of proceedings effectively. Some believe that there is too much scope for parties to engage in tactical manoeuvring and deliberate delays, rather than getting on sensibly and effectively with attempts to resolve disputes.

To address these concerns, new court rules will come into force on 26 April 1999. All proceedings issued after that date will be subject to these new rules while those already on foot will fall under transitional provisions, which aim to bring existing cases under the new rules at the most appropriate time. The rules will apply to proceedings in both the High Court and the County Court.

It is intended that many of the cumbersome existing procedures, negative attitudes towards litigation and adversarial approaches to its conduct will become things of the past. The good features of the present system, including the ability of the judges and the fact that the majority of the successful party's costs are paid by the unsuccessful party, will be retained.

Macfarlanes' objective will remain the same: to help our clients prosecute or defend their claims and resolve disputes in the quickest and most cost-effective way, whether by litigation in the courts, arbitration, mediation or straightforward dialogue and debate. This requires an appreciation of the fast-changing culture of dispute resolution, such as the increasing popularity of the alternatives to going to court and the potential revolution in the nature of court litigation itself. We believe that the new court rules offer opportunities to further this objective.

The Overriding Objective

The new rules are expressed as a new procedural code with "the overriding objective" of enabling the court to deal with cases justly.

From 26 April 1999, most types of legal proceedings in England and Wales will be subject to this "overriding objective". While it reflects common sense, its prominence (it is Rule 1 in the new rules - to be applied in spirit as well as to the letter) reflects the fact that the overriding objective is intended to create a true culture change.

Dealing with a case justly will include:

  • ensuring that the parties are on an equal footing
  • saving expense
  • dealing with the case in ways which are "proportionate"


- to the amount of money involved

- to the importance of the case

- to the complexity of the issues and

- to the financial position of each party

  • ensuring that it is dealt with expeditiously and fairly and
  • allotting to it an appropriate share of the court's resources, while taking into account the need to allot resources to other cases.


Application by the court of the overriding objective


The court must seek to give effect to the overriding objective when it exercises any power given to it by the new rules. In particular, the court will be expected to use its new-found case management powers, discussed below, to further this aspiration. The court should encourage resolution of disputes wherever possible, and to this end may impose a stay of proceedings or suggest alternative dispute resolution mechanisms (such as mediation), with a view to encouraging the parties to reach a settlement without the need for a trial. Technology will play a greater role in proceedings with courts and judges making more use of IT and automated court systems designed to increase efficiency.

Duty of the parties

Parties to litigation (and their lawyers) will also be expected to help the court to further the overriding objective of dealing with the case justly. This requirement is designed to have a considerable impact on the behaviour of parties even before litigation begins. There will be a far greater emphasis on co-operation between the parties rather than the traditional adversarial approach. Those litigants who unreasonably delay proceedings, or employ procedures for tactical reasons alone, are likely to find themselves penalised in costs by the court, as will those who fail to explore the possibility of resolving the dispute before issuing proceedings.

There will be more stress on openness between the parties and less tolerance of last minute surprise tactics. In addition, much of the preparation of a case will have to be undertaken at the first sign of a dispute, even before proceedings are issued. Litigation will become more "front-loaded", with the aim of getting more quickly to the heart of a dispute, and so resolving it more quickly.

Court's duty to manage cases

The court must further the overriding objective by actively managing cases.

This will include:

encouraging the parties to co-operate with each other in the conduct of the proceedings - and penalising them if they refuse to do so

  • encouraging the parties to use an alternative dispute resolution procedure if appropriate
  • deciding some issues at the beginning of a case, leaving others until trial
  • helping the parties to settle the whole or part of the case
  • fixing timetables or otherwise controlling the progress of the case and
  • considering whether the likely benefits of taking a particular step justify the cost of taking it.


Once proceedings have been issued, the court will allocate the case to one of three tracks. The "small claims track" will deal with claims under £5,000. Claims worth between £5,000 and £15,000 will usually be dealt with on the "fasttrack". On the "fast track", cases will have to proceed within a strict timetable and a fixed costs regime will apply.

More complex litigation and cases of a higher value will follow the "multi track". A timetable for the progress of the action will normally be set early in the proceedings at a Case Management Conference, a hearing at which the parties or their legal representatives will discuss the future conduct of the action with the court.

Again the emphasis should be on the speedy and efficient resolution of the dispute, with the court taking the initiative to ensure that a case - once started - is progressed to a conclusion as quickly as possible.

What this means for you

-Costs estimates

will have to be provided by solicitors at various stages in the proceedings, in order that the parties and the court can balance the value of the case against the legal expenses to be incurred.

A letter before action will have to be as full as possible, setting out as much detail about the claim and remedy sought as is available at the time. In certain types of cases (at present only personal injury and medical negligence claims), the letter before action and thepre-action steps will have to follow a prescribed format laid down in a pre-action protocol, part of the new rules. Pre-action protocols will eventually be extended to many other types of case.

-Summary judgment

should be easier to obtain, where there is "no real prospect" that a claim can be successfully pursued or defended. More claims should therefore be disposed of more quickly, and with less expense.

-Disclosure

of documents will take place early in proceedings, again with the emphasis on openness, reasonableness and proportionality. The new rules will mean that fewer documents or classes of documents will need to be disclosed than before and there will be less room for unreasonable applications and delaying tactics.

-Delay

in cases coming to trial should be reduced.

-Settlement

will be encouraged by the court. The court may order proceedings to be stayed in order to allow time for efforts to settle. Alternative forms of dispute resolution ("ADR") will be encouraged, such as mediation between the parties. There will be new procedures for both claimants and defendants to make formal settlement offers which, if rejected, may lead to adverse costs consequences. Parties may have to account to the court if they refuse to take part in settlement attempts and, again, will be penalised in costs for unreasonable conduct.

-Costs

may be recoverable as the action progresses, rather than being assessed at the end of the case. The costs which may be recovered will be limited to an amount which is proportionate to the sums at stake and the complexity of the litigation. Where there is a likelihood that costs will exceed the sums in issue, the pressure to settle will therefore be much greater than at present.

-The Trial

will be managed by the court to a much greater extent, perhaps with time limits laid down at the outset for presentation of arguments, restrictions on the number of witnesses and expert evidence and so on.

What this means for your Lawyers

The new rules present an opportunity for those who, like us, are ready to adopt the cultural shift which they represent. With proper commitment and funding to enable the courts to implement the rules in future, the court process could be:

  • cheaper
  • quicker and, overall
  • a more effective and responsive forum for the resolution of disputes in a commercial manner.


Macfarlanes has completed an extensive programme to ensure that we are ready to use the new rules in the best interests of our clients. We have already committed to mediation as a constructive alternative or adjunct to court proceedings where appropriate. Two of our partners are fully trained mediators. We will continue to use our technical, commercial and procedural expertise to put our clients in the best possible position to obtain a successful resolution of disputes by the most effective means.

This note is intended to provide general information which may be of interest. It is not intended to be comprehensive nor to provide any specific legal advice and should not be acted or relied upon as doing so. Professional advice appropriate to the specific situation should always be obtained.

If you would like further information on how Macfarlanes can help you please contact Andy Milmore.

This article was first published by Marcfarlanes in March 1999.

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