Litigation Developments: England And Wales – Quarterly Update

Welcome to our latest quarterly bulletin which contains updates on commercial litigation developments over the past three months, largely by reference to articles posted to our Litigation Notes blog in that period. Other posts are available on the blog, which you can visit any time, or subscribe to be notified of the latest updates: https://www.hsfkramer.com/notes/litigation/.

See also the latest episodes of our Commercial Litigation Update and Cross-examining AI podcast series.

CLASS ACTIONS

We have published the third edition of our leading textbook Class Actions in England and Wales, co-authored by HSF Kramer lawyers. The new edition reflects significant developments since the last edition in 2022, including landmark decisions from the Supreme Court and other appellate courts. It also includes three brand new chapters examining representative actions, tax disputes and arbitration. Previous editions of the book have been cited in two Supreme Court decisions, Lloyd v Google (2021) and AXA Insurance UK PLC v Commissioners of Inland Revenue (2026): New third edition of our leading textbook Class Actions in England and Wales.

The government has launched a consultation on reforms to the opt-out collective proceedings (CPO) regime in the Competition Appeal Tribunal, following last year's call for evidence on the CPO regime. Key proposals include amendments to the certification threshold, which the government regards as currently too low, reforms to funding, including permitting damages-based agreements for opt-out claims, and new provisions relating to costs and settlement: UK consults on “swifter and simpler” competition redress, regulatory appeals and competition enforcement.

The Supreme Court has dismissed an appeal against orders that test case decisions in the long-running CFC and Dividend Group Litigation Order (GLO) were not binding on other claims on the group register following dramatic changes in the law. It held that the court should order that test case decisions on GLO issues are not binding due to a change in the law only where it has been clearly established that the legal basis for the test case decision was wrong – mere doubt as to its correctness is insufficient – and even then the court must consider whether it would be unjust to make such an order. A decision may also not bind follower claims where what was decided was fact-specific in nature: Group litigation orders: Supreme Court clarifies when courts may order that a judgment on a GLO issue is not binding on other parties due to a subsequent change in the law.

The Court of Appeal has dismissed an appeal against the High Court's decision that some 5,800 motor finance discretionary commission claims could be brought together using "omnibus" claim forms, rather than separately as the district judge had required. The court stressed the fact-specific nature of unfairness claims under s.140A of the Consumer Credit Act 1974, confirming there can be no common issue on unfairness in principle divorced from the facts, though a common issue need not be binding in every claim. Despite scepticism about the utility of the common issues identified in this case, the high bar for overturning case management decisions meant the High Court could not be said to be wrong: Multi-party claims: Court of Appeal upholds decision allowing over 5,000 motor finance claims to be brought together.

In a securities class action against Entain Plc under sections 90 and 90A of the Financial Services and Markets Act 2000 (FSMA), the High Court has ordered that reliance, causation and certain limitation issues be determined at a second trial together with quantification of loss, with the first trial limited to defendant-side issues and claimants' standing. The court emphasised, however, that split-trial decisions turn on a wide range of case-specific factors, with no "one size fits all" approach. The court also ordered the sample claimants to given disclosure on reliance and causation issues, commenting that claimants bringing large civil claims must be ready to establish them, and not assume that they will be able to defer dealing with claimant-side issues: High Court considers appropriate split for trial of s.90 and 90A FSMA claims in Entain litigation.

The High Court has adjourned a securities class action under sections 90 and 90A of FSMA, which had been listed for October 2026 and would have been the first such claim to reach trial. The central issue was how the civil trial should proceed given substantial overlap with a pending criminal prosecution: while civil proceedings need not automatically be adjourned in favour of criminal proceedings, the court must consider any risk of injustice to the criminal proceedings and whether adequate safeguards could mitigate it. Notably, however, the court declined to stay the proceedings overall, on the basis that issues due to be dealt with at trial 2 (relating to the individual claimants' cases) could be progressed in the meantime and potentially included in a deferred trial 1: High Court adjourns landmark securities class action trial due to risk of prejudice to overlapping criminal proceedings.

The Solicitors Regulation Authority (SRA) has launched a consultation on proposals to strengthen requirements for solicitors using or arranging third-party litigation funding in consumer claims, together with new guidance on complying with existing professional obligations in this context. The consultation, which closed on 17 September 2026, forms part of the SRA's wider work addressing risks in the high-volume consumer claims sector, following a discussion paper issued last September: Solicitors Regulation Authority consults on consumer protection measures where litigation funding used for consumer claims.

AI

The UK Jurisdiction Taskforce (UKJT) has published its final legal statement on liability for AI harms under the private law of England and Wales, following an earlier public consultation. The statement addresses the circumstances and legal bases on which English law will impose liability for loss arising from the use of AI. The UKJT considers that English law is inherently flexible, has repeatedly accommodated novel and disruptive technologies, and can provide certainty and predictability in the face of technical innovation. Its overall conclusion is that English law is generally well-equipped to address the liability questions AI is likely to raise, though the application of existing legal concepts will remain highly fact-dependent and some areas of uncertainty are acknowledged: UK Jurisdiction Taskforce publishes final legal statement on liability for AI harms.

The Civil Justice Council (CJC) has published an update on its consultation into whether specific rules are needed for the use of AI by legal representatives in preparing court documents, following its interim report and consultation earlier this year. Respondents broadly agreed that no additional AI-specific requirements are necessary for legal professionals preparing pleadings, advocacy documents, skeleton arguments and similar materials. The main area of continuing debate concerns the use of AI in preparing witness statements, where views diverge on the need for further safeguards or disclosure requirements. Expert evidence and litigants in person were also identified as raising distinct issues requiring further attention. The CJC expects to publish its final report later in 2026: Civil Justice Council publishes update on consultation responses regarding use of AI for preparing court documents.

The Court of Appeal has made clear that a witness's use of AI to prepare for cross-examination can amount to unlawful witness coaching, emphasising that coaching witnesses on their evidence by any means is not permitted. Witnesses should be firmly discouraged from using AI to prepare for giving evidence, as doing so could risk unfairness to the point where a court may need to consider excluding evidence. Although the decision is a criminal one, the same principles are likely to apply in civil proceedings: A witness's own use of AI to prepare for cross-examination may amount to prohibited witness coaching.

The Solicitors Disciplinary Tribunal has, for the first time, sanctioned a lawyer in relation to the misuse of generative AI in legal proceedings, ordering that a Registered Foreign Lawyer be struck off. It found that the respondent’s misuse of AI amounted to a failure to uphold the rule of law, maintain public trust, and act with integrity, as well as misleading the Tribunal and advancing submissions that were not properly arguable: Lawyer struck off in first disciplinary case on AI misuse.

PRIVILEGE

The High Court has held that the Solicitors Regulation Authority (SRA) does not have power to require regulated persons to produce documents subject to a client's legal professional privilege (LPP) for the purpose of an SRA investigation, unless the client waives LPP. The court found that LPP is a fundamental right displaced only by express statutory override or necessary implication, and that s.44B of the Solicitors Act 1974 met neither test: it says nothing about privilege and, while the SRA's inability to compel privileged material may impede its statutory purpose, it does not stultify it. The decision departs from the SRA's previously stated position and aligns its powers with those of other regulators. It raises practical questions, including how the SRA can investigate third-party complaints and how solicitors can meet reporting duties without breaching LPP. The SRA has said it intends to appeal: Carter Ruck v SRA: High Court decision means SRA cannot compel production of privileged documents.

The High Court has held that privilege was waived where a company's solicitors disclosed its (presumed) privileged material to its shareholders' solicitors in the course of a dispute, but not where privileged material was provided to a director appointed by the shareholders. The decision suggests that, even where a shareholders' agreement contains broad information-sharing rights, those rights will not readily extend to privileged material. Parties who intend such rights to capture privileged material should include express wording to that effect. Absent clear wording to the contrary, the decision suggests that an investor-appointed director should not disclose privileged material to their appointing investor unless it is clearly in the interests of the company and they have clear authorisation to do so: High Court decision underlines need for investor-appointed directors to think carefully before disclosing the company's privileged material.

DISCLOSURE

The Disclosure Review Working Group (DRWG) has published an update on its review of the disclosure regime under Practice Direction 57AD, confirming that it will seek to simplify the regime rather than recommending a return to Part 31 of the CPR. The accompanying summary of the stakeholder survey results make for sobering reading: only 19% of respondents considered the PD 57AD reforms a success, and only 13% supported retaining the regime in its current form. Cost was a particular concern, with 67% of respondents reporting that costs had increased under the regime. The DRWG hopes to consult on recommendations later this year or early next year: Disclosure Review Working Group publishes summary of stakeholder survey results.

The High Court has ordered the directors of a claimant company to provide their mobile phones to an independent third-party reviewer, enabling the claimant to carry out a disclosure exercise in respect of their instant messages. The decision confirms the general rule that a principal may require its agent to produce documents relating to the principal's affairs, regardless of format. It also confirms that an individual's Article 8 right to privacy does not automatically override disclosure or delivery up obligations: High Court orders party's directors to hand over mobile devices to an independent reviewer.

The High Court has held that it had no jurisdiction to permit an application for pre-action disclosure to be served on a respondent outside England and Wales in respect of documents held outside the jurisdiction. The decision suggests that pre-action and third party disclosure applications are unlikely to be permitted against a respondent abroad unless perhaps the documents sought are located within the jurisdiction (as they were in a previous case where the Court of Appeal permitted a third party disclosure application to be served outside the jurisdiction): Pre-action disclosure: no jurisdiction to hear application where respondent and documents both located abroad.

ADR

We have relaunched our ADR Practical Guides series and Improving Conflict Management Toolkit, offering in-house counsel and senior executives a complete framework for making better use of alternative dispute resolution. First launched 10 years ago, the resources have been updated to reflect key developments including the growing willingness of English courts to order parties to mediate, the expanded use of ADR in specialist areas such as employment and tax disputes, and increasing commercial pressure to resolve disputes efficiently. The accompanying Toolkit addresses how organisations can embed a systematic approach to ADR across their operations: Herbert Smith Freehills Kramer relaunches ADR Practical Guides and Conflict Management Toolkit.

JURISDICTION

A recent Court of Appeal decision illustrates the steps a defendant should take to protect its position pending an appeal against a decision rejecting its jurisdiction challenge – namely, seek an extension of time to file a further acknowledgement of service, so as to avoid submitting to the court's jurisdiction pending appeal as well as the risk of having default judgment entered against it. The decision also confirms that the court may require steps to be taken in the proceedings pending the appeal, including the filing of a defence, provided that the defendant’s jurisdictional position is protected: Jurisdiction appeals: Court of Appeal decision illustrates steps defendants should take to protect their position pending appeal.

The European Commission has launched a formal review of the recast Brussels Regulation (Regulation (EU) No 1215/2012), which governs jurisdiction and the recognition and enforcement of judgments in civil and commercial matters across the EU. As part of the review, the Commission has published a Call for Evidence and launched a public consultation questionnaire inviting stakeholders' views on the Regulation's application and how it might be improved in terms of legal clarity, procedural efficiency and alignment with digital developments and international rules. The consultation identifies three policy options: maintaining the status quo; targeted clarification and simplification; or more ambitious reform, including extending jurisdiction to non-EU defendants and introducing specific rules on collective redress. The review builds on the Commission's 2025 report on the Regulation's application, which concluded that, while the Regulation has been a highly successful instrument that generally functions well, several areas would benefit from clarification, simplification and modernisation: European Commission consults on possible reforms to the recast Brussels Regulation.

CONTRACT

The Supreme Court has confirmed that an express compensation clause entitling buyers to recover their "loss" on exercising a contractual termination right encompassed loss of bargain damages, even in the absence of a repudiatory breach. The court applied orthodox principles of contractual construction, holding that "loss" in the relevant clause naturally included loss of bargain damages. It distinguished Court of Appeal authority to the effect that a party exercising a contractual right of termination is not entitled to loss of bargain damages if there is no repudiatory breach, on the basis that it concerned a bare right of termination without an express compensation clause. It left open the question of whether that authority should be reconsidered for another more appropriate case: Supreme Court confirms award of loss of bargain damages following termination for non-repudiatory breach under express contractual provision.

The High Court has summarily dismissed a claim for breach of implied duties of good faith, holding that there was no gap in the relevant agreements requiring a term to be implied and that, in any event, the contracts were not relational in nature. Reviewing the case law on implied terms generally and implied good faith duties specifically, the court suggested that the key question is not whether a contract is "relational", but whether the parties' agreement has been fully set out and, if not, whether a term should be implied; the characteristics of a relational contract may assist as a sense check, but this is not an alternative to the orthodox, high bar for implying terms. The decision will reassure commercial parties that vague good faith requirements will not lightly be implied into long-term contracts. Parties wishing to impose good faith obligations should do so expressly, considering also whether to limit or exclude any implied duty and how to define compliance: High Court finds no prospect of establishing implied terms of good faith in framework agreements for network services.

The High Court has held that the word "unforeseeable" in a force majeure clause meant an event "of negligible probability" – that is, one so unlikely to occur that it was commercially justifiable for the parties to disregard it when contracting. The decision highlights that the meaning of such terms is not fixed and must be determined by reference to context. The decision also underscores the importance of compliance with contractual notice requirements when invoking force majeure. In this case, timely notice was held to be a condition precedent to reliance on the clause, reflecting the commercial importance of enabling parties to know where they stand: High Court clarifies meaning of “unforeseeable” in force majeure clause.

In a decision that has significant implications for the drafting and interpretation of shareholders' agreements, the High Court has held that a derivative claim – brought by a shareholder in the name of and on behalf of a company to address wrongdoing done to it – is an act of the shareholder rather than the company itself, and therefore falls outside restrictions in a shareholders' agreement on the company's ability to institute legal proceedings without majority consent: Derivative claims were not claims instituted by the company for the purposes of restrictions in a shareholders' agreement.

DIRECTORS’ DUTIES

The Supreme Court has held that a director who covertly pursued his preferred objective whilst concealing his conduct from fellow directors acted in breach of his fiduciary duty to promote the success of the company under s.172 of the Companies Act 2006. While the courts will respect directors' business judgment as to how best to promote a company's success, the decision confirms that there is an objective element to s.172. A director is not free to adopt any course of conduct – including dishonesty, deception or disloyalty – simply because they consider it to be in the company's best interests: Supreme Court confirms objective element to directors’ duty to act in good faith under Companies Act s.172.

The Court of Appeal has held that directors' misappropriation of client money did not cause the company's wider trading losses. The decision is a reminder that the court will closely examine the relationship between the specific wrongdoing and the loss claimed in order to determine whether the loss flows from and is attributable to the wrongdoing. The decision also confirms, applying well-established principles, that directors do not, without more, owe a duty to prevent their company from trading at a loss or while insolvent. Nor is causing a company to continue to trade in those circumstances itself unlawful: Court of Appeal finds directors' misappropriation of client money did not cause company's wider trading losses.

INSOLVENCY LITIGATION

The Supreme Court has held that an unrecognised and unregistrable foreign judgment may form the basis of a bankruptcy petition under s.267 of the Insolvency Act 1986, overturning the Court of Appeal's contrary ruling. Foreign judgment creditors holding judgments from jurisdictions outside the UK's statutory enforcement regimes (such as Russia, the US and China) may therefore issue a statutory demand and present a bankruptcy petition without first bringing a common law action on the judgment in England. In contrast, creditors holding judgments registrable under the Foreign Judgments (Reciprocal Enforcement) Act 1933 must still register before commencing bankruptcy proceedings: Supreme Court allows bankruptcy petition to be founded on unrecognised and unregistrable foreign judgment.

The High Court has held that administrators may enter into litigation funding arrangements under which the funder is repaid from litigation proceeds ahead of creditors holding "super-priority" moratorium debts, provided this accords with the purpose of the administration and the administrators' duties. The decision will provide comfort to administrators and litigation funders, particularly in administrations where litigation represents the primary source of meaningful recovery, and should encourage the pursuit of claims for the benefit of all creditors: High Court rules that administrators may be able to pay administration expenses and litigation funding ahead of “super priority” moratorium debts.

The High Court has dismissed a substantial claim by the joint liquidators of a registered society against Co-Operative Group Limited and related entities, finding that the withdrawal of share capital from a registered society did not constitute a transaction at an undervalue under section 238 of the Insolvency Act 1986. The court distinguished the return of withdrawable share capital in a co-operative structure from a company's payment of a dividend. It also addressed how to identify the relevant "transaction" where a restructuring involves multiple interlinked steps, rejecting attempts to isolate individual components: High Court finds withdrawal of co-operative share capital could not be a transaction at an undervalue.