The Practical Guide to Commercial Disputes: A Sequential Overview
Shift in Commercial Litigation Landscape in the UK: Increase in Class Actions and Decrease in Freestanding Claims
Commercial litigation practices in the UK are undergoing a transformation, as the prevalence of high-value class actions rises, while freestanding commercial claims decrease.
In the realm of commercial legal disputes, the UK serves as a significant hub, with London continuing to be a leading center for resolving conflicts.
During the pre-action stage, parties are advised to adhere to pre-action protocols, which aim to settle disputes before initiating legal action. These protocols emphasize providing information before the settlement and encouraging parties to consider out-of-court settlements. Essential components of this stage include the Letter of Claim, Response, and alternative dispute resolution (ADR) approaches.
In the event that pre-action negotiations prove fruitless, claimants may proceed with formal proceedings. This process entails submitting a claim form at the appropriate court, determined by the value and complexity of the claim. Upon receiving the claim, the defendant must acknowledge service and indicate whether they intend to defend or not.
The parties subsequently exchange comprehensive documents detailing their respective claims and defenses, such as Particulars of Claim, Defence, and Reply. Following this exchange, the court manages the efficiency of active cases through Case Management Conferences (CMC), during which important milestones like disclosure, witness statements, and expert evidence may be scheduled.
Both parties provide relevant documents through the disclosure process, which is increasingly shifting toward electronic management due to technological advancements. Witness statements and expert evidence are then presented and cross-examined during the trial, which marks the final stage of the litigation process.
Various remedies may potentially result from the trial, such as damages, injunctions, or specific performance orders. In 2024, the number of commercial disputes in England's High Court decreased to 3,380 claims, the lowest in six years, due in part to increased scrutiny of litigation funding.
If the losing party does not comply with the judgement, the winning party may enforce the judgement by engaging bailiffs, imposing charging orders, or restricting the company's access to cash held by others. During the final quarter of 2024, there was a 5% increase in enforcement-related order applications compared to the same period in 2023.
The commercial litigation landscape's transformation can be attributed to numerous factors. Notably, the recent decline in High Court commercial litigation, the rise of ADR, and the impact of litigation funding constraints following the Supreme Court's ruling in Paccar Inc v Road Haulage Association Ltd (2023) have all contributed to this shift.
Businesses need to understand the influence of law, changes in legislation, and alternative resolution mechanisms on how disputes are managed and controlled within this evolving landscape. Seeking guidance from experienced legal practitioners remains crucial during these transformative times.
In this evolving commercial litigation landscape in the UK, an increase in class actions financing is noticeable, as businesses grapple with high-value disputes collectively. Additionally, the realm of business finance is affected as the decrease in freestanding commercial claims potentially results in reduced litigation costs for UK companies.
