In 2020 the courts in England and Wales have been dealing with two major challenges. What changes have been made to deal with these, and more importantly, are the changes here to stay? We look at how well some of the measures have worked and at their likely long-term impact.
For many years, English law and the English courts have been the choice of law and jurisdiction in a large percentage of international contracts in the energy sector and beyond. English law is "flexible, predictable and stable", the judicial system is "strong and reliable" and this fairness, efficiency and relative certainty continues to be a powerful attraction for parties. Furthermore, the English courts have shown themselves to work extremely well with both complex cases and those requiring expedition.
However, there is certainly no room for complacency and the courts in England and Wales have been facing two significant challenges in 2020. One is long-anticipated, although its precise form and timing were until recently unknown - indeed some crucially important details have yet to be ironed out. The other was a complete surprise and is proving even more disruptive. The challenges are, of course, Brexit and the COVID-19 pandemic.
The two events are very different in nature, but both have contributed to changes which should help to preserve England's reputation as the leading neutral forum for resolving international disputes. The question is: what has been done, and to what effect? Also, are the measures likely to remain in place once Brexit is complete and the pandemic is over?
We have grown accustomed to the idea that English jurisdiction agreements are respected in EU Member States and English court judgments are easily enforceable there. However, that expectation rested on our participation in reciprocal arrangements enshrined, first, in the Brussels Convention 1968 and then the Brussels I Regulation ('recast' in 2012). The UK still benefits from the Regulation, but only by virtue of the Withdrawal Agreement, which extends our membership of the EU, in effect, until the end of this year - the so-called transition or implementation period. When this ends on 31 December 2020, the UK will drop out of the EU's jurisdiction and enforcement regime, and litigants with EU-related disputes may have to fall back on national laws and procedures to enforce their rights there.
It has been the government's task to put satisfactory new arrangements in place. However, so far it has not managed to do so. True, the UK intends to re-join the Hague Convention on Choice of Court Agreements 2005, which establishes a global regime on both jurisdiction and judgments. The UK is in fact free to do that as an independent contracting state, without the agreement of the EU. However, for various reasons the 2005 Convention will be of little immediate benefit to litigants in the UK, so something more is needed. Ideally, the UK would enter into a bespoke arrangement with the EU more or less replicating the provisions of the Regulation, or more realistically, would re-join the Lugano Convention 2007, which currently extends a (less satisfactory) version of the Regulation's rules to three of the four EFTA member states. However, this cannot happen without the agreement of the EU, which may not be forthcoming, at least in time for a smooth transition into 2021. It is likely, then, that parties to exclusive English jurisdiction agreements will make more use of anti-suit injunctions to restrain proceedings in EU Member States, and be forced to rely on national laws to enforce English judgments there. Only proceedings commenced in the UK before 2021 will continue to benefit from EU jurisdiction and enforcement rules (regardless of the date on which judgment is given), and even that is not certain if the Withdrawal Agreement is going to be torn up, which is now a political possibility.
The array of specialist courts within the High Court have been designated the 'Business and Property Courts'. This makes the court system as a whole less confusing, and hopefully more attractive, to foreign or domestic litigants who are not familiar with it. Secondly, building on that, one of the more onerous elements of English litigation, disclosure, has been made more flexible and therefore cheaper to carry out.
The creation of the Business and Property Courts can easily be dismissed as a rebranding exercise, but presentation is important, and the changes in fact go deeper than that. They allow more large cases to be held in the regions, for example, and also a more efficient allocation of judges. The latter may not affect individual litigants directly, but it does improve the working of the courts generally, which ultimately benefits everyone who uses them.
The reform of English disclosure is more controversial. Arguably, disclosure is one of the great strengths of the English legal system: British 'fair play' in action. However, disclosure is expensive, of course, and intrusive too: enormous quantities of physical and electronic records have to be retained, assembled, and then sifted thoroughly for material of any relevance. After that, lists of documents have to be prepared and the documents themselves transmitted to the other side. Practitioners then have the (often enormous) task of reviewing the mass of material, as well as performing their own disclosure exercise. Advanced software can shoulder some of this burden, but by no means all.
To streamline this process and make it more focused on the issues in dispute, the Business and Property Courts are running a pilot scheme which involves different 'Models' of disclosure ranging from the traditional search-based kind, through to arbitration-style request-led disclosure, to parties simply disclosing the documents they rely on. The key point here is that different Models may be applied to different issues in dispute, once these have been identified. The pilot is therefore a hybrid of the traditional approach to disclosure and the approach in international arbitration, where there is no duty to make a general search for relevant documents. How well this mixed approach works, though, is difficult to say. Opinion is strongly divided.
The scheme has already been running for almost two years (it started in January 2019), but some basic issues are still being resolved. In particular, since parties are still under a duty to disclose all documents that are harmful as well as helpful to their case, this puts them in an awkward situation where they are not being ordered actually to look for such documents. In theory, their duty of disclosure extends to all relevant documents that are 'known', but despite official guidance on this, it is not clear exactly what the word means in this context. In any case, there is clearly an incentive here for unscrupulous parties not to admit to knowing about harmful documents, or at least not to address their minds to the question of whether or not they exist. This undermines trust in the new rules. To solve this dilemma, the courts have recently decided that 'reasonable and proportionate checks' must be made for harmful documents, regardless of whether a 'search' is ordered and, if so, on what terms. But this begs further questions: what amounts to a 'reasonably and proportionate check', and how can the duty to conduct such checks be policed?
Broader questions also need answering. How much less burdensome is disclosure now, and what overall savings have been achieved in terms of time and costs? Adopting a more flexible approach to disclosure also makes it more complex in certain ways - the new rules are certainly more bureaucratic than the old - so it is not a foregone conclusion that it will bring practical benefits beyond reducing the number of documents ultimately presented to the court. The pilot scheme was initially meant to run for two years only, but has now been extended to the end of 2021. No doubt more clarity on these points will be achieved before then and efforts are already being made to obtain feedback from court users and adjust the scheme rules accordingly.
At the same time as coping with organisational changes and implementing new forms of disclosure, the courts in England and Wales have been doing their best to keep the wheels of justice turning amid the COVID-19 pandemic. Clearly, it is difficult to do this where criminal and family cases are concerned. Here, remote (i.e. telephone or video) hearings are often unsatisfactory, given the nature of the proceedings and what is at stake. Juries pose a particular challenge when social distancing rules are in place.
In most commercial litigation, however, there is nothing to stop the courts operating more or less as normal, and indeed 85% of usual Business and Property Court business went ahead during the initial months of the pandemic, notwithstanding the disruption caused. Remote hearings require a great deal of organisation, and have to be conducted in a specific way. Opinion is divided about how satisfactory they are, in terms of advocacy but also in terms of the close cooperation that is needed within legal teams, for example, and the efficient use of documents. However, the courts have made it clear that these are hurdles to be overcome and the pandemic is not itself a reason for delaying court hearings. There may be problems with individual witnesses, particularly where these are shielding, but even then, parties should consider whether their testimony is really necessary for their case, and whether less witness evidence overall may be used. Even if a party is prejudiced by these practical limitations, the courts will consider whether other parties are prejudiced too, and will be satisfied if everyone is placed at a roughly equal disadvantage, particularly if they have roughly equivalent resources in preparing for the trial.
Certain court rules have been tweaked. In particular, the rules on agreeing time extensions with opponents, or obtaining them from the courts, have been relaxed considerably by the introduction of a new Practice Direction (51ZA), extending time periods and encouraging judges to take the pandemic into account (within limits) when considering an application. Particularly welcome is the fact that it allows applications to be dealt with on paper, without the need for a hearing, remote or otherwise.
The long view
The question raised by all these changes is whether English litigation would benefit if they were to remain in place indefinitely. The new disclosure rules, although officially a pilot scheme, appear set to continue, albeit in slightly modified form, partly because of the huge amount of time and effort already invested in them, but also because there is apparently no way of knowing for sure whether they save or increase costs overall. So long as there is a general perception that the new rules are workable and result in more focused disclosure, which is almost certain, they will be deemed a success.
It is less clear whether remote hearings and purely electronic working will be embraced by lawyers and the judiciary in the longer term. Some see them as a temporary expediency, compromising advocacy and rarely appropriate in normal times; others argue that they are the future - that an existing trend has been accelerated by the pandemic and we are only doing now what we would have been doing anyway in ten or twenty years' time. This is certainly the view of Sir Geoffrey Vos, Chancellor of the High Court. In a speech given in June, less than three months after lockdown started in the UK, Sir Geoffrey said that the new arrangements should, by and large, become the 'new normal', since they make justice quicker and more cost-effective and allow greater access to justice. For example, it has forced all judges and lawyers to use digital bundles of documents, rather than the traditional hard copy kind. Sir Geoffrey himself finds that he "can hear the argument and write judgments in even the most complex of cases without looking at a single sheet of paper." One thing is certain – many forests have been saved.
The latest edition of the White Book (the official commentary on the English Civil Procedure Rules) explains that, while emergency "legislation and guidance is expected to remain in place for no longer than the duration of the coronavirus pandemic, it is to be anticipated that the increased use of technology, and particularly remote hearings, will be adopted more broadly…" This will become much easier when HMCTS's Reform Programme has been rolled out, providing an end-to-end digital case management system for criminal, family and civil cases, including those in the Business and Property Courts.
It appears, then, that there is no turning back. Procedural reforms, whether intended to be temporary or not, tend to become permanent within a remarkably short space of time, and the reforms triggered by Brexit and the pandemic are particularly attractive, given the time and costs apparently saved.
After all, it is not just these two events that are bearing down on the English court system. It also faces strong competition from new international commercial courts set up in Singapore, China and elsewhere, as well as from international arbitration. It is no coincidence that the London Court of International Arbitration has just published new rules (effective from 1 October 2020) emphasising the primacy of electronic communication, facilitating remote hearings, and introducing a form of summary judgment ('early determination') that was once the preserve of the courts.
With such fierce global competition for commercial disputes, the changes outlined above are welcome and should ensure that England retains its place as the pre-eminent choice of law and jurisdiction in international disputes.