December 3, 2018

Could The New Disclosure Pilot Scheme Help Save English Courts From A Brexit Slump?

Will the new Disclosure Pilot Scheme show London’s courts are still the best place for international litigants to resolve their disputes?

With the first stage of Brexit negotiations entering their final stages before the final exit agreement is presented to Parliament to vote on, the UK is understandably on tenterhooks. With so much talk around setting policies for the trade of goods, few outside the profession will appreciate the value of the legal service industry (almost £4 billion per annum) and how vulnerable this sector of the economy is.

London has traditionally been a hub for cross-border commercial litigation for several reasons. The political situation is stable, the separation of powers between the legislature, executive and judiciary are strictly enforced, the commercial judiciary is highly experienced, and the disclosure regime is highly transparent.

In his article: Disclosure: take 2, President of LSLA, Julian Acratopulo comments that litigants from across the globe are drawn to the English courts “in part thanks to our transparent approach to disclosure, which requires each side to produce information both helpful and harmful to its case”. However, he and other commentators have noted that the proliferation of electronic disclosure has resulted in many parts of the Civil procedure Rules (CPR) being ineffective, inflexible, and outmoded. Much like the GDPR and Data Protection Act 2018 did earlier this year, the disclosure regime desperately needs updating to bring it into line with the digital revolution we have experienced in the last 10 years and the AI/machine learning advancements which are rapidly changing our world.

Two-thirds of cases argued in London’s Commercial Court involve international litigants. The Recast Brussels Regulation[1], which currently governs jurisdiction and the mutual recognition of judgments, will not apply between the UK and EU after Brexit. Proposals by the government to agree a successor regime have been announced by the British government, replicating the Recast Brussels Regulation. If this is not achieved, the UK will accede to the 2005 Hague Convention on Choice of Court Agreements.

[1] Recast Brussels Regulation (EU) No 1215/2012 of the European Parliament and of the Council of 12 December 2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (Brussels Recast Regulation).

However, similar to the situation in the finance industry, enterprising EU nations are eying up opportunities to offer alternatives should international commercial litigants start turning their backs on London. For example, from March 2018, the international division of the Paris Commercial Court (International Chamber of the Paris Commercial Court) and the Paris Court of Appeal (International Chamber of the Paris Court of Appeal) have been open to hearing international business law disputes. Judges will be bilingual and familiar with common law. The Netherlands is launching the Netherlands Commercial Court in early 2019, which will specialise in complex international commercial cases. And Ireland’s Bar and solicitors’ bodies are in talks to see how they can sell their legal system to international litigants. They have a particular advantage, given that Ireland operates under a common law system, is an English-speaking country, and has a well-established commercial court, capable of fast-tracking cases when required.

The Disclosure Pilot Scheme, which will launch in the Business and Property Courts in January 2019, will introduce greater flexibility to the English court system, and help ensure the Courts remain responsive to the complexities of the individual, multi-jurisdictional cases. An original version of the rules was published in November 2017. The consultation then followed.

“The Disclosure Pilot Scheme provides the opportunity for London’s commercial courts to show international litigants that they remain alive to the challenges and legal requirements of the business world”.

Amendments to the new disclosure rules

Since the publication of our last blog on the new disclosure rules (linked above), several amendments have been made in light of the feedback received during the consultation process. The main amendments are:

Known adverse documents

The draft of the rules, published in November 2017, prior to the consultation, contained an express duty to disclose documents a party “knows to be or to have been in its control and adverse to its case” (unless privileged), regardless of any order for disclosure. This was noted as a requirement which could cause potential problems, especially for large organisations where it would be easy for someone to forget about a particular document a while after creation.

The revised disclosure rules clarify this duty, stating document is adverse if it “contradicts or materially damages” the disclosing party’s contention or version of events, or supports that of an opposing party, on an issue in dispute. It goes on to say that the ‘known adverse document’ rule only applies to documents a party is actually aware of, without undertaking any further search for documents. For a company or organisation, the relevant awareness is that of “any person with accountability or responsibility … for the events or the circumstances which are the subject of the case, or for the conduct of the proceedings”.

Privilege

The draft rules stated that where a party to litigation had a duty or a right to withhold documents on the grounds of privilege, the document must be described and an explanation of “reasonable precision” must be given as to why the duty or right is being exercised. This left some concerned that there would be a move away from the current position of describing privileged documents in a non-specific way.

The post-consultation version of the rules removes reference to “reasonable precision” and clarifies that privileged documents can be treated as a class.

Updating disclosure laws will keep UK courts competitive

Julian Acratopulo states that for the pilot scheme to be successful, lawyers will need to embrace the changes and learn to look at disclosure differently. As the UK economy adjusts to life outside the EU over the coming years, law, like all other sectors, will need to adapt and prioritise flexibility in order to remain competitive. The Disclosure Pilot Scheme provides the opportunity for London’s commercial courts to show international litigants that they remain alive to the challenges and legal requirements of the business world.

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