Written by Hatty Sumption and Alexander George.
Parties experienced in international trade will be generally familiar with the sort of economic events that can increase market volatility and counterparty risk. Inevitably, such market shocks tend to drive a spike in litigation, often on an urgent basis, as parties take steps to preserve and enforce legal remedies. The economic impact of the coronavirus pandemic causing widespread disruption across the world has proved to be no exception, resulting in a sharp rise in disputes reaching – or in the process of reaching – the English Courts. However, what is proving to be unprecedented in modern times is the disruption caused to systems of justice at exactly the time that they are subject to increased demand from businesses across the globe.
With restrictions on our daily lives seeming likely to last for some time yet, one of the unique challenges posed by Covid-19 is whether it remains possible to turn to the Courts for effective redress.
New rules for a new normal
The good news is that the English Courts are adapting quickly to keep the wheels of justice turning.
Proceedings in the English courts are governed by the Civil Procedure Rules ("CPR"), and different specialist courts, such as the Queen's Bench Division of the High Court, and the Commercial Court, have their own specific practice which supplements the CPR.
In response to the disruption affecting parties to litigation caused by COVID-19, the Civil Procedure Rules Committee has published two new Practice Directions, 51Y and 51ZA (reviewed in a previous update here), which amend the CPR with the aim of providing greater flexibility in English Court proceedings. New protocols have also been published by the different specialist courts, including the Business and Property Courts and the Queen's Bench Division, under whose remit most commercial disputes fall.
What does commercial litigation in England look like during the coronavirus pandemic?
For the most part, the work of the English courts continues, and parties can still expect the English judiciary to consider the substance of a commercial dispute as rapidly as possible.
Court officials are working remotely and, in our experience, are processing applications quickly and efficiently. There are, however, some important procedural changes to be aware of.
Deadlines
Practice Direction 51ZA allows parties to agree extensions of up to 56 days (instead of the existing 28 days) for certain procedural deadlines. In practice, this means that litigants have the flexibility agree an extension of up to 56 days (i.e. 8 weeks) when faced with tasks that will now take longer (for example, drafting a witness statement over the telephone rather than by meeting your lawyer in person). If, however, the impact of the pandemic is minimal, the deadline can stay as it was.
Where the parties require an extension of more than 56 days, if that extension endangers a hearing date, or if the parties simply cannot agree, an application to the Court will be required.
In the recent case of Muncipio de Mariana v BHP Group Plc [2020] EWHC 928 (TCC), the Court was faced with an application for an extension which was less than 56 days but which could not be agreed. The extension requested would have required a hearing date to be vacated.
Practice Direction 51ZA explicitly requires the Court to take into account the impact of the pandemic, and the Muncipio de Mariana decision expands on this with extensive guidance on what the Court will take into account when considering an application for a time extension. Click here to read our update providing a more detailed review of this decision.
The decision establishes relevant principles to be considered which include:
- Confirmation that the objective is to keep to existing deadlines and where that is not realistically possible, to permit the minimum extension of time that is realistically practicable.
- The Court expects legal professionals and professional expert witnesses to make appropriate use of modern technology and to go further than they might otherwise be expected to go in normal circumstances.
- The Court should be willing to accept evidence and other material which is less polished and focused than would otherwise be required if that is necessary to achieve the timely production of the material, and be conscious that it is likely to take longer to achieve a particular result (such as the production of evidence) by remote working than by more traditional methods.
The Court should take account of the realities of the position, including the consequences of restrictions on movement and the limitations of working from home. It is clear from the Muncipio de Mariana decision that, while the new rules suggest that the English court clearly understands, and is sympathetic to, the acute difficulties faced by litigants in the new remote working environment, these rules are by no means a licence to delay difficult issues or to sit back and relax. The English courts will be rigorously objective in their assessment of whether the relief requested by a party is really necessary in the interests of justice – and that means justice to both parties not just the applicant. Litigants should also take note that success or failure will depend heavily on the quality of the explanations and evidence prepared in support of such applications.
Remote Hearings
The introduction of widespread remote hearings is one of the more significant changes to the procedures of the English Courts. The Protocol published by the Business and Property Courts acknowledges that "the objective is to undertake as many hearings as possible remotely so as to minimize the risk of transmission", and Practice Direction 51Y was designed to help achieve open and transparent justice while the majority of hearings no longer taking place in person, including guidance on how to allow public access to video and audio hearings.
The Muncipio de Mariana case was heard remotely – using Skype – and the Judge was also required to consider whether the hearing imperiled by the extension should go ahead in person or remotely. In doing so, he gave further helpful guidance on the principles to be applied when considering whether a hearing should go ahead in person:
- The Court must have regard to the importance of the continued administration of justice and remain aware that justice delayed is justice denied, even when the delay results from a response to the currently prevailing circumstances.
- The Court must recognise the extent to which the disputes in question can be resolved fairly by way of remote hearings.
- The Courts must be prepared to hold remote hearings in circumstances where such an approach may have been inconceivable prior to COVID-19.
- There should be a rigorous examination of the possibility of achieving a remote hearing consistent with justice before the Court reaches a decision that such a determination cannot be achieved.
- The question of whether there can be a fair resolution by way of remote hearing will be case-specific. A multiplicity of factors will come into play and the issue of whether live evidence and cross-examination will be necessary is likely to be important in many cases. There will be cases where the court cannot be satisfied that a fair resolution can be achieved by way of a remote hearing.
The judgment confirms that the Court will be required to undertake a detailed analysis of the causes of delays and the scope for them to be mitigated with technology when considering time extensions and the possible postponement of hearings. Although the particular challenges faced by parties and their advisors will be taken into account, it remains the case that the Court will be reluctant to allow undue delay and will only be prepared to jeopardise a hearing date as a last resort.
Guidance for the Business and Property Courts is that the parties should proactively be considering whether hearings are appropriate to be held remotely in coordination with the Judge well in advance, and it is hoped that whether a hearing is suitable to be dealt with remotely is something that, in most cases, can be agreed.
Electronic bundles
With judges – like most of us – working from home, when the Court has decided that a remote hearing is appropriate, traditional hard copy hearing bundles are no longer practical, and instead the Protocol published by the Business and Property Courts expects the parties to prepare an electronic bundle.
This presents a challenge for longer, more complex hearings which might previously have required extensive documents to be made available at the hearing. The guidance currently is to limit bundles to essential documents, because larger files are harder to send to the Court electronically, and navigate during the hearing. We expect this is something that might be relevant when considering whether a hearing is appropriate to be heard remotely, and might lead to increasing use of specialist e-bundle software even after restrictions are lifted.
Electronic Filing
Lastly, when it comes to filing documents, the Commercial Court has been ahead of the game for a number of years, and, thankfully, that is at least one thing that hasn't changed.
Electronic filing has been compulsory for legally represented parties using the Commercial Court (and some other specialist courts) since 2017, and documents can be filed with the Court, day and night, from the comfort of your own home (office), using their online ce-file system.
Summary
As we have seen, therefore, while the Courts are clearly committed to minimising disruption, litigation may look and feel a bit different. The key changes for litigants to consider are:
- So far as possible, it is business as usual. New claims can be issued in the Commercial Court electronically and are still being processed quickly and efficiently.
- Where a claim is already in proceedings, the parties can benefit from more flexibility to agree to extend procedural deadlines than was afforded under the pre-Covid regime.
- If an extension requires approval from the Court, the judge will be expected take into account the limitations imposed by coronavirus restrictions, but will not allow unnecessary delay, and parties can expect to be granted only the minimum extension possible.
- Increased use is being made of remote telephone and video hearings, and the logistics of remote hearings must be considered as far ahead as possible.
- Before ordering a remote hearing, litigants can expect the Court to consider rigorously whether the dispute can be fairly resolved by a remote hearing, but it appears that there will not be a bias in favour of postponing hearings until they can be held live.
- New technology can be expected to be used to make remote hearings run as smoothly as possible, including increased use of e-bundles.
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