Dispute Resolution Manual 2024 PDF

DISPUTE RESOLUTION July 2024 Reproduced by the College of Legal Practice Ltd (UK ID 11734212). © Copyright 2024 (used under licence from the copyright owners College of Law Ltd (ACN 138 459 015)). This publication is copyright. Except as permitted under the Copyright, Designs and Patents Act 1988, no part of this publication may be reproduced by any process, electronic or otherwise, without the specific written permission of the copyright owner. Neither may information be stored electronically in any form whatsoever without such permission. Disclaimer This manual has been prepared as a practice guide for students at the College of Legal Practice. It is not intended to be a comprehensive statement of the law or practice and should not be relied on as such. If advice on the law or practice is required or is required to be given, professional advice should be sought. Printed in the United Kingdom. Dispute Resolution Table of Contents 8.1 OPTIONS FOR DISPUTE RESOLUTION........................................................................ 7 Relevant SRA SQE Assessment specification..................................................................... 7 8.1.1 Introduction................................................................................................................. 7 8.1.2 Litigation..................................................................................................................... 7 8.1.3 Arbitration................................................................................................................... 8 8.1.4 Mediation.................................................................................................................. 13 8.1.5 Other examples of ADR............................................................................................ 15 8.1.6 Professional conduct issues..................................................................................... 15 8.1.7 Summary of key principles........................................................................................ 16 8.2 BUILDING A CLAIM....................................................................................................... 17 Relevant SRA SQE Assessment specification................................................................... 17 8.2.1 Introduction............................................................................................................... 17 8.2.2 Case analysis........................................................................................................... 17 8.2.3 Other important preliminary considerations............................................................... 28 8.2.4 Summary of key principles........................................................................................ 30 8.3 CROSS-BORDER CLAIMS............................................................................................ 32 Relevant SRA SQE Assessment specification................................................................... 32 8.3.1 Introduction............................................................................................................... 32 8.3.2 Overview.................................................................................................................. 32 8.3.3 Impact of Brexit........................................................................................................ 33 8.3.4 Applicable law.......................................................................................................... 33 8.3.5 Jurisdiction............................................................................................................... 42 8.3.6 Summary of key principles........................................................................................ 48 8.4 PRE-ACTION CONDUCT.............................................................................................. 50 Relevant SRA SQE assessment specification................................................................... 50 8.4.1 Introduction............................................................................................................... 50 8.4.2 Pre-action conduct and the court.............................................................................. 50 8.4.3 PDPAC..................................................................................................................... 51 8.4.4 Pre-action protocols.................................................................................................. 54 8.4.5 Consequences of failure to follow the PDPAC.......................................................... 57 8.4.6 Summary of key principles........................................................................................ 58 8.5 COMMENCING COURT PROCEEDINGS..................................................................... 60 Relevant SRA SQE assessment specification................................................................... 60 8.5.1 Introduction............................................................................................................... 60 8.5.2 Deciding to issue a claim.......................................................................................... 60 College of Legal Practice Ltd (UK ID 11734212) © Copyright 2024 (used under licence from the copyright owner) 2 THE COLLEGE OF LEGAL PRACTICE SOLICITORS LEGAL KNOWLEDGE 8.5.3 Choice of court......................................................................................................... 60 8.5.4 Commencing proceedings........................................................................................ 67 Money Claim Online (MCO) (Practice Direction 7C)............................................................. 69 8.5.5 Adding, removing or substituting parties................................................................... 71 8.5.6 Summary of key principles........................................................................................ 75 8.6 SERVICE OF PROCEEDINGS...................................................................................... 76 Relevant SRA SQE assessment specification................................................................... 76 8.6.1 Introduction............................................................................................................... 76 8.6.2 Service of the claim form within the jurisdiction......................................................... 76 8.6.3 Permitted methods of service................................................................................... 76 8.6.4 Place of service........................................................................................................ 78 8.6.5 Deemed date of service – claim form........................................................................ 82 8.6.6 Time limit for serving a claim.................................................................................... 84 8.6.7 Service of the claim form outside the jurisdiction...................................................... 85 8.6.8 Service by an alternative method or at an alternative place: CPR r 6.15................... 89 8.6.9 Dispensing with service: CPR r 6.16......................................................................... 90 8.6.10 Extending the period for service: CPR r 7.6............................................................ 90 8.6.11 Service of the particulars of claim........................................................................... 91 8.6.12 Response pack....................................................................................................... 93 8.6.13 Initial disclosure...................................................................................................... 93 8.6.14 Certificate of service: CPR r 6.17............................................................................ 93 8.6.15 Summary of key principles...................................................................................... 94 8.7 RESPONDING TO A CLAIM.......................................................................................... 95 Relevant SRA SQE Assessment specification................................................................... 95 8.7.1 Introduction............................................................................................................... 95 8.7.2 Key issues for a defendant to consider when served with a claim............................. 95 8.7.3 Time limits for responding to a claim........................................................................ 96 8.7.4 Acknowledging service............................................................................................. 99 8.7.5 Disputing the court’s jurisdiction............................................................................... 99 8.7.6 Admitting a claim.................................................................................................... 101 8.7.7 Filing a defence...................................................................................................... 104 8.7.8 Counterclaims and CPR Pt 20 claims..................................................................... 104 8.7.9 Judgment in default................................................................................................ 104 8.7.10 Summary of key principles.................................................................................... 107 8.8 STATEMENTS OF CASE............................................................................................. 108 Relevant SRA SQE Assessment specification................................................................. 108 8.8.1 Introduction............................................................................................................. 108 College of Legal Practice Ltd (UK ID 11734212) © Copyright 2024 (used under licence from the copyright owner) 3 Dispute Resolution 8.8.2 Statements of case................................................................................................. 108 8.8.3 Content of statements of case................................................................................ 109 8.8.4 Summary of key principles...................................................................................... 127 8.9 INTERIM APPLICATIONS............................................................................................ 129 Relevant SRA SQE Assessment specification................................................................. 129 8.9.1 Introduction............................................................................................................. 129 8.9.2 Interim applications (general)................................................................................. 129 8.9.3 Specific interim applications................................................................................... 135 8.9.4 Summary of key principles...................................................................................... 145 8.10 CASE MANAGEMENT............................................................................................... 147 Relevant SRA SQE Assessment specification................................................................. 147 8.10.1 Introduction........................................................................................................... 147 8.10.2 Overriding objective.............................................................................................. 147 8.10.3 Court’s general case management powers........................................................... 148 8.10.4 Allocation.............................................................................................................. 149 8.10.5 Costs and case management conference............................................................. 152 8.10.6 Typical case management directions.................................................................... 156 8.10.7 Non-compliance with court orders or rules............................................................ 158 8.10.8 Summary of key principles.................................................................................... 160 8.11 EVIDENCE................................................................................................................. 162 Relevant SRA SQE Assessment specification................................................................. 162 8.11.1 Introduction........................................................................................................... 162 8.11.2 Admissible evidence............................................................................................. 162 8.11.3 Burden and standard of proof............................................................................... 165 8.11.4 Evidence from witnesses of fact........................................................................... 166 8.11.5 Expert evidence: CPR Pt 35................................................................................. 171 8.11.6 Summary of key principles.................................................................................... 175 8.12 DISCLOSURE (AN OVERVIEW)................................................................................ 177 Relevant SRA SQE Assessment specification................................................................. 177 8.12.1 Introduction........................................................................................................... 177 8.12.2 Disclosure and inspection (CPR Pt 31)................................................................. 177 8.12.3 Orders for disclosure............................................................................................ 178 8.12.4 Duty of search...................................................................................................... 180 8.12.6 Form of disclosure................................................................................................ 182 8.12.7 Inspection: CPR r 31.15........................................................................................ 184 8.12.8 Continuing duty of disclosure: CPR r 31.11.......................................................... 186 8.12.9 Subsequent use of disclosed material.................................................................. 186 College of Legal Practice Ltd (UK ID 11734212) © Copyright 2024 (used under licence from the copyright owner) 4 THE COLLEGE OF LEGAL PRACTICE SOLICITORS LEGAL KNOWLEDGE 8.12.10 Challenging the authenticity of documents.......................................................... 187 8.12.11 Specific disclosure: CPR r 31.12........................................................................ 187 8.12.12 Documents referred to in statements of case and other documents: CPR r 31.14187 8.12.13 Pre-action disclosure: CPR r 31.16..................................................................... 188 8.12.14 Non-party disclosure: CPR r 31.17..................................................................... 189 8.12.15 Norwich Pharmacal orders................................................................................. 190 8.12.16 Witness summons: CPR Pt 34............................................................................ 191 8.12.17 Disclosure pursuant to a freezing order.............................................................. 191 8.12.18 Summary of key principles.................................................................................. 192 8.13 ELECTRONIC DISCLOSURE.................................................................................... 193 Relevant SRA SQE Assessment specification................................................................. 193 8.13.1 Introduction........................................................................................................... 193 8.13.2 Electronic documents........................................................................................... 193 8.13.3 Management of electronic documents.................................................................. 193 8.13.4 Searches of electronic documents........................................................................ 196 8.13.5 Disclosure review................................................................................................. 198 8.13.6 List of documents................................................................................................. 199 8.13.7 Production of electronic documents...................................................................... 199 8.13.8 Summary of key principles.................................................................................... 200 8.14 PRIVILEGE................................................................................................................ 201 Relevant SRA SQE Assessment specification................................................................. 201 8.14.1 Introduction........................................................................................................... 201 8.14.2 Legal professional privilege.................................................................................. 201 8.14.3 Common interest privilege.................................................................................... 203 8.14.4 Without prejudice communications....................................................................... 204 8.14.5 Privilege and the disclosure process..................................................................... 205 8.14.6 Waiver of privilege................................................................................................ 205 8.14.7 Summary of key principles.................................................................................... 206 8.15 TRIAL......................................................................................................................... 208 Relevant SRA SQE Assessment specification................................................................. 208 8.15.1 Introduction........................................................................................................... 208 8.15.2 Preparation for trial............................................................................................... 208 8.15.3 Reluctant witnesses.............................................................................................. 214 8.15.4 Trial...................................................................................................................... 215 8.15.5 The nature and effect of judgment........................................................................ 218 8.15.6 Summary of key principles.................................................................................... 220 8.16 COSTS....................................................................................................................... 222 College of Legal Practice Ltd (UK ID 11734212) © Copyright 2024 (used under licence from the copyright owner) 5 Dispute Resolution Relevant SRA SQE Assessment specification................................................................. 222 8.16.1 Introduction........................................................................................................... 222 8.16.2 Court’s discretion as to costs: CPR r 44.2(1)........................................................ 222 8.16.3 Inter-party costs orders......................................................................................... 223 8.16.4 Fixed costs: CPR Pt 45......................................................................................... 224 8.16.5 Assessed costs.................................................................................................... 226 8.16.6 Consequences of CPR Pt 36 offers...................................................................... 229 8.16.7 Non-party costs.................................................................................................... 231 8.16.9 Summary of key principles.................................................................................... 232 8.17 DISCONTINUANCE AND SETTLEMENT.................................................................. 234 Relevant SRA SQE Assessment specification................................................................. 234 8.17.1 Introduction........................................................................................................... 234 8.17.2 Discontinuing a claim: CPR Pt 38......................................................................... 234 8.17.3 Offers of settlement.............................................................................................. 235 8.17.4 Settlement............................................................................................................ 238 8.17.5 Summary of key principles.................................................................................... 243 8.18 APPEALS AND ENFORCEMENT.............................................................................. 244 Relevant SRA SQE Assessment specification................................................................. 244 8.18.1 Introduction........................................................................................................... 244 8.18.2 Appeals................................................................................................................ 244 8.18.3 Enforcement......................................................................................................... 250 8.18.4 Summary of key principles.................................................................................... 257 College of Legal Practice Ltd (UK ID 11734212) © Copyright 2024 (used under licence from the copyright owner) 6 THE COLLEGE OF LEGAL PRACTICE SOLICITORS LEGAL KNOWLEDGE 8.1 OPTIONS FOR DISPUTE RESOLUTION Relevant SRA SQE Assessment specification Functioning Legal Knowledge: Different options for dispute resolution: The characteristics of arbitration, mediation and litigation which make them an appropriate mechanism to resolve a dispute. 8.1.1 Introduction This chapter will introduce you to fundamental principles that will underpin your knowledge of the options for dispute resolution. This chapter will explain the key characteristics of litigation, arbitration and alternative dispute resolution (ADR) processes such as mediation. It will also help you to understand relevant factors to consider when advising a client on which dispute resolution options might be appropriate in their specific circumstances. 8.1.2 Litigation Litigation is the formal process used to resolve civil disputes in the courts of England and Wales. The process begins when the party making the claim (the claimant) files a claim against one or more parties (the defendant(s)), seeking a court-ordered remedy. Civil litigation has several core standard steps: formal statements of case from each party disclosure of relevant documents witness statements, and trial before a judge. These steps are complemented by further elements commonly involved in litigation, such as preparing expert reports and filing interim applications. Civil litigation in England and Wales is governed by the Civil Procedure Rules (the CPR). The CPR are a detailed set of rules and guidance for the conduct of civil litigation in the courts. The CPR are regularly updated and expanded by the Civil Procedure Rule Committee. 8.1.2.1 Advantages of litigation There are several advantages to consider when advising your client about litigation: the courts have extensive powers to issue and enforce orders, for example, orders to freeze assets or force the transfer of property the parties can apply for orders to add connected individuals or businesses as additional parties to the proceedings, and courts have resources and experience for dealing with very large and complex cases. 8.1.2.2 Disadvantages of litigation The disadvantages of litigation are: College of Legal Practice Ltd (UK ID 11734212) © Copyright 2024 (used under licence from the copyright owner) 7 Dispute Resolution the parties cannot choose the judge – they are appointed by the court the appointed judge may not have experience in the specific subject matter of the dispute court proceedings are not private – they are recorded as a matter of public record. Parties may not wish to litigate where sensitive matters are involved, or their businesses or reputations could be negatively impacted the progression of cases through to trial and judgment is rarely quick legal costs in many cases come amount to hundreds of thousands, even millions, of pounds, and once proceedings have commenced, the parties have little or no control over the course of events. 8.1.3 Arbitration Like litigation, arbitration is a formal process that leads to a legally binding outcome. However, unlike litigation, arbitration is private. Instead of a judge, there is one or more arbitrator(s) appointed by the parties themselves or under a mechanism they have agreed. Instead of a judgment, there is an arbitration award. Generally, both parties to a dispute must agree to refer the dispute to arbitration, unless it is specifically provided for in a clause in any contract between them. A binding arbitration clause gives the parties no choice but to go to arbitration. The Arbitration Act 1996 (Arbitration Act) is the key piece of legislation supporting arbitrations in England and Wales. It sets out the basis upon which the English and Welsh courts recognise the validity of arbitrations, support the conduct of arbitrations and enforce arbitration awards. In many ways, arbitration is considered alternative dispute resolution (ADR) in name only. In reality, it is more like private litigation and can take just as long and cost just as much as litigation. An arbitrator’s decision is binding in the same way that a judge’s decision is binding. However, arbitration does allow for greater flexibility. 8.1.3.1 Advantages of arbitration Some important advantages of arbitration are: the process is private the parties may be able to choose the arbitrator(s), depending on the wording of any arbitration clause arbitrators are often experts in the relevant field or profession there may be some flexibility in terms of choosing the procedure – so, for example, the parties could agree to set a limit to appeals, and the issues, including technical and legal issues, will be examined more thoroughly than in a mediation. 8.1.3.2 Disadvantages of arbitration The disadvantages of arbitration include: an arbitrator’s powers are not as wide as those of the court – for example, an arbitrator cannot grant freezing orders arbitration will not necessarily preserve a commercial relationship between the parties any more than litigation will – the parties will still undertake a contentious process, leading to one party winning and the other losing College of Legal Practice Ltd (UK ID 11734212) © Copyright 2024 (used under licence from the copyright owner) 8 THE COLLEGE OF LEGAL PRACTICE SOLICITORS LEGAL KNOWLEDGE as there are usually detailed arbitration rules and processes to follow, the process can be as lengthy as litigation it can be more expensive than litigation, as arbitrators and venues must be paid for privately, unlike judges and courts, and third parties cannot be added as parties to the proceedings at a later stage, as they can in litigation. 8.1.3.3 Arbitration clauses Any arbitration clause included in a contract must comply with Arbitration Act ss 5 and 6. It must: be in writing or evidenced in writing: s 5, and refer present and future “disputes” to arbitration: s 6. The arbitration clause should not refer to “claims” or “cases” as this may lead to interpretative issues. The Arbitration Act specifically uses the term “disputes”, using different terminology might require the courts to interpret what a “claim” is and decide whether it falls within the scope of the arbitration clause. See s 82(1) for the definition of “disputes”. There is a presumption that the arbitration clause is severed from the rest of the contract – so if there is a dispute over the validity of a contract itself, this does not necessarily affect the validity of the arbitration clause. The “seat” of the arbitration is not necessarily where it sits. The seat of an arbitration is the place the parties have agreed is its legal location. However, it is not necessarily where hearings take place. The seat determines the legal jurisdiction that has authority over the arbitration procedure. The seat can become relevant if there are issues that require an outside ruling by local courts. These issues can include disputes about the scope of the arbitration agreement itself (and therefore the scope of the arbitrator’s authority), interim orders to support the arbitration process and whether there is a legal basis to challenge an arbitration award. The seat is often chosen as a neutral jurisdiction, especially important in international disputes where local laws and courts may not be perceived as robust and impartial. The law that governs the substance of the dispute is often different to the law of the seat. For example, the governing law of an agreement between British and American counterparties might be English law but their designated seat for an arbitration could be Switzerland. 8.1.3.4 Enforcing an arbitration clause If a claimant commences court proceedings but they have previously agreed with the defendant to submit their disputes to arbitration instead, the defendant can take the following steps to dispute the court’s jurisdiction to handle the dispute. Step 1 – There must be a relevant, valid and binding arbitration clause – check the clause meets the requirements of Arbitration Act ss 5 and 6. Step 2 – Within 14 days of deemed service of the particulars of claim the defendant must file an acknowledgement of service to state that they will contest the jurisdiction: CPR r 11. Step 3 – The defendant must file an application notice (CPR r 62.8) seeking a stay of legal proceedings under the Arbitration Act s 9(1). This must be served on all parties to the proceedings who have provided an address for service. The application notice should be College of Legal Practice Ltd (UK ID 11734212) © Copyright 2024 (used under licence from the copyright owner) 9 Dispute Resolution filed with evidence and a draft order. Evidence includes the contract containing the valid arbitration clause and a witness statement explaining that the dispute falls within the scope of an arbitration clause. 8.1.3.5 Procedure for arbitrations The provisions of the Arbitration Act (as listed in Sch 1) are mandatory: s 4(1). These provisions are set out below. All other provisions are optional, which means that parties can agree their own, but if they do not agree specific provisions then all the non-mandatory provisions of the Arbitration Act will apply: s 4(2). Commencement – A party must provide the other side with notice and details of the dispute (in compliance with any arbitration clause). Appoint arbitrator – The process for appointing the arbitrator may be set out in the contract. If not, it will be governed by Arbitration Act ss 16–18. Preliminary hearing and directions – The purpose is to: o explain the rules/procedures o set out the timetable, and o deal with the approach to disclosure and evidence. The arbitrator/s (also known as “the tribunal”) is entitled to decide on all procedural and evidential matters unless the parties have agreed otherwise: s 34(1). This includes matters such as (s 34(2)): o locations and dates of hearings o the form and timing of any written statements o the extent of any disclosure o whether (and how) parties should be questioned o whether to apply the strict rules of evidence, and o whether there should be oral or only written evidence/submissions. The tribunal is also free to set timeframes (and extensions of time) for compliance with its directions: s 34(3). Appointment of experts – Unless the parties agree otherwise, the tribunal may appoint experts and/or legal advisors to report to it, and assessors to assist on technical matters: s 37(1)(a). The parties will be given the opportunity to comment on any such opinions or advice: s 37(1)(b). Further directions – Unless the parties agree otherwise, the tribunal will have various powers (set out in s 38 and elsewhere), which include: o ordering the claimant to provide security for costs (s 38(3)) o giving directions in relation to any property which is the subject of the proceedings – for example, ordering inspection, preservation, detention, observation or sampling, and o giving further directions as to any evidential or procedural matter. The parties themselves are under a general duty to do "all things necessary for the proper and expeditious conduct of the arbitral proceedings": s 40(1). The duty includes complying without delay with the tribunal's directions and orders and, if necessary, approaching a court without delay to determine any relevant preliminary question of jurisdiction or law: s 40(2). College of Legal Practice Ltd (UK ID 11734212) © Copyright 2024 (used under licence from the copyright owner) 10 THE COLLEGE OF LEGAL PRACTICE SOLICITORS LEGAL KNOWLEDGE Sanctions for non-compliance with directions experts – Unless the parties agree otherwise, if a party fails to comply with an order of the tribunal, the tribunal may make an award which dismisses that party’s case or continue proceedings without that party's involvement: s 41(3). The tribunal may make peremptory orders that would result in sanctions for further failure to comply: s 41(5)–(7). Peremptory orders may be enforced by application to the court: s 42. Applications to court experts – The court may need to be involved. Unless the parties agree otherwise, the court may make the same kinds of orders in arbitral proceedings as it could make in its own proceedings (s 44(1)), on the application of a party in the arbitration (s 44(3)–(4)), but only to the extent that the tribunal’s powers are not wide enough or the tribunal is unable to act effectively (s 44(5)). Court orders could cover (s 44(2)): o taking witness evidence o preserving evidence o inspections of property o selling any goods which are subject of the proceedings o granting interim injunctions, and o appointing a receiver. Also, the court may, unless the parties agree otherwise, determine any question of law arising in the arbitral proceedings, on the application of a party: s 45(1)–(2). Hearing – This is usually held in private. It can be adversarial in nature (that is, each party conveying their arguments – like court proceedings) or inquisitorial (that is, the tribunal takes a more active role in questioning the parties and investigating matters). Awards and costs – If the parties reach a settlement during arbitral proceedings, they may request the tribunal to terminate proceedings and record the settlement in the form of an award: s 51(2). Unless the parties agree otherwise, the tribunal may make one or more awards on all or part of the issues: s 47(2). The parties are free to agree the remedies which the tribunal may exercise: s 48(1). A tribunal may: s 48(5): o award payment of a sum of money o order a party to do (or refrain from doing) something o make an order for specific performance (other than a contract in relation in land), and o rectify or set aside a deed or other document. Unless the parties agree otherwise, they will be informed of the award by service of copies of it on them: s 55(2). The tribunal is entitled to withhold delivery of an award pending the payment of its fees and expenses: s 56(1). Awards are final and binding on the parties (s 58(1)), although the arbitral award may be challenged under ss 67–71. Awards can be enforced by an application to court under s 66. Unless the parties agree otherwise, the tribunal may direct that the recoverable costs of the arbitration (or any part of it) be limited to a specified amount: s 65(1). Once a settlement is reached, the parties should inform the court (if relevant). The agreement can then be formalised into a consent/Tomlin order. 8.1.3.6 How to challenge or appeal an arbitrator’s decision There are three possible grounds of challenge or appeal under the Arbitration Act: a challenge to the substantive jurisdiction: s 67 College of Legal Practice Ltd (UK ID 11734212) © Copyright 2024 (used under licence from the copyright owner) 11 Dispute Resolution serious irregularity – the applicant must be able to satisfy the court that there has been an irregularity in the proceedings which has caused, or will cause, them substantial injustice: s 68, and appeal on a point of law – unlike the above two grounds, which are mandatory, this provision is non-mandatory. The parties may have agreed to exclude appeals on a point of law beforehand, so this may not be an option: s 69. If the parties remove the requirement for the tribunal to explain the reasons for the award (under s 52), then the parties will not be able to appeal under s 69. The time limit for appeal is within 28 days of the date of the award: s 70. "The date of the award" means the date on which the award is signed by the arbitrator: s 54(2). 8.1.3.7 Is litigation or arbitration more appropriate? As explained above, parties to disputes do not always have a choice as to whether to litigate or arbitrate. However, if there is a choice, the following factors could be relevant to that decision. Arbitration Litigation Speed and cost: Can be quicker and Legal correctness: Should result in a legally cheaper than litigation, especially if the correct solution. Statute and precedent parties decide on rules such as limited assist in predicting outcomes, potentially disclosure of documents and disallowing leading to early settlement. appeals, which can save time and expense. Confidentiality: –Often a reason to choose Third parties: The court can join third parties arbitration, as litigation is public and may without their consent: CPR Pt 20. not be appropriate for sensitive matters. Flexibility: Parties can, to some extent, Remedies: Offers wide range of remedies, decide the rules. including freezing orders and orders for specific performance. Enforcement: Awards are enforceable in Appeals: Extensive rights to appeal and most jurisdictions under the United Nations structured court governance make Convention on the Recognition and irregularities and bias less likely. Enforcement of Foreign Arbitral Awards, opened for signature on 10 June 1958, 330 UNTS 3 (entered into force 7 June 1959) (New York Convention) – the current list of signatories can be checked easily online. Experts: Experts can be appointed as Settlement promotion: Since the arbitrators, which may be appropriate for introduction of the CPR and the Jackson technical matters. Unlike judges, arbitrators reforms (Lord Woolf, Access to Justice: may not need expert witnesses to assist Final Report (1996) and Lord Justice them. Jackson’s Final Report on Civil Litigation Costs: An Overview (2010)), the courts are more likely to promote early settlement between the parties. College of Legal Practice Ltd (UK ID 11734212) © Copyright 2024 (used under licence from the copyright owner) 12 THE COLLEGE OF LEGAL PRACTICE SOLICITORS LEGAL KNOWLEDGE Do not ignore “boilerplate” terms. Jurisdiction clauses often do not receive the consideration and scrutiny they deserve. The issues discussed in this section are relevant when negotiating the terms of commercial agreements. Advising a client in relation to these issues before they enter into an agreement could determine whether the client has the most appropriate mechanism for enforcing their rights. For example, if the counterparty only has assets in a jurisdiction that would not enforce an English or Welsh court order, you should consider whether that jurisdiction is a signatory to the New York Convention. If it is, an arbitration clause is likely to be advisable. In extreme circumstances, getting the jurisdiction clause right at the outset could, many years later, mean your client has legal rights that can be enforced effectively in a relevant jurisdiction, when otherwise they would not. 8.1.4 Mediation Mediation is a voluntary process where a neutral person is appointed to act, almost as a negotiator between the parties. Like arbitration, mediation is a private process (discussions are without prejudice). This means a flexible approach is possible. Mediation can be quick and reasonably inexpensive, but results are not guaranteed as the mediator does not have any power to make a decision – only facilitate negotiations. The parties to a mediation must agree who will act as mediator. 8.1.4.1 Advantages of mediation Some advantages of mediation include the following: without prejudice discussion – any concessions made during the mediation cannot be used on an “open basis” – that is, cannot be used against that party in any proceedings concerning the dispute it is possible that a commercial relationship may be maintained between the parties if they negotiate a settlement of their dispute the agreed solution may take any form, for example, an apology, not just damages confidentiality flexibility with process speed – may take just a day or two low cost reaching a solution together, rather than risking going to court, may be better for the parties, and the Practice Direction on Pre-Action Conduct and Protocols (PDPAC) provides that the parties must consider ADR, and mediation is one of the most common and effective forms of ADR. Even a failed mediation has potential benefits. Even if you or your client doubts that a mediation will be successful and would rather litigate, early mediation can be a good tactical decision for two main reasons: provided your client still attempts mediation in good faith, it will demonstrate to the court that you have complied with PDPAC which can give the client some costs protection under CPR r 44.2, and College of Legal Practice Ltd (UK ID 11734212) © Copyright 2024 (used under licence from the copyright owner) 13 Dispute Resolution your client may learn something new in relation to the other side’s case or tactics, thus being better informed when court proceedings are commenced later. 8.1.4.2 Disadvantages of mediation Some disadvantages of mediation are: uncertainty. It is not certain that parties will reach an agreement, even with the help of a mediator. Any result may only be a compromise at best the other party may not have a genuine desire to settle and might use the mediation as a delaying tactic or to appear co-operative to the court mediation might not be suitable for resolving complex legal or technical issues. 8.1.4.3 Process for a mediation The parties to a mediation have a lot of control and flexibility over the process. However, generally there are four main stages: Stage 1: A mediator will explain their role and the standard mediation procedure to the parties. Stage 2: There will be a joint or plenary session where both parties will gather to meet each other with the mediator. Usually, each side will then take it in turns to formally air their grievances and state their positions. Stage 3: The parties will go to separate rooms (so three rooms are necessary in total) and the mediator will go back and forth between them to establish the areas where compromise might be possible (known as “shuttle diplomacy”). Stage 4: If the parties are converging towards a middle ground, the mediator will invite both parties to meet directly again and agree a solution. Usually, each party will have legal representation. The solicitors will agree the mediator and the venue, brief their clients on the mediation process and attend the mediation. Barristers will not usually attend. At the mediation, lawyers will not necessarily suggest or negotiate a settlement but will be present to provide advice to their clients as and when required. If an agreement is reached, the lawyers will draft a formal settlement document for the parties to sign before leaving. Prepare for a long day. Mediations generally take place over one day and often continue well into the night. No party wants to appear desperate to settle, so achieving any meaningful progress towards compromise can take many hours. Also, since no settlement terms agreed at a mediation will be binding until in writing and signed, there is a strong incentive to negotiate and conclude a full written settlement agreement on the same day. Otherwise, compromises reached in principle (often late in the evening) might not hold once the parties have time to sleep on them and reconsider. The parties will each bear their own costs of attending the mediation and will equally share the mediator’s fees. Note that these costs will not be recoverable in any later litigation (as costs of the overall dispute), unless a specific order is granted (which would be very rare). College of Legal Practice Ltd (UK ID 11734212) © Copyright 2024 (used under licence from the copyright owner) 14 THE COLLEGE OF LEGAL PRACTICE SOLICITORS LEGAL KNOWLEDGE Keep settlement options under regular review. It is possible to start or go back to mediation even after court or arbitration proceedings have begun. A mediation (or any form of without prejudice negotiation) can happen in parallel to an ongoing formal dispute process. However, depending on the stage that process has reached, the parties will likely have to agree a stay of court proceedings for negotiations to take place. The court is generally keen to allow parties some time to try to reach a settlement. 8.1.5 Other examples of ADR There are many forms of ADR other than mediation. Some examples are: Early neutral evaluation (not legally binding) – An independent expert (or judicial evaluator) is appointed to meet with the parties and give a non-binding and confidential assessment of the dispute. This approach is beneficial for focussing minds early on and can promote settlement discussions even if parties are not happy with expert’s view Expert determination (legally binding) – An independent expert is chosen by the parties who will set out the expert’s powers in a new contract; this can mean that the decision is binding if that is what the parties elect. This is more suitable for complex and technical issues (for example, determining the value of assets, which might automatically trigger a payment under a contract), but not for full hearings with witnesses where credibility needs to be tested or there are complex legal issues in dispute. Mini trial (not legally binding) – An neutral person appointed as a moderator presides over a panel consisting of representatives from each side (often business executives in commercial matters). The panel hears representations from both sides and attempts to reach a negotiated settlement. It is also important to remember that disputes may be settled at any time, without resorting to a formal dispute resolution process – without prejudice negotiations between the parties or their solicitors can achieve this. Subject to a few narrow exceptions, without prejudice discussions cannot be used in any formal dispute; for example, anything said in a without prejudice discussion cannot be used against a party if the dispute goes to court. This is often referred to as without prejudice privilege. It can help to facilitate frank and open discussions and compromise proposals, to help the parties move towards an agreed outcome. Assessment tip You may be given a factual scenario and asked which dispute resolution option is most appropriate. 8.1.6 Professional conduct issues There are professional conduct rules you need to be familiar with when advising your client on suitable dispute resolution methods. These are captured in the SRA Code of Conduct for Solicitors: Principle 7: you should recommend the form of dispute resolution which is in the best interests of your client. Rule 3.4: you must consider and take account of your client’s attributes, needs and circumstances in considering whether a form of ADR might be appropriate for your client. College of Legal Practice Ltd (UK ID 11734212) © Copyright 2024 (used under licence from the copyright owner) 15 Dispute Resolution Rules 8.6 and 8.7: you must give your client enough information about all available methods of dispute resolution (whether ADR, arbitration or litigation), such that they can make informed decisions about their options and understand the likely costs of each. 8.1.7 Summary of key principles Litigation and arbitration are formal dispute resolution processes that result in a legally binding determination. Parties that are concerned about confidentiality and foreign enforcement generally opt for arbitration. ADR must be considered by parties at an early stage of disputes and should be kept under review throughout. ADR is available to parties at any stage of a dispute and can be conducted on a without prejudice basis, that is, what is said cannot be used against them in formal open proceedings. Mediation is a flexible and cost-effective ADR process that facilitates negotiations between parties. It is non-binding unless the parties reach a concluded settlement agreement. College of Legal Practice Ltd (UK ID 11734212) © Copyright 2024 (used under licence from the copyright owner) 16 THE COLLEGE OF LEGAL PRACTICE SOLICITORS LEGAL KNOWLEDGE 8.2 BUILDING A CLAIM Relevant SRA SQE Assessment specification Functioning Legal Knowledge: Resolving a dispute through a civil claim: preliminary considerations: limitation parties and causes of action calculating limitation periods for claims in contract and tort 8.2.1 Introduction This chapter will introduce you to fundamental principles that will underpin your knowledge of building a claim. This chapter will explain key preliminary considerations when preparing a civil claim before issuing it with the court. It will provide guidance on undertaking effective case analysis, including determining the correct parties and causes of action for a claim. It will also explain important issues to be assessed at the preliminary stage, such as limitation. 8.2.2 Case analysis You should prepare a case analysis as soon as you are instructed on a new matter, in order to ensure that no key issue is missed. There are various ways this can be approached – one suggested structure is below. Cause(s) of Parties Facts Evidence action Jurisdiction/ Limitation Remedies Enforceability governing law Prospects of success? 8.2.2.1 Parties It is essential to understand all potential parties to a dispute from the outset. The specific parties to a claim can have an impact on all other elements, including the cause(s) of action, jurisdiction, governing law, limitation, available remedies, and enforceability. The following are commonly parties to legal proceedings: individuals in their personal capacity companies limited liability partnerships College of Legal Practice Ltd (UK ID 11734212) © Copyright 2024 (used under licence from the copyright owner) 17 Dispute Resolution general partnerships/“firms” – that is, where the partners have not incorporated a limited liability partnerships or company the Crown individuals in their capacity as office holders, such as liquidators, trustees in bankruptcy administrators of an estate, and individual and corporate trustees (not a trust itself, as it does not have any legal personality). Multiple relevant parties The correct parties to a claim are often obvious – for example, where there are just two parties to a written contract. However, that will not always be the case. Complications with identifying the correct parties for a claim often arise when there are multiple corporate entities involved. For example, an individual might operate their business via multiple companies and, on the facts, the one with which your client was dealing might not be clear. Similarly, if your client is a company or has a group of companies, it is essential to carefully consider, based on the facts available, which entity holds the rights that could establish a cause of action. Wrong parties = no claim. If the analysis of a claim identifies the wrong claimant or defendant, and proceedings are issued on that basis, this could lead to an application by the defendant to have the claim struck out. In addition, if the issue is not discovered until after the limitation period has expired, it could mean that the opportunity to claim is lost. Even where substituting in the correct parties is permissible, it is likely to lead to an order that your client pay their opponent’s wasted costs of dealing with the error. Assignments and novations There can be circumstances where, for various reasons, the rights that will form a cause of action have been assigned to another party – for example, if a business (including the benefit of its contracts) has been bought in an asset acquisition. In such circumstances, provided the assignment is valid, it will be the assignee who has the cause of action. The obligations (as opposed to just the benefits) under a contract can also be transferred between parties where they agree – that is, a novation. This could happen formally in a written novation agreement or less formally, for example, by an exchange of emails or by obvious conduct and a common understanding. Where contractual obligations have been transferred to a third party (that is, not a party to the original agreement), the legality of those transfers must be considered carefully. If the transfers are valid, the correct parties to a claim under the contract may not be the original signatories to the contract. Agents Consider whether certain parties have been acting as agents for others. College of Legal Practice Ltd (UK ID 11734212) © Copyright 2024 (used under licence from the copyright owner) 18 THE COLLEGE OF LEGAL PRACTICE SOLICITORS LEGAL KNOWLEDGE Employers and the principals of agents are commonly parties to claims, even if relevant acts were done by their employees/agents. They often can be vicariously liable for such acts. Where the principal of an agent is disclosed, there will be a direct legal relationship between the principal and the party with whom the agent dealt. In those circumstances, the agent is generally not liable and only their principal should be the subject of a claim. Where the principal of an agent was not disclosed to the party with whom the agent dealt, that party has a choice (a right to elect) whether to sue the agent or the principal. Multiple causes of action between different parties Different causes of action can arise out of the same facts, depending on which parties are claimant(s) and defendant(s). For example, two companies might have entered into a contract but connected companies of each were the entities that actually undertook the work and were the intended beneficiaries of that work. In those circumstances, a breach of contract claim might exist between two companies, but a negligence claim might exist between two others, all arising out of the same facts. Assessment tip You may be asked to consider the capacity in which certain parties are acting in a factual scenario – for example, an individual director that signs a contract on behalf of a company would not be the correct claimant for a breach contract claim; it would be the company itself. Practical considerations In many cases, where there are multiple potential claimants and defendants, the claim will include them all. This could be on the basis of an alleged joint liability or as a succession of alternative claims. Practical issues, such as the location of the parties, whether they are likely to be insured and their solvency, will also be important considerations when building a claim. Failure to consider such matters could mean that, even if successful, your client only has a Pyrrhic victory and cannot even recover their legal costs. For all the same reasons, it is important to keep your analysis of the relevant parties to the dispute under review as the case develops and new facts emerge. Dramatis personae: every story has a cast. Where there are several relevant parties to various events, preparing a dramatis personae and keeping it updated is helpful, especially when briefing others about the case at later stages. Also bear in mind that certain parties might be wearing different/multiple “hats” at different times. An individual can be acting for themselves in one situation and as an agent for another party on another occasion – for example, a company director acting on behalf of a company. A dramatis personae should record these connections. College of Legal Practice Ltd (UK ID 11734212) © Copyright 2024 (used under licence from the copyright owner) 19 Dispute Resolution 8.2.2.2 Analysis of facts Based on information from your client and any documents available, you must ascertain the events that took place that might: form the basis for a claim, and otherwise affect its prospects (including matters that could form the basis for a defence). Establishing a systematic and user-friendly method of recording relevant information is essential for undertaking even an initial case analysis and identify gaps in the story about which further information must be sought. A chronology is an investment. The timing of various events, whether in isolation or as they relate to other events, is usually relevant to the analysis of a claim. It is therefore useful to prepare a chronology of relevant events when first undertaking an analysis of a case. Also, remember that facts that do not seem relevant at the outset can become relevant when other legal and factual issues come to light. Adding references to show the source of each piece of information is recommended. It can save hours of work in later stages, which also saves your client money. Your chronology should be updated as the case develops, and new facts come to light. This maintains the document as a central reference point. It can also help to identify where initial information might have been inaccurate and your analysis might have to be reviewed when a new source of information is considered. A detailed chronology can be an extremely valuable resource throughout the life of a case. 8.2.2.3 Causes of action In order to have a legal claim, there must be a cause of action. English law has a large number of potential causes of action, depending on the facts of a given case. Some of the most common are: breach of contract negligence misrepresentation nuisance trespass to land or to goods infringement of intellectual property rights defamation/malicious falsehood unjust enrichment various economic torts (for example, procuring a breach of contract and causing loss by unlawful means), and various claims under statute (for example, shareholder claims under s 994 of the Companies Act 2006, also known as unfair prejudice claims) Each cause of action has required elements. Some of these are well known. Others will require detailed consideration of the relevant leading cases and, where applicable, statute. Below we consider the necessary elements of two of the most common causes of action: breach of contract and negligence. College of Legal Practice Ltd (UK ID 11734212) © Copyright 2024 (used under licence from the copyright owner) 20 THE COLLEGE OF LEGAL PRACTICE SOLICITORS LEGAL KNOWLEDGE Breach of contract Analysis of a breach of contract involves the following steps. Contract? Terms? Breach? Contract: there must be a contractual relationship between the parties. Remember, this can be a written or oral contract. Terms: be sure what the terms of the contract are. Consider express terms and any implied terms. For example, terms implied by law into some contracts for the sale of goods or the supply of services. Breach: which, if any, terms have been breached? Are they easily identifiable as either a condition, a warranty or an innominate (intermediate) term? This will be relevant to the potential remedies for breach. Once you have established that the elements of a breach of contract claim are present, it is also important to consider whether there are any relevant defences, such as clauses in the contract that attempt to limit or exclude liability. If there are, the extent to which those clauses are enforceable must then be considered. Negligence Negligence is a form of tort. It is the breach of a legal duty of care which results in damage to the injured party. Analysis of a potential negligence claim involves the following steps. Duty of care? Breach? Loss? Causation? Remoteness? Duty of care: was a duty of care owed to the claimant by the defendant? Also consider the scope of the duty in question and whether it covers the facts of the case. Breach: was there a breach of that duty by the defendant? Damage: was there any damage/loss incurred by the claimant? Causation: was there causation between the breach by the defendant and the damage/loss? For the chain of causation to be broken, any novus actus interveniens must have been unforeseeable. Remoteness: was the damage caused reasonably foreseeable? If so, it should be recoverable, but damage that is too remote will not. Once you have established that the elements of a negligence claim are present, it is important to consider whether there are any relevant defences, such as contractual limitations or exclusions on liability, failure to mitigate loss or contributory negligence. 8.2.2.4 Evidence Consider what evidence there is, such as: What evidence has the client already provided in support of the cause of action? What evidence, if any, has the other side already provided? What further evidence might the other side or a third party have or be able to obtain? What evidence does your client need to provide in order to establish/prove their case? College of Legal Practice Ltd (UK ID 11734212) © Copyright 2024 (used under licence from the copyright owner) 21 Dispute Resolution What further evidence might come to light that could weaken your client’s case? 8.2.2.5 Jurisdiction and governing law Do you know the relevant jurisdiction and the governing law? Governing law and jurisdiction are separate issues. The two concepts often become conflated, particularly when considering governing law and jurisdiction clauses in contracts. However, it is essential that you treat them as separate issues in any analysis. Certainty in respect of one does not equate to certainty in respect of the other. If the claim is based on a contract, the answers to the following questions will be relevant: What was the subject matter of the contract? For example, supply of services. Was it with a consumer? If it is a breach of contract claim, is it a written contract and, if so, is there a governing law clause in it? Is there a jurisdiction clause in any written contract? o Is it an exclusive or non-exclusive jurisdiction clause? o Is there a binding arbitration clause in any written contract? o Is there an escalation process to be followed for disputes before any legal proceedings should commence? If there is no agreement between the parties on jurisdiction and governing law: o Where are the parties based? o Where was performance (or anticipated performance) of the contract? o If it involves a sale or transfer of goods, where are/were those goods located? Non-contractual claims are subject to separate rules, but similar questions will have to be considered, as well as: Where did the relevant events occur? Where was damage suffered? 8.2.2.6 Limitation periods Is the claim in time? Most causes of action expire after a set period of time. If a claim is not issued with the court before the expiry of the relevant limitation period, it is time-barred. This provides a defendant with a complete defence, regardless of whether the claim would have been successful had it been issued before the end of the limitation period. The Limitation Act 1980 sets out the relevant limitation periods for various types of claim. Some of the most common are the following: Claim type Limitation period Contractual claims: 6 years from breach: s 5 if a simple contract (that is, a verbal contract or a written agreement signed by just the parties (also known as “a contract under hand”)) College of Legal Practice Ltd (UK ID 11734212) © Copyright 2024 (used under licence from the copyright owner) 22 THE COLLEGE OF LEGAL PRACTICE SOLICITORS LEGAL KNOWLEDGE Claim type Limitation period if a contract made under a deed 12 years: s 8 Torts (general) (This includes an action pursuant to 6 years: s 2 Misrepresentation Act 1967 s 2(1), as that is a claim founded on tort.) Personal injury caused by negligence 3 years: s 11 Latent damage caused by negligence 6 years or, if later, 3 years from the date of knowledge, with a 15- year long stop: ss 14A and 14B Defamation or malicious falsehood 1 year: s 4A Claims against a trustee in respect of fraud or fraudulent Unlimited: s 21(1)(a) breach of trust Claims against a trustee to recover trust property or the Unlimited: s 21(1)(b) proceeds of trust property from the trustee Other breach of trust claims (for example, claims against non- 6 years: s 21 trustees for knowing receipt of trust funds) Claims in respect of defective products under the Consumer 3 years or, if later, 3 Protection Act 1987 years from the date of knowledge of certain material facts, with a long stop of 10 years from the date the defendant put the product into circulation: s 11A Not all limitation periods arise from the Limitation Act 1980. For example, claims against public authorities under s 6 of the Human Rights Act 1998 are subject to a one-year limitation period, which can be extended by the court: s 7(5)(a) of that Act. For judicial review proceedings, the CPR apply a time limit of only 3 months: CPR r 54.5(1). Also, when considering limitation, ensure that any contractual limitation clause or waiver is carefully considered. For example, parties sometimes agree different limitation periods in commercial contracts, such as a time limit of 3 years instead of 6 years for certain warranty claims. Terms agreeing shorter limitation periods might be subject to the Unfair Contract Terms Act 1977 or the Consumer Rights Act 2015. However, it is relatively common practice in corporate acquisitions and likely to be enforceable where the parties are both sophisticated commercial parties. College of Legal Practice Ltd (UK ID 11734212) © Copyright 2024 (used under licence from the copyright owner) 23 Dispute Resolution Watch the limitation clock. One of the urgent things to consider when first instructed on a potential dispute is limitation. Failure to advise a client that they need to issue a claim by a certain date can mean their claim becomes time barred. Such a failure will usually be negligent and can give rise to a significant claim for damages since the client will not be able to pursue their original claim. Even when limitation is not an immediate concern, create calendar reminders for you and your colleagues to bring future limitation deadlines to your attention well in advance. When does time start to run? In order to calculate the end of a limitation period, you need to understand when the limitation period starts to run. This is generally the day when the cause of action in question accrues. Different causes of action have different starting points for their limitation periods. For breach of contract and tort claims, the position is as follows: Breach of contract: the date of breach, whether anybody was aware of the breach or not and even if the damage was not suffered until a later date. This is because, unlike a tortious claim, loss/damage is not an essential component of the cause of action. Tort (for example, negligence): the date any loss/damage was suffered. This is because, unlike a breach of contract claim, loss/damage is an essential component of this cause of action. However, for negligence claims (except those involving personal injuries), there is also a long stop of 15 years from the date of the negligent act or omission, rather than from the date the cause of action accrued: Limitation Act 1980 s 14B. Unusually, this overriding time limit may, in some circumstances, pre-date the accrual of a cause of action in negligence – that is, if no damage was suffered until long after the negligent act or omission (damage being an essential component of the tort). This is acknowledged in s 14B(2). The day on which a cause of action accrues is generally excluded from the calculation of the limitation date unless it accrues at midnight. In the latter case, the day that immediately follows midnight is included. Assessment tip You may be asked to calculate limitation periods based on a factual scenario. When time does not start to run right away There are situations where the law applies a different starting point for time to run – usually a date later than when the cause of action accrued. The common theme for these situations is that the claimant would have been unable to discover the material facts on which to base their claim until a later date. The main examples are: Negligence (latent damage): the usual 6-year limitation period can be extended to 3 years from the earliest date the claimant had the knowledge required to bring a claim: s 14A and 14B. In summary, the knowledge required is: o the material facts about the relevant damage College of Legal Practice Ltd (UK ID 11734212) © Copyright 2024 (used under licence from the copyright owner) 24 THE COLLEGE OF LEGAL PRACTICE SOLICITORS LEGAL KNOWLEDGE o that the damage was attributable in whole or in part to the allegedly negligent act or omission (this does not require certainty but knowledge of the real possibility), and o the identity of the defendant. Knowledge for these purposes includes constructive (as opposed to actual) knowledge – that is, knowledge which the claimant might reasonably have been expected to acquire from facts observable or ascertainable to them or with the help of appropriate expert advice which it would have been reasonable for them to seek. The level of knowledge (or constructive knowledge) required for time to start running is not the full details of the matter or that it could found a legal claim, but its factual essence. It is enough, to start the 3-year limitation period, that the claimant had sufficient facts such that it would be reasonable to investigate the matter further. For negligence claims (except for those involving personal injuries), the 15-year long stop from the date of the negligent act or omission still applies to latent damage situations: s 14B. Personal injury: the limitation period is 3 years from the date on which the cause of action accrued or, if later, 3 years from the date of knowledge of the person injured: s 11. The date of knowledge is assessed in a similar way to that for latent damage negligence claims: s 14. The limitation period for personal injury claims can also be extended at the discretion of the court: s 33. Claims based on fraud, deliberate concealment or mistake: the limitation period does not start to run until the claimant has discovered, or could with reasonable diligence have discovered, the fraud, concealment or mistake in question: s 32. Concealment includes deliberately committing a breach of duty in circumstances where it is unlikely to be discovered for some time. When considering concealment, it is important to note that the concealed facts must be some essential element of the cause of action. Think about all possible causes of action. If more than 6 years have passed since the relevant events, a claim against a professional adviser for breach of a contractual duty to exercise reasonable care and skill could be time-barred but, if the claimant only recently became aware of the matter, a claim in negligence might still be brought within time: s 14A. How to stop the limitation clock The standard way to stop the limitation clock is to issue a claim form with the court within the limitation period. However, it is also possible for parties to a dispute to reach a “standstill agreement” for the purposes of pausing time for limitation purposes or extending the existing period. Essentially, such agreements mean that the defendant agrees not to rely on a limitation defence if a claim is issued by the claimant within an agreed period of time, which in effect extends the statutory limitation period. This issue will generally arise if the cause of action is approaching a potential limitation deadline, but the parties are still engaging in pre-action correspondence, fact finding or negotiating. To avoid the claimant having to take the step of issuing court proceedings before College of Legal Practice Ltd (UK ID 11734212) © Copyright 2024 (used under licence from the copyright owner) 25 Dispute Resolution the limitation deadline, it can be in both parties’ interests to agree to a standstill. The benefit to the defendant is to avoid having to plead a defence at an early stage, when pre-action correspondence and perhaps negotiations might mean a claim never becomes necessary. Great care must be taken in relation to standstill agreements to ensure they achieve their objective. They should be expressed in clear terms and documented in writing. If a standstill agreement is unclear, it might not be effective, and the claim could nevertheless become time barred. There is no standstill without a binding agreement. With a limitation deadline approaching, it can be difficult to get a prospective defendant to agree to a standstill agreement. They will know that the claimant is under pressure to issue their claim and incur a, sometimes substantial, court fee. The defendant might therefore conclude that it is better to see if the claimant is prepared to take the step of commencing proceedings. If not, or if the last-minute claim form fails to include the correct parties or cause of action, the defendant should have a complete limitation defence. In such circumstances, the claimant will have to issue a claim form with the court within the limitation period. This is sometimes referred to as a “protective claim form” because it is issued in order to prevent the claim from becoming time barred. There is then a set period of time in which to serve the claim form (usually 4 months), otherwise it will expire. If, following service of the claim form, the parties agree that there is good reason to pause the court proceedings, they can usually agree (subject to court approval) that the proceedings be stayed for a period of time. This situation typically arises if the parties have not yet completed pre-action correspondence or there are settlement negotiations already underway. Resetting the clock In specific categories of cases involving rights to property and debts, the limitation period can be extended by the defendant acknowledging the claimant’s claim or making a payment in respect of the claimant’s claim: Limitation Act 1980 ss 29–31. An acknowledgment by the defendant must be in writing and signed: s 30. Signed includes where a name is typed. This usually arises where a defendant acknowledges that it owes a debt to the claimant or makes a part payment in respect of a debt. If this occurs, the relevant limitation period is treated as having restarted from the date of the acknowledgment or part payment. This can happen multiple times. However, an acknowledgment or part payment will not be effective to restart the limitation period if it has already expired: s 29(7). Nor will it be effective if the defendant admits and pays part of the debt but makes it clear that they dispute the rest. Claims for which there are no statutory time limits The Limitation Act 1980 does not apply time limits for claims for various equitable remedies, such as injunctions or specific performance: s 36. However, the courts adopt a longstanding approach whereby they adopt time limits in the Limitation Act 1980 by analogy. Therefore, for example, a claim seeking specific performance of a contract is likely to have a 6-year limitation period applied, by analogy with the limitation period in s 5. College of Legal Practice Ltd (UK ID 11734212) © Copyright 2024 (used under licence from the copyright owner) 26 THE COLLEGE OF LEGAL PRACTICE SOLICITORS LEGAL KNOWLEDGE Separately, there is an equitable doctrine called “laches” that requires claimants to pursue remedies without unreasonable delay. This can be relevant to the exercise of the court’s discretion when faced with a claim that does not have statutory limitation period, alongside any evidence that would indicate acquiescence by the claimant or prejudice caused to the defendant by unjustified delay. 8.2.2.7 Possible remedies Damages may be available: In contract. Here, they are intended to put the injured party into the position they would have been in had the contract been properly performed. The relevant considerations are: o Causation and loss need to be established. o Is there any valid liquidated damages clause? o If there is no valid liquidated damages clause, then consider which measure of damages is most desirable: expectation loss, interest/reliance loss or interest/restitution loss. o Remoteness: was the claimant’s loss too remote in that it was not reasonably foreseeable? In tort. Here, they are intended to place the claimant in the position they would have been in had the tort not been committed. Other, often equitable, remedies may also be available, such as specific performance, rescission, or an injunction. 8.2.2.8 Is it viable to sue the defendant? You need to consider whether it is viable to sue the defendant. Consider: who they are, including their legal capacity where they are based if a limited company, whether they are solvent, and whether they have accessible assets. Spend some time investigating your opponent. Assessing the viability of a claim against a specific defendant is a crucial element of your advice to your client. If a defendant is, for example, a company without material assets, your client could spend substantial sums suing that company, succeed in their claim and still not achieve their objective. They would also have spent a lot of money for no real benefit. If the defendant is a UK company, certain financial information will be publicly available on the Companies House website, in the company’s annual filed accounts. This can be very useful but will not be fully up to date, so it should not be treated as current financial information. A search of the Insolvency Register can also yield important information on individuals. If you have the address of a defendant, a property search should show whether they own their property and whether there is a mortgage on it. If a defendant is based outside of the jurisdiction or has substantial assets in another jurisdiction, some advice from local solicitors is advisable at an early stage. In particular, College of Legal Practice Ltd (UK ID 11734212) © Copyright 2024 (used under licence from the copyright owner) 27 Dispute Resolution your client will need to understand whether the courts of that jurisdiction will enforce any UK court order or arbitral award that might be obtained in the proceedings. 8.2.3 Other important preliminary considerations When first instructed by a client, there are several important practical matters to attend to before providing substantive advice. Many of these are also related to your professional conduct obligations. 8.2.3.1 Conflicts Before agreeing to represent or advise any potential client, you should first check that your firm is not conflicted, that is, that the firm does not now, or has not in the past, represented another party in the same matter or is otherwise involved in a way which might result in a conflict of interest. 8.2.3.2 Basis for charging The basis on which you will charge your client and various other terms of your instruction should be set out in a client care letter, also known as an engagement letter. It should also include a costs estimate, which should be updated regularly. You should explain to all clients, in writing, that full responsibility to pay your legal fees and disbursements will not automatically fall to the other side, even if your client is completely successful at trial. Even if the court makes an order for payment of your client’s legal costs there will usually be a percentage (typically 10–30%) which the other side will not be ordered to pay. Your client will remain responsible for that excess. In addition to traditional private payment arrangements, where your client pays your fees as the case progresses, conditional (“no win no fee”) or contingency fee (damages based) arrangements are also now possible and widely used. Conditional Fee Arrangements (CFAs) – Also popularly known (and advertised) as “no win, no fee” agreements. If a CFA is agreed your fees are conditional on your client’s success. If your client loses, then no fees (or reduced fees) are due. If your client wins, then your fees, plus a percentage success fee, become payable. Clients must provide informed consent to the level of the success fee (which needs to be based on a detailed risk assessment), or the court may reduce it. It is important that clients are aware that, whilst the court may order the other side to pay their costs, the success fee is not recoverable – that will have to be paid by your client. Accordingly, the amount of the client’s net or “take home” compensation will be reduced. Damages-Based Agreements (DBAs) – With a DBA, if the client succeeds, a percentage of the damages awarded will be deducted and paid to you. This cannot be higher than 50% in any case and must be lower in personal injury and employment tribunal cases. If the client loses, they have no liability for legal fees, and you get nothing 8.2.3.3 Insurance Sometimes a client may have an existing insurance policy which could cover your client’s costs, so it is vital that you check this. If you fail to do so, it could impact the amount of the fees that you can later recover. College of Legal Practice Ltd (UK ID 11734212) © Copyright 2024 (used under licence from the copyright owner) 28 THE COLLEGE OF LEGAL PRACTICE SOLICITORS LEGAL KNOWLEDGE Before the event (BTE) insurance is often taken out as a general policy against the risk of future claims before the issue has arisen (for example in motor or home insurance policies and public indemnity insurance that businesses may have). If the client does not already have relevant insurance, then you should consider whether they could take out a specific insurance policy to cover the case. After the event (ATE) insurance is taken out after a specific issue or dispute has arisen, solely to cover the cost of litigating that claim, particularly if the client may lose. The premiums are generally a lot higher than for BTE and ATE is only available if the insurance company judges that the risk of losing is relatively low. Even if your client wins at trial and is awarded costs, recovery of the cost of any BTE premium from the other party is highly unusual. If your client wins at trial and is awarded costs, recovery of any ATE premium would generally only be possible if the policy was taken out before 1 April 2013 (unlikely). However, there are some limited exceptions to this, such as defamation claims, which still allow for recovery of ATE insurance premiums. 8.2.3.4 Preservation of documents As soon as you are instructed on a matter you should tell the client to preserve any documentation that could possibly be relevant (including electronic documents, such as emails, text messages and online calendars): As soon as litigation is contemplated, the parties' legal representatives must notify their clients of the need to preserve disclosable documents. The documents to be preserved include Electronic Documents which would otherwise be deleted in accordance with a document retention policy or otherwise deleted in the ordinary course of business: CPR Practice Direction 31B, para 7. More stringent requirements on both clients and legal representatives are included in place for proceedings in the Business and Property Courts: see CPR Practice Direction 57AD, paras 3 and 4. Think about documents as early as possible. Parties to a dispute must take steps to ensure relevant evidence is preserved. This includes suspending any processes that would destroy historic documents in the ordinary course of business. At a later stage of proceedings, parties often have to give information to confirm they have complied with this obligation. However, as well as considering what documents the client has, you should consider what documents they do not have. It is prudent to advise a client at an early stage not to increase the documents they might have to search and disclose, either by creating new documents (to the extent they would not be privileged) or by bringing documents into their control from third parties. 8.2.3.5 Practice Direction – preliminary considerations for the use of the Welsh language in civil proceedings The purpose of the Practice Direction Relating to the use of the Welsh Language in Cases in the Civil Courts in or Having a Connection with Wales is to reflect the principles of the Welsh Language Act 1993 and the Welsh Language (Wales) Measure 2011 that in the administration College of Legal Practice Ltd (UK ID 11734212) © Copyright 2024 (used under licence from the copyright owner) 29 Dispute Resolution of justice in Wales, the English and Welsh languages should be treated on the basis of equality. It applies to civil proceedings in or having a connection with Wales and means: conducting a hearing in Wales entirely in the Welsh language on an ad hoc basis and without notice will apply when all parties and witnesses directly involved at the time consent to the proceedings being so conducted in every case in Wales in which it is possible that the Welsh language may be used by any party or witness (or in any document which may be placed before the court), the parties or their legal representatives must inform the court of that fact so that appropriate arrangements can be made for the management and listing of the case any document placed before the court in civil proceedings in or having a connection with Wales may be in the English or Welsh language. The parties or their legal representatives must inform the court as soon as practicable if a document in the Welsh language will or may be placed before the court so that appropriate arrangements can be made. If costs are incurred as a result of a party failing to comply with this direction, a costs order may be made against that party or their legal representative. 8.2.4 Summary of key principles Do not start acting for a client without first checking whether you/your firm are conflicted. Consider all potential parties to the relevant events and the capacities in which each of them was acting on each occasion – for example, an individual director acting on behalf of company. One set of facts could give rise to multiple causes of action between various different parties. Practical issues, such as the location or solvency of potential defendants, could help determine which causes of action are pursued against which parties. If a claim is not issued with the court within the relevant limitation period, it is time-barred. Key limitation periods: Cause of action Limitation period Limitation period starts Breach of contract (simple 6 years Date of breach of contract contract) Breach of contract (deed) 12 years Date of breach of contract Torts generally 6 years Usually, date when damage suffered. Specific torts: Negligence 6 years Usually, date when damage suffered. If latent damage, 3 years From the date of relevant knowledge. In all cases, 15-year long From date of negligent act stop or omission (even if damage only suffered later). College of Legal Practice Ltd (UK ID 11734212) © Copyright 2024 (used under licence from the copyright owner) 30 THE COLLEGE OF LEGAL PRACTICE SOLICITORS LEGAL KNOWLEDGE Cause of action Limitation period Limitation period starts Personal injury 3 years but can be Usually, date when extended by the court damage suffered Where there has been fraud, deliberate concealment or mistake, the limitation period does not start to run until certain facts are known or could be known to the claimant. Consider what evidence is and might be available and take steps to preserve evidence at the earliest opportunity, all documented in writing. College of Legal Practice Ltd (UK ID 11734212) © Copyright 2024 (used under licence from the copyright owner) 31 Dispute Resolution 8.3 CROSS-BORDER CLAIMS Relevant SRA SQE Assessment specification Functioning Legal Knowledge: Resolving a dispute through a civil claim: applicable law: mechanisms to determine which country’s laws apply to a contractual or tortious claim issued in the courts of England and Wales jurisdiction: mechanisms to determine jurisdiction over an international contractual or tortious claim. 8.3.1 Introduction This chapter will introduce you to fundamental principles that will underpin your knowledge of cross-border claims. This chapter will explain the mechanisms to determine which law governs contractual and tortious claims. It will also explain the mechanisms to determine the jurisdiction over such claims. 8.3.2 Overview Many disputes involve one or more parties based out of the jurisdiction of England and Wales. Many also involve events or property in another jurisdiction. When these issues arise, it is important to assess at the outset whether: English and Welsh law applies to the dispute, and which court or tribunal has jurisdiction. Where English and Welsh law does not apply, advise your client to seek advice from a lawyer qualified to advise on the relevant foreign law. English and Welsh law is not always supreme. On occasions where foreign law is likely to apply, a client might still seek your legal advice. Whilst it is natural to want to help a client, this is to be resisted, unless you are a qualified lawyer in respect of the foreign law in question. Advising in respect of laws in which you are not qualified would also be a breach of the SRA Code of Conduct. In some circumstances, the English and Welsh courts will have jurisdiction to hear a case that is subject to foreign law. When that happens, the court will require expert evidence on the foreign law and seek to apply it to the substance of the dispute. However, English law will still apply to procedural matters in the proceedings. Conversely, there are of course many disputes over which the courts of England and Wales will not have jurisdiction. Instead, the courts of a foreign country or an arbitral tribunal may have jurisdiction. However, depending on the circumstances, English and Welsh law could still govern the dispute and be applied by those bodies. College of Legal Practice Ltd (UK ID 11734212) © Copyright 2024 (used under licence from the copyright owner) 32 THE COLLEGE OF LEGAL PRACTICE SOLICITORS LEGAL KNOWLEDGE 8.3.3 Impact of Brexit The issues addressed in this chapter have been particularly impacted by t

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