Commercial Dispute Resolution Overview

COMMERCIAL DISPUTE RESOLUTION OVERVIEW

COURT STRUCTURE

Technology and construction court (TTC)

- Technically complex issues- Building/construction- Enforcement of decisions of adjudicators- Engineering- Architects- Surveyors- Accountants- Construction of buildings- Computers, computer softwares- Landlord/tenant- Neighbours- Environment- Fires- Decisions of arbitrators

Mercantile court - General business matters in general if not specialist in the Chancery divisionCommercial court - Contract

- Export/import of goods- Carriage of goods- Exploitation of oil and gaz- Insurance/reinsurance- Banking/finance- Sale of commodities- Admiralty/construction of ships- Business agency- arbitration

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TYPE OF CLAIM / COURSES OF ACTION– CONTRACT OR TORT OR OTHER?

BREACH OF CONTRACT

Requirements:Element to establish

Details Legal authority

1. Contract (the existence of the contract)Offer, acceptance, consideration, intention to create legal relations

2. Breach of contract (cause of action)

Sale of goods Act 1979Implies

conditions into a contract for

the sale of goods, where the seller sells in the course of a business

Not satisfactory quality 14(2)

Implied condition that the goods will be of satisfactory quality, i.e. as to appearance and finish, free from minor defects, safe, durable and fit for purposes for which goods of the kind in question are commonly supplied (14(2))

Not fit for purpose14(3)

Where a buyer makes known to the seller a particular purpose for which the goods are being acquired, the goods are reasonably fit for that purpose (s14(3))

Supply of goods and

services Act 1982

Quality or fitness for uses.4

Implied condition re: quality or fitness for use: that where a transferor supplies goods in the course of a business, there is an implied condition that the goods supplied under the contract are of satisfactory quality (4(2)“Satisfactory quality” is where the goods meet the standard that a reasonable person would regard as satisfactory, taking into account of any description of the goods, the price (if relevant) and all other relevant circumstances (4(2A)). If dealing as consumer see 4(2B)

Skill and cares.13

Implied term re: skill and care: in a contract where the supplier is acting in the course of a business, there is an implied term that the supplier will carry out the service with reasonable care and skill (s13)

3. Causation

Did the breach of contract cause the loss?

The damages must not be too remote from the breach: Consequential loss flowing from breachHadley v Baxendale – reasonably foreseeable at the time of the contract:

everyone is taken to know what loss is liable to result in the ordinary course of things from a breach

in addition, the person breach in the contract may have actual knowledge of special circumstances which would give rise to additional loss

4. Loss (remedies available)

Purpose of damages – to place the injured party in the position he would have been in if the contract had been properly performed.

(a) rejecting the goods and claiming by way of damages a sum to enable him to buy goods equivalent to what should have been supplied under the contract

(b) where not possible (because the goods have been accepted) claiming by way of damages a sum to compensate for the loss suffered

(c)5. Mitigation

Has C mitigated his loss? Cf. no duty to mitigate in a debt action.

NEGLIGENT Under the precedent set in Hedley Byrne v Heller a duty of care shall exist in respect of negligent

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MISSTATEMENT misstatement if the following criteria exist:

Depends upon proof of a special relationship existing between the parties. Such a duty can arise in a purely commercial relationship where the representor has (or purports to have) some special skill or knowledge and knows (or it is reasonable for him to assume) that the representee will rely on the representation

Remedies:

The injured party may elect to claim damages for negligent misrepresentation at common law. The test of remoteness in the tort of negligence is that the injured party may recover for only reasonably foreseeable loss

Rescission, ie setting aside the contract, is possible in all cases of misrepresentation. The aim of rescission is to put the parties back in their original position, as though the contract had not been made. The injured party may rescind the contract by giving notice to the representor, unless any of the bars apply:

(i) AFFIRMATION OF THE CONTRACT(ii) LAPSE OF TIME(iii) RESTITUTION IN INTEGRUM IMPOSSIBLE(iv) THIRD PARTY ACQUIRES RIGHTS

NEGLIGENCEElements to establish Facts to establish Available evidence

Duty of care D owed duty of reasonable care and skill

Caparo v Dickman

Smith v Eric Bush (surveyors owe DofC; to that of a r'bly competent surveyor)

Breach of duty D failed to carry out duty Witnesses, docs, experts

Causation But for D’s breach would C have suffered loss?

Could type of damage been seen by rsb man?

i.e. loss not too remote "reasonably foreseeable"

Apply to facts

Damage/loss Apply to facts Apply to facts

Diminution in value = what was paid LESS what it was worth

PRIVATE NUISANCE

“a substantial and unreasonable interference with C’s use or enjoyment of land”

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As a person of ordinary sensitivity living in that locality Factors:

o Locationo Extent of harmo Continuing?o Social value of D’s useo Motive

For a matter to qualify and be actionable as a nuisance in law it must be a serious matter.

One-off events are rarely sufficient. Also, specific sensitivities of those suffering cannot be taken account of in deciding whether a matter is a nuisance.

Damage:o Torto Reasonably forseeability o remoteness

Under the common law, the only remedy for a nuisance was the payment of damages. However, with the development of the courts of equity,

the remedy of an injunction became available to prevent a defendant from repeating the activity that caused the nuisance, and specifying punishment for contempt if the defendant is in breach of such an injunction.

IF CONTRACT – CHECK TERMS OF CONTRACT

LIMITATION CLAUSE I TUT AND WS 1 AND GA 1

ARBITRATION CLAUSE

ITUT AND WS 8

JURISDICTION CLAUSE

ITUT AND WS 2

PROVISIONS REGARDING PLACE OF PERFORMANCE

I TUT AND WS 2

EVIDENCE TO SUPPORT CLAIM WS6 AND I TUT

DISCLOSURE Structure for Disclosure Question – r31.6

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DOCUMENTARY 1. Is it a Document?

- Wide definition- Anything information recorded on (r.31.6)- Ie written documents, discs, photos, included deleted ones- Electronic disclosure under PD 31 para 2A

o If email think about (a) the original held by the recipient and (b) copy held by the sender

2. Was / Is it in the clients control?

Must make a ‘reasonable search’ (r31.7) – for guidance see the nature/complexity of issues, ease / expense of retrieval / significance of document limited to documents which are, or which have been in his control under R.31.8(2):

a) Is it / was it in his physical possessionb) Has / had right to possession of itc) Has / had right to inspect or take copies of it

- parent/subsidiary: parent company considered as a 3rd party- but subsidiary does not have control of parent company’s docs- parent company would have control of subsidiary documents

- CHECK capacity person holding documents eg Director of client company and x company, is the director holding the document in capacity as director for client comp or x? if x then not in control.

3. Is it a R.31.6 document?

- Document client relying on (r.31.6(a))- Document adversely affects clients case (r.31.6(b)(i))- Adversely affects another party’s case (r.31.6(b)(ii))- Supports another party’s case (r.31.6(b)(iii)

IF YES = DOCUMENT MUST BE DISCLOSED

4. Is it privileged from inspection? (think about when it was created and why)

NB – A copy cannot be privileged if the original is not privileged!

- LEGAL ADVICE PRIVILEGE:o Communications between party and solicitoro For sole or dominant purpose of obtaining legal advice

- LITIGATION PRIVILEGE: Important : identify when litigation was contemplated

o Communications between Solicitor and 3rd party, or 3rd party and cliento For sole or dominant purpose of obtaining evidence, or obtain or give legal adviceo When litigation in reasonable contemplation or pending

o LOOK FOR ‘strictly privileged & confidential ‘ on doc’s = not conclusive but evidence to suggest the intention of parties

- COMMON INTEREST PRIVILEGE

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Would require SOL to check the contractual and constitutional doc’s. Does the Subsid have rights over parent’s doc’s and vice versa

o Communications between parties with common interest in potential litigationo Dominant purpose – inform other party of legal situation, exchange, facts, issues

advice received or for purpose of receiving legal adviceo Is parent funding litigation? Will their reputation be affected?o Interests sufficiently close that could’ve used same solicitoro This applies to parties in the same group, because if one company within the group is

found liable there will be financial consequences for all comp’s in the group

ALWAYS SAY WHICH PRIVILEGE AND WHY IT IS PRIVILEGED!!!!

5. Which part of list (N265(CC)) should document be disclosed in?- PART 1 – Has control of documents AND does not object to opponent inspecting them- PART 2 – Objects to opponent inspecting them- PART 3 – Documents you once had in your control (Not Priv / not in control) These are usually

the original versions of non-privileged documents sent to a third party

CHALLENGING DISCLOSURE BY OPPONENT

CHALLENGE TO CLAIM THAT A DOC IS NOT PRIVILEGED:

If you suspect that a document listed in Part 2 is not privileged, write to opponent

If no satisfactory reply is received then:- apply to court under r.31.19(5) = the court will decide whether doc is privileged- court can require doc be produced to court to rule on issue of privilege

INCOMPLETE DISCLOSURE:

If you suspect that some doc’s haven’t been disclosed, write to the other side covering following points:

- refer to list of documents

- state that disclosure is inadequate for reasons given in attached scheduleo limits placed on search aren’t reasonable or proportionate (scope of where / what

searched for)o Part A: inadequately itemised (e.g. bundles) and missing items + why they should be

there

- state action required – supplemental list of documents verified by affidavit within 21 days

- state action if not received:o application in accordance with Part 23,o R.23.12 – specific disclosure and inspection of omitted documents disclosable by an

increase scope of search under r.31.17o Application will be accompanied with a witness statement justifying why order sought

and why it should be given

- PD 31 Para 3.2 – proper itemisation of doc’s disclosed

- R.31.19 – Challenge part 2 documents privilege claimed

- Conclude with summary of what we want:o Supplemental List of Doc’s verified by affidavito Consequential directiono Costs for application

THEN – If opponent doesn’t comply with specific disclosure apply for an ‘unless order’ under r.3, if they still don’t comply with that then their claim / defence will be struck out and case over.

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EXPERT PART 35 AND PARA H2 OF THE COMMERCIAL COURT GUIDE

Role of experts in commercial court

- Opinion + facts- In commercial court: more likely to be able to call more than 1 expert

Instruction to experts - Not privileged- Expert’s protocol:

o Encourages exchange of early and full info about expert issues involved in a prospective claim (read w/CPR 35 + PD 35)

- If improper instructions were give, this may become clear at cross-examination and may lead to an application to disclose (part 35.10)his instructions on the basis that there are reasonable grounds for believing that the statement of instructions in the report are inaccurate/incomplete

Duty of the expert - Duty is to the court, not to party instructing the expert (PD35 para 1.1)- Must be independent and uninfluenced by the pressures of litigation PD 35 para

1.2- Must consider all material facts including those which might detract from his

opinion PD35 para 1.4- PD 35(2).4 statement of truth- if breach: possibly liable for contempt of court PD

35 para 2.5- The Ikarian Reefer

o Impartial/independent/objectiveo Must not ignore material facts o State facts which form their own opiniono State where a matter falls outside expertiseo State if view is “provisional”

Request for directions by expert

- Part 35.1.4(2)- If expert feels improper pressure- Must be given to other parties 4 days before he applies- Must be given to own party 7 days before application

Expert employed by a party instructing him

- Need to prove that truly independent and understands that his primary duty is to court, not employer

Biased/inadequacy of report

- Apply for report to be excluded and/or for the instructions to be disclosed in full- Possible breaches:

o PD 35 para 1.1: may not understand duty to the courto PD 35 para 1.2: could be influenced by his position as employeeo PD 35 para 1.3: may not be objective/unbiasedo PD 35 para 1.4: may not have considered all material facts

Conduct - Solicitor under duty not to mislead the court (Draft code of conduct 11.01)

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PROCEDURAL STEPS ON COMMENCEMENT OF PROCEEDINGS IN THE COMMERCIAL COURT

C issue proceedings in Commercial Court

Serve claim form + response pack (may be with or without partics of claim) –Pt 58.5(b)

D file Acknowledgement of Service within 14 days of service of Claim Form –Pt 58.6(2)

If PoC NOT served with Claim Form then C must serve PoC within 28 days of AoS- Pt 58.5(c)

Subject to extensions of time D must file defence within 28 days of service of PoC- Pt

58.10(1)

If D want to joint third party as Part 20 Third Party then issue Part 20 Claim Form at same time as OR before filing defence –Pt 20.7(3)

C may file reply to defence within 21 days of service of defence Pt 58.10(1)

Serve Part 20 Claim Form on Third Party within 14 days of issue with Response Pack + copy of

every statement of case already served- Pt 20.12(1)

+Serve a copy of the Part 20 Claim Form on C-

Pt 20.12(2)

CMC will deal with directions for trial for both the main action and the third party

proceedings. Pt 20.13 and PD 58 para 12(note no allocation questionnaire, instead C M

info sheet –PD 58 para 10.7)

Service of AoS by Third Paty as per Part 58 procedure- Pt 58.6

Third Party serve defence to Third Party Claim-Pt 58.10

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PART 20 PROCEEDINGS

Introduction Part 20 by which the court manages disputes involving a number of parties or causes of action.

The aim of the court is to have as few actions as possible, with as few parties as possible.

this reduces duplication of work, ensuring that the dispute is resolved as quickly as possible and without incurring unnecessary costs; it also avoids the risk of inconsistent judgments on related matters.

Counterclaim Part 20.4(1): counterclaim is claim by the defendant against the claimant- File a defence + counterclaim

Join other parties to the litigation

- Part 20.5 counterclaim against person other than the claimant- Part 20.6 claim for contribution/indemnity from co-defendant (multiple defendants)- Part 20.7 3rd party proceedings- treated as separate claim but takes place within

existing case number

PRE ACTION PROTOCOLSCHECKLIST – MEETING CLIENT FOR FIRST TIME

1 Check for any professional conduct issues

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What are clients objectives:

Maintain relationships – often very key Cost and speed of any action Adverse publicity – privacy often key Relationships with other customers that client works with

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Identify all the parties that could be involved:

A ------ sues ------- B --------- sues (using Part 20 Third Party Claim) ----- C

When considering who to serve Part 20 consider: Current relationship and how this would be affected Are they solvent What B will want from C ? eg Indemnity for what B has to pay A plus damages

4 Financial viability of parties involved

5Nature of the claim:

Breach of contract, if so what section of SGA / SGSA Negligence

6 Jurisdiction and Applicable law: consider;

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Foreign jurisdiction legal rules eg level of damages, claiming costs Does firm have capability to work in case abroad Enforceability of any judgements at home and abroad

NB – a physical check of the contracts is essential to determine what law and which jurisdiction applies

7 Limitation period - 6 years or does the contract shorten this???

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How will the case be funded?? Run through the various options:

o After event insurance – can expect to pay around 40% of claim for the insurance premium so this should be considered.

o CFA – generally not used in commercial litigation due to the level of risk involvedo Money on account – most common

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Further information / Evidence needed: Essential to see all contractual documents that are involved in case in order to check the terms and

conditions – check they match to what client believes. Proof of breaches / negligence Any reports – from both sides in the case and all expert opinions

NB – some kind of duty to preserve documents applies to solicitors??? FIND OUT WHAT RULE

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Consider dispute resolution options: Negotiation ADR / mediation Insol Litigation Expert determination Do nothing

11 Comply with PD protocols

12 Agree next steps going forward

Limitation Issues

Periods The principal statutory authority is the Limitation Act 1980 (LA 1980).

In the majority of cases, the limitation period commences on the date the cause of action arises. The basic rule for actions founded on contract or tort is that the claimant has six years from the date of the cause of action to commence proceedings.

Initial considerations Failure to issue proceedings or take other steps within the limitation period has always been a major source of negligence claims against solicitors.

All necessary checks must be put in place to ensure that any time limits are not missed (eg a duplicate diary system),

If there is any doubt as to whether the limitation period has expired, or if the time period left is short, a solicitor should issue proceedings to protect the client’s position.

Even if the most obvious claim is time-barred, an alternative claim might be

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available. Solicitors acting for potential defendants should pay equal attention to this consideration when first approached by their client.

If limitation can be pleaded as a defence, it is a very effective tool for a defendant.

Exceptions Negligence claims in tort have a time limit that can be extended by s.14A LA 1980 to the date three years after the claimant first had knowledge of all the facts relevant to the cause of action with max of 15years.

Some other points are worthy of a brief mention.

(a) Fraud. Section 32 of the LA 1980 contains a similar exception to that contained in s 14A, namely that in the event of fraud, concealment or mistake, the limitation period is postponed until six years from the claimant discovering the fraud.

(b) Consumer. Claims under the Consumer Protection Act 1987 are subject to a statutory 10-year longstop date after which claims cannot be brought.

(c) Contribution. Where a claim for contribution is brought by way of separate proceedings (ie not by way of an additional claim under Part 20), under the Civil Liability Contribution Act 1978 the limitation period is two years from the date of judgment or, if none, from the date of any agreement to settle reached between the parties.

(d) Pending actions. S.35 of the LA 1980 and r 19.5 of CPR 1998 restrict the ability of a party to defeat the rules on limitation by adding a new claim to existing proceedings when it would be too late to start a separate action.

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INJUNCTIONS – ARE ANY NECESSARY? ITUT AND WS 3 AND WS 4

General Points Who are you working for? Are you arguing for or against the injunction? Normally more than one in a question

ORDERS FOR INJUNC’S AND C’S UNDERTAKINGS

- C must give cross undertaking (PD 25 para 5.1(1)- Undertaking to court to serve on D

o Application notice, evidence in support and order made ASAP (PD 25 para 5.1(2))o Case law also required D be given full notes of hearing

- Order must state return date for hearing where D will have opportunity to argue injunction be set aside (PD 25 para 5.1 (3)

- If made before application notice filed – undertaking to file and pay fee on next or same day- If made before claim form issued – undertaking to issue claim form on same or next day OR order

contains directions for commencement of proceedings (PD 25 para 5.1(5)

Undertaking v’s Injunctions

UNDERTAKING INJUNCTION

- Saves costs – don’t needs interim hearing- As effective as injunction with penal notice –

non compliance punishable as contempt of court

- Can negotiate terms of undertaking so restraints on D more acceptable than what would be imposed by injunction

- Judge may be more favourable towards D when awarding costs because D’s acceptance of undertaking makes them appear reasonable and saved cost of interim hearing.

- Either party can apply to vary or set aside BUTo More difficult to vary or set aside

undertaking because given voluntarily by D

o Undertaking only varied if significant change in circumstances or have become aware or new facts

- If injunction set aside, D may be entitled to damages because of C’s cross undertaking

COSTS OF INJUNCTION

- Costs are usually reserved for trial judge to decide- If injunction later set aside trial judge will order C to pay D’s costs of injunction hearing- Judge may order costs then and there if one party clearly has stronger case OR either party

acted unreasonably in pursuing application – ‘costs in any event within 14/21 days’.

OPPOSING INJUNCTION STRUCTURE

If you are opposing the injunction then you will be arguing that the test has not been satisfied and/or that the order should be varied:

How to attack injunction:1. attack the root test for that injunction2. any arguments in equity?

o Full diusclosure?o Malice

3. any procedural irregularities?o CPR?o Served documents correctly?o Search order:

Any parts of order been breached?

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Any undertaking not been fulfilled?4. how can it be varied so better for client?

o Narrow ordero Personal / business allowances

PROHIBITORY INJUNCTION

APPLYING FOR A PROHIB INJUNC – WITH NOTICE

PROCEDURE:

1. Apply for application notice – FORM N244(note: r 23.3(2) allows court to dispense with this requirement-urgent)

Notice must state:o Order sought and why (r.23.6)o Date, time and place of hearing (PD 25, para 2.1)

2. Must be supported by evidence, unless court says otherwise (r.25.3(2)

3. Evidence can be set out in witness statement verified by statement of truth (PD 25, para 3.2) and state:

o Cause of actiono Facts applicant relying on and all material facts court should be made aware of (PD25

para 3.3)o Therefore should include information of C’s financial situation because of cross

undertaking needed from them

4. Application notice and witness statement must be served ASAP after its been issued, ANDo Not less than 3 days before hearing of application (r.23(7(1)), ANDo It must be filed with court (r.23.7(2)), ANDo Any draft order containing terms of injunction, penal notice and cross undertaking must

also be served and filed

5. Undertaking of Claimanto Order for Prohib injunc must have undertaking from C:

- To pay any damages suffered by D that court deems appropriate (PD 25 para 5.1(1)) ie cross undertaking – Court must be satisfied that C is financially viable.

6. Issue fee

APPLYING FOR A PROHIB INJUNC – WITH OUT NOTICE

WHEN IS IT ALLOWED?

- Court can grant interim remedy on without notice application if appears there are good reasons for no giving notice (r.25.3(1))

- Usual reasons:

o Matter is too urgent to wait for notice to be giveno D would take steps to harm C if forewarned of application

Application may be made orally if insufficient time for writing, but court will require undertakings from applicant or his solicitor to file and serve written evidence to support application:

1. Evidence in support of the application must explain why notice not given- evidence. C must make FULL disclosure of all facts, including any that go against C’s case. Pt 25.3(1)

2. The application, supporting evidence and a draft order should be filed 2 hours before hearing, wherever possible (PD25 para 4.3(1)

3. Evidence in support of the application should state:

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(a) the material facts the court should be made aware of (PD 25 para 3.3);(b) the facts justifying an interim injunction;(c) the facts justifying an application without notice to the D (r.25.3(3) + PD25 para 3.4)(d) any answer which is likely to be raised by the D ie in support of D’s case;(e) any facts known to the applicant which might make a without notice

- remedy inappropriate; and- the precise order being sought.

APPLICATION MADE BEFORE CLAIM FORM ISSUED:

- Court can grant prohib injunc before proceedings commenced if:o Matters urgento Or desirable in interests of justiceo R.25.2(1) & (2)

1. Application notice, evidence and draft order filed with court 2hrs before hearing (PD25 para 4.3(1)

2. if application made before application notice issued:o draft order should be provided at hearing, ANDo app. notice and evidence filed with court on same or next working day (PD 25 para 4.3(2)

3. C should informally notify D of application unless secrecy essential (PD 25 para 4.3(3))

4. C must undertake to court to issue claim form immediately, or court will give directions for commencement of claim (PD 25 para 4.4(1))

5. C should try and serve claim form with order for injunction on D (PD 25 para 4.4(2)

APPLICATION MADE AFTER CLAIM FORM ISSUED:

- Same as first 3 steps as in procedure for application made before claim form issurd- Simply DON’T have to undertake to issue claim form

AMERICXAN CYANAMID GUIDELINES:

Court has discretion to grant P.I even if guidelines are met

1. IS THERE A SERIOUS QUESTION TO BE TRIED?

- C must show that he has a real prospect of successo Use evidence to show that have a good arguable case - cause of action with substance.o Don’t have to prove that they will win

- D must show he has an arguable defence / ie real prospect of successo If DO then rest of guidelines are consideredo If DON’T then injunction granted so long as damages would be inadequate remedy for

Co (mention any possible ulterior motive of C for applying for injunction that makes it

inequitable for injunction to be granted)

2. WOULD DAMAGES BE AN ADEQUATE REMEDY FOR C

- C must argue damages would be inadequate to compensate them in these circumstances because:

o Loss unquantifiableo Irreparable loss (eg damage to reputation or loss of business)o D wouldn’t be able to pay damages

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3. CAN C GIVE CROSS UNDERTAKING? AND WOULD IT BE ADEQAUTE REMEDY FOR D?

IF C had to pay the D damages, would it be an adequate remedy to D for harm caused by injunction?

- Injunction usually will only be granted if C can give cross – undertakingo Ie injunction later set aside and D’s suffered loss, C will pay D damageso Therefore, can C afford to give such an undertaking?

- Can damages adequately compensate D for loss suffered because of injunction?o C would have to argue D’s losses would be quantifiableo D could argue that they’d suffer irreparable damage to reputation or loss of businesso Therefore, damages would be inadequate

- D could also argue that C wouldn’t be able to afford damages

4. WHERE DOES THE BALANCE OF CONVENIENCE LIE?

- Which course of action will cause the GREATER harm?o What course of action will cause the least harm?o Consider whether either will suffer irreparable harmo D should mention any alternative malicious motive of C for bringing application – C not

coming with ‘clean hands’.

- Status Quoo If balance of relative harm doesn’t clearly favour on partyo Court usually upholds status quo:

If C hasn’t delayed in applying for injunction = status quo = position parties in before cause of dispute arose

If C has delayed in applying = status quo = position of parties just before application issued

o Therefore C should mention haven’t delayed in application and what status quo iso Or if C has delayed, D should mention this and status quo

- IF COURT CANT MAKE DECISION AFTER CONSIDERING THE ABOVE:o Consider whether one party clearly has a stronger case – only able to do this if

American Cyanamid guidelines don’t produce solution

5. EXCEPTIONS TO AMERICAN CYANAMID

- There is unlikely to be a trial

- Applications to prevent court proceedings

- Applications for injunctions preventing publication of confidential information where ---there are public interest issues.

- Applications for mandatory injunctions

- Applications for freezing injunctions or search orders

If injunction granted, early trial should be considered minimising the loss suffered by D as a result

Grounds for applying to set aside or vary:

1. The C has failed to satisfy requirements for obtaining injunction

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2. Equitable grounds

3. Reach a conclusion

FREEZING INJUNCTIONS

STEPS 1 TO 3 = THE ROOT TEST

1. Good arguable case AFTER full disclosure ie a real prospect of success (essentially same as American Cyanamide , IPI)

2. Does D have assets within England and Wales?

3. D has property in jurisdiction and intends to act so as to frustrate the enforcement of the C’s judgement:

- ‘Real likelihood’- C must persuade court that D will deliberately deal with assets in a way which will defeat C’s ability to recover damages.

- Usually needs to be clear evidence that the D is a ‘debt dodger’/previous conduct, incl dishonesty, disregard of court orders, evidence of taking steps to dispose of assets.

STEPS 4 TO 6 = SET ASIDE OR VARY ORDER

D will argue that the order should not have been made in the first place under one of following:

4. Does C have a good arguable case after FULL disclosure?

- Even after all of the weaknesses of C’s case and strengths of the D’s case considered?o C still has a real prospect of successo Low threshold

- Application always made without notice:o C has duty to disclose all points D would have raised? Did they?o Duty to make reasonable enquirieso Has C made full and frank disclosure?

5. Does D have property in Juris and does he intend to act so as to frustrate enforcement of C’s judgement if C wins?

- Need to show real likelihood not mere possibility that D will frustrate enforcement?- Any evidence that they will / wont? Eg by moving property out if the Juris or disposing of it in

other ways?- Need evidence to show D is ‘debt dodger’ – type of person to try and frustrate C’s

enforcement – D should argue that C has no such evidence – never tried to avoid debts- D have any innocent reason for disposing of property to counter C’s argument?- Yet if D is based outside UK court will take into account D’s ability to remove property from

Juris AND difficulty of enforcing judgement in that country

6. Any equitable arguments?

- Can D argue C didt come to court with clean hands?- Did C fail to make full and frank disclosure?- Any ulterior malicious reasons for C applying for freezing order?- Delay before application made?

IF CANT SET ASIDE THEN:

7. Any variations to order sought if court won’t set it aside?

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- Need evidence to show variations necessary- Increase business expense? - Decrease amount frozen?- Increase domestic expense?

GENERAL INFORMATION ABOUTFREEZING INJUNCTIONS

PURPOSE (r.25.1(1)(f):

- Prevent D disposing of property by removing assets from Juris- Restrains D from dealing with assets wherever located

LIMITED TO:

- Value of freezing injunction limited to likely amount of judgement- If D had assets worth more than amount specified in order – can deal with surplus freely- Therefore, D will always hold assets C can enforce judgement against if succeed

EXCEPTIONS:

- D allowed to withdraw weekly specified sum for living and business expenses and legal costs- Amount D allowed to withdraw must be reasonable – based on D’s usual lifestyle

3RD PARTY LIABILITY:

- 3rd party can be in contempt of court if informed of order and help D break the order eg bank- Not liable in damages- 3rd party can apply to have injunction set aside or varied if its causing them undue difficulty

APPLICATION PROCEDURE:

- By application notice FORM N244- Made without notice- Application supported by evidence in affidavit (PD25 para 3.1)

ORDER

- Must include penal notice else D cant be held in contempt of court for non-compliance- C gives cross undertaking- Return date – hearing where D can try and get the injunction set aside or varied- States particular assets frozen – lists ones C knows of BUT not limited to them- Amount D frozen up to – can use surplus freely

SEARCH ORDER

Obtaining and Set Aside

STEPS 1 TO 3 = THE ROOT TEST

1. Does C have EXTREMELY strong prima facie case after FULL disclosure?o Higher standard – C will likely succeed not mere prospect, even after all weaknesses in

their case consideredo Has C made FULL disclosure?

Including supporting affidavit All points D would have raised if had chance to be heard Because always without notice application for search order C has duty to

disclose D’s case Duty to make reasonable enquiries

2. Has C proved that he’ll suffer serious harm and injustice if order not made?

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o Evidence that D will destroy evidence or property belonging to C in D’s possession?o If were destroyed – is this irreplaceable? Would cause signif harm to C’s case?

3. C cant recover materials in D’s possession by any other means?o Taken steps to contact D and do everything reasonably could to get them to voluntarily

hand them over?o Order for delivery up of goods not possible?

STEPS 4 TO 6 = SET ASIDE OR VARY ORDER

D will argue that the order should not have been made in the first place under one of following:

4. Any equitable arguments?o Because its an equitable remedy, shouldn’t be granted if C didn’t come to court with

clean handso Failure of C to give FULL and FRANK disclosureo Possible malicious / ulterior motive for applying for search order and bringing claim?o Did C use force as this is not permittedo Delay before application?

Acquiescence through delay? Evidence that C wouldn’t really suffer serious harm if materials destroyed, or

didn’t really think D would destroy them else wouldn’t delay

5. Any procedural irregularities?o Check search order and PD25 para 7.4 and 7.5 was complied with when search carried

out o Any breach equals contempt of court

7.4 Service:(1)   the order must be served personally by the Supervising Solicitor, (3)   the Supervising Solicitor may be accompanied only by the persons mentioned in the order,(4)   the Supervising Solicitor must explain the terms and effect of the order to the respondent in

everyday language (5)   where the Supervising Solicitor is a man and the respondent is likely to be an unaccompanied

woman, at least one other person named in the order must be a woman and must accompany the Supervising Solicitor, and

(6)   the order may only be served between 9.30 a.m. and 5.30 p.m. Monday to Friday 7.5 Search and custody of materials:(1)   no material shall be removed unless clearly covered by the terms of the order,(2)   the premises must not be searched and no items shall be removed from them except in the

presence of the respondent or a person who appears to be a responsible employee of the respondent,

(3)   where copies of documents are sought, the documents should be retained for no more than 2 days before return to the owner,

(8)   if any of the listed items exists only in computer readable form, the respondent must immediately give the applicant's solicitors effective access to the computers, with all necessary passwords, to enable them to be searched,

(9)   the applicant must take all reasonable steps to ensure that no damage is done to any computer or data,

(10)   the applicant and his representatives may not themselves search the respondent's computers unless they have sufficient expertise to do so without damaging the respondent's system,

(13)   where the Supervising Solicitor is satisfied that full compliance with paragraph 7.5(7) and (8) above is impracticable, he may permit the search to proceed and items to be removed without compliance with the impracticable requirements.

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IF CANT SET ASIDE THEN:

6. Apply to have the order varied:o Any documents that have been taken to be returned immediately to SOL or client

GENERAL INFORMATION ABOUT SEARCH ORDERS

Undertakings (schedule 3)

- Undertaking as to damages from C (compensation if oppressive + confidentiality)- Applicant’s solicitor

o Safe-keeping of docs- SS’s solicitor

o Explain effects of ordero Inform respondent of right to legal adviceo Provide report

- If solicitors make mistakes: contempt of court

Supervising solicitor - Experienced in operation of search orders- Independent- To help D understand what is happening + nothing else happens- Prepare report afterwards- C’s solicitors should file affidavit

o ID supervising solicitor’s experience- Order must be served personally by supervising solicitor

Dealing with items - Order will specify items- C cannot take away everything that may be relevant - Evidence belonging to D

o SS undertakes to return original within 2 working dayso Can take copies

- Ownership disputedo Applicant’s solicitor can retain items until gets undertaking by D’s solicitor to keep

them in safe custody and produce them on request of the court (cannot let anyone else use items)

o Then applicant’s solicitor must give items to D’s solicitor within 2 working days

Terms of the order - Penal notice: warns of contempt of court- Applicant can ask D’s cooperation but cannot compel it

o Only remedy is contempt of court- Permits search of premises mentioned in order + places discovered as result of the

order + vehicles on/around premises - Can include home (ATTENTION if woman only, SS needs to be woman)- There can be a representative of application (must inform court)

Respondent - Required to cooperate- Para 18 Required to show where items are- Para 16 required to hand over items- Para 18 required to reveal IDs + address of suppliers and customers + location of items- Confirm info is accurate- Entitled to have order explained to him- Para 10+ 11 entitled to refuse disclosure of docs under privilege- Para 20 can’t tell anyone except his lawyers about proceedings + search order- Para 21 can’t destroy, tamper cancel or dispose of items- If does not comply: CONTEMPT OF COURT

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ESTABLISING JURISDICTION (EU AND RoW)

IF BOTH PARTIES ARE DOMICILED IN THE EU

BRUSSELS REGULATIONS

EU jurisdiction checklist:

1. Is the dispute subject to arbitration (Art.1(2)(d)) ?? IF YES THE REG’S NOT APPLY

2. Is it a civil or commercial matter? (BR only applies to these)

3. Is there exclusive jurisdiction under Art.22? IF YES THE REGS WILL NOT APPLY

- Cant be contracted out of

1. Concerns regulation of IP rights

- State where the registration was applied for or has taken place.- if the dispute is about whether they have been infringed, the normal rules apply- Article 22(4)

2. Dispute concerning land rights

- Exclusive jurisdiction in the courts of the state where the property is situated- any claim for any equitable remedy (eg specific performance) claimant free to sue in

the defendant’s local court if he so chose.- Article 22(1)

3. Concerns constitution or dissolution of Company

- State where the company has its seat- Article 22(2)

4. Where judgement is being enforced

- Any dispute arising out of the enforcement of a judgement must be heard in the State where judgement is being enforced (Art.22(5))

4. Is it a consumer or insurance contract? IF YES THE REGS WILL NOT APPLY

1. Insurance (Article 8 – 14)

- insured can choose to sue in own home court or insurer’s home court- insurer must sue in insured’s home court (Article 12(1)- liability insurers and insurers of property can be sued in MS court where cause of

action

2. Consumer Contracts (Article 15 – 17)

- consumer can choose to sue in own local court or other parties- other party must sue consumer in consumer’s local court

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- can only contract out of the above after dispute’s arisen – anything before agreed will be void.

5. Has the D submitted to the jurisdiction? Eg filed defence / failed to make app to challenge jurisdiction in time… if not:

1. Has C issued and served a claim form?2. has D filed a defence?3. if yes then D’s submitted to jurisdiction of Court C issued claim form

NB – applies even if there is an exclusive jurisdiction clause in contract.

Not possible if rules of exclusive juris. apply (Article 22)

4. Also submit if D files acknowledgement of service saying they intend to challenge Juris. AND then fail to make application within time limit (28 days from acknowledgement of service if commercial or mercantile court, 14 days in all other cases)

6. Is there a binding exclusive jurisdiction clause (Art.23)

The agreement must be;- in writing or - evidenced in writing or - capable of being inferred from an international trade or - commercial activity of which the parties were or should have been aware.

If the parties agree to confer juris. to specific court then that specific court will have juris.

Cant contract out of exclusive juris. rules (Art 22) (ie insurance and insurance etc)

IF NONE OF THE ABOVE APPLY:

NB – step 7 and 8 carry equal weighting

7. Apply basic rule – Art 2 – sue where D is domiciled

1. D to be sued where they’re domiciled if all of above don’t apply (or no alternative stated below can be used) Three months’ residence will prima facie establish domicile (s.41)

2. S.41 of Civil Juris & Judgement Act 1982 - Individual domiciled in England and Wales if they’re resident there, and- Nature and circumstances of their residence indicate substantial connection with UK

3. Art 60 – Domicile of company registered office or p/s – where is has its statutory seat, central admin or principal place of business.

8. Any alternative applicable rules:

a. Art 5(5) – branch or agency alternative

Can issue proceedings in MS branch / agency domiciled if:

1. Company domiciled in a MS and has branch in another MS, AND2. The dispute has arisen out of operations of that branch / agency

b. Art 5(1) – contract alternative (nb – what is the place of performance)

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- Can issue proceeding in MS where place of performance of contract occurred or should have occurred

- Where more than one obligation is in dispute, the courts for the place of the principal obligation was to be performed have juris. (Shenavai v Kreischer)

- UNLESS agreed to contrary, place of performance will be:o sales of goods = where goods were / should have been delivered (Art 5(1)(b)o supply of services = where services were / should have been provided (Art 5(1)(b)o IF mixed goods and services – services prevail

c. Art 5(3) – Tort alternative

- Can issue proceeding in MS where tort committed or where harm occurred or may occur- A court can hear a case under this rule even though only part of the harm was caused

within its jurisdiction (Shevill v Presse Alliance SA)- the court for the State where the harm occurred can only award remedies for the harm

which occurred in that State.

d. check are there any co-D’s / 3rd parties (Art 6)

- Only applies if C suing D in place D domiciled- Must be a real defendant- C suing D in MS where D domiciled can join other D’s domiciled in EU that are party to

those proceedings provided:o Claims are so closely connected that its expedient (convenient) to determine them

together (to avoid risk or irreconcilable judgements resulting from separate proceedings)

9. What if the other side win the race – has it been first seized?

Where proceedings have been started first – that will mean case is seized. (Art.30)

If claim form is issued in elsewhere before issued in England, then consider:

- Same parties AND same cause of action = English court cannot hear if proceedings started elsewhere (Art.27)

- Related cause of action = English court have a discretion to accept juris (Art.28)

IF ONE OF THE PARTIES IS DOMICILED IN THE REST OF THE WORLD

PART 6.20 AND 6.21 - PERMISSION TO SERVE OUT OF THE JURISDICTION

SERVICE OUT CHECKLIST (REST OF THE WORLD)

1. Is D of EU domicile / seat? NO….

2. Can D be served within England and Wales? Either while they are in E&W or at place of business in E&W?

If NO to 1 & 2 – permission to serve out is required

3. Do any of the Rule 6.20 grounds for service outside of juris apply?

General grounds - Application by C:

- Claim made for remedy against someone domiciled in Juris (r.6.20(1))

- Claim made for injunction against D to do, or stop doing an act within the juris (r.6.20(2))

- When C wants 3rd party to join in action and 3rd party outside of juris: (r.6.20(3)

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Can serve outside juris if: o already, or about to, serve claim form on D (who’s in EU or UK), ANDo C and D have real issue between them that’s reasonable for court to try, ANDo 3rd party is necessary or proper party to that claim

Claims relating to contracts:

- Permission granted if the contract the claim relates to was:o Made within Juris (r.6.20(5)(a)), oro Made by / through agent trading or residing in Juris (r.6.20(5)(b)), oro Governed by English Law (r.6.20(5)(c)), oro Has a term stating English court has Juris (r.6.20(5)(d)), oro Breach committed within Juris (r.6.20(6)) – place of performance

Claims relating to tort:

- Permission granted where:o Damage sustained in Juris (r.6.20(8)(a)), oro Damage sustained resulted from act committed within Juris (r.6.20(8)(b)

General grounds – Application by D:

- Claim is Part 20 claim AND person to be served is necessary or proper party to claim (r.6.20(3A)

4. Does claim have a reasonable prospect of success? Rule 6.21(1)(b) – JUST MENTION – low threshold

Question of fact – probably yes on most occasions

5. Is England and Wales the proper place to bring the claim? Rule 6.21(2A)NB – show connection with England – as many as possible reasons / rules

For example:- Where is most convenient place?- Where are the witnesses based?- Where is the majority of the evidence located?- Where was the contract negotiated / concluded?- Where do each party have their offices?- Where was place of performance?

If yes to 3 – 5 – permission may be granted – judge still has discretion

CHALLENGING JURISDICTION (EU AND RoW)

DOCUMENTS REQUIRED TO CHALLENGE JURIS

- Acknowledgement of service- Application notice- Witness statement in support of application

BOTH PARTIES BASED IN EU (BRUSSELS REG’S)

USED WHEN ANOTHER MS COURT IS ALREADY SEIZED OF THE MATTER (ART 27)

Which one of following circumstances apply on the facts:

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1. Proceedings involving SAME parties and SAME cause of action

- Commenced already in another MS so English courts cannot hear case- ART 30 = court deemed to be seized:

o At time document instituting proceeding is lodged, provided its then servedo UNLESS document has to be served before lodged with court then court seized when

document is received by authority responsible for service.

2. Proceedings begun in another MS that involves RELATED cause of action (Art.28)

- English court has the discretion to decide whether or not to decline jurisdiction- Consider whether risk that its judgement will conflict with judgement of other EU court.

PROCEDURE: (WHEN WANT TO CHALLENGE THAT ENGLISH COURT ISNT JURIS)

1. Acknowledge service of Particular of Claim (or claim form if its in commercial (r58.6(3)) or mercantile court (r.59.5(3)) within 21 days (PD 6B, para 7.3) and state intention to challenge jurisdiction.

2. Apply to court to challenge juris. on grounds that English court doesn’t have calid juris (FORM N244).

- Within 14 days of filing acknowledgement of service (28 days if commercial (r.58.7(2) or mercantile (r.59.6(2))

- Along with evidence (r11(4))

3. If don’t apply within time limit then deemed as having submitted to English courts juris. (r11(5))

4. DON’T file a defence as doing so will be deemed to have submitted to English Juris.

5. GROUNDS FOR CHALLENGING JURISDICTION:

- GO through Brussels reg’s checklist (above) and claim the court doesn’t have valid juris under the regs.

o If D sued in English courts because C claims D domiciled there? Can D challenge this? Is D’s statutory seat outside the UK? Try to show that D has no real connection with UK.

o Any exclusive juris apply under Art.22?o Anything in their contract that equates to a exclusive jurisdiction clause?o Any of the alternatives apply?

GENERAL TACTICS FOR THE DEFENDANT IN JURISDICTION MATTERS

- Aim to seize court of their choice in EU before C issues claim form- D has counter claim:

o Then should issue their claim form before C, in EU court they chooseo And that their allowed to choose under Brussels Reg’so Can choose court better suited to them

- D can apply for Declaration of non liability in court they want case to be heard – if allowed under the Brussel Regs

ONE OF THE PARTIES IS BASED OUTSIDE THE EU

PROCEDURE: (WHEN WANT TO CHALLENGE THAT ENGLISH COURT ISNT JURIS)

1. Acknowledge service of Particular of Claim and state intention to challenge jurisdiction. The time for doing so is set out in the PD 6B to Part 6 para 7.2 and 7.3. FIND the relevant amount of days in table below.

NB – REMEMBER IN THE COMMERCIAL AND MERCANTILE COURTS TIME RUNS

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FROM SERVICE OF THE CLAIM FORM NOT THE PoC (where tey are not served together)

Place or country Days Place or country Days Place or country Days

Abu Dhabi 22Holland (Netherlands)

21 Puerto Rico 23

Afghanistan 23 Honduras 24 Qatar 23Albania 25 Hong Kong 31 Reunion 31Algeria 22 Hungary 22 Romania 22Angola 22 Iceland 22 Russia 21Anguilla 31 India 23 Rwanda 23Antigua 23 Indonesia 22 Sabah 23Antilles (Netherlands) 31 Iran 22 St. Helena 31Argentina 22 Iraq 22 St. Kitts--Nevis 24Armenia 21 Ireland (Republic) 21 St. Lucia 24Ascension 31 Ireland (Northern) 21 St. Pierre 31Australia 25 Isle of Man 18 St. Vincent 24Austria 21 Israel 22 Samoa 30Azores 23 Italy 21 Sarawak 28Bahamas 22 Ivory Coast 22 Saudi Arabia 24Bahrain 22 Jamaica 22 Scotland 21Balearic Islands 21 Japan 23 Senegal 22Bangladesh 23 Jersey 18 Seychelles 22Barbados 23 Jordan 23 Sharjah 24Belarus 21 Kampuchea 38 Sierra Leone 22Belgium 21 Kazakhstan 21 Singapore 22Belize 23 Kenya 22 Slovakia 21Benin 25 Kirgizstan 21 Slovenia 21Bermuda 31 Korea (North) 28 Society Islands 31Bhutan 28 Korea (South) 24 Solomon Islands 29Bolivia 23 Kuwait 22 Somali 22Bosnia-Hercegovina 21 Laos 30 South Africa 22Botswana 23 Latvia 21 South Georgia 31Brazil 22 Lebanon 22 South Orkneys 21Brunei 25 Lesotho 23 South Shetlands 21Bulgaria 23 Liberia 22 Spain 21Burkina Faso 23 Libya 21 North Africa 31Burma 23 Liechtenstein 21 Sri Lanka 23Burundi 22 Lithuania 21 Sudan 22Cameroon 22 Luxembourg 21 Suriname 22Canada 22 Macau 31 Swaziland 22Canary Islands 22 Macedonia 21 Sweden 21Cape Verde Islands 25 Madagascar 23 Switzerland 21Caroline Islands 31 Madeira 31 Syria 23Cayman Islands 31 Malawi 23 Taiwan 23Central African 25 Malaya 24 Tajikistan 21Chad 25 Maldive Islands 26 Tanzania 22

25

Place or country Days Place or country Days Place or country DaysChile 22 Mali 25 Thailand 23China 24 Malta 21 Tibet 34Christmas Island 27 Mariana Islands 26 Tobago 23Cocos 41 Marshall Islands 32 Togo 22Colombia 22 Mauritania 23 Tonga 30Comoros 23 Mauritius 22 Tortola 31Congo 25 Mexico 23 Trinidad & Tobago 23Corsica 21 Moldova 21 Tristan Da Cunha 31Costa Rica 23 Monaco 21 Tunisia 22Croatia 21 Montserrat 31 Turkey 21Cuba 24 Morocco 22 Turkmenistan 21Cyprus 31 Mozambique 23 Turks & Caicos Islands 31Cyrenaica (see Libya) 21 Nauru Island 36 Uganda 22Czech Republic 21 Nepal 23 Ukraine 21Denmark 21 Netherlands 21 USA 22Djibouti 22 Nevis 24 Uruguay 22Dominica 23 New Caledonia 31 Uzbekistan 21Dominican Republic 23 New Hebrides 29 Vanuatu 29Dubai 22 New Zealand 26 Vatican City State 21Egypt (Arab Rebublic) 22 Nicaragua 24 Vietnam 28El Salvador ( 25 Niger (Republic of) 25 Virgin Islands -- 31Equatorial Guinea 23 Nigeria 22 Virgin Islands -- U.S.A 24Estonia 21 Norfolk Island 31 Wake Island 25Ethiopia 22 Norway 21 Western Samoa 34Faroe Islands 31 Pakistan 23 Yugoslavia 21Fiji 23 Panama 26 Zaire 25Finland 24 Papua New Guinea 26 Zambia 23France 21 Paraguay 22 Zimbabwe 22French Guiana 31 Peru 22French Polynesia 31 Philippines 23French West Indies 31 Pitcairn Island 31Gabon 25 Poland 21Gambia 22 Portugal 21Georgia 21 Portuguese Timor 31Germany 21Ghana 22Gibraltar 31Greece 21Greenland 31Grenada 24Guatemala 24Guernsey 18Guyana 22Haiti 23

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2. Apply to court for order declaring that it has no Juris using Form N244 under Part 11(2)&(4) - Within 14 days of filing acknowledgement of service (28 days if commercial

(r.58.7(2) or mercantile (r.59.6(2))- Along with evidence (r11(4))

3. If don’t apply within time limit then deemed as having submitted to English courts juris. (r11(5))

4. Don’t file defence - else will submit to Juris.

5. GROUNDS FOR CHALLENGING JURIS:

UNDER R.6.20: (ONLY NEED TO SHOW ONE TO SUCCEED)

- CONTRACT GROUNDS (R.6.20(5))o Contract made outside juris?o Not governed by English Law?o No exclusive Juris clause?o Breach committed outside Juris? Ie place of performance outside England

- TORT GROUNDS (R.6.20(8))o Damage sustained outside of Juris?o Tortious act committed outside Juris?

ENGLAND NOT PROPER PLACE TO BRING CLAIM:

- FORUM NON CONVENIENSo Not most convenient juris to try case

Witnesses in different country? Evidence in different country? Expensive shipping involved? Time consuming to move everything? Risk of losing evidence

- CASE HAS LITTLE CONNECTION TO ENGLANDo Contract negotiated and concluded in other country?o Place of performance in other country?o D located in other countryo C has office in other country

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ARBITRATION – ITUT AND WS 8

Checklist: Valid arbitration clause / agreement? (if no would they agree anyway?)

o If binding then cant commence proceedings Does it cover this dispute? Has time limit for commencing Arbitration expired?

o Ask Arbitrator thenb S.12 apply to court

Guiding principles - Fair resolution of disputes- Impartial tribunal- Without unnecessary expense/delay

- s. 1

Terms of arbitration agreement

- Should have a phrase that covers disputes “with reference to the contract”- Disputes “arising out of or under the contract” includes rectification of the contract but not where

parties have actually formed a contract- Doctrine of precedent should not be rigidly applied- see circumstances as a whole- “in connection with the contract” includes disputes about pre-contract mistake and

misrepresentation- best clause to include for arbitration: “any dispute arising out of or in connection with this contract

shall be referred to and finally resolved by arbitration under the Rules of the Chartered Institute of Arbitrators, which rules are deemed to be incorporated by reference to this clause”.

Case Law

Incorporating the arbitration clause

- Agreement in writing: wide meaningo Exchange of letters/other communicationso Agreements evidenced in writing (by parties/3rd party)o Oral agreements to written terms

- If written submissions by a part during arbitration or proceedings + one party alleges that there is an arbitration agreement + other party does not deny = arbitration agreement will apply

- Mandatory provisions of the Act

- S. 5 AA

- S. 5(5)

- Sch 1 AA 1996

Incorporation of arbitration clause

- By referring to arbitration clause in another agreement in another agreement

- Even if main contract is invalid: arbitration clause still effective

- S. 6(2)

- S. 7

Appointing arbitrator

- Parties free to decide number of arbitrators- If no agreement, 1 arbitrator- Parties can agree on procedure for choosing 1 arb- If no procedure agreed either party can make written request to make joint appointment within 28

days- Otherwise apply to the court- If decide 3 arbitrators: each party appoints 1 within 14 days of request and 2 arb choose 3rd

- If 1 party doesn’t make appointment: A gives notice to B that he proposed X as sole arbitrator- B has 7 days to appoint other arb- otherwise A’s arb appointed

- Only remedy: application to court- If can’t agree on chairman: apply to court- If only 2 arbs: implied that there should be a 3rd one- If no chairman: can choose an umpire (only comes if they get stuck)- If parties haven’t chosen an umpire: 2 arbs will choose umpire as soon as unable to agree (b4 final

hearing)- Parties can agree on functions of umpire- Parties can decide on rule on how tribunal should exercise powers- otherwise majority vote- All decisions taken by majority unless agreed

- S. 15(1)- S. 15(3)- S. 16(1)- S. 16(3)

- S. 18- S. 16(5)- S. 17

- S. 18- S. 18- S. 15(2)- s. 15(1)- s. 16(6)

- s.21- S. 22- S. 20

Arbitrator’s duties - General definition - Decide if he is competent + time + validly appointed- Decide whether there is a valid arbitration agreement + whether tribunal validly constituted + what

matters were submitted to arbitration- Disclose circumstances which may affect impartiality

o Business relationships with partieso Social relationships with parties

- S. 33- s. 30

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o Prior knowledge of disputeo Commitment which may affect availability

- Dispute arb’s jurisdiction: party’s first step in dealing with merits of the application after the arbitrator’s appointment

- Challenge arb’s jurisdiction in court. Will be considered ifo Decision will have substantial costo No delay in making applicationo Good reasons for matter to be considered

- Party who continues in arbitration: cannot subsequently apply to the court

- s. 31

- s. 32

- s. 73

Arbitrator’s powers

- make different awards on different issues at different times- award security for costs - decide on procedural/evidential matters

o e.g. apply for permission to include expert’s report as evidence

- s. 47- s. 38(3)- s. 34

Arbitrator’s fee - can refuse to give award if fee unpaid - s. 56

Removal of arbitrator

- impartiality (w/ regards to all circumstances)- lacks qualifications- doubts mental/physical capacity- too slow

- s. 24

Duties of parties - do all things necessary for proper and expeditious conduct of proceedings (e.g. complying with orders/asking for directions)

- pre-emptory orders- if don’t respect pre-emptory order: may dismiss claim, draw adverse inferences, make an award,

order as to costs

- s. 40

- s. 41(5)- s. 41(7)

Role of court - can make order requiring compliance with pre-emptory order- party must have exhausted all other available arbitral processes- orders in relation to

o evidenceo propertyo selling goodso interim injunctionso appointing a receiver

- s. 42

- s. 44

Starting arbitration proceedings

- extension of time possible (on notice to other parties and if all other arbitral process)o if circumstances outside reasonable contemplation of parties + just to extend timeo conduct of 1 party makes it unjust to hold it to the terms of the arbitration agreement

- s. 12- s. 12(3)a- s. 12(3)b

Staying court proceedings - parties apply to court

- must first acknowledge proceedings/taking steps to answer the substantive claim- see Part 11 CPR for procedure

o application for stay of proceedings must be made within 14 days of filing acknowledgement of service

o witness statement

- s. 9- s. 9(3)

Preliminary hearing

- arb to decide procedural/evidential matters subject to parties’ right to choose their own procedures- consider:

o statements of caseo documentso expertso evidenceo points of law (apply to court s. 45)o directions as to property (s. 38(4))o hearingo arb’s fee

- s. 34

Points of law - only with consent of other parties or arbitrator- will be accepted only if will save costs + no delay in making application- can rarely be appealed- s. 45 can be excluded- if exclude arbitrator’s need to give reasons = exclude court’s jurisdiction under s. 45

- s. 45

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Preparation for hearing

- overriding objective (can’t contract out)- parties duties (no delay in evidence, experts...)- copy all correspondence to arbitrator to other party

- s. 33- s. 40

Costs - arbitrator can award 1 party to pay costs of arbitration- costs should follow the even (if you lose, you pay)- inter-parties costs- payment of arbitration costs- enforcement of award

o may be enforced like judgement court order (with leave of court)

- s. 61- s. 61(2)- s. 63- s. 64- s. 66-

Challenging the award

- issues of jurisdiction- serious irregularity- issues of law- appeals

- s. 67- s. 68- s. 69- s. 70

LITIGATION – ITUT AND WS 1

WHICH COURT

REMEMBER FINACIAL LIMITS FOR THE DIFFERENT COURTS AND THE TYPE OF CLAIM THEY DEAL WITH

COURT INFORMATION

Small track(Part 27)

Up to £5K

Small claims stuff, intended to provide a proportionate procedure for straightforward claims (PD 26, para 8.1()). Limited costs (generally) r27.14

Allocation to track will depend on a number of things (see p97) including value of claim, complexity of case, importance to the public etc (see rule 26.8(1))

Fast track (Part 28)

£5001 to £15000

Timetable Structure (Para 3.12 of PD28 – sets out typical timetable from date of allocation)

STAGE DURATION

Preliminary Directions (ADR – stay in proceedings) (6 weeks)

Disclosure

o Scope?o How long?o Where?

6 - 10 weeks after ADR

Inspection 1 week

Exchange of W/S 6 weeks

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8 weeks (if out of Juris)

Exchange of experts’ reports

o Very expensive and time-consuming- usually restricted number (2 per party)

o 8 weeks because complicated issueo experts should meet at least 2 weeks after. In this

case 4 weeks because complicated area o (consider single joint expert)

Usually 4 weeks(depending on complexity)

Court sends pre-trial checklist, listing questionnaires 6 weeks

Parties file listing questionnaires 2 weeks

Case Management 7 Days before trial

Trial 8 weeks

Costs Costs in the case

Variation by agreement ok (PD28 para 4.5) for some things BUT

Party must apply to COURT to change; - return of allocation questionnaire / pre-trial checklist- the trial the trial period (Rule 28.4)

Failure to comply: PD 28, para 5

(1) warn the other party that you intend to make an application to court and then: (2) If a party fails to comply with a direction, any other party may apply for an order

enforcing compliance / sanction to be imposed (see case management powers under r3).

Multi-track (Part 29)

Over £15000

Directions must reflect diversity of the case

Court can adopt CM directions of the fast track. But don’t have to: can have

VARYING DIRECTIONS – rule 29.5

A party must apply to the court if he wishes to vary the date which the court has fixed for:

(a) a CMC(b) a pre-trial review(c) the return of a pre-trial checklist, listing questionnaire(d) the trial, or(e) the trial period

NON-COMPLIANCE (PD 29, para 7)

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(1) warn the other party that you intend to make an application to court (PD para 7.2) and then:

(2) If a party fails to comply with a direction, any other party may apply for an order enforcing compliance / sanction to be imposed (see case management powers under r3).

DIRECTIONS

CMC’s

CASE MANAGEMENT CONFERENCE – Para 5.1 PD29 – the court will:

(1) review the steps which the parties have taken in preparation of the case(2) decide and give directions about the steps which are to be taken to secure progress of the claim in

accordance with the overriding objective(3) ensure (as far as possible) that all agreements that can be reached are reached and recorded

Case management - all cases have CMCs para D3.1 CCG - date can’t be changed except for court order- incl. progress monitoring info sheet- pre-trial checklist- PF 58 para 10.2: C’s responsibility within 14 days of date when all respondents

filed defenceo Otherwise any other party or court

Issues in CMC - Witnesses of facts (how many)- Experts- Possible directions to be made- Progress Monitoring date- para D12 CCG- Progress monitoring information sheet D12.2 CCG (3 days before Progress

monitoring date)- Re-convene CMC- Pre-trial checklist within 7 days of progress monitoring date- para D14 CCG- Pre-trial review- para D18 CCG

Documents required for case management

- Case memorandum: short and uncontroversial description of case PD 58 para 10.8(1) and D5 CCG

- List of issues- what is agreed and what is in dispute- PD 58 para 18(2) and D6 CCG

- Case management information sheet- file and serve 7 days before CMC- PD 58 para 10.7 and D8.5 CCG

- Case management bunde- PD 58 para 10.8(3) and D7 CCG- in court at least 7 days before CMC

Contents of Case Management Bundle

- C’s Solicitor obliged to update bundle and revise it. D7.5 when it needs revising- Claim form- All statements of case- Case memorandum- List of issues- Case management information sheets- Pre-trial timetable (if agreed)- Principal orders of the court- Any agreement in writing as to disclosure

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the Hearing of the Case Management Conference

o CPR 29.5 - Date for CMC can only be altered by order of the court

o CPR 29.3(2) and Commercial Court Guide para D8.2 - Must be attended by legal representative with knowledge of the issues and at least one of the advocates

o CPR 58.13(4) - Court will give directions for trial

Case Management Directions and Final Preparation for Trial

Fix trial date Set Progress Monitoring Date Set date for filing Progress Monitoring Information Sheet Pre–trial Checklists – to be filed at least 3 weeks before trial Possible pre-trial review Lodge trial bundles – at least 7 days before trial

The Other Specialist Courts

o Case Management in the Mercantile Court

Part 59 Practice Direction to Part 59 The Mercantile Court Guides

o Case Management in the Chancery Division

Governed by the CPR supplemented by the Chancery Division Guide It is envisaged that cases in the Chancery Division will be allocated to or

deemed to be multi track – see Chancery Guide para 2.5 Part 29 CPR applies to case management in the Chancery Division The specialist courts within the Chancery Division for example the Patents

Court have their own procedures which need to be followed:

o Bankruptcy Court – PD – Insolvency Proceedings; Insolvency Rules 1986

o Companies Court – PD 49; PD – Insolvency Proceedings; Insolvency Rules 1986

o Patents and other intellectual property claims – Part 63 and PD 63; Patent Court Guide

TACTICS – PRE COMMENCEMENT I TUT AND WS 5

STATUTORY DEMAND

IS THERE ANY DISPUTE ON THE FACTS

Issue statutory demand against the company (insolvency proceedings)

Procedure Advantages Disadvantages

- s. 123(1)f IA 1986: unable to pay its debts

- s. 123 IA 1986 >750 undisputed debt/judgement order/unable to pay its debts as they fall due

- effective threat- cheap and easy- if not paid: public

knowledge (petition to wind up is

- less scope for negotiations- other people can come

forward and rank higher as creditors

- if company does not have

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- warn debtor that the company may be wound up if no payment within 3 weeks

- service at registered office or recorded delivery

advertised) money- waste of time

Issue statutory demand against the individuals (bankruptcy proceedings)

Procedure Advantages Disadvantages

- s. 268 IA 1986: unable to pay its debts if: undisputed debt >750/judgement debt

- 18 days to apply to set it aside because the debts is disputed/demand improperly served or errors

- prescribed form for immediate debt IR6

- service IR6.3- personal service (“all that is reasonable” will suffice- incl. post)

- IR6.11 creditor can rely on any acknowledgement of receipts

- 3 weeks (not including date of service) to pay up (s. 270 exception if serious risk of depletion of assets)

- must show that it is unfair to rely on stat. demand to prove that unable to pay its debts (counterclaim/security for cots/demand ought to be set aside on other grounds)

- will serve solvent debtor into action (solvent debtor gets more time to pay)

- cheap to make demand if payment received

- individuals have more assets (on the facts)

- more public stigma attached

- other creditors may not have personal guarantees

- can stay proceedings by other creditors

- puts other creditors on notice (i.e. mortgage ranks higher)

- expensive if bankruptcy initiated

- only available for undisputed debt (here debtor’s position unknown)

- useless if insolvent

SUMMARY JUDGEMENT BY C OR D?

o Summary Judgment – CPR 24.2

The court may give summary judgment against a claimant or defendant on the whole of a claim…if

(a) it considers that-

I. the claimant has no real prospect of succeeding on the claim or issue; or

II. that the defendant has no real prospect of successfully defending the claim or issue; and

(b) there is no other compelling reason why the case… should be disposed of at trial”

o Summary Judgment – procedure

- CPR 24.4(3) - Applicant must give at least 14 days notice of the hearing and file evidence in support

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- CPR 24.5(1) – respondent may file evidence in reply at least 7 days before the hearing- CPR 24.5(2) – the applicant may respond by filing evidence at least 3 days before the hearing

o Tactical use of summary judgment

- Debtor can only afford to pay some but not all debts - Debtor cannot afford to pay any debts- Debtor can afford to pay but is delaying to put off the date of payment- Debtor has a genuine dispute about whether the debt is due

o Summary judgment – risks

- Another creditor starts insolvency proceedings before enforcement complete

o Proceedings stayedo Execution void

- Waste of costs

- Must have good information about likely solvency of debtor

Issue proceedings against the company

Procedure Advantages Disadvantages- serve claim form + particulars of

claim- wait for defence (28 days if

acknowledgement of service)- apply for summary judgement

(part 24.2) once defence filed/ if not default judgement

- litigation is less public- so other creditors will be less likely to know of D’s difficulties

- likely to win: quicker + cheaper

- if successful, can then ask for charging order- becomes secured creditor

-

- risk that other creditor gets ahead of them to wind up the company and therefore their proceedings will be stayed

- even if they win: if the company does not have money: waste of money

Issue proceedings against the individual

Procedure Advantages Disadvantages- letter of claim- claim for within 28 days +

particulars of claim- defence (14 days after

acknowledgement of service)- apply for summary

judgement/default judgement

- may persuade them to settle (likely to succeed)

- may recover costs- if debtor can pay

some of their debt but not all- ahead of other creditors

- not public- other creditors not aware

- can get charging order and become secured creditor

- costly- time consuming- proceedings may be stayed if

someone else starts bankruptcy proceedings

- difficult to enforce- depends on personal

interests

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DEFAULT JUDGEMENT

Applying for default judgment:

If D takes no action (i.e. doesn’t file an acknowledgment of service or a defence)

The form C uses depends on whether the claim is for a specified / unspecified amount (see FORMS N205A, N205B, N225, N227)

Conditions of default judgment:

(a) PoC have been served on D;(b) D has not acknowledged service / filed a defence and the relevant time period (14 / 28 / longer by

agreement) has expired;(c) D has not satisfied the claim;(d) D has not admitted liability for the full amount of the claim

Interest – default judgment may include interest, in the claim for a specified amount, if:

(a) the particulars of claim include the necessary details(b) any claim for statutory interest does not exceed 8% per annum(c) the request for judgment includes a calculation of the amount of interest from the date from which it

was calculated in the claim form to the date of the request

SETTING ASIDE A DEFAULT JUDGMENT (PART 13)

TWO ways of setting aside:

MANDATORY (r13.2)

Court is obliged to set aside a default judgment that was wrongly entered before the defendant’s deadline for acknowledgment / defence expired. Court is also obliged to set aside a default judgment entered after the claim was paid in full.

DISCRETIONARY r13.3(1)

Court has power to set aside / vary default judgment where: (a) D has a real prospect of successfully defending the claim or;(b) It appears to the court that there is some other good reason why-

i.the judgment should be set aside or varied; orii. the defendant should be allowed to defend the claim

ANALYSE FACTUAL ISSUES THAT MAY ARISE WHEN APPLYING TO SET ASIDE A DEFAULT JUDGMENT (see p113)

C has a duty (if he knows D didn’t get the PoC) to set asise the default judgment himself or apply to the court for directions (rule13.5)

INTERIM PAYMENT

MADE BY THE CLAIMANT

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APPLICATION An advance payment on account of damages or a debt paid directly to applicant

CPR 25.7 - The court may order an interim payment only if-

(a) the defendant against whom the order is sought has admitted liability to pay damages or some other sum of money to the claimant;

(b) the claimant has obtained judgment against that defendant for damages to be assessed or for a sum of money (other than costs) to be assessed;

(c) it is satisfied that, if the claim went to trial, the claimant would obtain judgment for a substantial amount of money (other than costs) against the defendant from whom he is seeking an order for an interim payment

o Interim payments – procedure

- Make a written request for payment first in accordance with the overriding objective- CPR 25.6(1) - Apply after the time for acknowledging service has expired- CPR 25.6(3) – the application notice and evidence must be served at least 14 days before the

hearing- CPR 25.6(4) – the respondent may serve written evidence in response at least 7 days before the

hearing- CPR 25.6(5) – the applicant may respond by serving written evidence at least 3 days before the

hearing

o How much can the court order?

- CPR 25.7(4) A reasonable proportion –o Rule of thumb – 60% of lowest estimate of damages

- Obtain good evidence on quantum

o Interim payment – tactics

- Claimant will receive % of damages before trial- It can be an alternative if the case not quite good enough for summary judgment- Interest will stop running on the amount paid- Claimant may have to repay money if they recover less BUT the defendant may have difficulties in

recovering the money if they are successful

Advantages - Paid directly to applicant- If case not good enough for summary judgement- Can stop interest running for the respondent

Disadvantages - May already have been spent

SECURITY FOR COSTS – APPLICATION MADE BY THE D

Security for costs CPR 25.12 – 13

Grounds: (in witness statement)

- Part 25.13(1) remedy is discretionary - court must have regard to whether it is just and must look at all the circumstances as well as the conditions

o Strength of claim and defenceo Claimant's ability to provide securityo Cause of claimant’s impecuniosityo Property within the jurisdiction

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AND (another ground has to be satisfied):

- Part 25.13(2)(a) the claimant is resident outside the jurisdiction + not in a Brussels convention state

- Part 25.13(2)(c) claimant is a company or other body and there is reason to believe that it will be unable to pay the defendant’s costs if ordered to do so

- Part 25.13(2)(d) the claimant has changed address since the claim was commenced with a view to evading the consequences of the litigation

- Part 25.13(2)(e) the claimant failed to give his address in the claim form or gave an incorrect address in that form

- Part 25.13(2)(f) the claimant is acting as nominal claimant and there is reason to believe that he will be unable to pay the defendant’s costs if ordered to do so

- Part 25.13(2)(g) the claimant has taken steps in relation to his assets that would make it difficult to enforce an order for costs against him

o Security for costs – form of security

- Money to be paid into court BUT- May be more commercial ways of providing security eg bank guarantee or bond- Claim might be struck out if security not provided

ATTENTION - Only if defendant us concerned about recovering his costs- always ask the opponent first before making a formal application

o Ask if assets in the jurisdictiono Enclose disclosure of costs

- Use appendix 16: does not have to take into account merits of the case- R 3.1(5) court can order security for costs when fails to comply with CMC

Methods - Joint bank a/c- Pay into court- Bank guarantee- Solicitor holds money on stakeholder a/c- Undertaking to the court

Procedure - Must write to claimant- Set out reasons- Detailed estimate of costs for which you want security- If no satisfactory response: application notice (Part 23) + witness statement (Part 25.12.22)- Witness statement:

o Conditionso Heading of actiono Set out applicationo Set out grounds for applicationo Relevant info about Co Details of costs incurred to date and future costs (exhibit)

What if claimant didn’t provide security?

- no automatic stay in the commercial court- Give them more time

o Unless order (+ after that strike out)o Problem: costs may not be recovered

- Ask for summary judgement- part 24

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- Ask for interim payment- part 25

SETTLEMENT /ENFORCEMENT

Assets Enforcement Further info required

House jointly owned - charging order - value- kids

Car - Execution order + writ of fifa

- Hire purchase?- Value?

Shares - Charging order - Up to date valuation

Time share - N/A

Furniture (antiques) - execution - value- identify which are the

furniture in question

Rented apartment - N/A

Joint a/c - N/A

Savings - 3rd party debt order - valuation

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ADR

Strategy and Tactics

In view of this, the solicitor needs to keep numerous points in mind at the start of a case, including thefollowing:

What is the appropriate method of dispute resolution to best achieve the client’s aims? Is the client’s priority a quick settlement – possibly to avoid incurring legal costs ‘unnecessarily’? Does the client want to preserve the business relationship with the other party? How will the dispute, and possibly the chosen method of resolution affect relationships with other

customers or suppliers? Clients will not generally want to be seen as a ‘soft touch’. Will the knowledge that your client is willing to resort to litigation in order to enforce or preserve his rights

deter others from attempting to infringe those rights? Is the other party involved in the dispute solvent? Does the client want the legally correct solution to the dispute, the cheapest solution or the quickest

solution?

ADR - The court has power to make an order for the parties to attempt ADR even if neither party wants to do so CCG 1.8

- The court will stay proceedings to enable ADR to be attempted CCG1.7 - A party who unreasonably refuses to attempt ADR may be penalised in costs. CCG1.10

Advantages Disadvantages

- cheapness and speed (APPLY TO FACTS)- flexibility- preserving a business relationship- commercial reality

- it does not bind the parties to the procedure- the awards are not so easily enforceable- the facts may not be fully disclosed- no appropriate for cases such as: client needs an

injunction, there is no dispute, the client needs a ruling on a point of law

TYPE INVOLVES: ADVANTAGES DISADVANTAGES

ARBITRATION - third party reaches a decision which is binding on the parties.

- Many business contracts contain an arbitration clause

- In the absence of such a clause, the parties in dispute may agree to arbitration once the dispute has arisen and may choose their own arbitrator with the relevant expertise.

- governed by statute, namely the Arbitration Act 1996

- arbitration may be quicker than litigation;

- the procedures are less formal and occur in private;

- the solutions reached are often more practical than those a court has power to order; and

- at the same time those decisions are binding on the parties.

- Arbitration Act 1996, s.66:

- Certain remedies, such as injunctions, are not available

- depending on the procedures adopted, the dispute may not receive the depth of investigation it would have done in the courts.

- not always necessarily cheaper than litigation.

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enforcement of judgments by the High Court

MEDIATION AND CONCILIATION

- third party who has been selected as mediator will have written statements from both parties.

- mediator will discuss the case with them. They will tell him what they think about each party’s case on a without prejudice basis.

- mediator will not pass on to the other party information which is confidential, unless given permission

- quick because, if necessary, the parties can meet face to face to iron out their differences.

- A mediator may only disclose to the other party information provided by one party with that party's permission

- if party refuses mediation: o The Court may order a stay

of the litigation to enable mediation to take place.

o The Court may penalise that party in costs

o The Court may suggest that that party reconsider

‘MED-ARB’ - parties agree to submit their dispute to mediation

- if this does not work, they will refer the matter to arbitration.

- Can use the person who has been acting as their mediator as their arbitrator

- Save costs - mediator will have become privy to confidential information belonging to one of the parties.

The Overriding Objective

CPR 1998. Rule 1.1(1) states that:

These Rules are a new procedural code with the overriding objective of enabling the court to deal with cases justly and r 1.1(2) states that:

Dealing with a case justly includes, so far as is practicable—

(a) ensuring that the parties are on an equal footing;(b) saving expense;(c) dealing with the case in ways which are proportionate—

I. to the amount of money involved;II. to the importance of the case;III. to the complexity of the issues; andIV. to the financial position of each party;

(d) ensuring that it is dealt with expeditiously and fairly; and(e) allotting to it an appropriate share of the court’s resources, while taking into account the need to allot

resources to other cases.

Rule 1.2 requires the court to give effect to the overriding objective and r 1.4(1) states that:

The court must further the overriding objective by actively managing cases.

Rule 1.4(2) indicates that this may involve:

(a) encouraging the parties to co-operate with each other in the conduct of the proceedings;…(f) helping the parties to settle the whole or part of the case;(g) fixing timetables or otherwise controlling the progress of the case;

(h) considering whether the likely benefits of taking a particular step justify the cost of taking it.

In addition, r 1.3 states that:

The parties are expected to help the court to further the overriding objective.

Solicitors are under a duty to ensure that clients are both aware of and comply with r 1.3 in the conduct of litigation. One important purpose of r 1.3 and CPR 1998 generally is to dissuade parties from deliberate delaying tactics in litigation in an attempt to force their opponent to settle the case on unfavourable terms due to concerns over escalating costs.

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