The Three Paths of Justice: Court Proceedings, Arbitration, and Mediation in England

THE THREE PATHS OF JUSTICE IUS GENTIUM COMPARATIVE PERSPECTIVES ON LAW AND J USTICE VOLUME 10 Series Editors Mor...

59 downloads 639 Views 3MB Size Report

This content was uploaded by our users and we assume good faith they have the permission to share this book. If you own the copyright to this book and it is wrongfully on our website, we offer a simple DMCA procedure to remove your content from our site. Start by pressing the button below!

Report copyright / DMCA form

DOWNLOAD PDF

THE THREE PATHS OF JUSTICE

IUS GENTIUM COMPARATIVE PERSPECTIVES

ON

LAW

AND J USTICE

VOLUME 10

Series Editors Mortimer Sellers (University of Baltimore) James Maxeiner (University of Baltimore)

Board of Editors Myroslava Antonovych (Kyiv-Mohyla Academy) Nadia de Araujo (Pontifical Catholic University of Rio de Janeiro) ´ Jasna Bakšic-Mufti c´ (University of Sarajevo) David L. Carey Miller (University of Aberdeen) Loussia P. Musse Felix (University of Brasília) Emanuel Gross (University of Haifa) James E. Hickey Jr. (Hofstra University) Jan Klabbers (University of Helsinki) Claudia Lima Marques (Federal University of Rio Grande do Sul) Aniceto Masferrer (University of Valencia) Eric Millard (Paris-Sud University) Gabriël Moens (Murdoch University, Australia) Raul C. Pangalangan (The University of the Philippines) Ricardo Leite Pinto (Lusíada University of Lisbon) Mizanur Rahman (University of Dhaka) Keita Sato (Chuo University) Poonam Saxena (University of New Delhi) Gerry Simpson (London School of Economics) Eduard Somers (University of Ghent) Xinqiang Sun (Shandong University) Tadeusz Tomaszewski (University of Warsaw) Jaap W. de Zwaan (Netherlands Inst. of Intrntl. Relations, Clingendael)

THE THREE PATHS OF JUSTICE COURT PROCEEDINGS, ARBITRATION, AND MEDIATION IN ENGLAND

by Neil Andrews

123

Neil Andrews Clare College Trinity Lane CB2 1TL Cambridge United Kingdom [email protected]

ISBN 978-94-007-2293-4 e-ISBN 978-94-007-2294-1 DOI 10.1007/978-94-007-2294-1 Springer Dordrecht Heidelberg London New York Library of Congress Control Number: 2011936162 © Springer Science+Business Media B.V. 2012 No part of this work may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, microfilming, recording or otherwise, without written permission from the Publisher, with the exception of any material supplied specifically for the purpose of being entered and executed on a computer system, for exclusive use by the purchaser of the work. Printed on acid-free paper Springer is part of Springer Science+Business Media (www.springer.com)

For Liz, Sam, Hannah, and Ruby and in memory of Kurt Lipstein 1909–2006 Professor of Comparative Law, University of Cambridge, Fellow of Clare College, Bencher of Middle Temple

This is Blank Page Integra

vi

Foreword

In this book Neil Andrews does non-English lawyers a great service: he gives us an authoritative, digestible and—and at the same time—critical guide to the new civil justice in England and Wales. For a dozen years we have watched—sometimes puzzled—as the queen of common law systems has transformed itself in ways that we have not seen heretofore and to an extent that England has not experienced for a long time. Led by the ‘Woolf reforms’ of 1999, the metamorphosis has included, in addition to substantial changes in civil procedure, the introduction of the Human Rights Act of 1998 (entered into force 2000), the establishment of a Ministry of Justice (2007) and the abolition of the House of Lords (Judicial) and creation of the Supreme Court of the United Kingdom (began business 2009). Neil Andrews is one of England’s best known proceduralists and author of one of its best known treatises on civil procedure. He, as well as anyone could, guides readers through the thickets and hedges of England’s reforms to the essential elements of the reforms. He helps readers learn conveniently what is new and what is old: what is system-shaking and is therefore especially worthy of foreign attention. Such a guide is particularly needed by American lawyers and law reformers: Americans are accustomed to looking to England for ideas for the American system. Even before the Woolf reforms came into effect, some American observers ascribed a ‘Continental Character’ to English law distinct from America’s common law. We all wonder what the effects of the predominantly civil law European Union will be on its premier common law system. American lawyers need not fear English abandonment of values their system holds dear. The ‘overriding objective’ of the Woolf reforms is the enabling of courts ‘to deal with cases justly.’ Areas they target for reform include putting parties on an equal footing, dealing with cases proportionately to the disputes involved, and handling cases expeditiously and fairly. Neil Andrews, in Chap. 2 of the book, ‘Principles of Civil Justice,’ lays out four headings under which to consider the fundamental and important principles of civil justice:

vii

viii

Foreword

a. Regulating Access to Court and to Justice b. Ensuring the Fairness of the Process: a Shared Responsibility of the Court and the Parties c. Maintaining a Speedy and Efficient Process d. Achieving Just Outcomes These are not alien to American lawyers: they are at the heart of American civil justice. They are the promises that America’s founding fathers made in their declarations of rights of 1776.1 These are, indeed, values shared by civil law systems. I commend Neil Andrews for his openness. His work is valuable because he is critical. He is not timid. He is not content to recite the hopes of English reformers; he does not finesse hard problems by calling them out of place in a short work. He does not retreat to a student’s outline. Instead he sets out the realities of the reforms’ implementation. He calls failures when he sees them: through colorful language he imprints them in readers’ memories. I give but one example: Bill Gates himself, and other modern-day descendant of Croesus, would hesitate to run the risk of engaging in protracted and complicated claims hear by the High Court. The ‘Woolf reforms’ of 1999 were expected to alleviate the problem of the high costs of litigation. But the situation has not improved. [9.16]

Americans hoping to find in England a panacea for the failures of American civil justice will be disappointed. The ailments of English civil justice—above all lawyer control of proceedings—are largely our own. If we are to overcome them, we must be open to changes that differ from traditional common law approaches. Baltimore, Maryland

James R. Maxeiner

1

They were included in what are called ‘open courts’ clauses. That in Maryland’s Declaration of Rights of November 3, 1776 reads: 17. That every freeman, for any injury done to him in his person, or property, ought to have remedy by the course of the law of the land, and ought to have justice and right, freely without sale, fully without any denial, and speedily without delay, according to the law of the land.

Maryland Declaration of Rights of Nov. 3, 1776, in The Decisive Blow is Struck, A facsimile edition of The Proceedings of the Constitution Convention of 1776 and the First Maryland Constitution (1977). Similar declarations were made throughout colonial America. J. Maxeiner, G. Lee, and A. Weber, Failures of American Civil Justice in International Perspective 3–5 (2011).

Preface

This work is intended to enable lawyers, especially non-English lawyers, to gain an overview of the three main processes now operating in England for the resolution of civil disputes: civil proceedings in the courts, arbitration, and mediation. These three forms of civil justice, and their developing connections, continue to (1) bewilder, frustrate, and impoverish disputants, (2) enrich lawyers, (3) confuse most advisors, and (4) stimulate scholars. It seems to lie beyond the power of Government to respond successfully to (1). As for (2), proposals for changes in the costs rules for court litigation will increase the opportunity for some lawyers to become very rich quickly (contingent fees: 5.20 ff). It is hoped that (3) (confusion) might be reduced and (4) (stimulation) promoted by this short work. It is also hoped that the reader will find pointers for further research not just in the footnotes and bibliography, but in the section entitled ‘Leading Contributors to English Civil Justice’, which introduces foreign readers to the main players in the subject’s modern development and analysis. The text reflects fast-moving changes within this subject. The sources of this change are internal—constant development of the subject by the English courts and legislature—and external, notably the influence of the European legal authorities. For example, this book contains discussion of: curbing appeals (1.40; 4.01 ff); creation of the United Kingdom Supreme Court (2.06 ff; 4.03 ff); expansion of electronic justice (1.42); attempted reform of costs in England (5.20 ff); judicial abolition of the immunity protecting party-appointed experts against civil liability (3.73); awards of secret injunctions to protect privacy (currently a red-hot issue within England) (3.09); EU law and the limits of legal professional privilege (2.11 ff, and 3.30 ff); European human rights law and the scope of the privilege against self-incrimination (2.15 ff; 7.25); protective relief, namely ‘freezing injunctions’, in support of foreign proceedings (7.17 ff); the European mediation directive (2008) (9.49); mediation and sanctions (9.32); proposals for automatic referral of court proceedings to mediation (9.19); mediation sceptics (9.21); the long-running debate whether England should expand opportunity for opt-out system of class action

ix

x

Preface

litigation in money actions (8.09; 8.23 ff); the controversy concerning arbitration and the ‘anti-suit injunction’ within the European Union (10.16 ff; 11.03 ff); problems concerning attempted enforcement of foreign arbitral awards under transnational convention (10.29 ff; 11.17 ff); the transnational trend towards combining the functions of mediators and arbitrators (11.36 ff); links between the courts and the processes of mediation and arbitration (Chapter 11); and perennial and fundamental issues, such as identification of fundamental principles of civil justice, under the American Law Institute/UNIDROIT principles (2.22), or Article 6(1) (2.02 ff) of the European Convention on Human Rights, and generally (Chapter 2, notably the author’s four-fold categorisation at 2.35 ff—(i) Regulating Access to Court and to Justice (ii) Ensuring the Fairness of the Process (iii) Maintaining a Speedy and Efficient Process (iv) Achieving Just and Effective Outcomes); and the capacity of courts to engage actively in aspects of the case (1.08, 1.22 ff; 1.28). I am grateful to my wife, Elizabeth Deyong, and our children, Samuel, Hannah, and Ruby. Their good humour has enabled me to keep the Law fully at arm’s length outside normal business hours. This work is copyright Neil Andrews 2011. Cambridge, UK

Neil Andrews

Contents

1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1 The New Procedural Code (‘CPR 1998’) and the Woolf Reforms . . . . . . . . . . . . . . . . . . 1.2 Enduring Features of the English Civil Justice System . 1.3 Changes and Challenges Association with the Civil Procedure Rules (1998) . . . . . . . . . . . . . . . 1.4 Six Phases of English Civil Proceedings . . . . . . . . . 1.5 Concluding Remarks . . . . . . . . . . . . . . . . . . .

.

1

. .

1 3

. . .

3 8 23

. . .

25 25 26

.

32

.

40

.

44

. . .

45 45 47

. . . . .

49

. . . . . . . .

50 50 52 55 57 58 59 62

2 Principles of Civil Justice . . . . . . . . . . . . . . . . . . . . . 2.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . 2.2 Article 6(1), European Convention on Human Rights . 2.3 Other Aspects of European Influence on English Civil Procedure . . . . . . . . . . . . . . . . . . . . . . 2.4 UNIDROIT/American Law Institute Project (2000–2006) . . . . . . . . . . . . . . . . . . . . . . . . 2.5 Author’s First List of Principles: Principles of Civil Procedure (1994) . . . . . . . . . . . . . . . . . . 2.6 Author’s Second List of Principles: English Civil Procedure (2003) . . . . . . . . . . . . . . . . . . . . . 2.7 A Fresh Start: Four Fundamental Aims of Civil Justice 2.8 Concluding Remarks . . . . . . . . . . . . . . . . . . . 3

First Instance Proceedings . . . . . . . . 3.1 Introduction to Accelerated Relief the Substance of the Claim . . . . 3.2 Interim Payments . . . . . . . . . 3.3 Interim Injunctions . . . . . . . . 3.4 Default Judgments . . . . . . . . . 3.5 Preliminary Issues . . . . . . . . . 3.6 Summary Judgment . . . . . . . . 3.7 Striking Out Claims or Defences . 3.8 Disclosure . . . . . . . . . . . . .

. . . . . . . . Concerning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

xi

xii

Contents

3.9 3.10 3.11 3.12 3.13 3.14 3.15 3.16 3.17 3.18 3.19 3.20 3.21 3.22 3.23 3.24 3.25 3.26 3.27

Pre-action Protocols . . . . . . . . . . . . . . . . . . . . Pre-action Judicial Orders for Disclosure . . . . . . . . Disclosure Against Non-parties . . . . . . . . . . . . . . Assessment of Pre-action and Non-party Disclosures . Disclosure of Documents During the Main Proceedings Privileges in General . . . . . . . . . . . . . . . . . . . Legal Advice Privilege . . . . . . . . . . . . . . . . . . . Litigation Privilege . . . . . . . . . . . . . . . . . . . . Experts . . . . . . . . . . . . . . . . . . . . . . . . . . . Roles of the Court and Experts . . . . . . . . . . . . . . The ‘Single, Joint Expert’ System . . . . . . . . . . . . Court Assessors . . . . . . . . . . . . . . . . . . . . . . Party-Appointed Experts . . . . . . . . . . . . . . . . . Selection and Approval of Party-Appointed Experts . . Disclosure of Party-Appointed Expert Reports . . . . . Discussions Between Party-Appointed Experts . . . . . Factual Witness Immunity . . . . . . . . . . . . . . . . Trial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Evidence at Trial . . . . . . . . . . . . . . . . . . . . . .

4 Appeals and Finality . . . . . . . . . . . . . . . . . . . . . . . 4.1 Appeals . . . . . . . . . . . . . . . . . . . . . . . . . . 4.2 Res Judicata: ‘Cause of Action Estoppel’ and ‘Issue Estoppel’ . . . . . . . . . . . . . . . . . . . 4.3 Preclusion of Points That Should Have Been Raised: The Rule in Henderson v. Henderson (1843) 4.4 Other Aspects of Finality . . . . . . . . . . . . . . . . 5

Costs . 5.1 5.2 5.3

5.4 5.5 5.6 5.7 5.8 5.9 5.10 5.11 5.12

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A Time of Change . . . . . . . . . . . . . . . . . . . Costs-Shifting Rule . . . . . . . . . . . . . . . . . . Security for Costs . . . . . . . . . . . . . . . . . . . 5.3.1 Factors Relevant to the Exercise of the Discretion to Order Security for Costs . . . 5.3.2 Claimant Resident Outside England and Outside the Territories of the European Union or the Lugano Convention . . . . . 5.3.3 Security for the Costs of an Appeal . . . . Protective Costs Orders and Costs Capping . . . . . Discretionary Costs Decisions . . . . . . . . . . . . Standard and Indemnity Costs . . . . . . . . . . . . Costs Against Non-parties . . . . . . . . . . . . . . ‘Wasted Costs’ Orders Against Lawyers and Experts Conditional Fee Agreements . . . . . . . . . . . . . Assessment of the English Conditional Fee System Comparison with USA Contingency Fees . . . . . . The Jackson Report (2009–10) . . . . . . . . . . .

. . . .

. 64 . 64 . 65 . 67 . 68 . 70 . 71 . 75 . 80 . 82 . 84 . 87 . 88 . 89 . 91 . 94 . 99 . 100 . 103

. . 107 . . 107 . . 115 . . 118 . . 119 . . . .

. . . .

121 122 122 123

. . . 124

. . . . . . . . . . .

. . . . . . . . . . .

. . . . . . . . . . .

125 126 126 127 128 128 129 130 135 137 138

Contents

xiii

6 Enforcement of Court Judgments and Orders . . . . . . . . . . 141 6.1 Money Judgments . . . . . . . . . . . . . . . . . . . . . . 141 6.2 Enforcement of Injunctions . . . . . . . . . . . . . . . . 145 7

Protective Relief . . . . . . . . . . . . . . . . 7.1 Introduction . . . . . . . . . . . . . . 7.2 Freezing Relief . . . . . . . . . . . . . 7.3 Search Orders . . . . . . . . . . . . . 7.4 Civil Orders for Custody of Passports

. . . . .

. . . . .

. . . . .

. . . . .

. . . . .

. . . . .

. . . . .

. . . . .

. . . . .

. . . . .

. . . . .

151 151 152 161 165

8

Multi-party Litigation . . . . . . . . . . . . . . . . . . 8.1 Three Forms of English Multi-party Litigation 8.2 Representative Proceedings (‘Opt Out’) . . . . 8.3 Group Litigation Orders (‘Opt In’) . . . . . . . 8.4 English Rejection (2009) of Generic ‘Opt Out’ Class Action . . . . . . . . . . . . . . . . . . . 8.5 Conclusion . . . . . . . . . . . . . . . . . . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

167 168 169 178

. . . . . . 184 . . . . . . 186

9 Mediation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.1 The Spectrum of ADR . . . . . . . . . . . . . . . . . . . 9.2 Disputants’ Duty to Consider Mediation . . . . . . . . . 9.3 Mediation’s Growth in England . . . . . . . . . . . . . . 9.4 Mediation and Settlement Scepticism . . . . . . . . . . 9.5 Mediation Agreements . . . . . . . . . . . . . . . . . . 9.6 Pre-action Duty of Parties to Consider ADR . . . . . . 9.7 Occasions for Judicial Encouragement of Mediation . . 9.8 Judicial Order to ‘Stay’ Court Proceedings to Facilitate Mediation . . . . . . . . . . . . . . . . . . . . 9.9 Costs Sanctions for Failure to Pursue Mediation . . . . 9.10 Privileged Mediation Discussion . . . . . . . . . . . . . 9.11 English Reception of the European Mediation Directive 9.12 Concluding Remarks . . . . . . . . . . . . . . . . . . . 10

Arbitration in England . . . . . . . . . . . . . . . . . . . 10.1 Introduction . . . . . . . . . . . . . . . . . . . . . 10.2 Confidentiality . . . . . . . . . . . . . . . . . . . . 10.3 Party Selection: Of the Panel, Governing Norms, and Arbitral Procedure . . . . . . . . . . . . . . . 10.4 Arbitration Clauses . . . . . . . . . . . . . . . . . 10.5 Anti-suit Injunctions Concerning Offending Proceedings Outside the European Union . . . . . 10.6 Anti-suit Injunctions Concerning Offending Proceedings Within the Europe Union . . . . . . . 10.7 Damages for Breach of an Arbitration Clause . . . 10.8 Speed and Efficiency . . . . . . . . . . . . . . . . 10.9 Finality . . . . . . . . . . . . . . . . . . . . . . . . 10.10 Freezing Relief and Arbitration . . . . . . . . . .

. . . . . . . .

187 187 191 193 197 201 203 204

. . . . .

205 206 211 214 215

. . . . 219 . . . . 219 . . . . 221 . . . . 225 . . . . 227 . . . . 228 . . . . .

. . . . .

. . . . .

. . . . .

231 235 237 237 240

xiv

Contents

10.11

Recognition and Enforcement of Arbitration Awards Under the New York Convention (1958) . . . . . 241 10.12 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . 247 11

Connections Between Courts, Arbitration, Mediation and Settlement: Transnational Observations . . . . . . . . . . . 11.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . 11.2 Courts and the Appointment of Arbitrators . . . . . . . . 11.3 Courts and Anti-suit Remedies to Support Arbitration Agreements . . . . . . . . . . . . . . . . . . . 11.4 Courts and Protective Relief to Support Arbitration . . . 11.5 Courts Providing Support for the Gathering of Evidence for Use in Arbitration . . . . . . . . . . . . . 11.6 Recognition and Enforcement of Foreign Arbitral Awards Under the New York Convention (1958) 11.7 Effect of a National Court’s Annulment of a Domestic Arbitral Award . . . . . . . . . . . . . . . . . . 11.8 Mediation Before Commencement of Arbitration . . . . 11.9 Mediation When Arbitration is Pending . . . . . . . . . . 11.10 The Conservative View: Arbitrators Should Not Combine the Function of a Mediator . . . . . . . . . . . 11.11 Parties Consenting to Arbitrators Acting Also as Mediators: The Transnational Rise of the Chameleon ‘Neutral’ . . . . . . . . . . . . . . . . . 11.12 Institutional Support for Contractually Mandating Arbitrators to Facilitate Settlement . . . . . . 11.13 Concluding Remarks . . . . . . . . . . . . . . . . . . . .

249 249 251 251 253 259 261 262 264 265 265

267 271 274

Bibliography . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 275 Leading Contributors to English Civil Justice . . . . . . . . . . . . . 281 Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 293

Chapter 1

Introduction

Contents 1.1 1.2 1.3 1.4 1.5

The New Procedural Code (‘CPR 1998’) and the Woolf Reforms . . . . . Enduring Features of the English Civil Justice System . . . . . . . . . . Changes and Challenges Association with the Civil Procedure Rules (1998) Six Phases of English Civil Proceedings . . . . . . . . . . . . . . . . . Concluding Remarks . . . . . . . . . . . . . . . . . . . . . . . . . .

. . . . .

1 3 3 8 23

1.1 The New Procedural Code (‘CPR 1998’) and the Woolf Reforms 1.01 Under the 1998 procedural code, the Civil Procedure Rules (‘CPR (1998)’), also known as the ‘Woolf Reforms’,1 English judges have been granted wide-ranging powers to manage the development of civil cases, especially in large actions. This was a fundamental change because before 1998 English procedure had generally avoided pre-trial judicial management (although, as explained below, even before the Woolf reforms, case management had emerged as a convenient and necessary technique in, notably, the Commercial Court, part of the High Court).2 The 1998 code was intended to change the culture of English court-based litigation. English civil procedure has moved from an antagonistic style to a more co-operative

1

Lord Woolf’s two reports are: Access to Justice: Interim Report (1995) and Access to Justice: Final Report (London, 1996) both available on-line at: http://www.dca.gov.uk/ civil/reportfr.htm. 2 On the CPR system from the perspective of the traditional principle of party control, Neil Andrews, ‘A New Civil Procedural Code for England: Party-Control “Going, Going, Gone”,’ Civil Justice Quarterly 19 (2000): 19–38; Neil Andrews, English Civil Procedure (Oxford: Oxford University Press, 2003), 13.12 to 13.41; 14.04 to 14.45; 15.65 to 15.72.

N. Andrews, The Three Paths of Justice, Ius Gentium: Comparative Perspectives on Law and Justice 10, DOI 10.1007/978-94-007-2294-1_1, C Springer Science+Business Media B.V. 2012

1

2

1 Introduction

ethos. Although lawyers have adapted to the judicial expectation that they should no longer pursue their clients’ interests in a relentless and aggressive manner, practitioners report3 that the adversarial nature of the underlying contest remains a daily reality. It is true that correspondence between rival parties, which might be seen by the court in due course, is no longer couched in the aggressive terms which characterised pre-CPR dealings between adversaries. But the softer and sometimes more conciliatory tone of written exchanges under the CPR regime often masks an intensely fought battle. 1.02 English civil procedure appears to occupy a mid-position between the distinctively robust American system and the court-orientated systems of the civilian tradition. Thus the English system of disclosure imposes quite strict restrictions upon the scope of documentary disclosure.4 Each party must now disclose and allow inspection of: documents on which he wishes to rely; or which adversely affect his case or his opponent’s case, or which support the latter’s case.5 Furthermore, pre-action disclosure in commercial cases is controlled to prevent arrant forms of ‘fishing’.6 England has yet to countenance USA-style contingency fee agreements in ordinary court litigation (under the American system the attorney’s fee is measured as a percentage of the size of the damages award or settlement).7 As for party-autonomy, and the respective powers of the court and of the parties, English judges must respect the parties’ procedural rights to (I) define the issues in dispute; (II) to make private decisions concerning how the claim and defence are to be factually supported, by gathering, refining and presenting witness evidence, and other forms of evidence; (III) if the court gives permission for expert evidence to be used in the case, the parties are free to select the relevant party-appointed experts and so procure their own opinion for use in evidence at trial8 ; (IV) finally, the parties retain the freedom to formulate legal submissions concerning the claim or defence, and to present statutory or case law authority to support those submissions.

3

For example, London litigation partner, seminar, Cambridge March 2010. Especially, CPR 31.3(2), 31.7(2), 31.9(1); generally, Neil Andrews, The Modern Civil Process (Tübingen, Germany: Mohr & Siebeck, 2008), Chap. 6. 5 CPR 31.6; the court can vary the width of disclosure in special situations: CPR 31.5(1),(2). 6 CPR 31.16 (3) contains a general power to order pre-action disclosure of documents against a ‘respondent who is likely to be a party to subsequent proceedings’. 7 A convenient source of details concerning the USA system is Moorhead and Hurst’s study: Improving Access to Justice: Contingency Fees: A Study of their operation in the United States of America: A Research Paper informing the Review of Costs (November 2008), edited by Robert Musgrove: www.civiljusticecouncil.gov.uk/files/cjc-contingencyfees-report-11-11-08.pdf. 8 Under the CPR system the main rule is that no expert evidence can be presented in a case unless the court has granted permission: CPR 35.4(1) to (3). 4

1.3 Changes and Challenges Association with the Civil Procedure . . .

3

1.2 Enduring Features of the English Civil Justice System 1.03 In 19979 I explained that the pre-CPR system had the following five main characteristics, and these in fact remain cardinal features of the present system, and hence aspects of continuity. First, nearly all first instance English civil trials are adjudicated by professional judges sitting alone, lacking support both from fellow judges and from a civil jury (jury trial in civil matters being now confined to specific tort claims, for defamation, malicious prosecution, or false imprisonment).10 Secondly, large actions involve a segmented passage through various interim and pre-trial stages and remedies.11 Thirdly, litigation is conducted under the shadow of the principle that each litigant is at risk of an order to pay the legal costs reasonably incurred by the opponent, if the latter emerges victorious from the fray.12 This cost-shifting rule operates intensively because English legal costs are high (Sir Rupert Jackson’s ‘Civil Litigation Costs Review’13 places the whole topic of costs and funding under scrutiny). Fourthly, the professional division between different types of litigation lawyers has been maintained: overall control of the case resting with solicitors, who delegate specific tasks, such as advocacy or ‘advice on law or evidence’, to specialists, namely barristers. Fifthly, trial is a rare event because most cases settle, the parties nearly always accommodating themselves to the wisdom of compromise.

1.3 Changes and Challenges Association with the Civil Procedure Rules (1998) 1.04 On 28 March 1994, Lord Mackay LC of Clashfern (Lord Chancellor 1987–1997) appointed Lord Woolf to make recommendations concerning civil procedure, with the following aims14 : (i) improving access to justice

9

Neil Andrews, ‘Development in English Civil Procedure: How Far Can the English Courts Reform Their Own Procedure?’ Zeitschrift für Zivilprozess International 2 (1997): 3–29. 10 Andrews, English Civil Procedure, 34-06 ff. 11 For example, Sir Leonard Hoffmann, ‘Changing Perspectives on Civil Litigation,’ Modern Law Review 56 (1993): 297. 12 Generally on costs, Andrews, The Modern Civil Process, Chap. 9; Andrews, English Civil Procedure, Chap’s. 35 to 37; M.J. Cook, Cook on Costs (annual editions); P. Hurst, Civil Costs (4th edn, 2007); A. Zuckerman, Civil Procedure (2nd edn, 2006), Chap. 26. 13 Sir Rupert Jackson, Review of Civil Litigation Costs (December, 2009: London, 2010); on which A.A.S. Zuckerman, ‘The Jackson Final Report on Costs—Plastering the Cracks to Shore up a Dysfunctional System,’ Civil Justice Quarterly 29 (2010): 263. 14 Terms of appointment cited in Lord Woolf, Access to Justice: Interim Report (London, 1995), introduction.

4

1 Introduction

and reducing the cost of litigation (ii) reducing the complexity of the rules (iii) modernising terminology (iv) removing unnecessary distinctions of practice and procedure. Woolf’s interim and final reports appeared in 199515 and 1996,16 and they stimulated a substantial literature.17 The CPR was enacted in 1998 and took effect on 26 April 1999. 1.05 In the preface to Andrews on English Civil Procedure (2003),18 published 4 years after the Woolf reforms were implemented, I suggested that the CPR and associated recent developments involved twelve changes. Three changes had in fact preceded Lord Woolf’s 1999 procedural reforms. First, the interests of fiscal economy had led to introduction of the conditional fee system.19 The Courts and Legal Services Act 1990 permitted lawyers to agree with litigants ‘conditional fee agreements’ (‘CFAs’), and this paved the way for implementation in 1995 (personal injury litigation) and 1998 (expansion to most civil litigation).20 Secondly, the Human Rights Act 1998 incorporated the European Convention on Human Rights into English law (with effect from 2 October 2000). Thirdly, as I explained in 1997,21 rule changes and judicial initiative had created the framework for case management, that is, active involvement of judges before trial in the preparation of a case for adjudication, with emphasis on the need for proportion (and hence overall economy) and expedition. 1.06 From the perspective of overarching principle, the main features of this exciting fresh start can be summarised as follows. The new CPR system recognised and sought to promote these principles, values, or aims:

15

Ibid.; this and its successor are available on-line at: http://www.dca.gov.uk/civil/ reportfr.htm. 16 Access to Justice: Final Report (London, 1996). 17 A.A.S. Zuckerman and R. Cranston, eds., The Reform of Civil Procedure: Essays on ‘Access to Justice’ (Oxford: Oxford University Press, 1995); R. Cranston, How Law Works: The Machinery and Impact of Civil Justice (Oxford: Oxford University Press, 2006), Chap. 5; Andrews, English Civil Procedure, Chap. 2; Andrews, ‘A New Civil Procedural Code for England: Party-Control “Going, Going, Gone”,’ 19–38; S. Flanders, ‘Case Management: Failure in America? Success in England and Wales?’ Civil Justice Quarterly 17 (1998): 308; J.A. Jolowicz, ‘The Woolf Report and the Adversary System,’ Civil Justice Quarterly 15 (1996): 198; M. Zander, ‘The Government’s Plans on Civil Justice,’ Modern Law Review 61 (1998): 383 and ‘The Woolf Report: Forwards or Backwards for the New Lord Chancellor?,’ Civil Justice Quarterly 16 (1997): 208; A.A.S. Zuckerman, ‘The Woolf Report on Access to Justice,’ Zeitschrift für Zivilprozess International 2 (1997): 31 ff. 18 Andrews, English Civil Procedure, preface. 19 A clear statement of this background is M. Zander, The State of Justice (London: Hamlyn Lecture Series, 2000), Chap. 1. 20 On this development Andrews, The Modern Civil Process, 9.19 ff; and Andrews, English Civil Procedure, Chap. 35. 21 Andrews, ‘Development in English Civil Procedure: How Far Can the English Courts Reform Their Own Procedure?’ Zeitschrift für Zivilprozess International, 3, at 14 ff.

1.3 Changes and Challenges Association with the Civil Procedure . . .

5

(1) proportionality, (2) procedural equality, (3) active judicial involvement in a case’s progress, (4) accelerated access to justice by improved summary procedures, (5) curbing excessive documentary disclosure, (6) greater resort to the disciplinary use of costs orders, (7) curbing appeals, (8) stimulating settlement by use of costs incentives to induce acceptance of reasonable settlement offers, and (9) judicial encouragement of resort to ADR, notably mediation. These bare points are fleshed out in the following paragraphs. 1.07 ‘The Overriding Objective’ in CPR Part 1 gives prominence to the notion of ‘proportionality’ both in the organisation of levels of procedure— small claims, fast-track, or multi-track proceedings22 —and in the exercise of the court’s extensive case management powers.23 Part 1 also emphasises the requirement of procedural equality. 1.08 The principle of party-control was modified.24 The CPR created a general framework for active involvement of judges in the pre-trial development of moderately or extremely complex litigation. Judges are required to ensure that litigation proceeds with reasonable speed and that the issues are identified and prioritised. At trial (and during its preparation), judges should control the volume of evidence. But there are limits to judicial initiative: (i) parties still select factual witnesses and draw up witness statements25 ; (ii) parties still select party-appointed experts (they can also agree upon selection of a single, joint expert, this ‘shared’ expert being an innovation of the CPR system); judicial permission to use experts is required, but judicial selection of individual experts is avoided, unless the parties reach stalemate in agreeing a single, joint expert26 ;

22

Respectively, CPR Parts 27, 28, 29. CPR 1.4(2); CPR 3.1(2); CPR Parts 26, 28, 29; Andrews, The Modern Civil Process, 3.13 ff; Neil Andrews, English Civil Justice and Remedies: Progress and Challenges: Nagoya Lectures (Tokyo: Shinzan Sha Publishers, 2007), Chap. 3; see now The Admiralty and Commercial Courts Guide (9th edn, 2011), Section D; and note the anxious discussions engendered by ‘rogue’ ‘super-cases’: the Long Trials Working Party Report December 2007; and a pilot scheme since 2008; for the background, Sir Anthony Clarke MR, ‘The Supercase-Problems and Solutions’, 2007 Annual KPMG Forensic Lecture: available at http://www.judiciary.gov.uk/docs/speeches/kpmg_speech.pdf. 24 On the CPR system from the perspective of the traditional principle of party control, Andrews, ‘A New Civil Procedural Code for England: Party-Control “Going, Going, Gone,”’ 19–38; Andrews, English Civil Procedure, 13.12 to 13.41; 14.04 to 14.45; 15.65 to 15.72. 25 Andrews, The Modern Civil Process, 8.04 ff. 26 On these aspects of CPR Part 35, Neil Andrews, Ibid., Chap. 7; D. Dwyer, The Judicial Assessment of Expert Evidence (Cambridge: Cambridge University Press, 2008). 23

6

1 Introduction

(iii) the Court of Appeal has said that excessive intervention by trial judges during the course of evidence is prohibited because it would be wrong for a judge to ‘arrogate to himself a quasi-inquisitorial role’, this being something which is ‘entirely at odds with the adversarial system.’27 1.09 Summary disposal of cases is promoted by introduction of a more searching test of ‘real prospect of success’, in CPR Part 24.28 1.10 ‘Standard disclosure’ was intended to subject documentary discovery to a more focused notion of relevance. ‘Standard disclosure’29 covers documents on which a party will rely; or which adversely affect his case; or adversely affect the opponent’s case; or support the opponent’s case. 1.11 Procedural discipline would be reinforced by a more discretionary approach to costs decisions.30 The courts could adjust costs awards and so reflect the fact that a victorious party had raised unnecessary issues. Lord Woolf MR in AEI Rediffusion Music Ltd v. Phonographic Performance Ltd (1999), attempting to temper the perceived rigidity of the ‘winner takes all’ approach, said: too robust an application of the ‘follow the event principle’ encourages litigants to increase the costs of litigation; and he suggested ‘if you recover all your costs as long as you win, you are encouraged to leave no stone unturned in your effort to do so.’31 1.12 Finality of judgment would be fortified by the requirement that an appellant must obtain permission to appeal.32 Nearly all appeals require the court to give its permission (formerly known as ‘leave’),33 in response to the appellant’s speedy request to the first instance court (normally within 14 days34 ; a period which cannot be extended by party agreement).35 If the lower court refuses permission, a fresh application for permission can be made to the appeal court.

27

Southwark London Borough Council v. Maamefowaa Kofiadu [2006] EWCA Civ 281, at [148]. 28 CPR 24.2: Swain v. Hillman [2001] 1 All ER 91, 92, C.A.; Andrews, The Modern Civil Process, 5.18 ff. 29 CPR 31.6; Andrews, op. cit., Chap. 6, notably 6.04, 6.22; on the pre-CPR excessive documentary disclosure system, Woolf, Access to Justice: Interim Report, Chap. 21, at paras 1–9 (commenting on the Peruvian Guano test: Compagnie Financière v. Peruvian Guano Co (1882) 11 QBD 55, 63, CA); Sir Johan Steyn (later Lord Steyn), preface. to Hodge and Malek, Discovery (London, 1992); R. Cranston, ‘Complex Litigation: The Commercial Court,’ Civil Justice Quarterly 26 (2007): 190, 203. 30 Andrews, The Modern Civil Process, 9.09 ff. 31 [1999] 1 W.LR 1507, 1522-3, C.A. 32 Andrews, The Modern Civil Process, 8.12 ff. 33 CPR 52.3(1): except decisions affecting a person’s liberty. 34 CPR 52.4(2); appeals out of time will only exceptionally be permitted: Smith v. Brough [2005] EWCA 261; [2006] CP Rep 17. 35 CPR 52.6(1) (2).

1.3 Changes and Challenges Association with the Civil Procedure . . .

7

1.13 Settlement would be promoted by the capacity of both defendants and claimants to make settlement offers backed by costs sanctions.36 In essence: under the English CPR system, Part 36, the claimant’s costs risk arises if he does not accept the defendant’s settlement offer.37 In that situation, if the claimant at trial ‘fails to obtain a judgment more advantageous than a defendant’s Part 36 offer’, then, ‘unless [the court] considers it unjust to do so’, the claimant must pay the defendant’s costs incurred after the date when the claimant should have accepted the settlement offer. The defendant will only be liable for the claimant’s costs incurred before that date. The defendant’s costs risk arises if he does not accept the claimant’s settlement offer. If ‘judgment against the defendant is at least as advantageous to the claimant as the proposals contained in a claimant’s Part 36 offer’, then, ‘unless [the court] considers it unjust to do so’, the defendant will be liable to pay the claimant not just the ordinary measure of costs (‘standard’ costs) but an aggravated measure (so-called ‘indemnity costs’), with the further possibility of a high level of interest on those costs. 1.14 The courts were charged with the duty to promote resort to ADR,38 especially mediation, though use of costs orders,39 and the staying of proceedings.40 1.15 Litigation Less Popular: There has been a decrease in the amount of litigation in England under the CPR (1998) system. It is now no longer possible to refer to listing crises and chronic congestion, except in the Administrative Court.41 It is widely known that the public, and even large companies and government departments, no longer wish to spend large sums on litigation. The CPR (1998), although excellent in many respects, did not alter the system of remuneration for lawyers. The financial background is well known. Law firms require revenue. Litigation is a source of fees. Individual lawyers have ‘billing targets’. Billing clients by the hour naturally leads to the search for more ‘billable’ hours in preparation for trial.

36

Andrews, The Modern Civil Process, 10.15 ff. C v. D [2010] EWHC 2940 (Ch); [2011] 1 WLR 31, Warren J, establishes that a Part 36 offer cannot be time-limited, but must be open for acceptance unless withdrawn by the offeror; Gibbon v. Manchester City Council [2010] EWCA Civ 726; [2010] 1 WLR 2081, CA, establishes that a counter-offer made by the offeree does not terminate a Part 36 offer. 38 CPR 1.4(2)(e). 39 Notably, Dunnett v. Railtrack plc [2002] 1 WLR 2434, C.A.; Halsey v. Milton Keynes General NHA Trust [2004] 1 WLR 3002, CA; Nigel Witham Ltd v. Smith [2008] EWHC 12 (Technology and Construction Court), at [36] (J. Sorabji, Civil Justice Quarterly 27 (2008): 427); on this line of cases, Andrews, The Modern Civil Process, 11.40 ff. 40 CPR 3.1(2)(f); Neil Andrews, op. cit., at 11.31. 41 The Times 9 April 2009 reported that the ‘hugely overburdened Administrative Court in London. . .struggles with the caseload that requires extra judges for its 8,000 asylum and immigration cases a year.’ 37

8

1 Introduction

Besides expense, there are other factors which render litigation less attractive. Litigation is normally conducted by lawyers. As a result, the client can lose control, sometimes all control. Furthermore, the system of all-ornothing victory at judgment, with costs liability for the defeated litigant, introduces a high risk. In short, the process is expensive, alien and alienating, and fraught with risk. To reverse the exodus from the court system, the formal system must become much more attractive: cheaper and more focused; and judges must be more robust in exercise of their powers to maintain clarity and time-discipline.

1.4 Six Phases of English Civil Proceedings 1.16 The phases to be discussed here are: (i) the pre-action phase; (ii) commencement and pleadings; (iii) party preparation of factual evidence, expert evidence, and exchange of documents between the parties (‘disclosure’, formerly known as ‘discovery’); (iv) trial; (v) appeal; (vi) enforcement. ‘Pre-trial applications’, including ‘case management’ hearings, can take place at stages (ii) and (iii). Protective relief is often sought at stage (i). 1.17 Pre-Action Phase42 : The ‘pre-action phase’ covers the period from when the relevant ground of complaint or contested issue arose until that matter produces formal civil proceedings. When the period of prescription (or ‘limitation of actions’) is generous, pre-litigation phase will not be short (for example, 6 years for ordinary contractual claims, or even 12 years if the contract is contained in a formal ‘deed’.43 Perhaps no other subject so vividly reflects the scope for national difference than the fixing of periods of prescription.44

42

See the author’s ‘general report’ (examining nearly 20 jurisdictions) on this topic for the world congress on procedural law in Brazil (2007): Andrews, ‘Pre-action Stage of Civil Proceedings,’ in Direito Processual Comparado: Proceedings of the XIII World Congress on Procedural Law, eds. A. Pellegrini Grinover and Petronio Calmon (Editora Forense: Rio de Janeiro, 2007), 201–41. 43 For the formalities of a deed, s 1(2)(3), Law of Property (Miscellaneous Provisions) Act 1989; 158–60; Bolton MBC v. Torkington [2004] Ch 66, CA. 44 For comparative discussion, R. Zimmermann, Comparative Foundations of a European Law of Set-off and Prescription (Cambridge: Cambridge University Press, 2002); in England the subject of limitation of actions, based largely on case law interpretation of the Limitation Act 1980, is so fast-moving and abstruse that Parliament seems to have despaired of reforming it; the nature of possible legislative reform remains controversial: Andrews, English Civil Procedure, Chap. 12; Zuckerman on Civil Procedure (London, 2006), 24.4 ff; A. McGee, Limitation Periods (6th edn, 2010); Law Commission’s discussion, ‘Limitation of Actions’ (Law Commission Report No 270, HC 23, 2001); and ‘Limitation of Actions’ (Law Commission Consultation Paper No 151, 1998); on which, Neil Andrews [1998] Cambridge Law Journal 588; R. James, Civil Justice Quarterly 22 (2003): 41.

1.4

Six Phases of English Civil Proceedings

9

1.18 The CPR (1998) system introduced an important set of ‘preaction protocols’. As explained in Andrews (2007)45 and (2008),46 a leading aim of the English scheme of pre-action protocols is to promote early and informed settlement, avoiding the expense and inconvenience of formal litigation. This is rooted in the philosophy that formal litigation, notably trial, is a form of dispute resolution which should be treated as a matter of ‘last resort’. The rules contained in the protocols are largely self-executing and require the disputants to co-operate. The courts become involved in the pre-action phase of litigation only retrospectively, once proceedings have begun. The judges are then prepared to criticise parties who have failed to comply with the pre-action protocol. The courts have a wide discretion to adjust costs orders to reflect this criticism. Pre-action protocols prescribe ‘obligations’ which the prospective parties and their legal representatives must satisfy before commencing formal proceedings. One of the aims of this system is that each side should know the strengths of his opponent’s case. It is also hoped that settlement will be promoted by efficient exchange of information.47 For example, a person who alleges that he was the victim of medical negligence can gain access to hospital or medical records under this system of pre-action protocols. If the dispute does proceed to a formal action, the court has power to sanction a person’s failure to comply by making an appropriate costs order. Various rules or judicial powers regulate preservation of, or access to, potential evidence and information before formal commencement of proceedings. 1.19 Tracks: The allocation of cases to different types of first instance court (county court or High Court) and to different systems of procedure (known as ‘tracks’) under the CPR (1998) is founded on the principle of jurisdictional proportionality: that litigation must be tailored to the size and nature of the dispute. The idea of allocating cases to different types of court according to their value or importance was not an innovation of the CPR system. The dualism of county court and High Court first instance jurisdiction can be traced to the nineteenth century. Within the county court system, small claims procedure was introduced in the 1960s and 1970s. These matters, therefore, ante-date the Woolf Inquiry of 1994–1996. However, the CPR (1998) system does refine the notion of proportionate allocation (stopping short of amalgamating the county court and High Court system into a unified first instance court). There are now three tracks (that is, types of first instance procedure to which a case can be allocated): the small claims jurisdiction; the fast-track; and the multi-track. High Court 45

See Neil Andrews, ‘General report’ (examining nearly 20 jurisdictions) on this topic for the world congress on procedural law in Brazil,’ in Direito Processual Comparado: XIII World Congress of Procedural Law, eds. A. Pellegrini Grinover and R. Calmon (Editora Forense: Rio de Janeiro, 2007), 201–42. 46 Andrews, The Modern Civil Process, 2.26 ff. 47 In Carlson v. Townsend [2001] 3 All ER 663, CA, at [24], [28], [31], Brooke LJ.

10

1 Introduction

litigation is concerned only with the multi-track. The county courts, which are the inferior first instance jurisdiction, are concerned with all three tracks. At the time of writing (April 2011), the small claims system concerns actions not exceeding £5,000 (or £1,000 in the case of personal injury claims and housing repair claims by resident tenants).48 (However, a press release of 29 March 2011 by the Ministry of Justice, London,49 states that the Government wishes to expand the small claims jurisdiction. It said: Raising the maximum value for small claims from £5,000 to £15,-000: This would enable more cases to be heard through the simple small claims process rather than a more costly, complicated trial.).50 Above the small claims jurisdiction is the second tier of first instance adjudication, the ‘fasttrack’, dealing with claims not exceeding £25,000.51 At the top of the first instance system, the third tier, is the versatile ‘multi-track’, dealing with all other actions.52 The High Court tends not to deal with matters less than £50,000.53 Subject to this, the county courts and High Court now share the burden of the multi-track case load. The financial bands mentioned above create presumptions for the allocation of cases to the various tiers of first instance procedure. These presumptions can yield to other considerations. Accordingly, a case might be allocated to a lower or higher band, depending on the special features of the case. Thus, irrespective of the amount at stake, the multi-track might be the suitable venue for the following matters: a case which raises issues of public importance, or which is a test case54 ; cases where oral evidence might be extensive, or where there is a heavy amount of documentary material; or cases where trial might last more than 1 day. Allocation to a track will take place in the light of the parties’ answers to the allocation questionnaire, which are normally served by the court on each party once a defence is filed.55 The rules provide the following criteria to guide the court in making this allocation:

48

CPR 26.6(1)(2)(3); CPR 27.1. http://www.justice.gov.uk/news/press-release-290311a.htm. 50 ‘A consultation paper of 2011 supplies details: Solving disputes in the county courts: creating a simpler, quicker and more proportionate system’ (CP 6/2011: Ministry of Justice: Cm 8045) (29 March 2011). 51 CPR 26.6(4); generally, CPR 28. 52 CPR 29; CPR 26.6(6) states: ‘The multi-track is the normal track for any claim for which the small claims track or the fast track is not the normal track.’ 53 PD (29) para 2.2. 54 Cf. the small amount litigated in Bowerman v. ABTA (1995) New LJ 1815, CA. 55 CPR 26.3; CPR 26.8(2) states: ‘It is for the court to assess the financial value of a claim and in doing so it will disregard (a) any amount not in dispute; (b) any claim for interest; (c) costs; and (d) contributory negligence.’ PD (26) 7.3(2) states: ‘Where the court believes that the amount the claimant is seeking exceeds what he may reasonably be expected to recover it may make an order under [CPR] 26.5(3) directing the claimant to justify the amount.’ 49

1.4

Six Phases of English Civil Proceedings

11

– – – – –

the financial value, if any, of the claim (see preceding note); the nature of the remedy sought; the likely complexity of the facts, law or evidence; the number of parties or likely parties; the value of any counterclaim or other Part 20 claim and the complexity of any matters relating thereto; – the amount of oral evidence which may be required; – the importance of the claim to persons who are not parties to the proceedings; – the views expressed by the parties; and—the circumstances of the parties.56 Such allocation can be changed by the court.57 1.20 Commencement and Pleadings: Proceedings begin once the claimant issues a claim form. This requires a positive act by the claimant, who must notify the relevant court of his wish to instigate proceedings. Not surprisingly, despite the efforts of procedural draftsmen to achieve absolute precision, the moment when the procedural ‘starter’s gun’ has been fired is often disputed.58 The date when proceedings are ‘commenced’ or ‘brought’ or become ‘definitively pending’ varies between legal systems. This date is important for determining at least two important procedural issues: whether the plaintiff’s attempt to bring proceedings is in fact ‘out of time’ for the purpose of the limitation or prescription rules; and whether the present proceedings are to be accorded priority under a regime of lis alibi pendens (for example, under the Brussels jurisdictional regime).59 But it is unnecessary to investigate this matter further. What is significant for us is that the process of court proceedings has an officially-defined beginning.

56

CPR 26.8(1). CPR 26.10; see also Maguire v. Molin [2002] 4 All ER 325, CA. 58 The time of commencement of civil proceedings is when the court enters the date on the claim form, CPR 7.2(2); however, for limitation purposes, the date can be earlier: when the claim form was received in the court office: PD (7) 5.1; thus in St Helens MBC v. Barnes [2006] EWCA Civ 1372; [2007] CP Rep 7 (noted J. Sorabji, Civil Justice Quarterly (2007): 166) the Court of Appeal held that a claim was ‘brought’ when a claimant’s request for the issue of a claim form was delivered to the correct court office during its opening hours on the day before the expiry of the limitation period, even though the claim was not issued by the court office until four days later, by which date it was out of time. 59 (EC) No 44/2001 of 22 December 2000 on ‘jurisdiction and the recognition and enforcement of judgments in civil and commercial matters’: [2001] OJ L 12/1; see, e.g., Gasser GmbH v. MISAT Srl (Case C-116/02) [2003] ECR I-14693 (a court of a Member State on which exclusive jurisdiction has been conferred pursuant to Article 23 of the 2001 Regulation, cannot issue an injunction to restrain a party from prosecuting proceedings before a court of another Member State if that court was first seised of the dispute). 57

12

1 Introduction

Before that point, any dispute or disagreement is not subject to formal proceedings. 1.21 Each party to English civil proceedings must produce a sworn ‘statement of case’ (formerly known as ‘pleadings’). This must set out the main aspects of the claim or defence. There is no need to include in a ‘statement of case’ any detailed evidence or details of legal argument. The claimant should also specify the relief he is seeking, such as the remedies of a debt claim, damages, injunction, or a declaration. 1.22 Case Management60 : As examined in the next paragraph, the courts possess extensive ‘case management’ powers. In his reports of 1995– 199661 Lord Woolf adopted this technique as the mainstay for actions on the ‘multi-track’, thus including all High Court litigation.62 The court must now ensure that matters are properly focused, procedural indiscipline checked, expense reduced, progress accelerated, and that just outcomes are facilitated or awarded Case management has three main functions: to encourage the parties to pursue mediation, where this is practicable; secondly, to prevent the case from progressing too slowly and inefficiently; finally, to ensure that judicial resources are allocated proportionately, as required by ‘the Overriding Objective’ in CPR Part 1. This requires the court and parties to consider the competing demands of other litigants who wish to gain access to judges, the court’s ‘scarce resources’.63 1.23 The CPR lists various managerial responsibilities. These are not intended to be exhaustive statements of the court’s new active role.64 Judges, especially at first instance, have the following managerial responsibilities: co-operation and settlement: encouraging co-operation between the parties65 ; helping parties to settle all or part of the case66 ; encouraging alternative dispute resolution67 ; if necessary, staying the action to enable such extra-curial negotiations or discussions to be pursued68 ;

60

On the new system from the perspective of the traditional adversarial principle, Andrews, ‘A New Civil Procedural Code for England: Party-Control “Going, Going, Gone”,’ Civil Justice Quarterly 19 (2000): 19–38; Andrews, English Civil Procedure, 13.12 to 13.41; 14.04 to 14.45; 15.65 to 15.7. 61 Lord Woolf’s two reports are: Access to Justice: Interim Report (1995), and Access to Justice: Final Report (London, 1996): for comment, Zuckerman and Cranston, The Reform of Civil Procedure: Essays on ‘Access to Justice’; Cranston, How Law Works, Chap. 5. 62 For example, Andrews, English Civil Procedure, Chap.’s 13, 14, 15; Zuckerman on Civil Procedure (London, 2006), at 1.74 ff, Chap. 10, 11.53 ff. 63 For example, Andrews, English Civil Procedure, Chap.’s 13, 14, 15; Zuckerman on Civil Procedure (London, 2006), at 1.74 ff, Chap. 10, 11.53 ff. 64 CPR 1.4(2); CPR 3.1(2); CPR Parts 26, 28, 29. 65 CPR 1.4(2)(a). 66 CPR 1.4(2)(f). 67 CPR 1.4(2)(e). 68 CPR 3.1(2)(f).

1.4

Six Phases of English Civil Proceedings

13

determining relevance and priorities: helping to identify the issues in the case69 ; deciding the order in which the issues are to be resolved70 ; deciding which issues need a full trial and which can be dealt with summarily71 ; making summary decisions: deciding whether to initiate a summary hearing (under CPR Part 24) 72 ; or whether the claim or defence can be struck out as having no prospect of success73 ; or whether to dispose of a case on a preliminary issue74 ; excluding issues from consideration75 ; maintaining impetus: fixing time-tables and controlling in other ways the progress of the case76 ; giving directions which will bring the case to trial as quickly and efficiently as possible77 ; regulating expenditure: deciding whether a proposed step in the action is cost-effective,78 taking into account the size of the claim (‘proportionality’).79 Lord Woolf commented on these powers: . . .judges have to be trusted to exercise the wide discretions which they have fairly and justly. . .[Appeal courts] should not interfere unless judges can be shown to have exercised their powers in some way which contravenes the relevant principles.80 A party must obtain permission to appeal from a case management decision, but this will be difficult to obtain.81 Appellate courts are prepared to show considerable deference to judges’ case management decisions, unless they are incorrect in principle.82

69

CPR 1.4(2)(a). CPR 1.4(2)(d); 3.1(2)(j). 71 CPR 1.4(2)(c). 72 PD (26) 5.1, 5.2. 73 CPR 3.4(2). 74 CPR 3.1(2)(l). 75 CPR 3.1(2)(k). 76 CPR 1.4(2)(g). 77 CPR 1.4(2)(l). 78 For example, suggestion that video-conferencing should be used for short appeals: Black v. Pastouna [2005] EWCA Civ 1389; [2006] CP Rep 11, per Brooke LJ. 79 CPR 1.4(2)(h) and 1.1(2)(c). 80 Biguzzi v. Rank Leisure plc [1999] 1 WLR 1926, 1934 F, CA, per Lord Woolf MR. 81 PD (52) 4.4, 4.5: ‘Case management decisions include decisions made under rule 3.1(2) [containing a long list of procedural powers] and decisions about disclosure, filing of witness statements, or experts reports, directions about the timetable of the claim, adding a party to a claim, and security for costs.’ In this context, a decision concerning permission to appeal requires consideration whether ‘the issue is of sufficient significance to justify the costs of an appeal’, ‘the procedural consequences of an appeal (e.g. loss of trial date) outweigh the significance of the case management decision’, and whether ‘it would be more convenient to determine the issue at or after trial’. 82 Thomson v. O’Connor [2005] EWCA Civ 1533 at [17] to [19], per Brooke LJ; Three Rivers DC v. Bank of England [2005] EWCA Civ 889; [2005] CP Rep 46, at [55]; the authorities cited in Andrews, English Civil Procedure, 13.61 to 13.68, 38.49; Zuckerman on Civil Procedure (London, 2006), 23.193 ff. 70

14

1 Introduction

1.24 Case Management in the Commercial Court83 : The Commercial Court is part of the Queen’s Bench Division within the High Court.84 It has its own detailed procedural code: The Admiralty and Commercial Courts Guide.85 Its judges hear all pre-trial applications, including case management hearings.86 This contrasts with the general pattern in the Queen’s Bench Division where full High Court judges (‘puisne judges’) are generally involved in civil litigation only at trial and Masters hear many pre-trial matters.87 1.25 There are two important pre-trial hearings, the ‘case management conference’ (‘CMCs’) and the ‘pre-hearing review’. Sir Richard Aikens, a former Commercial Court judge, (now a member of the Court of Appeal), has recently emphasised the need for procedural efficiency and focus in this important court.88 His scholarly survey of the Commercial Court’s impressive history is an important examination of the severe procedural challenges created by complex and protracted litigation. The 2011 Commercial Court Guide places emphasis on continuity of judicial involvement during the case’s development, and on a ‘docket’ arrangement in cases of complexity.89 The same Guide90 identifies the following Key features of case management: 83

A. Colman, Commercial Court (5th edn, London: Lloyd’s of London Press, 2000), Chap. 5 (although now rather dated). 84 Senior Courts Act 1981, s 6(1)(2). 85 The Admiralty and Commercial Courts Guide (9th edn, 2011); Colman, Commercial Court, 19–20; Cranston, Complex Litigation: The Commercial Court, 190. 86 Colman, Commercial Court, 6–7. 87 ‘puisne’ is the adjective used to describe High Court judges who are knighted or decorated as ‘Dame’. 88 R. Aikens, ‘With A View to Despatch’ (now a Lord Justice of Appeal), in Tom Bingham and the Transformation of the Law: A Liber Amicorum, eds. M. Andenas and D. Fairgrieve (Oxford: Oxford University Press, 2009), 563–88. 89 The Admiralty and Commercial Courts Guide (9th edn, 2011), at section D4.1, 4.3 and 4.4.: D.4.1: An application for the assignment of a designated judge to a case may be made in circumstances where any or all of the following factors—(i) the size of or complexity of the case, (ii) the fact that it has the potential to give rise to numerous pre-trial applications, (iii) there is a likelihood that specific assignment will give rise to a substantial saving in costs, (iv) the same or similar issues arise in other cases (v) other case management considerations—indicate that assignment to a specific judge at the start of the case, or at some subsequent date, is appropriate. . . . D4.3: If an order is made for allocation to a designated judge, the designated judge will preside at all subsequent pre-trial case management conferences and other hearings. Normally all applications in the case, other than applications for an interim payment, will be determined by the designated judge and he will be the trial judge. D4.4: In all cases the Commercial Court listing office will endeavour to ensure a degree of judicial continuity. To assist in this, where a previous application in the case has been determined by a judge of the Commercial Court whether at a hearing or on paper, the parties should indicate clearly when lodging the papers, the identity of the judge who last considered the matter, so that so far as reasonably practicable, the papers can be placed before that judge. 90 The Admiralty and Commercial Courts Guide (9th edn, 2011), at section D2.

1.4

Six Phases of English Civil Proceedings

15

. . .case management will include. . .: 1. statements of case will be exchanged within fixed or monitored time periods; 2. a case memorandum, a list of issues and a case management bundle will be produced at an early point in the case; 3. the case memorandum, list of issues and case management bundle will be amended and updated or revised on a running basis throughout the life of the case and will be used by the court at every stage of the case. In particular the list of issues will be used as a tool to define what factual and expert evidence is necessary and the scope of disclosure; 4. the court itself will approve or settle the list of issues and may require the further assistance of the parties and their legal representatives in order to do so; 5. a mandatory case management conference will be held shortly after statements of case have been served, if not before (and preceded by the parties lodging case management information sheets identifying their views on the requirements of the case); 6. at the first case management conference the court will (as necessary) discuss the issues in the case and the requirements of the case with the advocates retained in the case. The court will set a pre-trial timetable and give any other directions as may be appropriate; 7. after statements of case have been served, the parties will serve a disclosure schedule or schedules. At the first case management conference, the court will discuss with the advocates retained in the case by reference to the list of issues the strategy for disclosure set out in the disclosure schedules with a view to ensuring that disclosure and searches for documents are proportionate to the importance of the issues in the case to which the disclosure relates and avoiding subsequent applications for specific disclosure; 8. before the progress monitoring date the parties will report to the court, using a progress monitoring information sheet, the extent of their compliance with the pre-trial timetable; 9. on or shortly after the progress monitoring date a judge will (without a hearing) consider progress and give such further directions as he thinks appropriate; 10. if at the progress monitoring date all parties have indicated that they will be ready for trial, all parties will complete a pre-trial checklist; 11. in many cases there will be a pre-trial review; in such cases the parties will be required to prepare a trial timetable for consideration by the court; 12. throughout the case there will be regular reviews of the estimated length of trial, including how much pre-trial reading should be undertaken by the judge.

1.26 Sanctions and Procedural Discipline: The main sanctions for breach of a procedural requirement are: costs orders91 ; stay of the proceedings92 ; striking out part or all of the claim or defence.93 Breach of a judicial order or injunction can involve contempt of court, for example a freezing injunction.94 But Adrian Zuckerman has contended that the courts have not been consistent and tough enough in exercising their powers of case

91

CPR 3.8(2). CPR 3.1(2)(f). 93 CPR 3.4(2)(c). 94 For example, Daltel Europe Ltd v. Makki [2006] EWCA Civ 94; [2006] 1 WLR 2704. 92

16

1 Introduction

management.95 In particular, he contends that they have shown undue clemency towards procedural default. In his view, the courts are wrong to relieve parties and their lawyers from failure to comply efficiently with the procedural framework and specific orders administered during case management. Against this it might be suggested that it is important to apply the principle of ‘procedural equity’.96 ‘Procedural non-compliance’ cannot be treated as uniformly reprehensible. Examples of procedural default vary greatly in their intrinsic importance. They also cause, or have the potential to cause, different degrees of ‘collateral’ impact, that is, disturbing the ‘case flow’ of other litigation in the same ‘list’ of actions. For example, the courts have sensibly refrained from making draconian orders where parties have slightly delayed in making disclosure of expert reports or witness statements, provided this delay can be acceptably explained.97 Furthermore, litigants in person require special consideration.98 1.27 Party Preparation of Factual Evidence: The decision to call particular factual witnesses and to use particular documents lies with the parties. The claimant bears the burden of proof. For example, he must show that the defendant breached his contract, or failed to exercise reasonable care, or committed some other legal wrong. The defendant bears the burden of proof on points of defence, for example that the claimant 95

A.A.S. Zuckerman, ‘Litigation Management Under the CPR: A Poorly-Used Management Infrastructure. . .’, in The Civil Procedure Rules: Ten Years On, ed. D. Dwyer (Oxford: Oxford University Press, 2010), 89–108; A.A.S. Zuckerman, ‘Court Management,’ in The Future of Transnational Commercial Litigation: English Responses to the ALI/UNIDROIT Draft Principles and Rules of Transnational Civil Procedure, eds. M. Andenas, Neil Andrews, and R. Nazzini, (London: British Institute of Comparative and International Law; re-printed 2006), Chap. 12; and in N. Trocker and V. Varano, eds., The Reforms of Civil Procedure in Comparative Perspective (Torino: Giappichelli, 2005), 143 ff, and Zuckerman on Civil Procedure (2nd edn, 2006), Chap. 10, especially at 10.139 and 10.164 ff; D. Piggott, ‘Relief from Sanctions. . .,’ Civil Justice Quarterly (2005): 103–29. 96 Andrews, English Civil Procedure, 6.66 ff; recent examples, Keen Phillips (A Firm) v. Field [2006] EWCA Civ 1524; [2007] 1 WLR 686 at [18]; Estate Acquisition and Development Ltd v. Wiltshire [2006] EWCA Civ 533; [2006] CP Rep 32; Horton v. Sadler [2006] UKHL 27; [2007] 1 AC 307; Baldock v. Webster [2004] EWCA Civ 1869; [2006] QB 315; but there are limits, e.g., Olafsson v. Gissurarson [2006] EWHC 3162 (QB); [2007] 1 All ER 88 (invalid service in Iceland could not be cured under CPR 3.10). 97 Meredith v. Colleys Vacation Services Ltd [2001] EWCA Civ 1456; [2002] CP 10; RC Residuals Ltd v. Linton Fuel Oils Ltd [2002] EWCA Civ 11; [2002] 1 WLR 2782; N. Madge, ‘Court Management,’ in Experts in Civil Courts, ed. L. Blom-Cooper (Oxford: Oxford University Press, 2006), 4.34 ff; cf., in a different context, Calden v. Nunn [2003] EWCA Civ 200 (where the trial window would be missed and the application for permission to adduce the report of a party-appointed expert was unacceptably late); and for refusal to make a disproportionate order in respect of late disclosure of a witness report, Halabi v. Fieldmore Holdings Ltd [2006] EWHC 1965 (Ch). 98 Hougie v. Hewitt [2006] EWHC 2042 (Ch) (relief from striking out for breach of an ‘unless order’; litigant in person’s default mitigated by depression).

1.4

Six Phases of English Civil Proceedings

17

failed to act reasonably in order to ‘mitigate’ his loss.99 The ‘standard’, that is, level or quantum of proof in civil cases is that the court must be satisfied that the relevant matter has been substantiated ‘on the balance of probabilities’. This contrasts with the higher standard of proof in criminal cases, which is ‘beyond reasonable doubt’. However, the more serious or drastic is the civil wrong alleged to have been committed by the defendant, the more proof the court will tend to require. The civil courts have emphasised this need for more exacting proof the case contains allegations of assaults upon children or fraud claims. Thus Lord Nicholls said in Re H (Minors) (Sexual Abuse: Standard of Proof) 100 : . . . the more serious the allegation the less likely it is that the event occurred and, hence, the stronger should be the evidence before the court concludes that the allegation is established on the balance of probability. Fraud is usually less likely than negligence. Deliberate physical injury is usually less likely than accidental physical injury. . .. Built into the preponderance of probability standard is a generous degree of flexibility in respect of the seriousness of the allegation.

1.28 English ‘evidence collection’ and ‘preparation’ are controlled by the parties, subject only to case management directions. Thus the court does not compel the parties to produce particular witnesses or documents. The parties also select the particular expert(s) for the case. The Common Law system presupposes that the impartial court will determine the victor in a factual dispute by listening to rival presentations of evidence. Under the CPR system, the court retains this ‘responsive’ and ‘reactive’ role. But the modern civil judge is required to control the proceedings to ensure that the case is not unduly prolonged, unreasonably complicated, or unfairly tilted in favour of a stronger party (this last aim is known as the ‘equality of arms’ principle or ‘procedural equality’). The court has power to restrict the number of witnesses at trial. This power should be used delicately and not in a heavy-handed manner. It can also place limits on the time devoted at trial to examining witnesses. 1.29 Each party must normally produce a witness statement in respect of each factual witness, including the party’s own intended factual evidence. No witness can be heard unless such a statement has been made and exchanged before trial. The judge will be expected to have read the witness statements before trial. Each party is competent to give evidence as a ‘factual witness’, that is, evidence of what he or she saw or heard. This 99

An interesting qualification exists where the claimant seeks damages for expenditure wasted as a result of the defendant’s breach of contract; the claim will succeed unless the defendant shows that the claimant had entered a loss-making contract, that is, one which would have resulted in economic loss to the claimant even if there had been no breach of contract (CCC Films (London) Ltd v. Impact Quadrant Films Ltd [1985] QB 16, Hutchison J; approved in Dataliner Ltd v. Vehicle Builders and Repairers Association The Independent 30 August 1995, CA). 100 [1996] AC 563, 586, HL.

18

1 Introduction

must take the form of a witness statement. At trial this evidence can be supplemented by oral examination. 1.30 Expertise101 : The three problems experienced before the CPR (1998) were: first, the tendency for expert witnesses hired by a litigant to lose objectivity and tailor their reports to suit that party’s case; secondly, the need to control the number of experts involved in a particular case, especially with a view to achieving proportionality between the scale of experts’ involvement and the case’s value or importance102 ; thirdly, the need to promote ‘equality of arms’ between rich and poor parties. 1.31 English law allows matters of expert evidence to be admitted by use of a ‘single, joint expert’, or by party-appointed experts, or by court assessors.103 The court can restrict use of experts. It can require the parties to agree upon the nomination of a ‘single, joint expert’. However, in more complex cases, the traditional system of ‘party-appointed’ witnesses continues to apply. This permits the parties to select their own ‘rival’ experts. Under the CPR system the main rule is that no expert evidence can be presented in a case unless the court has granted permission.104 1.32 Use of ‘single, joint experts’ is a major innovation of the CPR system. Such an expert acts jointly for the parties and is paid by both. Like all experts under the CPR system, he owes an overriding duty to the court to present evidence which he honestly believes to be accurate.105 However, compared with the system of party-appointed experts, a ‘single, joint expert’ is more likely to enjoy neutrality and objectivity. It has often been suspected that party-appointed experts’ evidence might be tailored to suit the appointing party.106 1.33 But some suggest that the problem of lack of neutrality is exaggerated. The party-appointed expert system can inject salutary scepticism, debate, and ‘intellectual honesty’, into the process of taking a ‘view’ on debatable matters of opinion, a point emphasised by Professor Hazard in the American Law Institute/UNIDROIT’s Principles of Transnational

101

The most recent examination is Dwyer, The Judicial Assessment of Expert Evidence, containing comparative discussion at 188 ff. Andrews, The Modern Civil Process, Chap. 7; Andrews, English Civil Procedure, Chap. 32; L. Blom-Cooper, ed., Experts in Civil Courts (Oxford: Oxford University Press, 2006). 102 CPR 35.1 states: ‘Expert evidence shall be restricted to that which is reasonably required to resolve the proceedings.’ 103 The court assessor system is of minor significance, being confined to maritime collisions, patent disputes, and costs issues: Andrews, The Modern Civil Process, 7.04. 104 CPR 35.4(1) to (3). 105 Andrews, The Modern Civil Process, 7.05; Blom-Cooper, Experts in Civil Courts, Chap. 11. 106 Sir Thomas Bingham MR in Abbey National Mortgages plc v. Key Surveyors Ltd [1996] 1 WLR 1534, 1542, CA (a pre-CPR case concerning appointment of a court expert under the old RSC Ord 40).

1.4

Six Phases of English Civil Proceedings

19

Civil Procedure.107 Furthermore, Lord Woolf in his 1996 report on the civil justice system said that: in large and strongly contested cases the full adversarial system, including oral cross-examination of opposing experts, is the best way of producing a result. That will apply particularly to issues on which there are several tenable schools of thought, or where the boundaries of knowledge are being extended.108 1.34 The major problem with the ‘single, joint expert’ system is the danger of inaccuracy, for experts are fallible. For this reason, the better view is that English law is correct to have retained the system of party-appointed experts for large or complex litigation or as a ‘safety-net’ for unsatisfactory ‘single, joint expert’ evidence in smaller cases.109 1.35 Disclosure of Documents: Main Framework110 : Both the systems of pre-action disclosure and pre-trial disclosure are intended to enable each side of the contest to gain access to relevant information which might otherwise be known only to one side. Reciprocal disclosure achieves equality of access to information, facilitates better settlement of disputes, and avoids ‘trial by ambush’ (where a party is unable to respond properly to a surprise revelation at the final hearing). After proceedings have begun, each party must prepare a list of documents on which he will rely, or which might assist the other party.111 A party is obliged both to provide a list of documents (‘disclosure’) and to allow inspection of these by the other side.112 Such information is not yet evidence: it only becomes evidence if it is ‘adduced’ by one party for the purpose of a trial or other ‘hearing’. ‘Standard disclosure’ concerns113 : documents on which party A will rely; or which adversely affect A’s own case; or adversely affect party B’s case; or support B’s case; or any other documents which A is required to disclose by a relevant practice direction.114 For this purpose, a ‘document’ is ‘anything in which information of any description is recorded’.115 1.36 The recipient of information disclosed under legal compulsion should only use this material for the purpose of the present proceedings and he should not divulge it to others.116 Accordingly, the so-called ‘Implied 107

Principle 22.4; accessible at: http://www.unidroit.org/english/principles/ civilprocedure/main.htm. Also published as ALI/UNIDROIT: Principles of Transnational Civil Procedure (Cambridge University Press, 2006). 108 Woolf, Access to Justice: Final Report, Chap. 13, at [19]. 109 Andrews, The Modern Civil Process, 7.13, 7.14, for details. 110 Andrews, English Civil Procedure, Chap. 26. 111 CPR Part 31. 112 CPR 31.10(2) and 31.15, subject to certain qualifications added at CPR 31.3(2). 113 CPR 31.6. 114 The court can order narrower disclosure in special situations: CPR 31.5(1) and (2). 115 CPR 31.4. 116 As Lord Hoffmann explained in Taylor v. Serious Fraud Office [1999] 2 AC 177, 207, HL:

20

1 Introduction

Undertaking’ provides117 : a party to whom a document has been disclosed may use the document only for the purpose of the proceedings in which it is disclosed, except (a) where the document has been read to or by the court, or referred to, at a hearing which has been held in public; or (b) the court gives permission118 ; or (c) the party who disclosed the document and the person to whom the document belongs agree. 1.37 Evidence at Pre-trial Hearings: There is hardly ever any presentation of oral evidence at such hearings, although formally the rules do permit this in exceptional circumstances. And so the court only receives oral testimony from witnesses at trial. At a pre-trial hearing, witness evidence is received in the form of sworn statements. There is opportunity for the judge and the parties’ lawyers to discuss the content of these statements. Given that few actions reach trial, pre-trial hearings have considerable practical importance. At such a hearing, the court can award interim relief or payments or strike out claims or defences, or dispense summary justice. 1.38 Trial: Adjudication at trial is nearly always by a single judge, without a jury.119 The general rule is that a hearing must be in public.120 The court can order that the identity of a party or of a witness must

The concept of an implied undertaking originated in the law of discovery in civil proceedings. A solicitor or litigant who receives documents by way of discovery is treated as if he had given an undertaking not to use them for any purpose other than the conduct of the litigation. As Hobhouse J pointed out in Prudential Assurance Co Ltd v. Fountain Page Ltd [1991] 1 WLR 756, 764 the undertaking is in reality an obligation imposed by operation of law by virtue of the circumstances in which the document or information is obtained The reasons for imposing such an obligation were explained by Lord Keith of Kinkel in Home Office v. Harman [1983] 1 AC 280, 308, HL: ‘Discovery constitutes a very serious invasion of the privacy and confidentiality of a litigant’s affairs. It forms part of English legal procedure because the public interest in securing that justice is done between parties is considered to outweigh the private and public interest in the maintenance of confidentiality. But the process should not be allowed to place upon the litigant any harsher or more oppressive burden than is strictly required for the purpose of securing that justice is done.’ 117

CPR 31.22; even in situation (a), however, the court has power to make a special order restricting or prohibiting use of a document: CPR 31.22(2). 118 SmithKline Beecham Biologicals SA v. Connaught Laboratories Inc [1999] 4 All ER 498, CA. 119 Jury trial is confined to serious criminal cases (for example, murder, rape, armed robbery) and civil actions for defamation or misconduct by the police (the torts of defamation, malicious prosecution, and false imprisonment). 120 CPR 39.2(1); CPR 39.2(3) and PD (39) 1.5 set out exceptions; the primary source is s 67, Senior Courts Act 1981; J. Jaconelli, Open Justice (New York: Oxford University Press, 2002).

1.4

Six Phases of English Civil Proceedings

21

not be disclosed where this is necessary to protect that person’s interest.121 The civil jury’s virtual disappearance has transformed the rules of evidence. Civil evidence now displays a strong trend towards ‘free evaluation’, that is, assessment of relevant evidence liberated from the fetters of types of inadmissible evidence. English law reflects the transnational movement towards ‘free evaluation’, a concept embraced in the American Law Institute/UNIDROIT’s Principles of Transnational Civil Procedure.122 Factual witness testimony is the main type of evidence at trial. 123 Witnesses can be compelled to attend a trial (or other hearing) by the issue of a ‘witness summons’.124 The witness must be offered compensation for travelling to and from court and for loss of time.125 1.39 The trial proceeds as follows: counsel’s opening speech (although this can be dispensed with)126 ; examination-in-chief of claimant’s witnesses (although this will not be oral where, as usual, the witness statement is received as a substitute for oral testimony)127 ; cross-examination of claimant’s witnesses by defendant’s counsel; re-examination of witnesses; examination-in-chief of defendant’s witnesses (although this will not be oral where, as usual, the witness statement is received as a substitute for oral testimony)128 ; cross-examination of the same by claimant’s counsel;

121

CPR 39.2(4); PD (39) 1.4A emphasises the need to consider the requirement of publicity enshrined in Art 6(1) of the European Convention on Human Rights (incorporated into English law, Human Rights Act 1998, Sch 1). 122 Rule 25: accessible at: http://www.unidroit.org/english/principles/civilprocedure/ main.htm. Also published as American Law Institute/UNIDROIT’s Principles of Transnational Civil Procedure (Cambridge University Press, 2006), 137 ff; the members of the drafting group were: Neil Andrews, University of Cambridge, UK; Professor Frédérique Ferrand, Lyon, France; Professor Pierre Lalive, formerly University of Geneva, sometime Goodhart Professor Legal Science, Cambridge, in practice as an international commercial arbitrator, Switzerland; Professor Masanori Kawano, Nagoya University, Japan; Mme Justice Aida Kemelmajer de Carlucci, Supreme Court, Mendoza, Argentina; Professor Geoffrey Hazard Jr, now Hastings College of the Law, San Francisco, USA; Professor Ronald Nhlapo, formerly of the Law Commission, South Africa; Professor Dr iur Rolf Stürner, University of Freiburg, Germany, and Judge at the Court of Appeals of the German State Baden-Württemberg, Karlsruhe; the assistant to these discussions was Professor Antonio Gidi, now University of Houston Law Center. 123 Detailed account: Andrews, English Civil Procedure, 31.41 to 31.51. 124 This phrase replaces the hallowed terms subpoena ad testificandum (order to attend to give oral evidence) and subpoena duces tecum (order to attend with relevant documents or other items): CPR 34.2. 125 CPR 34.7; PD (34) 3, referring to provisions applicable also to compensation for loss of time in criminal proceedings. 126 Fast-track: PD (28) 8.2; multi-track: PD (29) 10.2; detailed account: Andrews, English Civil Procedure, 31.21 to 31.24. 127 Ibid. 128 Ibid.

22

1 Introduction

re-examination of same; defendant counsel’s final speech; claimant counsel’s final speech; (the reason this is the last party intervention at trial is that the claimant bears the burden of proof, and so deserves the last say); judgment129 ; order for costs, including in appropriate cases a summary assessment of costs.130 1.40 Appeals131 : All appeals now require permission,132 which can be granted by the first instance court or by the appeal court.133 Secondly, most appeals proceed directly (without ‘leap-frogging’) to the next level of civil judge (district judge to circuit judge, Master to High Court judge, circuit judge to High Court judge, High Court judge to Court of Appeal).134 Thirdly, the appeal court will rarely receive oral evidence. Nor will it normally consider new evidence (evidence not presented to the lower court). But the appeal court can ‘draw any inference of fact which it considers justified on the evidence’.135 Fourthly, the court will allow an appeal when the lower court’s decision was ‘wrong’ or ‘unjust because of a serious procedural or other irregularity in the proceedings in the lower court.’136 1.41 Enforcement: The court’s judgments or orders are open to enforcement. For example, money judgments can be enforced, at the creditor’s initiative, according to various official processes: seizure of the debtor’s goods, attachment of earnings orders, garnishee proceedings (‘third party debt orders’), or by charging orders against real property. There are special procedures relating to the recovery of movable and immovable property. Disobedience to injunctions and other coercive orders can be punished by contempt of court proceedings (‘committal proceedings’).

129

Or direction to the jury; for rules concerning judgments, CPR 40 and PD (40); on the court’s discretion whether to complete judgment once it has begun to deliver it (or to deliver it initially in draft form) Prudential Assurance Co v. McBains [2000] 1 WLR 2000, CA; on the court’s power to re-open a case before perfecting a judgment, Stewart v. Engel [2000] 3 All ER 518, CA. 130 CPR 44.3, 44.7(a). 131 Detailed account: Andrews, English Civil Procedure, Chap. 38; CPR Part 52; for US comparisons, P.S. Atiyah and R. Summers, Form and Substance in Anglo-American Law (Oxford: Oxford University Press, 1987), Chap. 10; for comparative perspectives on appeals, J.A. Jolowicz, On Civil Procedure (Cambridge: Cambridge University Press, 2000), Chaps. 14 to 16; for reflections on the private and public functions of civil appeals, especially in the highest chamber, see the reports by J.A. Jolowicz, P. Lindblom, and S. Goldstein, in The Role of the Supreme Courts at the National and International Level, ed. P. Yessiou-Faltsi (Thessaloniki, Greece: Sakkoulas Publications, 1998). 132 CPR 52.3(1): except decisions affecting a person’s liberty, namely appeals against committal orders, refusals to grant habeas corpus and secure accommodation orders made under s 25, Children Act 1989. 133 CPR 52.4(2). 134 PD (52). 135 CPR 52.11(2) and (4). 136 CPR 52.11(3).

1.5 Concluding Remarks

23

1.42 Expansion of Online Justice in Relatively Simple Cases: The Government announced in March 2011 (press release of 29 March 2011 by the Ministry of Justice, London)137 that it wished to expand an online system of civil justice for moderate or small cases. It said . . .Expanding the use of a successful online system to slash waiting times and legal expenses. . .. The time taken to resolve road traffic accident personal injury claims of up to £10,000 has dropped from 1 year to 4 months in some cases following the introduction of a simple online system that allows lawyers and insurance companies to resolve low-value claims without going to court. We propose expanding the availability of this online system to process Employers Liability and Public Liability personal injury claims. . .up to £50,000.

1.5 Concluding Remarks 1.43 The CPR system (1998) places management of cases in the hands of judges. Before 1999, too many cases had been left to drift without official direction. These disputes had become the (lucrative) play-thing of rival teams of lawyers. 1.44 However, the post-1998 English case management revolution has not abrogated the fundamental principle (also widely respected within the civilian tradition) that the scope of the litigation is determined by the parties’ pleadings rather than dictated by the court. Nor has English law abandoned the principle that the parties must choose how to support their rival contentions, by adducing witness and documentary evidence, and by framing and researching legal submissions (and this contrasts with the more active involvement of some civil law courts). Furthermore, under the English system, witness statements and expert reports are prepared in consultation with the parties’ lawyers but without judicial supervision. And at trial, factual witnesses and experts are examined and cross-examined by the parties (normally by their advocates) in the presence of a judge whose task is to listen.138 The trial judge must only ask occasional questions, for the purpose of clarification. Thus the Court of Appeal in the Southwark London Borough Council case (2006) affirmed that if the judge were to intervene excessively during presentation of oral evidence, he would ‘arrogate to himself a quasi-inquisitorial role’, something which is ‘entirely at odds with the adversarial system.’139

137

http://www.justice.gov.uk/news/press-release-290311a.htm. Andrews, The Modern Civil Process, 8.02 ff for details of trial. 139 Southwark London Borough Council v. Kofi-Adu [2006] EWCA Civ 281; [2006] HLR 33, at [148]. 138

This is Blank Page Integra

vi

Chapter 2

Principles of Civil Justice

Contents 2.1 2.2 2.3 2.4 2.5 2.6 2.7 2.8

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . Article 6(1), European Convention on Human Rights . . . . . . . Other Aspects of European Influence on English Civil Procedure . . UNIDROIT/American Law Institute Project (2000–2006) . . . . . . Author’s First List of Principles: Principles of Civil Procedure (1994) Author’s Second List of Principles: English Civil Procedure (2003) . A Fresh Start: Four Fundamental Aims of Civil Justice . . . . . . . Concluding Remarks . . . . . . . . . . . . . . . . . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

25 26 32 40 44 45 45 47

2.1 Introduction 2.01 Principles of civil justice have become an important field of comparative study, and constitutional procedural principles have come into prominence.1 In Europe this is partly because Convention States, including the United Kingdom, must comply with the jurisprudence of the Strasbourg court concerning on the guarantees contained in Article 6(1) of the European Convention on Human Rights. Another stimulating source of major procedural principles is the UNIDROIT/American Law Institute’s Principles of Transnational Civil Procedure- published in 2006,2 although 1

For example, Stephen Goldstein, ‘The Influences of Constitutional Principles on Civil Procedure in Israel,’ Israel LR 17 (1982): 467–510; and ‘Constitutional Norms of Civil Procedure as Reflected in the ALI/UNIDROIT Principles of Transnational Civil Procedure’ (Estudios en Homenage a Hector Fix-Zamudio); ‘The Proposed ALI/UNIDROIT Principles and Rules: the Utility of Such A Harmonization Project,’ Uniform LR VI (2001–4): 789–801. 2 ALI/UNIDROIT’s Principles of Transnational Civil Procedure (Cambridge: Cambridge University Press, 2006).

N. Andrews, The Three Paths of Justice, Ius Gentium: Comparative Perspectives on Law and Justice 10, DOI 10.1007/978-94-007-2294-1_2, C Springer Science+Business Media B.V. 2012

25

26

2

Principles of Civil Justice

that is non-binding. Besides these external influences, there is the internal task of arranging a set of fundamental procedural norms. Such a canon of principles seems indispensable if lawyers are to view procedural justice in a coherent and systematic way, liberated from the fine detail of individual rules. 2.02 The main suggestion in this chapter is that the fundamental and important principles of civil justice can be usefully arranged under these four headings: a. Regulating Access to Court and to Justice b. Ensuring the Fairness of the Process: a Shared Responsibility of the Court and the Parties c. Maintaining a Speedy and Efficient Process d. Achieving Just Outcomes

2.2 Article 6(1), European Convention on Human Rights 2.03 The Human Rights Act 1998, which took effect in October 2000, rendered the European Convention on Human Rights directly applicable in English courts. Article 6(1) of the Convention states3 : Right to a Fair Trial: In the determination of his civil rights and obligations or of any criminal charge against him, everyone is entitled to a fair and public hearing within a reasonable time by an independent and impartial tribunal established by law.

That important codification of fundamental principle consists of the following elements: a. The right to a fair hearing: this is a wide concept embracing4 : i. the right to be present at an adversarial hearing; ii. the right to equality of arms; iii. the right to fair presentation of the evidence; 3

(Cmd 8969); Human Rights Act 1998, s 1(3), Sch 1 incorporates the European Convention on Human Rights into UK law; S. Grocz, J. Beatson, and P. Duffy, Human Rights: The 1998 Act and the European Convention (2nd edn, 2008); M.W. Janies, R.S. Kay, and A. Bradley, European Human Rights Law: Text and Materials (3rd edn, Oxford University Press, 2008); R. Clayton and H. Tomlinson, The Law of Human Rights (2nd edn, Oxford University Press, 2008). 4 R. Clayton and H. Tomlinson, op. cit., Chap. 11.

2.2 Article 6(1), European Convention on Human Rights

27

iv. the right to cross examine opponents’ witnesses; v. the right to a reasoned judgment.5 b. a public hearing: including the right to a public pronouncement of judgment6 ; c. a hearing within a reasonable time; and d. a hearing before an independent7 and impartial8 tribunal established by law. 2.04 ‘Access to Court’ Principle: Of great interest is that the Strasbourg court in Golder v. U.K. (1975)9 divined an implicit fundamental right of ‘access to court’. Lord Bingham in Brown v. Stott (2001) explained10 : Article 6(1) contains no express right of access to justice, but in Golder v. U.K. (1975)11 the European Court of Human Rights said that it was ‘inconceivable’ that this provision should give detailed procedural guarantees without protecting access to justice. The court in the Golder case conceded that this implied right was not absolute and so admitted limitations.12

The Jackson (Sir Rupert Jackson’s) ‘Civil Litigation Costs Review’ (2009) has examined the high cost of English civil justice, as well as the ‘nuts and bolts’ of the notoriously technical topic of costs. 2.05 Duty to Give A Reasoned Judgment: The Court of Appeal in English v. Emery Reimbold & Strick Ltd (2002) noted that Article 6(1) requires a court to provide a reasoned judgment13 : The [European Convention on Human Rights] . . . requires that a judgment should contain reasons that are sufficient to demonstrate that the essential issues that have been raised by the parties have been addressed by the domestic court and how those issues have been resolved It does not seem . . . that the Strasbourg jurisprudence goes further and requires a judgment to explain why one contention, or piece of evidence, has been preferred to another.

5

Neil Andrews, English Civil Procedure (Oxford University Press, 2003), para’s 5.39 to 5.68. 6 Ibid., at 4.59 to end of chapter; Strasbourg authorities cited, ibid., at 7.21 to 7.79. 7 Starrs v. Ruxton 2000 JC 208, 243; 17 November 1999, The Times (High Court of Justiciary) per Lord Reed; Millar v. Dickson [2002] 1 WLR 1615, PC; Andrews, English Civil Procedure, para’s 4.02 to 4.27 (judicial independence). 8 Porter v. Magill [2002] 2 AC 357, HL. 9 (1975) 1 EHRR 524, 536, at [35]. 10 [2003] 1 AC 681, 694, PC. 11 (1975) 1 EHRR 524, 536, at [35]. 12 Ibid., at [38]. 13 [2002] EWCA Civ 605; [2002] 1 WLR 2409, C.A., at [12] (adumbrated by Flannery v. Halifax Estate Agencies Ltd [2000] 1 WLR 377, CA; noted J.A. Jolowicz, [2000] Cambridge Law Journal 263 (judge must give intelligible reasons for rejecting one side’s expert testimony and preferring the other side’s; a common law decision which ante-dated commencement of the Human Rights Act on 2 October 2000).

28

2

Principles of Civil Justice

The duty to give reasons extends to criminal cases. In 2010, the European Court of Human Rights held in Taxquet v Belgium (2010)14 that the system of jury trial (which is used in various forms in many European countries for the hearing of criminal matters) is compatible with the right to a fair trial under Article 6(1) of the European Convention on Human Rights even though the jury does not produce a reasoned decision. Nevertheless, the absence of reasons must be counter-balanced by provision of clear information concerning the terms of the indictment, and the counts or allegations on which the accused is being tried. It must also be apparent from the jury’s verdict to what extent the accused has been found guilty. The European Court of Human Rights explained this framework as follows15 : Article 6 does not preclude a defendant from being tried by a lay jury even where reasons are not given for the verdict. Nevertheless, for the requirements of a fair trial to be satisfied, the accused, and indeed the public, must be able to understand the verdict that has been given; this is a vital safeguard against arbitrariness. Article 6 requires an assessment of whether sufficient safeguards were in place to avoid any risk of arbitrariness and to enable the accused to understand the reasons for his conviction. . . Such procedural safeguards may include, for example, directions or guidance provided by the presiding judge to the jurors on the legal issues arising or the evidence adduced. . ., and precise, unequivocal questions put to the jury by the judge, forming a framework on which the verdict is based or sufficiently offsetting the fact that no reasons are given for the jury’s answers. . . Lastly, regard must be had to any avenues of appeal open to the accused.

The European Court of Human Rights held that Belgium had violated Article 6(1) because the circumstances of the jury’s verdict were unacceptably opaque. The European Court of Human Rights made these criticisms of the criminal process which had led to Taxquet’s conviction for premeditated murder16 : . . . even in conjunction with the indictment, the questions put in the present case did not enable the applicant to ascertain which of the items of evidence and factual circumstances discussed at the trial had ultimately caused the jury to answer the four questions concerning him in the affirmative. Thus, the applicant was unable, for example, to make a clear distinction between the co-defendants as to their involvement in the commission of the offence; to ascertain the jury’s perception of his precise role in relation to the other defendants; to understand why the offence had been classified as premeditated murder (assassinat) rather than murder (meurtre); to determine what factors had prompted the jury to conclude that the involvement of two of the co-defendants in the alleged acts had been limited, carrying a lesser sentence; or to discern why the aggravating factor of premeditation had been taken into account in his case. . . This shortcoming was all the more problematic because the case was both factually and legally complex and the trial lasted more than two months, from 17 October 2003 to 7 January 2004, during which time many witnesses and experts gave evidence.

14

(Application No 926/05) [2010] ECHR 1806 (16 November 2010). Ibid., at [91] and [92]. 16 Ibid., at [97] and [98]. 15

2.2 Article 6(1), European Convention on Human Rights

29

In this connection, it should be emphasised that precise questions to the jury were an indispensable requirement in order for the applicant to understand any guilty verdict reached against him. Furthermore, since the case involved more than one defendant, the questions should have been geared to each individual as far as possible.

2.06 Abolition of the House of Lords (Judicial) and Introduction of the United Kingdom Supreme Court: Undoubtedly the most significant impact of the European Convention on Human Rights has been the decision to abolish the traditional judicial role of the Lord Chancellor and to reconstitute the Appellate Committee of the House of Lords as the United Kingdom Supreme Court (which first sat on 1 October 2009). These events unfolded as follows. On 12 June 2003, the Labour Government (led by Prime Minister ‘Tony’ Blair) announced its plan to abolish the ancient judicial function of the Lord Chancellor, to scrap the judicial House of Lords, and to transfer its function to a new Supreme Court. As was well-known, this would end the complex set of offices held by Mr Blair’s former pupil-master, then Lord Chancellor, Lord Irvine of Lairg. This Press Release came as a shock, notably to the former pupil-master, and then Lord Chancellor.17 In 2005 the Constitutional Reform18 Act was enacted, leading to the House’s abolition in 2009. On 28 July 2009, the Lords of Appeal in Ordinary last gave judgment in the Chamber of the House of Lords (the very last case concerned the question of assisted suicide).19 On 1 October, 2009, the United Kingdom Supreme Court sat for the first time. The main reason for abolition of the Appellate Committee of the House of Lords was the perceived need to dismantle the three-fold responsibilities of the Lord Chancellor, the so-called ‘universal joint’ of the British Constitution.20 For he combined Cabinet status (with Ministerial responsibility for an Executive branch of government, for a Department of State, then known as the Lord Chancellor’s Office, now the Ministry of Justice); he was also Speaker of the House of Lords, and so had a legislative capacity; and, thirdly, he was a judge,

17

Lord Irvine, LC, had not seen the need (2 April 2003: A. Le Sueur, ‘From Appellate Committee to Supreme Court: A Narrative’, in The Judicial House of Lords: 1876–2009, eds. L. Blom-Cooper, B. Dickson, and G. Drewry (Oxford University Press, 2009), 65 nn 6, 7); although Lord Bingham had advocated such a change: Bingham, ‘The Evolving Constitution,’ EHRLR (2002): 1; and Lord Steyn had also favoured this change, ‘The Case for a Supreme Court,’ Law Quarterly Review 118 (2002): 382. 18 ‘Reform! Reform! Don’t talk to me about reform. Aren’t things bad enough already?’, per Astbury J, as noted by D. Neuberger, ‘The Supreme Court: Is the House of Lords “Losing Part of Itself”’ (2 December 2009), at [13]. 19 D. Neuberger, op. cit., at [2]. 20 A. Le Sueur, ‘From Appellate Committee to Supreme Court: A Narrative’, in op. cit., eds. L. Blom-Cooper, B. Dickson, and G. Drewry, at 66–70.

30

2

Principles of Civil Justice

able to preside in appeals heard by the House of Lords or the Privy Council.21 2.07 The European Court of Human Rights in McGonnell v. UK (2000), in a case concerning legal arrangements on the island of Guernsey, a ‘minilegal system’ within the British Isles, had signalled the need for there to be complete separation of judicial, executive, and legislative functions. In the McGonnell case the European Court of Human Rights held that the United Kingdom had infringed this requirement because the Bailiff of Guernsey (a judge and a member of the Guernsey legislature) had sat in a civil case concerning planning legislation which had been enacted when he was presiding over the legislative chamber on the island.22 The Strasbourg Court held that such a confusion of legislative and judicial roles is incompatible with the requisite appearance of independence and impartiality demanded by Article 6(1) of the European Convention on Human Rights. The Strasbourg court declared: Any direct involvement in the passage of legislation or of executive rules is likely to be sufficient to cast doubt on the judicial impartiality of a person subsequently called to determine a dispute over whether reasons exist to permit a variation from the wording of the legislation or rules at issue.23 The same court said that once a person has presided over a legislative chamber he should be precluded from adjudicating in any civil or criminal case which requires interpretation of the relevant enactment.24 2.08 The McGonnell decision raised doubts concerning the Lord Chancellor’s capacity to adjudicate in judicial cases (in practice appeals). This is because he is simultaneously head of the judiciary, a member of the Government’s Cabinet, the senior minister in charge of a Department of State (the Lord Chancellor’s Department), and the senior member of the House of Lords’ legislative chamber.25 And so change was driven by the

21 On the Law Lords’ roles, R. Cornes, ‘McGonnel v. UK, the Lord Chancellor and the Law Lords,’ Public Law (2000): 166, 174; D. Woodhouse, ‘The Office of Lord Chancellor: Time to Abandon the Judicial Role–The Rest will Follow,’ LS 22 (2002): 128, 141 ff. 22 (2000) 30 EHRR 289, ECHR; on which, A. Le Sueur, ‘Access to Justice Rights in the United Kingdom,’ EHRLR 5 (2000): 457, 467, and Cornes, ‘McGonnell v. UK, the Lord Chancellor and the Law Lords’, 166; and D. Woodhouse, ‘The Office of Lord Chancellor,’ Public Law (1998): 617 and ‘The Office of Lord Chancellor: Time to Abandon the Judicial Role . . .’, 128, 141–3, and, generally, D. Woodhouse, The Office of the Lord Chancellor (Oxford: Hart, 2001). 23 McGonnell case, (2000) 30 EHRR 289, ECHR, at [55]. 24 Ibid., at [57]. 25 For a list of the Law Lords’ various roles, Cornes, ‘McGonnell v. UK, the Lord Chancellor and the Law Lords,’ 174; Woodhouse, ‘The Office of Lord Chancellor: Time to Abandon the Judicial Role—The Rest will Follow,’ 128, 141 ff.

2.2 Article 6(1), European Convention on Human Rights

31

constitutional purist’s26 wish to detach the judicial House of Lords from the legislative House of Lords so that (i) the Law Lords would be physically separate from the legislature and (ii) they would no longer be allowed to participate in legislative debates.27 As Lord Neuberger (now the Master of the Rolls, in the Court of Appeal, formerly a member of the House of Lords in its judicial capacity) has diplomatically put it, with a note of agnosticism: ‘whether one agrees with it or not’, after the Human Rights Act 1998, the fact that this court remained in form ‘part of the legislature’ was bound to be ‘regarded as a constitutional impropriety, at least by the more purist or literalist public lawyers.’28 As for the role of the Lord Chancellor, in modern times successive Lord Chancellors had continued to adjudicate (normally as a member of a five court panel, and thus never adjudicating alone) in the judicial House of Lords during appeals29 (although Lord Bingham’s research reveals that from 1945 until 2003 the Lord Chancellor had sat in appeals on average only 8 days per year, which was a fifteenth of a Law Lord’s stint of 120 court days a year).30 For a short while a compromise was sought31 : it was accepted that the Lord Chancellor would not sit in any criminal cases (in which, necessarily, the State is involved through the prosecution of an alleged offender), and it was accepted that he would only sit in a civil case if the Government had no interest in the case’s outcome, whether directly or otherwise.32 But this was felt to be insufficient. The Constitutional Reform

26

Lord Irvine LC in HL Deb 17 February 1999, vol 597, col 736 and HL Deb 2 March 2000 vol 610, col 657; B. Dickson and P. Carmichael, eds., The House of Lords: Its Parliamentary and Judicial Roles (Oxford: Hart, 1998). 27 Non-retired Law Lords had already eschewed participation in Parliamentary debates concerning party-political matters; some had even vowed individually not to speak at all in the legislative chamber: for details, L. Blom-Cooper, B. Dickson, and G. Drewry, eds., op. cit., at 269, and ibid., David Hope, Chap. 11, especially at 175 ff. 28 D. Neuberger, ‘The Supreme Court: Is the House of Lords ‘Losing Part of Itself’, at [17]. 29 Lord Hailsham sat in House of Lords’ appeals for 81 days during his two terms in this office; and Lord Mackay for 60 days: HL Deb 17 February 1999, vol 597, col 738; L. Blom-Cooper, B. Dickson, and G. Drewry, eds., The Judicial House of Lords: 1876–2009 (Oxford University Press, 2009), 232. 30 T. Bingham, ‘The Old Order Changeth,’ Law Quarterly Review 122 (2006): 211, 217. 31 Parliamentary debate on separation of powers, HL Deb 17 February 1999, vol 597, cols 710–39; former Lords Chancellors denied that there was a problem: Lord Hailsham, ‘The Office of Lord Chancellor and the Separation of Powers,’ Civil Justice Quarterly 8 (1989): 308; Lord Mackay, ‘The Lord Chancellor in the 1990s,’ Current Legal Problems 44 (1991): 241; but for criticism, Woodhouse, ‘The Office of Lord Chancellor,’ (1998): 617; D. Oliver, ‘The Lord Chancellor, the Judicial Committee of the Privy Council and Devolution,’ Public Law (1999): 1; C. Munro, Studies in Constitutional Law (2nd ed, 1999), 314–7, 328, 331. 32 Lord Irvine LC in HL Deb 17 February 1999, vol 597, col 736 and HL Deb 2 March 2000 vol 610, col 657; B. Dickson and P. Carmichael, eds., The House of Lords: Its Parliamentary and Judicial Roles (1998).

32

2

Principles of Civil Justice

Act 200533 has now stripped out the judicial role from the ancient office of the Lord Chancellor. He has ceased to be a judge. Instead he is merely a representative of the Executive, a Minister of the Crown, and a Cabinet member. Furthermore, since the 2005 Act, the Lord Chancellor need not be legally qualified. Once the Lord Chancellor had been down-graded to a non-judicial Minister, the ground was cleared for creating a Supreme Court. As Lord Bingham has explained34 : With the Lord Chancellor ceasing to sit judicially, and his professional centre of gravity shifting to his departmental headquarters. . ., there was little. . .to justify the continued presence of the Law Lords in a legislature to which they had come, of late, to contribute relatively little. The constitutional purists have prevailed. Whether or not there was any constitutional necessity to disturb the settled traditions of the House of Lords, the new court is now manifestly insulated from any ‘legislative or executive contamination’: none of its judges is involved in the legislative process, or in the practice of Government. But it is still a matter for political debate whether it was necessary to create the Supreme Court and to annihilate the judicial House of Lords.

2.3 Other Aspects of European Influence on English Civil Procedure 2.09 Compatibility of the English ‘Striking Out’ Procedure and Article 6 of the European Convention on Human Rights35 : (generally on striking out, see 3.18 ff). The power to strike out a pleading (now known as a ‘statement of case’, whether it is a claim, defence, reply, or counterclaim, or any part of one) is exercisable in any of these situations, CPR 3.4(2): the statement of case discloses no reasonable grounds for bringing or defending the claim; or the statement of case is an abuse of the court’s process36 or is otherwise likely to obstruct the just disposal of the proceedings; or failure to comply with a rule, practice direction or court order.37 One of the grounds for striking out (because the statement of case discloses no reasonable grounds for bringing or defending the claim) can overlap with the court’s jurisdiction to award summary judgment under CPR Part 24 (on which see above). Both pre-trial procedures serve the function of enabling

33

Anticipating the Constitutional Reform Act 2005, Lord Steyn (now retired as a Lord of Appeal in Ordinary), in his 2002 ‘All Souls College, Neill Lecture’, had criticised the multi-faceted role of the Lord Chancellor: Steyn, ‘The Case for a Supreme Court,’ 382. 34 Bingham, ‘The Old Order Changeth,’ 211, 221–2. 35 Andrews, English Civil Procedure, Chap. 21; Zuckerman on Civil Procedure (London: Sweet & Maxwell, 2006), 8–30 ff. 36 Generally on abuse of process, Andrews, English Civil Procedure, Chap. 16. 37 CPR 3.4(2)(a) to (c).

2.3 Other Aspects of European Influence on English Civil Procedure

33

the court to weed out bad or tenuous claims or defences. Both are subject to the evidential constraint that the court can only receive oral evidence at trial. As we shall see, the summary judgment sieve has a slightly finer mesh than the striking out jurisdiction. 2.10 The European Court of Human Rights in Osman v. UK (1998) castigated the English courts for employing striking out to dismiss legally unfounded claims. It held that there had been a violation of Article 6 on the facts of that litigation. But the European Court in Z v. UK (2001) acknowledged that such a pre-trial filter is compatible with the human right to a ‘fair hearing’, provided the English court only decides to strike out a claim (or possibly a defence) after considering possible pertinent differences between factual situations.38 The Court said39 : ‘There is no reason to consider the striking-out procedure which rules on the existence of sustainable causes of action as per se offending the principle of access to a court. In such a procedure, the plaintiff is generally able to submit to the court the arguments supporting his or her claims on the law and the court will rule on those issues at the conclusion of an adversarial procedure. . .’40 It added: ‘the inability of the applicants to sue the local authority flowed not from an immunity but from the applicable principles governing the substantive right of action in domestic law. There was no restriction on access to a court. . ..’41 (For an example of the English courts acting on this requirement, and considering whether an immunity has been over-stretched, see the UK Supreme Court’s abolition in Jones v. Kaney (2011)42 of party-appointed expert’s immunity, examined at 3.73).

2.11 Legal Advice Privilege: the Problem of In-House Counsel43 : (generally on this privilege, 3.39 ff). A party cannot be called to give evidence of, or produce any document containing details of, confidential discussion

38

Z v. United Kingdom—29392/95 [2001] ECHR 333 (10 May 2001); (2001) 10 BHRC 384, (2002) 34 EHRR 333; [2001] 2 FCR 246, [2001] 2 FLR 612; ECtHR, not following Osman v. UK (1998) BHRC 293; (1999) 29 EHRR 245; for comment Andrews, English Civil Procedure, 7–64 ff; ACL Davies (2001) 117 Law Quarterly Review 521 and other literature cited Andrews, op. cit., at p. 167 nn 114 ff. 39 Z v. United Kingdom, ibid. 40 Ibid., at [97]. 41 Ibid. 42 [2011] UKSC 13; [2011] 2 WLR 823. 43 Generally on attorney-client privilege, known in England as ‘legal advice privilege’: Andrews, English Civil Procedure, Chap.’s 27, 28; other sources are Cross and Tapper on Evidence (12th edn, Oxford University Press, 2010), 435 ff.; I. Dennis, The Law of Evidence (4th edn, London: Sweet and Maxwell, 2010), Chap. 10; C. Hollander, Documentary Evidence (10th edn, London, 2009), Chap.’s 11–15, especially 13, 14; P. Matthews and H. Malek, Disclosure (3rd edn, London: Sweet and Maxwell, 2010), Chap. 11; Phipson on Evidence (17th edn, London: Sweet and Maxwell, 2009), Chap. 23; C. Passmore, Privilege (2nd edn, London: Sweet and Maxwell, 2006), Chap. 2; B. Thanki, ed., The Law of Privilege (Oxford University Press, 2006); Zuckerman on Civil Procedure (2nd edn, London, 2006), Chap. 15; J. Auburn, Legal Professional Privilege: Law & Theory (Oxford: Hart, 2000); H.L. Ho, ‘History and Judicial Theories of Legal Professional Privilege,’ Sing J L Studies (1995):558.

34

2

Principles of Civil Justice

between a client and a lawyer concerning the law and its application. In the United States it is known as ‘attorney-client’ privilege (Upjohn Co v. United States, 1981).44 Protection of confidential legal consultation is also recognised as a human right under the European Convention on Human Rights,45 and as part of European Community law.46 In the leading English decision on this privilege, Three Rivers DC v. Governor and Company of the Bank of England (No 6) (2004),47 Baroness Hale said that ‘legal advice is not confined to telling the client the law. It must include advice as to what should prudently and sensibly be done in the relevant context.’48 As I wrote in 1994, ‘modern society accepts that there is an important constitutional value in obtaining “free, confident, and candid” legal consultation.’49 The Court of Appeal in R (Prudential plc) v. Special Commissioner of Income Tax (2010)50 held that accountants are not lawyers for the purpose of legal advice privilege, even if the accountant in question is a tax specialist. However, in 2011 the UK Supreme Court gave permission for this decision to proceed to final appeal.51

44 449 US 383 (1981); cf the US material collected at Zuckerman on Civil Procedure (2nd edn, 2006), 15.43 ff, at nn 70 to 82, also noting J. Sexton, ‘A Post-Upjohn Consideration of Corporate-Client Privilege,’ NYULR 57 (1982): 442; on the danger of corporate ‘cloaking’, Thanki, ed., The Law of Privilege, 2.28 n 73, noting Australian discussion in Esso v. Federal Commissioner of Taxation (1999) 201 CLR 49. 45 For example, Morgan Grenfell case [2002] UKHL 21; [2003] 1 AC 563 at [39], Lord Hoffmann: ‘the European Court of Human Rights has said that [the privilege] is a fundamental human right which can be invaded only in exceptional circumstances: Foxley v. United Kingdom (2001) 31 EHRR 637, para 44’. 46 AM & S Europe Ltd v. Commission of the European Communities (Case 155/79) [1983] QB 878, ECJ, at [18] and [25]. 47 [2004] UKHL 48; [2005] 1 AC 610; noted Neil Andrews, Civil Justice Quarterly (2005): 185; S. Partington and J. Ward [2005] JBL 231; J. Seymour [2005] Cambridge Law Journal 54; C. Tapper (2005) 121 Law Quarterly Review 181; the leading historical survey conducted by an English court is Lord Taylor of Gosforth CJ’s remarkable speech in R v. Derby Magistrates Court, Ex p B [1996] AC 487, HL; H.L. Ho, ‘History & Judicial Theories of Legal Professional Privilege,’ 558. 48 [2004] UKHL 48; [2005] 1 AC 610, at [62], referring to Taylor LJ’s statement in Balabel v. Air India [1988] Ch 317, 330, CA. 49 Neil Andrews, Principles of Civil Procedure (London: Sweet & Maxwell, 1994), 12-009. 50 [2010] EWCA Civ 1094; [2011] 2 WLR 50; noted K. Hughes [2011] Cambridge Law Journal 19; in England, legal advice privilege has been extended to trade mark and patent agents, and certain other ‘quasi-legal’ advisors, mostly by statute, for references, Andrews, English Civil Procedure, 27.03 at nn 10–15 and B. Thanki, ed., ibid., at 1.40 to 1.51, Passmore, ibid., at 1.144. In Bolkiah v. KPMG [1999] 2 AC 222, HL, privilege arose in the dealings between ‘forensic accountants’ and potential witnesses; but this seems to have been rooted in litigation privilege, Passmore, Privilege, 1.145. 51 (2011) New Law Journal 565; the Law Society for England and Wales will intervene in the appeal.

2.3 Other Aspects of European Influence on English Civil Procedure

35

2.12 However, the European Court of Justice in the Akzo Nobel case (2010)52 confirmed that an in-house lawyer’s advice does not attract legal advice privilege for the purpose of EU competition law. The case concerned these facts. In 2003 European competition law investigators, acting for the European Commission, in exercise of their statutory investigative powers, and in co-operation with the Office of Fair Trading, visited premises in Manchester used by Akzo Nobel Chemicals Ltd and a member of its group, Akcros Chemical Ltd. Many documents were copied by the investigating team. These included the material which gave rise to this appeal. The disputed documents were e-mails between Akcros’s general manager and Mr S, coordinator for competition law, within the relevant corporate group, and a member of Akzo’s legal department. Mr S was a full-time employee of Akzo and a member of the Netherlands Bar. 2.13 The Akzo Nobel case (ECJ 2010) is not surprising.53 Different European Member States have adopted different approaches concerning the status of in-house lawyer’s advice. In England it is clear that in-house lawyer’s advice can be protected by legal advice privilege. But in the specific context of EU competition law, the European Court of Justice’s decision in AM & S Europe Ltd v. Commission of the EC (1982)54 has been a clear exception to this. The factors underpinning the ECJ’s restrictive approach are four-fold: (I) in-house lawyers are less likely to be consistently ‘independent’, especially within the private sector; this is because they are economically dependent on their employer; furthermore, close ties are inevitable within a ‘single client’ relationship; this close set of relations and dependency results in loss of objectivity and inability to deal readily with conflicts of interest55 ; (II) furthermore, in-house counsel are often used in a specialist capacity to assist in competition matters; in that specialist capacity they become closely associated with the commercial strategy of the company56 ; this deepening of the ties between in-house counsel and employer again tends to undermine their capacity for forensic objectivity and independence;

52 Akzo Nobel ECJ Case C-550/07 (decision of 14 Sept. 2010); noted A. Higgins, Civil Justice Quarterly (2011): 113; and L. Bastin, ‘Should ‘Independence’ of In-House Counsel be a Condition Precedent to a Claim of Legal Professional Privilege. . .?,’ Civil Justice Quarterly 30 (2011): 33. 53 ECJ Case C-550/07. 54 [1982] ECR 1575; [1983] QB 878, ECJ. 55 Akzo Nobel ECJ judgment, at [45] to [49]. 56 Ibid., at [47], [48].

36

2

Principles of Civil Justice

(III) there is an obvious danger of in-house counsel being used to provide a screen behind which companies and commercial agents might conceal evidence of damaging breaches of competition law; (IV) the task of enforcing competition law has become harder.57 2.14 By contrast, English law has recognised that in-house counsel can give privileged legal advice. This has been the position for a very long time. In the leading case, Alfred Crompton Amusement Machines Ltd v. Customs & Excise Commissioners (No 2) (CA 1972),58 the Court of Appeal unhesitatingly endorsed a long-standing practice,59 which can be traced to at least the early part of the nineteenth century (in the case of the Treasury Solicitor, the main body of lawyers responsible for conducting much of the litigation affecting the government). According to this practice, salaried in-house counsel can be relied upon to maintain independence and professional probity when advising their client-employer in legal matters. The same respect has been extended to private sector in-house lawyers. As the Alfred Crompton decision (1972)60 made clear, retrospective dismantling of that system of public and private sector ‘in-house’ privilege would be unthinkable. Lord Denning MR acknowledged, in that case, the perils of maintaining this arrangement, but he sanguinely suggested that in-house counsel would rise to the challenge: Being a servant or agent too, [inhouse counsel] may be under more pressure from his client. So he must be careful to resist it. He must be as independent in the doing of right as any other legal adviser.61 Phipson on Evidence (2010)62 notes that the Australian High Court in the Waterford case (1987)63 has also acknowledged that in-house counsel can give advice which attracts legal advice privilege. However, one judge broke rank: Brennan J, in a minority judgment,64 refused to accept that private sector in-house counsel should be capable of giving privileged legal advice. Nevertheless, in house-counsel in Australia remain sources of legal advice privilege vis-a-vis their employers and clients, whether counsel is employed in the public or private sector.

57

Ibid., at [85]. [1972] 2 QB 102, 129, CA; not challenged on appeal, [1974] AC 405, 430-1, HL. 59 [1972] 2 QB 102, 120, CA, arguendo, citing the Revenue Solicitors Act 1828, the Attorneys and Solicitors Act 1874 and the Solicitors Act 1932. 60 [1972] 2 QB 102, 129, CA; not challenged on appeal, [1974] 405, 430-1, HL. 61 [1972] 2 QB 102, 129, CA. 62 Phipson on Evidence (17th edn, London, 2009), 23–26). 63 Waterford v. Commonwealth [1987] 163 CLR 54; Thanki, ed., The Law of Privilege, 1.43; Thanki, ibid., at n 129 cites R. Desiatnik, Legal Professional Privilege in Australia (2nd edn, 2005), 92 n 139 for later NSW case law upholding in-house counsel legal advice privilege. 64 Waterford v. Commonwealth [1987] 163 CLR 54, 72. 58

2.3 Other Aspects of European Influence on English Civil Procedure

37

2.15 The Privilege Against Self- Privilege: (on this privilege, 7.24 ff). In this context European Human Rights law can sometimes give a narrower version of the privilege and sometimes it can afford wider protection than English law. In English law the privilege is defined broadly by section 14 of the Civil Evidence Act 1968 as follows65 : The right of a person in any legal proceedings other than criminal proceedings to refuse to answer any question or produce any document or thing if to do so would tend to expose that person [or his or her spouse] to proceedings for an offence or for the recovery of a penalty [under UK law]. However, a majority of the Court of Appeal in C plc v. P (2007)66 held that there is no privilege in things or documents existing prior to the order compelling their production, applying the European Court of Human Rights’ decision in Saunders v. UK (1996).67 2.16 The source of the Strasbourg definition is the European Court of Human Rights’ decision in Saunders v. UK, where the court said68 : The right not to incriminate oneself is primarily concerned. . . with respecting the will of an accused person to remain silent. . . [It] does not extend to the use in criminal proceedings of material which may be obtained from the accused through the use of compulsory powers but which has an existence independent of the will of the suspect such as. . . documents acquired pursuant to a warrant, breath, blood or urine samples and bodily tissue for the purpose of DNA testing.69 The decision also confirms that the

65 C plc v. P [2007] EWCA Civ 493; [2008] Ch 1; generally on the privilege against self-incrimination: Andrews, English Civil Procedure, 29.24 to 29.28 and (on possible reform), 29.56 ff; Dennis, The Law of Evidence, Chap. 5; Thanki, ed., The Law of Privilege, Chap. 8; Cross and Tapper on Evidence (12th edn, Oxford University Press, 2010), 417 ff; I.H. Dennis, The Law of Evidence, (2nd edn, London, 2002), Chap. 5; Hollander, Documentary Evidence, Chap. 17; Matthews and Malek, Disclosure; Phipson on Evidence (17th edn, 2010), 24–60 ff.; Zuckerman on Civil Procedure (2nd edn, London, 2006), Chap. 17. 66 [2007] EWCA Civ 493; [2008] 1 Ch 1, at [26] to [38], per Longmore LJ, and Sir Martin Nourse at [74]; noted R. Moules [2007] Cambridge Law Journal 528. 67 (1996) 23 EHRR 313, at [69]. 68 (1996) 23 EHRR 313, ECHR; noted Neil Andrews [1997] Cambridge Law Journal 243; G. Stessens, ‘The Obligation to Produce Documents vs the Privilege Against SelfIncrimination,’ ELRev Supp HRS 22 (1997): 45, 54–55 supports a distinction between (i) (non privileged) bare production of pre-existing material known to exist and (ii) (privileged) admission by ‘testimonial’ self-incrimination that documents exist, are authentic, have been lost, or destroyed, or information concerning their current location, discernible in US jurisprudence (Fisher v. US 425 US 391, 423–3 (1976), US v. Doe 465 US 605, 1984); for other comment on the Saunders case, John Andrews, ‘Hiding Behind the Veil: Financial Delinquency and the Law,’ ELRev 22 (1997): 22, 369; and Eriksen and Thorkildsen, ‘Self-Incrimination, the Ban on Self-Incrimination after the Saunders Judgment,’ Financial Crime 5 (1997): 182. 69 Saunders case, ibid. at [69]; the ECHR in JB v. Switzerland added that the same applies to evidence obtained by means of a tachograph compulsorily fitted to a lorry.

38

2

Principles of Civil Justice

privilege is not an absolute human right but can be qualified in appropriate circumstances. 2.17 In C plc v. P (2007)70 Lawrence Collins LJ, in the minority, observed that the majority’s decision in this case, although supported by a line of Strasbourg jurisprudence, could not be reconciled with settled House of Lords’ authority. This tension has not been resolved, because the House of Lords in this litigation did not hear argument (it had earlier given permission for the appeal to be conducted). The case, therefore, leaves a loose-end. This is an example of English law providing a more generous scope to the privilege against self-incrimination that European Human Rights law. 2.18 In R v. S (2008)71 the Court of Appeal (Criminal Division) held that the privilege in criminal matters is confined to the relevant respondent’s supply of information which has no independent existence before it is so revealed. On the facts of the case, a computer ‘key’ (a series of password letters or numbers) was held to exist ‘independently of the respondent’s will’ (because the machine had already been instructed to recognise that ‘key’). To require the respondent to reveal that information, which he alone had memorised, was not an infringement of the privilege. The privilege would only arise if it turned out that the information held on the machine involved a crime (it was suspected that if there were unlawful information on the machine, its possession might involve a terrorism offence; if so, the criminal court would have a discretion under section 78, Police and Criminal Evidence Act 1984, to disallow use of that evidence on the basis that the respondent had been compelled to reveal his knowledge of that information). Sir Igor Judge, giving the Court of Appeal’s judgment in R v. S (2008), said: [18] The principle that evidence existing independent of the will of the subject does not normally engage the privilege against self-incrimination is clearly established in domestic law. . . [20] On analysis, the key [to decrypt the relevant computer information in this case] which provides access to protected data, like the data itself, exists separately from each appellant’s ‘will’. . .

2.19 Conversely, sometimes European Human Rights law can rescue a civil litigant whose compulsorily disclosed information is otherwise about to lead to criminal prosecution. An example is R v. K (2010), where the Court of Appeal held that information concerning matrimonial assets in family proceedings cannot be used to incriminate the disclosing party (on the facts for alleged tax fraud). This is because, applying the so-called ‘Saunders

70

[2007] EWCA Civ 493; [2008] 1 Chap. 1, at [63] to [73]. [2008] EWCA Crim 2177; (2008) 158 New Law Journal 1459; The Times, 15 October, 2008.

71

2.3 Other Aspects of European Influence on English Civil Procedure

39

exclusionary principle’ (Saunders v. UK 1996),72 it would be oppressive in all the circumstances for the prosecuting authorities to use this information.73 This is an open-textured principle, which is applied on a context by context basis. The ‘Saunders exclusionary principle’ is an example of European Human Rights law providing wider protection on the basis of freedom from self-incrimination than English statutory law. 2.20 But a different current of analysis has emerged within the Strasbourg jurisprudence. The Strasbourg court deviated in JB v. Switzerland (2001) from the analysis of the privilege’s scope suggested in the earlier Saunders case (1996, European Court of Human Rights). In the JB case the European Court of Human Rights held that coercion to produce pre-existing documents can be a violation of the privilege recognised under Article 6(1).74 The court began by repeating the reference to material or evidence ‘obtained through methods of coercion or oppression in defiance of the [respondent’s] will’.75 But it then asserted that pre-existing documents can fall within the scope of the Convention’s protection of this privilege.76 Similarly, in Jalloh v. Germany (European Court of Human Rights 2006) it was held that there had been a violation of the privilege when authorities required an individual to disgorge from his digestive system evidence that he had swallowed a plastic bag of illegal drugs (cocaine, wrapped in a ‘bubble’) to avoid detection for drugs vending on a German street.77 The procedure involved insertion of a pipe and the swallowing of an emetic. The court accepted that this process involved the discovery of 72

(1996) 23 EHRR 313. R v. K (A) [2009] EWCA Crim 1640; [2010] QB 343, at [33] to [43]. 74 JB v. Switzerland (Application No 31827/96; 3 May, 2001); [2001] Crim LR 748, ECHR: Swiss tax inquiry; criminal offence if tax payer fails to supply documents relating to tax liability; Art 6(1) held to apply and violated on facts of case; the Court, para 68 of the JB case, distinguished the Saunders case, saying bluntly that the documents in the present case did not fall within the ‘existence independent of the person’s will’ test in the Saunders case; noted A. Ashworth, Archbold News (2001) Issue 5, June 27, 5–6. 75 JB case, at [64]. 76 JB case, at [68]. 77 (2006) 44 EHRR 32; 20 BHRC 575. The facts are not for the squeamish, ibid., at [11] ff: but in essence the Police saw a suspected drug trader acting suspiciously handing over packages for money; before they could arrest him for possession, he swallowed a bag of cocaine; he was taken into custody and the public prosecutor ordered that emetics (Brechmittel) be administered to the applicant by a doctor in order to provoke the regurgitation of the bag (Exkorporation). He was taken to a hospital and this procedure was carried out. ‘As the applicant refused to take the medication necessary to provoke vomiting, he was held down and immobilised by four police officers. The doctor then forcibly administered to him a salt solution and the emetic Ipecacuanha syrup through a tube introduced into his stomach through the nose. In addition, the doctor injected him with apomorphine, another emetic that is a derivative of morphine. As a result, the applicant regurgitated one bubble containing 0.2182 grams of cocaine.’ He later alleged that he had suffered gastric problems for some time after these events. Approximately an 73

40

2

Principles of Civil Justice

physical evidence already present (that is, ‘pre-existing evidence’) within the individual’s body. But the nature and degree of compulsion applied to secure it was held to constitute a violation of the privilege. In O’Halloran and Francis v. UK (2007)78 the European Court of Human Rights confirmed, during its review of the Jalloh case (see above), that compulsory discovery of ‘independent’ or pre-existing evidence can fall within the protection of the privilege if the discovery involves unacceptably intense ‘direct compulsion’. 2.21 It is becoming clear that the ‘independent’ evidence test (the Saunders test, see paragraph above) is no longer the test favoured by the Strasbourg case law. This is ironic because both the Criminal Division (R v. S, 2008)79 —and Civil Division (C plc v. P, 2007)80 of the English Court of Appeal have now purported to redefine the scope of the privilege against self-incrimination under English law in the light of the Saunders criterion.

2.4 UNIDROIT/American Law Institute Project (2000–2006) 2.22 The drafting group81 of the UNIDROIT/American Law Institute project82 —now known as Principles of Transnational Civil Procedurepublished by Cambridge University Press in 2006,83 first met in Rome in 2000. On the table on day one was a detailed document containing Rules of Transnational Civil Procedure, drafted by Geoff Hazard and Michele Taruffo. By the second day of this first meeting, the working group had drawn up a list of principles. These were elaborated during the working group’s meetings from 2000 to 2003. Rolf Stürner, appointed to be the General Reporter of the UNIDROIT side of this collaborative project, has

hour and a half after being arrested and taken to the hospital, the applicant was examined by a doctor and declared fit for detention. He was briefly imprisoned for the ‘dealing’ offence. 78 (2008) 46 EHRR 21; 24 BHRC 380; noted JR Spencer [2007] Cambridge Law Journal 531–3. 79 [2008] EWCA Crim 2177; (2008) 158 New Law Journal 1459; The Times, 15 October, 2008, and the earlier Court of Appeal (Criminal Division) decisions there relied upon. 80 [2007] EWCA Civ 493; [2008] Ch 1 at [26] to [38], per Longmore LJ, and Sir Martin Nourse at [74]. 81 The members of the drafting group are listed in footnote 122. 82 Neil Andrews, ‘The Modern Procedural Synthesis: the American Law Institute and UNIDROIT’s Principles and Rules of Transnational Civil Procedure’ (2008) Revista de Processo 109–120 (Brazil) also published in (2009) Tijdschrift voor Civiele Rechtspleging 52–7 (Netherlands). 83 ALI/UNIDROIT’s. Principles of Transnational Civil Procedure.

2.4 UNIDROIT/American Law Institute Project (2000–2006)

41

chronicled the working group’s elaboration of these principles.84 The original Rules were not rejected but they became the subsidiary element of the project. They were later refined, once the principles had been established— and fixing the principles took 3 years of debate. The Rules are more detailed than the Principles. As Geoffrey Hazard Jr explained, the Rules are ‘merely one among many possible ways of implementing the Principles’.85 In fact the Rules were relegated to an unofficial appendix to the main project. 2.23 The ALI/UNIDROIT Principles offer a balanced distillation of best practice, especially in the sphere of transnational commercial litigation. They are not restricted to the largely uncontroversial ‘high terrain’ of constitutional guarantees of due process. The Principles and Rules were drafted by a team, appointed by the ALI and UNIDROIT. The drafting team met for a total of 20 days in Rome during the years 2000–2003 (the present author was privileged to be a member). The ‘Common Law’ was clearly outnumbered seven to two by the ‘Civil Law’ representatives. It is also fair to say that the Civil Law members of the group were strong in resisting certain Common Law ideas. Everywhere the restraining hand of the Civil Law is visible, and robust Common Law tendencies (American and English) are curbed. 2.24 It was apparent throughout the drafting group’s discussion that there were radical differences between the USA and English systems, and between the various civil law jurisdictions represented around the table. These differences make a nonsense of both the glib phrase ‘Anglo-American procedure’ and the crude expression ‘civilian procedure’. 2.25 Sometimes, the Principles acknowledge that there is scope for radical differences of approach on aspects of practice. Such agnosticism pervades discussion of the following topics: sanctions for procedural default, receipt of expert evidence, examination of witnesses, and the system of appeal. 2.26 As I have suggested elsewhere,86 the Principles operate at three levels of importance: fundamental procedural guarantees, other leading principles and framework or incidental principles. The UNIDROIT/ALI

84

Rolf Stürner, ‘The Principles of Transnational Civil Procedure,’ Rabels Zeitschrift (2005): 201–254. 85 ALI/UNIDROIT—Principles and Rules of Transnational Civil Procedure (Cambridge: Cambridge University Press, 2006), 99. 86 Neil Andrews, ‘Embracing the Noble Quest for Transnational Procedural Principles,’ in The Future of Transnational Commercial Litigation: English Responses to the ALI-UNIDROIT Draft Principles and Rules of Transnational Civil Procedure, eds. M. Andenas, N. Andrews, and R. Nazzini (London: British Institute of International and Comparative Law, 2003; re-printed 2006) (a collection of essays and comments by British judges and commentators on the draft UNIDROIT/American Law Institute’s project).

42

2

Principles of Civil Justice

principles range from (1) quasi-constitutional declarations of fundamental procedural guarantees to (2) major guidelines concerning the style and course of procedure to (3) points of important detail.87 Fundamental procedural guarantees: i. judicial competence; judicial independence; judicial impartiality; procedural equality; ii. due notice or the right to be heard; publicity; reasoned decisions; iii. prompt and accelerated justice; iv. professional independence of counsel; right to assistance of counsel; attorney-client privilege (‘legal professional privilege’); v. the privilege against self-incrimination. Leading principles concerning the style and course of procedure: vi. jurisdiction over parties; venue rules; party initiation of proceedings; vii. party’s definition of scope of proceedings; joinder rules; allocation of burden and nature of standard of proof; pleadings; parties’ duty to avoid false pleading and abuse of process; viii. rights of access to information; judicial initiative in evidential matters; experts ix. judicial management of proceedings; sanctions against default and non-compliance; need for proportionality in use of sanctions; x. parties’ duty to act fairly and to promote efficient and speedy proceedings; parties’ duty to co-operate; xi. parties’ right to discontinue or settle proceedings; judicial encouragement of settlement, xii. right to an oral stage of procedure; final hearing before ultimate adjudicators; judicial responsibility for correct application of the law; xiii. basic costs shifting rule; finality of decisions; appeal mechanisms; xiv. effective enforcement; recognition by foreign courts; international judicial co-operation. Points of important detail: xv. protection of parties lacking capacity; security for costs; expedited forms of communication; non-party submissions; making of judicial ‘suggestions’. 2.27 The UNIDROIT/ALI project was not the first attempt at bridging the division between Civilian and Common Law procedures. Marcel Storme 87

Andrews, ‘Embracing the Noble Quest for Transnational Procedural Principles,’ in ibid., eds. M. Andenas, et al., at 23–25.

2.4 UNIDROIT/American Law Institute Project (2000–2006)

43

(and his team, including Tony Jolowicz) had led the way.88 But, thus far, the UNIDROIT/ALI project is the most detailed identification of points of common ground. Although the ALI/UNIDROIT project is relatively young (completed in 2004, published in 2006), it seems likely that it will assist greatly in the intellectual mapping of civil justice and that it will influence policy-makers. At a London meeting (2002), the ALI/UNIDROIT text was widely admired by English commentators, who found this work to be suggestive, original, and admirably flexible.89 2.28 Some topics might be considered at a revision council: pre-action co-ordination of exchanges between the potential litigants90 ; multi-party litigation (the latter is a ‘hot’ and controversial topic within the USA, Europe,91 including England,92 Canada, Australia, and Brazil); and greater attention might be given to: the interplay of mediation and litigation93 ; costs and funding (in England, the expense of litigation is the greatest impediment to effective civil justice; Lord Justice Jackson’s ‘Civil Litigation Costs Review’ (2009) has examined this topic); evidential privileges and immunities (notably, attorney-client privilege, protection of negotiation and mediation discussions, and the privilege against self-incrimination)94 ; and transnational ‘provisional and protective relief’95 (notably, asset preservation).

88

M. Storme, ed., Approximation of Judiciary Law in the European Union (Gent, 1994). 89 A.A.S. Zuckerman, ‘Conference on “The ALI-UNIDROIT Principles and Rules of Transnational Civil Procedure”,’ Civil Justice Quarterly 21 (2002): 322. 90 See Neil Andrews, ‘“general report” (examining nearly 20 jurisdictions) on this topic for the world congress on procedural law in Brazil,’ in Direito Processual Comparado: XIII World Congress of Procedural Law, eds. A. Pellegrini Grinover and R. Calmon (Editora Forense, Rio de Janeiro, 2007), 201–42. 91 C. Hodges, The Reform of Class and Representative Actions in European Legal Systems (Oxford: Hart, 2008). 92 Neil Andrews, ‘Multi-party Litigation in England: Current Arrangements and Proposals for Change’ (2008) Lis International 92–7 (Italy). 93 Neil Andrews, The Modern Civil Process (Tübingen, Germany: Mohr & Siebeck, 2008) passim; Neil Andrews, ‘Alternative Dispute Resolution in England,’ Zeitschrift für Zivilprozess International 10 (2005): 1–34; Neil Andrews, ‘Mediation: A Pillar of Civil Justice in Modern English Practice,’ Zeitschrift für Zivilprozess International 12 (2007) 12 1–9; Neil Andrews (in Italian), ‘I Metodi Alternativi di Risoluzione delle Controversie in Inghliterra’, in L’Altra Giustizia, ed., V. Varano (Milano: Giuffre Editore, 2007), 1–43. 94 In England this is a fast-moving and delicate topic, Andrews, 6.26–6.40. 95 Neil Andrews, ‘Towards an European Protective Order in Civil Matters,’ in Procedural Laws in Europe: Towards Harmonisation, ed., M. Storme (Antwerp:

44

2

Principles of Civil Justice

2.5 Author’s First List of Principles: Principles of Civil Procedure (1994) 2.29 Having been given an opportunity in the mid 1980s to teach civil procedure in Cambridge, I wrote Principles of Civil Procedure (1994).96 The ten main principles selected in that text were97 : a. b. c. d. e. f. g. h. i. j.

due notice; pre-trial disclosure; protection against spurious claims and defences; justice is not to be evaded (the concept of ‘effective’ justice); accelerated justice; oral proceedings; publicity; promoting settlement; finality; the adversarial principle;

2.30 Some of these had been highlighted by Sir Jack Jacob in his The Fabric of English Civil Justice (1987).98 2.31 In Principles of Civil Procedure (1994) I said that these ten main principles ‘lie within the realm of practical politics’. I then mentioned the following three ‘noble aims’, and expressed doubt whether they might ever ‘be fully attained’99 : i. access to justice; ii. prevention of undue delay; iii. management of complex litigation. 2.32 Later in the 1994 book (Chap. 21, where these ‘persistent’, perhaps perennial,100 problems were more fully analysed), I said101 : Maklu, 2003); published also in ‘Provisional and Protective Measures: Towards an Uniform Protective Order in Civil Matters’ (2002) VI Uniform Law Review 931–49 (Rome); Stephen Goldstein, ‘Revisiting Preliminary Relief in Light of the ALI/UNIDROIT Principles and the New Israeli Rules,’ in Studia in honorem: Pelayia Yessiou-Faltsi (Athens: Sakkoulas Publications, 2007), 273–96; N. Trocker, ‘Provisional Remedies in Transnational Litigation: The Issue of Jurisdiction: A Comparative Outline,’ Lis Int’l (2009): 48–56, and 93–101 (Italy). 96 Andrews, Principles of Civil Procedure, 596 pp text; discussion of pre-CPR system. 97 Ibid., para’s 2-003 ff. 98 (1987) (Hamlyn Lectures for the year 1986). 99 Andrews, Principles of Civil Procedure, para 2-013. 100 Sir Anthony Clarke MR, ‘The Supercase-Problems and Solutions’, 2007 Annual KPMG Forensic Lecture: available at http://www.judiciary.gov.uk/docs/speeches/kpmg_speech. pdf. 101 Andrews, Principles of Civil Procedure, para 21-001.

2.7 A Fresh Start: Four Fundamental Aims of Civil Justice

45

‘Accessibility, speed and simplicity are closely related virtues. . .When the cost increases, the court system is closed off from all but the very poor [an allusion to civil legal aid], the rich and the mad.’ Lord Justice Jackson’s ‘Civil Litigation Costs Review’ (December 2009)102 has placed the whole topic of costs and funding under scrutiny. 2.33 Neither I, in 1994, nor Sir Jack Jacob, in 1987, had thought it necessary to spell out the implied term that civil judges should enjoy judicial independence. But Tony Jolowicz in 1973 had rightly emphasised this principle and observed its close connexion with the question of impartiality. Jolowicz wrote: Without a judiciary which can and will administer law fairly and fearlessly between the parties, no other guarantee given to the litigants by the law is likely to be of value. . .The judge must be free from interference by the state itself; he must also be free of interference or influence outside the proceedings from the parties or others; he must also himself be unbiased and personally disinterested in the question at issue in the litigation he has to try.103

2.6 Author’s Second List of Principles: English Civil Procedure (2003) 2.34 Having participated in the UNIDROIT/American Law Institute project, and stimulated by the first years of the brave new CPR world, in English Civil Procedure (Oxford University Press, 2003), I decided to look again at the kaleidoscope of procedural principle because it was obvious that new patterns had emerged In Chaps. 4 and 5, I examined various procedural ‘guarantees’. In Chap. 6, entitled Leading Procedural Principles, I examined an array of major requirements, ranging from ‘Access to Justice’ to ‘Finality’. And of course in Chap. 7 of the 2003 book it was necessary to examine the British reception of Article 6(1) of the European Convention.

2.7 A Fresh Start: Four Fundamental Aims of Civil Justice 2.35 I suggest that principles of civil justice can be usefully arranged under these four headings: a. Regulating Access to Court and to Justice b. Ensuring the Fairness of the Process: a Responsibility Shared by the Court and the Parties 102 Sir Rupert Jackson, Review of Civil Litigation Costs (December, 2009: London 2010); on which A.A.S. Zuckerman, ‘The Jackson Final Report on Costs—Plastering the Cracks to Shore up a Dysfunctional System,’ Civil Justice Quarterly 29 (2010): 263. 103 J.A. Jolowicz, in Fundamental Guarantees of the Parties in Civil Litigation, eds. M. Cappelletti and D. Tallon (Milano: A. Guiffrè, 1973), 121.

46

2

Principles of Civil Justice

c. Maintaining a Speedy and Efficient Process d. Achieving Just and Effective Outcomes 2.36 In greater detail, this is how the various leading and fundamental principles of civil justice can be arranged.

Regulating Access to Court and to Justice 1. Access to Court and to Justice (including, where appropriate, Promoting Settlement and Facilitating Resort to Alternative Forms of DisputeResolution, notably Mediation and Arbitration) 2. Rights of Legal Representation (Right to Choose a Lawyer; Confidential Legal Consultation; Representation in Legal Proceedings) 3. Protection against Bad or Spurious Claims and Defences

Ensuring the Fairness of the Process: A Responsibility Shared by the Court and the Parties 4. 5. 6. 7. 8. 9. 10.

Judicial Independence Judicial Impartiality Publicity or Open Justice Procedural Equality (equal respect for the parties) Fair Play between the Parties Judicial Duty to Avoid Surprise: The Principle of Due Notice Equal Access to Information, including Disclosure of Information between Parties

Maintaining a Speedy and Efficient Process 11. Judicial Control of the Civil Process to Ensure Focus and Proportionality (tempered, where appropriate, by Procedural Equity; the process is not to be administered in an oppressive manner) 12. Avoidance of Undue Delay

Achieving Just and Effective Outcomes 13. Judicial Duty to Give Reasons 14. Accuracy of Decision-making 15. Effectiveness (provision of protective relief and enforcement of judgments) 16. Finality

2.8 Concluding Remarks

47

2.8 Concluding Remarks 2.37 International scholarly discussion thrives on fundamental principle. There are now many studies of comparative civil justice.104 Jurists in this area stand on the shoulders of Hazard,105 Jolowicz,106 Kawano,107 104 In the English language, these include: J.A. Jolowicz, On Civil Procedure (Cambridge University Press, 2000) (thereafter in chronological order): M. Cappelletti and J. Perillo, Civil Procedure in Italy (The Hague, 1995); M. Cappelletti, ed., International Encyclopaedia of Comparative Law (The Hague, and Tübingen, 1976), vol. XVI ‘Civil Procedure’; J. Langbein, ‘The German Advantage in Civil Procedure,’ 52 (1985): 823–66; M. Damaska, The Faces of Justice and State Authority: A Comparative Approach to the Legal Process (New Haven, 1986); M. Cappelletti, The Judicial Process in Comparative Perspective (Oxford University Press, 1989); Storme, ed., Approximation of Judiciary Law in the EU; A.A.S. Zuckerman, ed., Civil Justice in Crisis: Comparative Perspectives of Civil Procedure (Oxford University Press, 1999); W. Rechberger and H. Klicka, eds., Procedural Law on the Threshold of a New Millenium, XI World Congress of Procedural Law (Center for Legal Competence, Vienna, 2002); D. Asser et al., ‘A Summary of the Interim Report on Fundamental Review of the Dutch Law of Civil Procedure,’ ZZPInt 8 (2003): 329–87; M. Storme, ed., Procedural Laws in Europe—Towards Harmonization (Antwerpen/Apeldoorn: Maklu, 2003); M. Storme and B. Hess, eds., Discretionary Power of the Judge: Limits and Control (Dordrecht: Kluwer, 2003); Peter Murray and Rolf Stürner, German Civil Justice (Durham, NC, 2004); C.H. van Rhee, ed., The Law’s Delays: Essays on Undue Delay in Civil Litigation (Antwerp and Oxford, 2007); C.H. van Rhee, European Traditions in Civil Procedure (Oxford: Intersentia and Hart, 2005); N. Trocker and V. Varano, eds., The Reforms of Civil Procedure in Comparative Perspective (Torino, 2005); Oscar Chase, Helen Hershkoff, Linda Silberman, Vincenzo Varano, Yasuhei Taniguchi, and Adrian Zuckerman, Civil Procedure in Comparative Context (Thomson West, 2007); A. Pellegrini Grinover and R. Calmon, eds., Direito Processual Comparado: XIII World Congress of Procedural Law (Rio de Janeiro: Editora Forense, 2007), 201– 42; A. Uzelac and C.H. van Rhee, eds., Public and Private Justice (Antwerp and Oxford, 2007); M. Deguchi and M. Storme, eds., The Reception and Transmission of Civil Procedural Law in the Global Society (Antwerp: Maklu, 2008); R. Verkerk, Fact-Finding in Civil Litigation: A Comparative Perspective (Antwerp: Intersentia, 2010); J. Maxeiner, G. Lee, and A. Weber, Failures of American Civil Justice in International Persprective (Cambridge University Press, 2011). And on ‘transnational principles’, Storme, ed., Approximation of Judiciary Law in the European Union and ALI/UNIDROIT’s Principles of Transnational Civil Procedure; on this project, H. Kronke, ed., special issue of the Uniform Law Review VI (2002); M. Andenas, N. Andrews, and R. Nazzini, eds., The Future of Transnational Commercial Litigation: English Responses to the ALI/UNIDROIT Draft Principles and Rules of Transnational Civil Procedure (London: British Institute of Comparative and International Law, 2006); Stürner, ‘The Principles of Transnational Civil Procedure,’ 201–54. 105 ALI/UNIDROIT’s Principles of Transnational Civil Procedure. 106 Jolowicz, On Civil Procedure. 107 Nagoya/Freiburg project on ‘A New Framework for Transnational Business Litigation’, a project led by Professor Masanori Kawano; the published works in this series (so far) are: R. Stürner and M. Kawano, eds., Current Topics of International Litigation (Tübingen: Mohr Siebeck, 2009); R. Stürner and M. Kawano, eds., International Contract Litigation, Arbitration and Judicial Responsibility in Transnational Disputes

48

2

Principles of Civil Justice

Murray,108 Shetreet,109 Storme,110 Stürner,111 and Taruffo.112 These celebrated authors have consistently emphasised the need to attend to matters of first principle. 2.38 The main contention has been that the wide array of fundamental and important principles of civil justice can be usefully arranged under these four headings: 1. Regulating Access to Court and to Justice 2. Ensuring the Fairness of the Process: A Responsibility Shared by the Court and the Parties 3. Maintaining a Speedy and Efficient Process 4. Achieving Just and Effective Outcomes.

(Tübingen, Germany: Mohr Siebeck, 2011); R. Stürner and M. Kawano, eds., Comparative Studies on Business Tort Litigation (Tübingen, Germany: Mohr Siebeck, 2011); national studies: Neil Andrews, English Civil Justice and Remedies: Progress and Challenges: Nagoya Lectures (Tokyo: Shinzan Sha Publishers, 2007); Laura Ervo, ed., Civil Justice in Finland (Tokyo: Jigakusha Publishing, 2009); Carlos EsluguesMota and Silvia Barona-Vilar, eds., Civil Justice in Spain (Tokyo: Jigakusha Publishing, 2009); Miklós Kengyel and Viktória Harsági, Civil Justice in Hungary (Tokyo: Jigakusha Publishing, 2010); Neil Andrews, Contracts and English Dispute Resolution (Tokyo: Jigakusha Publishing, 2010); Dimitris Maniotis and Spyros Tsantinis, Civil Justice in Greece (Tokyo: Jigakusha Publishing, 2010); Stephanie Schmidt, Civil Justice in France (Tokyo: Jigakusha Publishing, 2010); Marco de Cristofaro and Nicolo Trocker, eds., Civil Justice in Italy (Tokyo: Jigakusha Publishing, 2010). 108 Murray and Stürner, German Civil Justice. 109 Mount Scopus International Standards of Judicial Independence. 110 Storme, ed., Approximation of Judiciary Law in the European Union; M. Storme, ed., Procedural Laws in Europe—Towards Harmonization; M. Storme and B. Hess, eds., Discretionary Power of the Judge: Limits and Control. 111 Murray and Stürner, German Civil Justice; ALI/UNIDROIT’s Principles of Transnational Civil Procedure. 112 ALI/UNIDROIT’s Principles of Transnational Civil Procedure.

Chapter 3

First Instance Proceedings

Contents 3.1 3.2 3.3 3.4 3.5 3.6 3.7 3.8 3.9 3.10 3.11 3.12 3.13 3.14 3.15 3.16 3.17 3.18 3.19 3.20 3.21 3.22 3.23 3.24 3.25 3.26 3.27

Introduction to Accelerated Relief Concerning the Substance of the Claim . . . . . . . . . . . . . . . . . . . . . . . . . Interim Payments . . . . . . . . . . . . . . . . . . . . . . Interim Injunctions . . . . . . . . . . . . . . . . . . . . . Default Judgments . . . . . . . . . . . . . . . . . . . . . Preliminary Issues . . . . . . . . . . . . . . . . . . . . . Summary Judgment . . . . . . . . . . . . . . . . . . . . . Striking Out Claims or Defences . . . . . . . . . . . . . . . Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . Pre-action Protocols . . . . . . . . . . . . . . . . . . . . Pre-action Judicial Orders for Disclosure . . . . . . . . . . . Disclosure Against Non-parties . . . . . . . . . . . . . . . Assessment of Pre-action and Non-party Disclosures . . . . . Disclosure of Documents During the Main Proceedings . . . . Privileges in General . . . . . . . . . . . . . . . . . . . . Legal Advice Privilege . . . . . . . . . . . . . . . . . . . . Litigation Privilege . . . . . . . . . . . . . . . . . . . . . Experts . . . . . . . . . . . . . . . . . . . . . . . . . . . Roles of the Court and Experts . . . . . . . . . . . . . . . The ‘Single, Joint Expert’ System . . . . . . . . . . . . . . Court Assessors . . . . . . . . . . . . . . . . . . . . . . . Party-Appointed Experts . . . . . . . . . . . . . . . . . . Selection and Approval of Party-Appointed Experts . . . . . Disclosure of Party-Appointed Expert Reports . . . . . . . . Discussions Between Party-Appointed Experts . . . . . . . . Factual Witness Immunity . . . . . . . . . . . . . . . . . Trial . . . . . . . . . . . . . . . . . . . . . . . . . . . . Evidence at Trial . . . . . . . . . . . . . . . . . . . . . .

. . . . . . 50 . . . . . . 50 . . . . . . 52 . . . . . . 55 . . . . . . 57 . . . . . . 58 . . . . . . 59 . . . . . . 62 . . . . . . 64 . . . . . . 64 . . . . . . 65 . . . . . . 67 . . . . . . 68 . . . . . . 70 . . . . . . 71 . . . . . . 75 . . . . . . 80 . . . . . . 82 . . . . . . 84 . . . . . . 87 . . . . . . 88 . . . . . . 89 . . . . . . 91 . . . . . . 94 . . . . . . 99 . . . . . . 100 . . . . . . 103

N. Andrews, The Three Paths of Justice, Ius Gentium: Comparative Perspectives on Law and Justice 10, DOI 10.1007/978-94-007-2294-1_3, C Springer Science+Business Media B.V. 2012

49

50

3

First Instance Proceedings

3.1 Introduction to Accelerated Relief Concerning the Substance of the Claim 3.01 All these procedures precede trial. Interim relief exists to supply short-term relief, pending the case’s final resolution at trial, whereas the aim of summary judgment, striking out, and default judgment is to dispose speedily of the entire case. Protective relief (for which see Chap. 6) does not concern the substance of the case but instead preservation of assets or evidence in order to keep open the prospect of achieving eventual full justice.

3.2 Interim Payments1 3.02 Outline: Interim payments were at first confined to protect plaintiffs in personal injury or fatal accident claims.2 In 1978 the system of interim payments was expanded to cover all damages or debt claims.3 An interim payment order enables the claimant to obtain advance payment, often well before trial.4 The payment will be a ‘reasonable proportion’ of the claim. The court can order an interim payment if the defendant has admitted liability, or judgment on the question of liability has already been obtained, or the court ‘is satisfied’ that, if the case went to trial, the claimant would obtain judgment for a ‘substantial’ monetary award against the defendant, other than costs. 3.03 The sum awarded by the court as an interim payment must not exceed a reasonable proportion of the likely amount of the final judgment.5 When assessing the maximum sum that might be awarded at trial, the court must take into account (a) contributory negligence and (b) any relevant setoff or counterclaim.6 In the commercial context, an interesting example

1

CPR 25.6 to 25.9; and PD (25) ‘Interim Payments’; on which Neil Andrews, English Civil Procedure (Oxford University Press, 2003), 18-04 ff; Zuckerman on Civil Procedure (London, 2006), 9–205 ff; I.S. Goldrein, ed., Commercial Litigation: Pre-emptive Remedies (International Edition: Sweet & Maxwell, 2005), 590 ff. 2 s 20, Administration of Justice Act 1969. 3 Responding to the criticism made in Associated Bulk Carriers Ltd v. Koch Shipping Inc [1978] 2 All ER 254, CA, of the narrowness of this regime. 4 CPR 25.1(1)(k) defines an interim payment as: ‘an order (referred to as an order for interim payment) under rule 25.6 for payment of any damages, debt or other sum (except costs) which the court may hold the defendant liable to pay.’ 5 CPR 25.7(2). 6 CPR 25.7(3); on set-off, Andrews, English Civil Procedure, 11.07 ff; and on counterclaims, ibid., 11.65 ff; comparative discussion, R. Zimmermann, Comparative Foundations of a European Law of Set-off and Prescription (Cambridge: Cambridge University Press, 2002).

3.2 Interim Payments

51

is Pfizer Inc. v. Mills (unreported, 2010),7 where Vos J made an order for an interim payment of 75 per cent of the estimated profits made by the defendant which had infringed the claimant’s trade marks by passing off. The claimant was part of a substantial international corporation which would be able to repay any excess should the amount eventually assessed be lower than anticipated. In the context of personal injury claims, problems have arisen because of the sophistication of the regime for calculating damages in cases involving serious disability. The Court of Appeal in Eeles v. Cobham Hire Services Ltd (2009)8 examined the method for assessing an interim payment where the trial judge will be likely to award a periodical payments order (‘PPO’), rather than a single lump sum. Such a PPO is now common in the case of seriously injured claimants whose disability and other difficulties, allegedly caused by the defendant, are bound to endure for many years. The Court of Appeal enunciated the following factors: the judge should assess the likely amount of the final judgment, leaving out of account the heads of future loss which the trial judge might wish to deal with by a periodical payments order (notably loss of future earnings, and other continuing heads of loss); assessment should comprise only special damages to date and damages for pain, suffering and loss of amenity, with interest; it would usually be appropriate to include accommodation costs in the expected capital award; assessment should be carried out on a conservative basis; a reasonable proportion may well be a high proportion, provided that the assessment had been conservative; additional elements of future loss could be included in the judge’s assessment of the likely amount of the final judgment but only if the court could confidently predict that the trial judge would wish to award a larger capital sum than that covered by general and special damages, interest and accommodation costs alone (but here the judge would need to be satisfied to a high degree of confidence that there was a real need for the interim payment requested and that the trial judge would take the course indicated).

On the facts of this case, the claimant had been injured while still a baby in a road accident. He was now 11 years of age. He would never work, and would require constant assistance. The Court of Appeal held that Foskett J had had no justification in awarding a second interim payment of £1.2 million (an earlier interim payment of £450,000 had been made). Foskett J’s order had been designed to enable the claimant’s family to buy a very substantial Hall (a former hotel, with nine bedrooms and a separate bungalow in the garden). The Court of Appeal held that there was no pressing need for such a purchase. The claimant’s circumstances did not demand this luxurious level of accommodation. The award would exceed the conservatively assessed predicted capital award of damages at trial (£1.1 M).

7 8

Unreported, 10 May 2010: [2010] All ER (D) 96 (May). [2009] EWCA Civ 204; [2010] 1 WLR 409.

52

3

First Instance Proceedings

3.04 To avoid the danger of pre-judgment at trial, the existence of an interim payment will not be disclosed to the court at trial until all questions concerning liability have been considered, unless ‘the court directs’, or the defendant agrees otherwise.9 Secondly, a claimant who has received an interim payment cannot discontinue the proceedings unless the defendant consents in writing or the court gives permission.10

3.3 Interim Injunctions11 3.05 The court’s statutory power to grant injunctions includes the power to issue interim injunctions where the relief sought at trial is a final injunction.12 3.06 Recipients of interim injunctions are normally bound by an implicit ‘cross-undertaking’ (an implied promise to the court for the benefit of the other litigant) to indemnify the respondent if the interim order is subsequently held, for whatever reason, to have been improperly granted. And so this duty to indemnify will apply if the court discharges the interim order or the claimant later concedes during a settlement arrangement that the interim injunction should not have been granted.13 3.07 General ‘Embargo’ on Examination of the Substantive Merits: The leading case is the House of Lords’ decision in American Cyanamid Ltd v. Ethicon Ltd (1974).14 It establishes the general rule that, on an application for an interim injunction, the court must not attempt to consider the ‘merits’ (that is, provisional assessment of the strength of the claim and of the defence). Instead the court must strive to balance the hardship to the applicant caused by refusal of relief against the hardship to the other party if he is temporarily bound by an injunction. According to the American Cyanamid doctrine, consideration of the case’s factual merits would be

9

CPR 25.9. CPR 38.2(2)(b). 11 Andrews, English Civil Procedure, 18–41 ff; D. Bean, Injunctions (10th edn, London: Sweet & Maxwell, 2010); S. Gee, Commercial Injunctions (London: Sweet and Maxwell, 2004), Chap. 2; Goldrein, ed., Commercial Litigation: Pre-emptive Remedies, 1 ff; Zuckerman on Civil Procedure, 9.5 ff; L.A. Sheridan, Injunctions and Similar Orders (Chichester: Barry Rose, 1999). 12 s 37, Senior Courts Act 1981. 13 F Hoffmann—La Roche & Co AG v. Secretary of State for Trade & Industry [1975] AC 295, 360–1, HL, American Cyanamid Co v. Ethicon Ltd [1975] AC 396, 407–9, HL; on enforcement of the cross-undertaking, Cheltenham & Gloucester Building Society v. Ricketts [1993] 1 WLR 1545, CA, Goldman Sachs International v. Philip Lyons The Times 28 February, 1995, CA, Barratt Manchester Ltd v. Bolton MBC [1998] 1 WLR 1003, CA, Customs & Excise Commissioners v. Anchor Foods Ltd [1999] 1 WLR 1139. 14 [1975] AC 396, HL. 10

3.3

Interim Injunctions

53

just and proper only if the court discovered no real difference in weight between the parties’ respective potential hardships. In fact Laddie J in the Series 5 Software case (1996)15 attractively suggested that the courts will often be well positioned to make reliable assessment of the ‘case’s strength’ on the factual merits and that the embargo should be reserved for really difficult issues of fact requiring prolonged investigation at trial, including oral examination of witnesses.16 3.08 Decisions continue to cite the American Cyanamid decision. It remains the starting-point for analysis.17 However, decisions since 1974 have acknowledged various situations where efficiency and fairness demand pre-trial examination of the ‘merits’ (as explained above). The most important contexts are as follows.18 urgent cases: the matter is highly urgent; there is not enough time to wait until trial; for example, when the delay necessitated by waiting for trial would render the central dispute a ‘non-issue’ (for example, if a restrictive covenant clause, contained in a former employee’s contract, has only three months to run)19 ; transparent cases: where the factual merits of the application are ‘plain and uncontroversial’, or perhaps the case is plainly hopeless20 ; applications for mandatory injunctions: such an order compels the defendant actively to do something, such as ‘you must build the wall, as agreed’; it would be inconvenient, wasteful and unjust to make an interim order to build and then for the court at trial instead to require the defendant to demolish. And so the interim decision to make such a positive order requires a ‘high degree of assurance that the claimant will win at trial’21 ; freedom of expression: where the case concerns the respondent’s freedom of expression, the Human Rights Act 1998 states that an interim injunction must be clearly justified on the merits

15

Series 5 Software Limited v. Clarke [1996] 1 All ER 853; Laddie J in Antec International v. Southwestern Chicks (Warren) Ltd [1997] FSR 278 and in Direct Line Group Ltd v. Direct Line Estate Agency and Others Ltd [1997] FSR 374, 376; for comment on the Series 5 Software case, Barnsley Brewery Co Ltd v. RBNB [1997] FSR 462, Robert Walker J and SIG Architectural Products Ltd v. Castle House Windows Ltd (unreported 20 June 1996), Robert Walker J; Jacob J in Cable and Wireless plc v. British Telecommunications plc (unreported, 8 December, 1997). 16 Series 5 Software case [1996] 1 All ER 853. 17 For example, Intelsec Systems Ltd v. Grech-Cini [1999] 4 All ER 11, 25 and R v. Secretary of State for Health, ex p Imperial Tobacco Ltd [2000] 1 All ER 572, 598, CA, per Laws LJ (‘American Cyanamid is the ordinary rule by which applications for interlocutory injunctions in private law proceedings are decided every day. . .’); R v. Secretary of State for Health ex p Imperial Tobacco Ltd [2001] 1 WLR 127, 131, 135, HL; and Att-Gen v. Punch [2002] UKHL 50; [2003] 1 AC 1046, at [74], [99], [100]. 18 Andrews, English Civil Procedure, 18.53 to 18.65. 19 Cayne v. Global Natural Resources Ltd [1984] 1 All ER 225, CA. 20 Office Overload Ltd v. Gunn [1977] FSR 39, 44, CA, per Bridge LJ. 21 Shephard Homes Ltd v. Sandham [1971] Ch 340, Megarry J; Locabail v. Agroexport (‘The Sea Hawk’) [1986] 1 WLR 657, CA affirming this exception to American Cyanamid; cf Akai Holdings Limited (in compulsory liquidation) v. RSM Robson Rhodes LLP and Another [2007] EWHC 1641, Briggs J.

54

3

First Instance Proceedings

matters of real public importance: occasionally such cases have been held to justify examining the case’s substantive merits at the interim stage.22

3.09 Injunctions and Privacy: Protection of privacy by injunctions is a topical matter in England.23 It has become not uncommon for the court to grant an anonymised injunction, whereby the identity of the applicant for an interim injunction is concealed, so that his or her interest in privacy can be fully protected.24 There is even a so-called ‘super-injunction’, where the fact that an injunction has been obtained at all is kept secret.25 The Supreme Court in Re Guardian News & Media Ltd (2010)26 removed anonymity from alleged terrorists who were London-based and who had been subject to freezing injunctions, this relief having been obtained by the Government under anti-terrorism legislation. But in JIH v. News Group Newspapers Ltd (2011)27 the Court of Appeal held that it would not be appropriate to reveal the name of a top sportsman alleged to have been engaged in extra-marital sex. Lord Neuberger MR said28 that the telling point in this was that the applicant had previously been alleged to have had an affair with another person, and that had leaked out. To reveal the applicant’s name, without revealing the nature of the alleged misconduct would quickly lead to the implication that ‘he had been at it again’. Whereas, to retain his anonymity, but indicate the broad nature of the misconduct, would not enable the ‘jig-saw’ of inference to be drawn, so as indirectly to disclose the applicant’s identity. In that case Lord Neuberger MR enunciated these guidelines29 : (1) The general rule is that the names of the parties to an action are included in orders and judgments of the court.(2) There is no general exception for cases where private matters are in issue.(3) An order for anonymity or any other order restraining the publication of the normally reportable details of a case is a derogation from the principle of open justice and an interference with the Article 10 rights of the public at large.(4) Accordingly, where the court is asked to make 22

Smith v. Inner London Education Authority [1978] 1 All ER 411, CA; Express Newspapers Ltd v. Keys [1980] IRLR 247; Thanet DC v. Ninedrive Ltd [1978] 1 All ER 703. 23 Sir David Eady, ‘Injunctions and the Protection of Privacy,’ Civil Justice Quarterly 29 (2010): 411. 24 Eady, ibid., at 425–7. 25 Ibid., at 425–7. 26 [2010] UKSC 1; [2010] 2 AC 697. 27 [2011] EWCA Civ 42; [2011] 2 All ER 324; on injunctions to protect confidentiality in the family context, Imerman v. Tchenguiz [2010] EWCA Civ 908; [2011] Fam 116. 28 JIH case [2011] EWCA Civ 42; [2011] 2 All ER 324, at [40]. 29 Ibid., at [21]; and on anonymity more generally, Pink Floyd Music Ltd v. EMI Records Ltd [2010] EWCA Civ 1429; [2011] 1 WLR 770 (commercially sensitive royalty figure; no need for private hearing; sufficient for the figure not to be divulged in open court; lower court’s decision on private proceedings not binding on Court of Appeal in same litigation).

3.4

Default Judgments

55

any such order, it should only do so after closely scrutinising the application, and considering whether a degree of restraint on publication is necessary, and, if it is, whether there is any less restrictive or more acceptable alternative than that which is sought.(5) Where the court is asked to restrain the publication of the names of the parties and/or the subject matter of the claim, on the ground that such restraint is necessary under Article 8, the question is whether there is sufficient general, public interest in publishing a report of the proceedings which identifies a party and/or the normally reportable details to justify any resulting curtailment of his right and his family’s right to respect for their private and family life.(6) On any such application, no special treatment should be accorded to public figures or celebrities: in principle, they are entitled to the same protection as others, no more and no less.(7) An order for anonymity or for reporting restrictions should not be made simply because the parties consent: parties cannot waive the rights of the public.(8) An anonymity order or any other order restraining publication made by a Judge at an interlocutory stage of an injunction application does not last for the duration of the proceedings but must be reviewed at the return date.(9) Whether or not an anonymity order or an order restraining publication of normally reportable details is made, then, at least where a judgment is or would normally be given, a publicly available judgment should normally be given, and a copy of the consequential court order should also be publicly available, although some editing of the judgment or order may be necessary.(10) Notice of any hearing should be given to the defendant unless there is a good reason not to do so, in which case the court should be told of the absence of notice and the reason for it, and should be satisfied that the reason is a good one.

3.4 Default Judgments30 3.10 Judgment by default is an important means of accelerating the legal process. It involves judgment without trial where a defendant (a) has failed to file an acknowledgment of service; or (b) has failed to raise a defence.31 A claimant can obtain default judgment if the claim is for: ‘a specified amount of money’ (formerly known as ‘liquidated claims’); or ‘an amount of money to be decided by the court’ (formerly known as ‘unliquidated claims’); or delivery of goods where the claim form gives the defendant the alternative of paying their value.32 In these situations, the claimant can normally apply for judgment by administrative process without troubling a judge.33 If the claimant seeks some other remedy, default judgment must be sought by specific application to the court.34 Certain classes of claim are not amenable to default judgment.35 30 Andrews, English Civil Procedure, Chap. 19; Goldrein, ed., Commercial Litigation: Pre-emptive Remedies, Chap. 5; Zuckerman on Civil Procedure, 8–3 ff. 31 CPR 12.1 and 12.3; CPR 10.2 and CPR 15.3. 32 CPR 12.4(1)(a)–(c). 33 For exceptions, CPR 12.9, 12.10, 12.11. 34 CPR 12.4(2), 12.10, 12.11. 35 CPR 12.2; PD (2) 1.2.

56

3

First Instance Proceedings

3.11 Setting Aside Default Judgments if Substantive Merits Justify: A judgment by default is regarded as not as strong as a judgment obtained after a full contest between the parties. In the classic statement, Lord Atkin said: The principle obviously is that unless and until the court has pronounced a judgment upon the merits or by consent, it is to have the power to revoke the expression of its coercive power where that has been obtained by a failure to follow any of the rules of procedure.36 If a default judgment is challenged by the defendant in good time, the court can set aside or vary a regular judgment if ‘the defendant has a real prospect of successfully defending the claim’ or ‘there is some other good reason’ why judgment should be set aside or varied.37 The court will consider whether the defence has objective merits and why the defendant failed to acknowledge service or file a defence.38 3.12 When asked to set aside a default judgment, the court should not dismiss peremptorily a (newly-presented) defence, even it is has been merely sketched by the defendant. The court should not lean too far in its scepticism39 : ‘. . .the [defendant’s suggested] arguable case must carry some degree of conviction but judges should be very wary of trying issues of fact on evidence where the facts are apparently credible and [those facts] are to be set aside against the facts being advanced [by the claimant]. Choosing between them is the function of the trial judge. . .’40 When the default judgment was obtained on the question of liability, the power to set aside exists whether or not there was a further failure to contest the quantification of damages or other monetary relief.41 A default judgment which survives a review on the merits, as just explained, in fact becomes a stronger form of judgment: the claimant now holds a judgment on the merits, capable of being reconsidered only on appeal.42 Finally, the court can impose a condition upon the setting aside of a regular judgment. The condition can either require the defendant to provide security for the claimant’s costs,43 or to make a payment into court.44

36

Evans v. Bartlam [1937] AC 473, 480, HL, per Lord Atkin. CPR 13.3. 38 The leading pre-CPR (but still illuminating) decision is Alpine Bulk Transport Co Inc v. Saudi Eagle Shipping Co Inc (The Saudi Eagle) [1986] 2 Lloyd’s Rep 221, CA; considered in Allen v. Taylor [1992] 1 Personal Injury and Quantum Reports P 255, CA and Shocked v. Goldschmidt [1998] 1 All ER 372, 376, CA (the last case in fact concerned with non-appearance at trial). 39 Day v. RAC Motoring Services Ltd [1999] 1 WLR 2150, CA. 40 Ibid., 2157. 41 Strachan v. The Gleaner Co Ltd [2005] 1 WLR 3204, PC. 42 Clapp v. Enron [2005] EWCA Civ 1511 at [36] ff, citing Odyssey (London) Ltd v. OIC Run-off [2001] Lloyd’s Rep (Insurance) 1. 43 Burchmore v. Hills (1935) 79 Law Journal Newspaper 30. 44 City Construction Contracts (London) Ltd v. Adam, The Times 4 January, 1988, CA. 37

3.5

Preliminary Issues

57

3.13 Setting Aside Procedurally Defective Default Judgments: The court must uphold the defendant’s application to set aside a procedurally defective default judgment in any the following situations: (i) because judgment was procedurally premature (it preceded expiry of the time for acknowledging service or filing a defence)45 ; or (ii) an application for summary judgment was still pending46 ; or (iii) the defendant had fully discharged the claim (including any costs claim)47 ; or (iv) the defendant had admitted liability in full and requested more time to pay.48 If the defendant satisfies the court that he was unaware of the relevant claim form, the court will ‘normally’ set aside the default judgment ‘unless it is pointless to do so.’49 There is a cognate power to set aside judgment where the relevant party fails to attend trial and his claim or defence is struck out.50

3.5 Preliminary Issues51 3.14 The court can be asked to pronounce in final form on a preliminary issue: either a point of pure law or ‘construction’ (that is, interpretation) of a document. The preliminary matter can be heard before the factual issues have been investigated. Such a ‘preliminary’ decision is not provisional, but final. Often the point singled out for this accelerated treatment is the ‘crux’ on which the entire fate of the litigation might depend. Even if the preliminary decision does not determine the rest of the dispute, it might provide the basis for settlement of the remaining issues, or at least reduce the scope or length of the ensuing process. Thus considerations of speediness, proportionality, and efficiency justify measured use of this technique. 45

CPR 13.2, 12.3(1), (2). CPR 13.2, 12.3(3). 47 CPR 13.2(c), 12.3(3)(b). 48 CPR 13.2, 12.3(3)(c), 14.4, 14.7. 49 Godwin v. Swindon BC [2001] 4 All ER 641, CA, at [49], per May LJ, considering CPR 13.3(1)(b); Akram v. Adam [2004] EWCA Civ 1601; [2005] 1 WLR 2762, at [42] and [43]: service is technically effective under the deemed service regime even if notice was never received; but default judgment will not be set aside where there is no reasonable basis for the proposed defence and the defendant has delayed in applying to have the default judgment set aside, e.g., City & Country Properties Ltd v. Kamali [2006] EWCA Civ 1879; [2007] 1 WLR 1219, at [17], noted J. Sorabji, Civil Justice Quarterly 26 (2007): 279. 50 CPR 39.3(5); which requires, among other things, proof of a ‘good reason’ for non-attendance at trial; see Estate Acquisition and Development Ltd v. Wiltshire [2006] EWCA Civ 533; this topic has led to confusion: e.g., Nelson v. Clearsprings (Management) Ltd [2006] EWCA Civ 1854; [2007] 2 All ER 407; for the general common law principles governing this context, Gaydamak v. UBS Bahamas Ltd (Bahamas) [2006] UKPC 8; [2006] 1 WLR 1097. 51 Andrews, English Civil Procedure, 9.33, 9.34, 34.17. 46

58

3

First Instance Proceedings

Typical ‘preliminary issues’ are: points concerning limitation of actions52 ; consensual time bars upon valid proceedings53 ; exclusion clauses54 ; disputes on a preliminary point of substantive law, for example whether the defendant owes a duty of care on the present facts.55

3.6 Summary Judgment56 3.15 This procedure allows claimants or defendants (a change introduced in the CPR in 1998) to gain final judgment if they can show that their opponent’s claim or defence lacks a ‘real prospect’ of success. It is a stream-lined procedure, enabling the applicant to avoid the delay, expense and inconvenience of taking the case to trial. Factual issues are considered on the basis of written witness statements and statements of truth.57 CPR 24.2 states: The court may give summary judgment against a claimant or defendant on the whole of a claim or on a particular issue 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 reason why the case or issue should be disposed of at a trial.

3.16 The pre-CPR test gave the respondent the benefit of the doubt in more situations: ‘is there a fair or reasonable probability of the defendant having a real or bona fide defence?’58 The CPR test is whether the defence or claim has a ‘real’ chance of succeeding as opposed to a merely fanciful chance of success. As Lord Woolf said in Swain v. Hillman (2001), the new words (‘no real prospect’ of success) ‘speak for themselves’ and he refused to gloss this language (other than accepting that ‘realistic’ means the same as ‘real’).59 He added that the function of CPR Part 24 would be distorted if 52 Ibid., 9.33 n 39; e.g., Haward v. Fawcetts [2006] UKHL 9; [2006] 1 WLR 682, on s 14A, Limitation Act 1980. 53 Senate Electrical Wholesalers Ltd v. Alacatel Submarine Networks Ltd [1999] 2 Lloyd’s Rep 243, CA, 355–7; Laminates Acquisition Co v. BTR Australia [2003] EWHC 2540 (Comm), Cooke J. 54 Cremdean Properties v. Nash (1977) 244 EG 547, CA. 55 For example, Customs & Excise v. Barclays Bank plc [2006] UKHL 28; [2007] 1 AC 181; Deep Vein Thrombosis and Air Travel Group Litigation [2005] UKHL 72; [2005] UKHL 72; [2006] 1 AC 495. 56 Andrews, English Civil Procedure, Chap. 20; Goldrein, ed., Commercial Litigation: Pre-emptive Remedies, Chap. 6; Zuckerman on Civil Procedure, 8.39 ff. 57 CPR 24.5. 58 National Westminster Bank plc v. Daniel [1993] 1 WLR 1453, 1457, CA. 59 Swain v. Hillman [2001] 1 All ER 91, 92, CA; for other judicial observations on this test, see the references collected by Blackburne J in HRH The Prince of Wales v. Associated Newspapers Limited [2006] EWHC 522 (Ch), at [11]; for comment on

3.7 Striking Out Claims or Defences

59

summary judgment hearings were allowed to become ‘mini-trials’. Instead, issues involving detailed factual investigation require the case to progress through disclosure under CPR 31 and preparation of witness statements, perhaps culminating in cross-examination at trial. 3.17 The Court’s Options at a Summary Judgment Hearing: The court has three options. First, the court can give judgment (summary judgment) for the applicant, whether this is the claimant or the defendant. The second option is that the court can dismiss outright the application for summary judgment.60 The third option is that the court can grant a conditional order where ‘it appears to the court that a claim or defence may succeed but improbable that it will do so’.61 This conditional decision will permit the claim or defence to proceed to trial only if the relevant party satisfies a stipulated condition.62 Possible conditions are: a payment into court or some other ‘specified step’.63 A payment into court will protect the intended beneficiary against the payor’s insolvency.64 Such a payment can be made as a form of security for costs (5.03) even though the normal rules concerning such security would not otherwise support such an award.65

3.7 Striking Out Claims or Defences66 3.18 The power to strike out a pleading (now known as a ‘statement of case’, whether it is a claim, defence, reply, or counterclaim, or any part of one) is exercisable in any of these situations, CPR 3.4(2): the statement of case discloses no reasonable grounds for bringing or defending the claim; or the statement of case is an abuse of the court’s process67 or is otherwise likely to obstruct the just disposal of the proceedings; or failure to comply the CPR test, Derek O’Brien, ‘The New Summary Judgment: Raising the Threshold of Admission,’ Civil Justice Quarterly 18 (1999): 132, 137, 145–8. 60 PD (24) 5.1(3). 61 PD (24) 4; Yorke Motors Ltd v. Edwards [1982] 1 WLR 444, HL. 62 PD (24) 4 (see also PD (24) 5). 63 Note to CPR 24.6, cross-referring to CPR 3.1(3); PD (24) 5.2. 64 Re Ford [1900] 2 QB 211. 65 Olatawura v. Abiloye [2002] EWCA Civ 998; [2003] 1 WLR 275, the court recognised a power to make an order for a security payment by an individual claimant who was mostly resident outside the jurisdiction, and having modest financial means; this power subsists independently of the general regime concerning security for costs contained in CPR Part 25, Section II; the exceptional nature of this case was emphasised in Huscroft v. P & O Ferries Ltd [2010] EWCA Civ 1483; [2011] 1 WLR 939, noting also at [15] ff the discussion of Olatawura in Ali v. Hudson [2003] EWCA Civ 1793; [2004] CP Rep 15, CA, especially the summary by Clarke LJ at [40], and also noting at [16] and [19] Rimer J’s decision in Halabi v. Fieldmore Holdings Ltd [2006] EWHC 1965 (Ch). 66 Andrews, English Civil Procedure, Chap. 21; Zuckerman on Civil Procedure, 8–30 ff. 67 Generally on abuse of process, Andrews, English Civil Procedure, Chap. 16.

60

3

First Instance Proceedings

with a rule, practice direction or court order.68 (See 2.09 and 2.10 on the compatibility of this procedure with Human Rights law, according to the European Human Rights Court in Strasbourg). The instrument of striking out can be used, for example, when a party’s first action has been struck out on the basis of an abuse of process and that party commences a second action on the same facts. In a comprehensive survey of this topic, Rix LJ in Aktas v. Adepta (2010)69 distinguished two situations: (i) the second action follows dismissal of the first action on the basis of an abuse of process (inordinate and inexcusable delay, contumelious disobedience, or wholesale disregard of the procedural rules)70 and (ii) the second action follows termination of the first action other than on the merits, and without an element of ‘abuse of process’ (notably the first action has misfired because service was not made within the time limits, and the court in this first litigation refused to grant an extension of the time for service). In situation (i), the second action might be legitimately struck out, although this will not be an automatic or invariable response.71 But in situation (ii) the second action will normally be allowed to proceed, provided it has not become statute-barred,72 or provided the court (as in the case of personal injury litigation) exercises in favour of the claimant the statutory discretion73 to disapply the statute bar. Rix LJ summarised the position as follows74 : loss of a first action for reasons otherwise than on the merits is no bar to a second action within time save where there has been conduct [in the first action] which can be described as an abuse of process: whether such [abusive] conduct is intentional and contumelious, or a want of prosecution, or wholesale disregard of rules of court. 3.19 One of the grounds for striking out (because the statement of case discloses no reasonable grounds for bringing or defending the claim) can overlap with the court’s jurisdiction to award summary judgment under CPR Part 24 (on which see above). Both pre-trial procedures serve the function of enabling the court to weed out bad or tenuous claims or defences. Both are subject to the evidential constraint that the court can only receive oral evidence at trial. As we shall see, the summary judgment sieve has a slightly finer mesh than the striking out jurisdiction. In S v. Gloucestershire CC (2000)75 the Court of Appeal said that striking out on the factual or 68

CPR 3.4(2)(a) to (c). [2010] EWCA Civ 1170; [2011] 2 WLR 945, CA. 70 Securum Finance Ltd v. Ashton [2001] Ch 291, CA. 71 Aktas v. Adepta [2010] EWCA Civ 1170; [2011] 2 WLR 945, CA, at[53]. 72 Limitation Act 1980; Andrews, English Civil Procedure, Chap. 12; Zuckerman on Civil Procedure, 24.4 ff; A. McGee, Limitation Periods (6th edn, 2010); ‘Limitation of Actions’ (Law Commission Report No 270, HC 23, 2001); on which, Neil Andrews (1998) Cambridge Law Journal 588; R. James, Civil Justice Quarterly 22 (2003): 41. 73 s 33, Limitation Act 1980. 74 [2010] EWCA Civ 1170; [2011] 2 WLR 945, CA, at [72]. 75 [2000] 3 All ER 346, 370–3, CA. 69

3.7 Striking Out Claims or Defences

61

legal merits is justified only in ‘the clearest case’76 ; whereas summary judgment under CPR Part 24 offers slightly greater scope for disposing of the relevant claim or defence (see above). And so the two tests have the same function (to eliminate unsound claims or defences without trial); and they apply to the same raw material, because at a pre-trial hearing, (whether for summary judgment or striking out), the court can only receive written evidence77 ; but the tests are slightly differently calibrated, summary judgment allowing slightly more searching review of the relevant issue. 3.20 In Three Rivers DC v. Bank of England (No 3) (2001) (the BCCI case)78 three members of the House of Lords fatefully allowed this case to proceed to trial. The trial lasted 2 years. The claimant eventually discontinued it before judgment, on ‘day 256’ of the trial.79 Sir Anthony Clarke (now Lord Clarke),80 Andrews81 and Zuckerman82 have lamented this illcalculated refusal to dismiss a claim. According to Lord Millett, one of the dissentients, even taking into account the voluminous pre-trial papers, the claim was objectively ‘most implausible’, ‘scarcely credible’ and ‘extravagant’.83 This case demonstrates that appeal courts should be slow to upset a striking out decision, even if the case is complicated and involves extensive documentation. English law should also consider introducing a focused pre-trial oral hearing. Its purpose will be to probe weak claims which might otherwise proceed to lengthy trial. This would require abandonment of the practice that oral evidence must always be postponed until trial. 3.21 As for procedural abuse, the Court of Appeal in Arrows Nominees Inc v. Blackledge (2000)84 held that striking out is appropriate if a litigant’s procedural misconduct has created a substantial risk that there can no longer be a fair trial. Such a danger had arisen in that case because one party had forged documents and destroyed others. But later cases have become unconvincing and convoluted. The Court of Appeal in Masood v. Zahoor (2009),85 noting the Court of Appeal’s decision in Ul-Haq v. Shah

76

S v. Gloucestershire County Council [2000] 3 All ER 346, 373. Ibid., at 372–3. 78 [2001] 2 All ER 513, HL, notably at [90] ff, and [134] ff. 79 Three Rivers DC v. Bank of England [2006] EWHC 816 (Comm) (12 April 2006), Tomlinson J at [1]. 80 Sir Anthony Clarke MR, ‘The Supercase-Problems and Solutions’, 2007 Annual KPMG Forensic Lecture: available at http://www.judiciary.gov.uk/docs/speeches/kpmg_speech. pdf. 81 Andrews, English Civil Procedure, 20–15 to 20–19. 82 A. Zuckerman, ‘A Colossal Wreck—The BCCI/Three Rivers Litigation,’ Civil Justice Quarterly (2006): 287. 83 Three Rivers case [2001] 2 All ER 513, HL, at [90] ff, and [134] ff, especially at [180], [181]. 84 [2000] 2 BCLC 167; considered in Ul-Haq v. Shah [2009] EWCA Civ 542; [2010] 1 WLR 616, and Masood v. Zahoor [2009] EWCA Civ 650; [2010] 1 WLR 746 85 [2009] EWCA Civ 650; [2010] 1 WLR 746. 77

62

3

First Instance Proceedings

(2009)86 Ul-Haq v. Shah (2009),87 that it is too late to strike out a case if the abuse (taking the form of a fraudulent claim) only reveals itself at the end of the trial, although striking out would be possible if this abuse is discovered at any point before then. Zuckerman88 has suggested that the ‘too late once the case has been fully presented’ restriction on striking out is nonsensical and contrary to sound procedural principle. He shows that the Arrow Nominees case (2000)89 contains three strands, each capable of providing an independent basis for striking out on the ground of serious procedural misconduct: (i) that striking out is necessary because a fair trial is no longer practicable or likely; (ii) that striking out is appropriate because the guilty party’s procedural misconduct will need to be judicially ascertained and assessed, and that this forensic labour will absorb a significant or disproportionate amount of time; and this undeserved use of the court’s ‘scare resources’ will run counter to the whole ethos of the CPR; therefore, striking out is a procedurally fair and efficient response to the guilty party’s conduct; or (iii) striking out is required because, in the particular circumstances of the case, the misconduct is so gross that it would be an affront to the court to allow the guilty party to continue his case—this last approach being known as the ‘forfeiture’ principle. Zuckerman favours this third approach, and he contends that it does not involve punishment, but merely a procedural response to serious abuse of process.90

3.8 Disclosure 3.22 This section concerns two topics: first, the system of documentary disclosure91 ; secondly, the main ‘privileged’ exceptions to the party’s obligation to disclose relevant documents, legal advice and litigation privileges. 3.23 ‘Disclosure’ serves four main functions: it can achieve equality of access to information; secondly, it can facilitate settlement of disputes;

86

[2009] EWCA Civ 542; [2010] 1 WLR 616. Ibid. 88 Zuckerman, Civil Justice Quarterly 27 (2008): 419; and at length Civil Justice Quarterly 30 (2011): 1. 89 [2000] 2 BCLC 167, CA. 90 Zuckerman, Civil Justice Quarterly 30 (2011): 1, noting that if a case is procured by fraud, and judgment is then set aside, or an appeal against it succeeds, the fraudulent party would be precluded from re-litigating the claim even if you confined himself to the non-fraudulent elements of his claim; and noting the so-called insurance rule, that a fraudulent over-claim will preclude judgment for the true (smaller) loss. 91 Leading practitioner works are: P. Matthews and H. Malek, Disclosure (3rd edn, London: Sweet & Maxwell, 2010) and C. Hollander, Documentary Evidence (10th edn, London: Sweet & Maxwell, 2009); Andrews, English Civil Procedure, Chap. 26; Zuckerman on Civil Procedure (2nd edn, London, 2006), Chap. 14. 87

3.8

Disclosure

63

thirdly, it avoids so-called ‘trial by ambush’, that is, the situation when a party is unable to respond properly to a surprise revelation at the final hearing; and, finally, it assists the court in reaching accurate determinations of fact when entering judgment on the merits.92 3.24 CPR Part 31 introduced a more restrictive approach to exchange of documents between the parties in preparation for trial.93 Before the CPR, the so-called Peruvian Guano (1882) test of relevant documents was much too broad.94 It included peripheral documents. The idea was that if an opponent were permitted to inspect these ‘outer’ documents, this might enable him, by a side-ways investigation (a ‘train of inquiry’), to uncover centrally important matters. This process of revelation by one side and inspection by the other could result in large legal fees and delay; and it could be used to intimidate, because one side could cynically bury the other in an avalanche of paper.95 3.25 Lord Woolf’s new ‘standard disclosure’ test (effective since 1999) is an attempt to render the process proportionate to the nature of the claim.96 Each party must now disclose and allow inspection of97 : documents on which he wishes to rely; or which adversely affect his case or his opponent’s case, or which support the latter’s case.98 3.26 However, technological change continues to challenge the discovery system. Under the CPR, ‘document’ refers to ‘anything in which information of any description is recorded’99 : whether paper or electronic; literary, pictorial, visual or ‘audio’. It thus encompasses ‘e-mail’, ‘e-commerce’, information held on answer-phones, and details recorded in mobile phones. Since 1998, the rules have been amended to deal with the question of disclosure of electronic data.100

92

Tweed v. Parades Commission for Northern Ireland [2006] UKHL 53; [2007] 2 All ER 273 at [2], per Lord Bingham. 93 For the inspiration, Lord Woolf, Access to Justice: Interim Report (London, 1995), Chap. 21, paras 1–9. 94 The ‘Peruvian Guano’ test: Compagnie Financière v. Peruvian Guano Co (1882) 11 QBD 55, 63, CA. 95 Sir Johan Steyn (later Lord Steyn), preface to Hodge and Malek, Discovery (London, 1992), reprinted in Matthews and Malek, Disclosure; R. Cranston, ‘Complex Litigation: the Commercial Court,’ Civil Justice Quarterly 26 (2007): 190, 203. 96 Especially, CPR 31.3(2), 31.7(2), 31.9(1). 97 CPR 31.6. 98 The court can vary the width of disclosure in special situations: CPR 31.5(1)(2). 99 CPR 31.4. 100 See PD (31), at (new) para 2A on the duty to disclose electronic data, including ostensibly ‘deleted’ documents: see the Appendix to this lecture.

64

3

First Instance Proceedings

3.9 Pre-action Protocols 3.27 The CPR (1998) system introduced a set of ‘pre-action protocols’ which prescribe ‘obligations’ which the prospective parties and their legal representatives must satisfy before commencing formal proceedings. At the end of 2010 there were eleven specific pre-action protocols.101 Furthermore, there is now a set of general pre-action requirements,102 the ‘Practice Direction –Pre-Action Conduct’. This (at 6.2 and 6.2) formulates three general ‘principles’ or aims: stimulation of exchanges of information; secondly, the quest for settlement, including resort to ADR; and, thirdly, avoidance of disproportionate steps and expense. Pre-action protocols are intended to promote efficient exchange of information between the prospective parties, including pre-action disclosure of ‘essential’ documents held by each side.103 All such disclosure is subject to the restriction that the material can only be used for the purpose of the immediate prospective proceedings.104 3.28 It is difficult to make a clear empirical assessment of the benefits conferred by the system of pre-action protocols. The values of instilling a greater prominence for settlement and ADR, as well as promoting more disclosure of information and documents, have to be weighed against the palpable increase in cost in ensuring compliance with the protocols. Sir Rupert Jackson, in his ‘Civil Litigation Costs Review’ (2010)105 recommended that the general pre-action provisions should not apply at all to Commercial or Chancery litigation.

3.10 Pre-action Judicial Orders for Disclosure 3.29 CPR 31.16(3) contains a general power for the court to make a pre-action documentary disclosure order against any type of prospective defendant.106 When first introduced in 1999, it seemed that the pre-action 101

(1) ‘Construction and Engineering Disputes’; (2) ‘Defamation’; (3) ‘Personal Injury Claims’; (4) ‘Clinical Disputes’; (5) ‘Professional Negligence’; (6) ‘Judicial Review’; (7) ‘Disease and Illness Claims’; (8) ‘Housing Disrepair Cases’; and (9) ‘Possession Claims based on Rent Arrears’; (10) ‘Possession Claims based on Mortgage etc Arrears in respect of Residential Property’; (11) ‘Low Value Personal Injury Claims in Road Traffic Accidents’. 102 Practice Direction-Pre-Action Conduct. 103 Practice Direction-Pre-Action Conduct, para’s 1.2(1), 4.4(3), 6.1(1), 7, 9.2; Annex A para’s 2.2(1), 4.2(5)(6)(7), 5.1. 104 Practice Direction-Pre-Action Conduct, para 9.2; S. Gibbons, ‘Protecting Documents Disclosed under Pre-Action Protocols against Subsequent Use,’ Civil Justice Quarterly (2002): 254. 105 Sir Rupert Jackson, Review of Civil Litigation Costs (December, 2009, London: Stationery Office, 2010), Chap. 35, at 343 ff. 106 CPR 31.16 (3) states: The court may make an order under this rule only where—

3.11

Disclosure Against Non-parties

65

disclosure system might expand very significantly. However, in Black v. Sumitomo Corporation (2002) the Court of Appeal refused to countenance ‘deep-sea fishing’ expeditions, at least in commercial contexts,107 that is, speculative applications when the applicant has no hard evidence at all to support his allegations of civil wrongdoing.

3.11 Disclosure Against Non-parties 3.30 The starting point108 has been that non-parties are compellable to supply evidence only as ‘witnesses’, that is, by court order in connection with trial. This is the ‘mere witness rule’109 (for example, see Lord Woolf CJ in Ashworth Hospital Authority v. MGN Ltd, 2002).110 However, in the nineteenth century, Equity (see end of current paragraph for explanation of this word) had recognised an exception to the ‘mere witness’ rule, now known as a ‘Norwich Pharmacal order’. This is a judicial power to compel a person (not necessarily a prospective defendant) to disclose documents or non-documentary information if that person was factually ‘involved’ (actively or passively—but not as a mere onlooker), whether culpably or innocently, in an alleged civil wrong.111 A Norwich Pharmacal order, normally made before the main proceedings have begun, can concern112 : (a) the respondent is likely to be a party to subsequent proceedings; (b) the applicant is also likely to be a party to those proceedings; (c) if proceedings had started, the respondent’s duty by way of standard disclosure, set out in rule 31.6, would extend to the documents or classes of documents of which the applicant seeks disclosure; and (d) disclosure before proceedings have started is desirable in order to— (i) dispose fairly of the anticipated proceedings; (ii) assist the dispute to be resolved without proceedings; or (iii) save costs. 107 [2002] 1 WLR 1562, CA; Andrews, English Civil Procedure, 26.70; for a successful application in a commercial context, Landis and Gyr Ltd v. Scaleo Chip ET [2007] EWHC B3 (QB). 108 More precisely, under the procedure administered by the Common Law courts, as distinct from the pre-1875 Court of Chancery, which provided a parallel but distinct system of procedure: see the ‘historical note’ at the end of this paragraph. 109 Norwich Pharmacal Co v. Commissioners for Customs and Excise [1974] AC 133, 203, HL, per Lord Kilbrandon. 110 [2002] 1 WLR 2033, HL. 111 In Ashworth Hospital Authority v. MGN Ltd [2002] UKHL 29; [2002] 1 WLR 2033, HL, Lord Woolf CJ re-stated the principles governing this jurisdiction. 112 Andrews, English Civil Procedure, 26.102 ff on these various categories; note also Carlton Film Distributors Ltd v. VCI plc [2003] EWHC 616; [2003] FSR 47, Jacob J (nonparty holding records of amount of film copies made in suspected violation of prospective defendant’s contract with applicant; information necessary to enable applicant to plead breach of contract and sign a statement of truth).

66

3

First Instance Proceedings

(i) the main wrongdoer’s identity113 ; (ii) the location, nature and value of the prospective defendant’s assets114 ; (iii) whether the applicant has fallen victim to a civil wrong, such as defamation, committed behind his back115 ; (iv) to enable the applicant to identify and discipline a dishonest or defaulting employee within the applicant’s organisation.116 Breach of the order will expose a party to contempt of court, as in JSC BTA Bank v. Solodchenko (No 2) (2010) (6.08 ff).117 (‘Equity’ refers to the body of law which was invented and developed by the Court of Chancery, under the control of the Lord Chancellor, as distinct from the Common Law courts. In fact this jurisdictional division disappeared during the late nineteenth century when jurisdiction changes achieved an amalgamation of the Common Law courts and the Court of Chancery. Thus the Supreme Court of Judicature Acts 1873 and 1875 enabled the High Court and county courts (the two courts of first instance) to administer both Common Law and Equity in the same case. Even so, the distinction between Common Law and Equity remains important for the exposition of the modern law, including aspects of procedure. Thus in the modern law there is still a fundamental distinction between Common Law and equitable doctrines118 and remedies. Examples of this classification are the remedies for breach of contract: the money claims for debt and damages are both Common Law remedies, but injunctions, specific performance, and an account of profits, are ‘equitable’. Some recent decisions have tended to diminish the Common Law/equitable distinction.119 Nevertheless, the distinction between Common Law and Equity remains ‘bed-rock’ within English private law,120 and

113 Norwich Pharmacal Co v. Commissioners for Customs and Excise [1974] AC 133, HL (government department having details of imports of pharmaceutical drugs into the UK; suppliers’ names and addresses needed by applicant to ascertain identity of alleged infringer of applicant’s patent rights). 114 Mercantile Group (Europe) AG v. Aiyele [1994] QB 366, CA (if the information is sought to assist enforcement after judgment, Hoffmann LJ observed that the ‘mere witness’ rule is in any case inapplicable). 115 P v. T Ltd [1997] 1 WLR 1309, Scott V-C. 116 Ashworth Hospital Authority v. MGN Ltd [2002] UKHL 29; [2002] 1 WLR 2033, HL. 117 JSC BTA Bank v. Solodchenko (No 2) [2010] EWHC 2843; [2011] 1 WLR 906, Proudman J. 118 In the USA, the fact that the remedy of injunction is ‘equitable’ places a claim for such relief outside the constitutional guarantee of jury trial: see G. Hazard and M. Taruffo, American Civil Procedure (New Haven, CT: Yale University Press, 1993), 130. 119 For example, no separate doctrine of shared ‘equitable’ mistake, The Great Peace [2003] QB 679, CA; no separate equitable principles of construction of contracts, BCCI v. Ali [2001] UKHL 8; [2002] 1 AC 251, at [17]. 120 For example on the question whether a beneficial (as distinct from legal) owner has title to sue in the tort of negligence: Shell UK Ltd v. Total UK Ltd [2010] EWCA Civ 180; [2010] 3 All ER 1192 (beneficial owern competent to sue if joins legal owner as co-claimant).

3.12 Assessment of Pre-action and Non-party Disclosures

67

in other Common Law jurisdictions. It will prove hard to eradicate. It is likely that this distinction will endure for many years. However, a debate has emerged whether English law should ‘move on’ and jettison this historical baggage. Andrew Burrows has strongly advocated abandonment of this distinction.)121

3.31 Furthermore, after commencement of proceedings, the court has a statutory power under rule CPR 31.17 to order disclosure of documents against a non-party in any type of case.122 This applies if the required document is ‘likely’ to be supportive in those proceedings; and ‘likely’ means something weightier than a mere ‘fanciful chance’ that the document might assist the applicant.123

3.12 Assessment of Pre-action and Non-party Disclosures 3.32 Pre-action disclosure can encourage and enhance settlement, and it can reduce litigation expenses by advancing the stage at which disputants focus upon the essential matters in dispute. The American Law Institute’s/UNIDROIT’s ‘Principles of Transnational Civil Procedure’124 state that potential parties, litigants, and the court should each enjoy appropriate ‘access to information’.125 However, as a matter of principle, there are three counter-constraints: (i) the problem of ‘fishing’, that is, an applicant’s ‘roving’ request for evidence to make out a contemplated claim which is wholly speculative; (ii) non-parties’ reasonable expectations in maintaining confidentiality and privacy (whether in respect of their own private information, or to satisfy duties of confidentiality owed to fourth parties); (iii) the danger that judicially administered orders for pre-action disclosure can increase the expense of resolving disputes.

121

Inaugural Oxford lecture, A.S. Burrows, ‘We do this at Common Law but that in Equity,’ OJLS 22 (2002): 1. 122 CPR 31.17; this rule concerns only documents: see CPR 31.17(3)(4); cf CPR 18.1 (‘further information’): this rule has been held to require a defendant to disclose details of its liability insurance, Harcourt v. Griffin (Representative of Pegasus Gymnastics Club) [2007] EWHC 1500 (QB), Irwin J. 123 Three Rivers DC v. Bank of England (No 4) [2002] EWCA Civ 1182; [2003] 1 WLR 210, CA, at [32], [33]. 124 American Law Institute/UNIDROIT’s Principles of Transnational Civil Procedure (Cambridge University Press, 2006), Principle 16. 125 Hence the title to Part VII (‘Access to Information: Disclosure and Evidence’) of Andrews, English Civil Procedure.

68

3

First Instance Proceedings

3.13 Disclosure of Documents During the Main Proceedings 3.33 Automatic directions, or ad hoc case management, will require each party to prepare a list of documents on which he will rely, or which might assist the other party.126 A party is obliged both to provide a list of documents (‘disclosure’) and to allow inspection of these by the other side.127 Such information only becomes evidence if it is ‘adduced’ by one party for the purpose of a trial or other ‘hearing’. 3.34 The CPR defines a ‘document’ as ‘anything in which information of any description is recorded’, including electronic sources.128 As for disclosure of Electronic Data, there is a specific English rule on that type of material.129 The CPR Part 31 definition of ‘document’, however, does not catch information held in a human memory. Nor does it cover nondocumentary ‘things’, such as the claimant’s body, physical chattels, or immovable property.130 ‘Standard disclosure’ concerns documents which satisfy one of the following criteria131 : documents on which a party will rely; or which adversely affect his case; or adversely affect the opponent’s case; or support the opponent’s case; or any other documents of which disclosure is required under a practice direction.132 The obligation to make disclosure applies to ‘documents’, whether or not they are currently available, and whether they were created before or during the relevant litigation.133 These documents must either fall within the scope of standard disclosure (discussed above), or they must have been referred to in that party’s statement of case, a witness statement or summary, affidavit, or (subject in the last case to special judicial control) in that party’s expert report(s).134 A party’s duty to make ‘disclosure’ embraces documents which ‘are or have been in [the relevant party’s] control’; and ‘control’ refers to material which ‘is or was in his physical possession’, or other material to which he has or has had a ‘right to possession’ or ‘a right to inspect or take copies’.135 However, there is no obligation to produce for inspection 126

CPR Part 31. CPR 31.10(2) and 31.15, subject to certain qualifications added at CPR 31.3(2); Form N 265, available on-line, is instructive. 128 CPR 31.4. 129 PD (31), para 2A; See also Earles v. Barclays Bank [2010] Bus LR 566, Judge Simon Brown QC. 130 For example, Civil Evidence Act 1968, s 14. 131 CPR 31.6. 132 The court can order narrower disclosure in special situations: CPR 31.5(1),(2). 133 On the duty to make disclosure until the end of the relevant proceedings, CPR 31.11. 134 CPR 31.14. 135 CPR 31.8; Three Rivers DC v. Bank of England (No 4) [2002] EWCA Civ 1182; [2003] 1 WLR 210, CA, at [46] to [51] (application to obtain disclosure held by nonparty, HM Treasury, at the National Archive, Kew, London; held that the defendant, the 127

3.13 Disclosure of Documents During the Main Proceedings

69

(as distinct from listing during the first stage of discovery) material which is subject to any of the various privileges136 (for these see below). 3.35 The duty to make disclosure extends to non-privileged confidential material.137 However, when deciding whether to order disclosure and inspection of confidential material, the courts will consider three questions138 : is the information available to the other side from some other convenient source139 ; secondly, might sensitive material be blanked out140 ; thirdly, might the class of recipients be restricted?141 3.36 The ‘implied undertaking’ ensures that the recipient can use the information only in the present proceedings.142 The recipient’s lawyer is similarly constrained.143 CPR 31.22 provides: a party to whom a document has been disclosed may use the document only for the purpose of the proceedings in which it is disclosed,144 except (a) where the document has been read to or by the court, or referred to, at a hearing which has been held in public; or (b) the court gives permission145 ; or (c) the party who disclosed the document and the person to whom the document belongs agree.146 The same undertaking also obliges him not to reveal the information to any non-party.147

Bank of England, had no possession of these documents; nor any right to possess them; nor any right to inspect them). 136 CPR 31.3(1)(b). 137 Wallace Smith Trust Co v. Deloitte Haskins & Sells [1997] 1 WLR 257, CA. 138 For example, when deciding whether to order specific disclosure under CPR 31.12. 139 Wallace Smith case [1997] 1 WLR 257, CA. 140 GE Capital etc v. Bankers Trust Co [1995] 1 WLR 172, CA. 141 Neil Andrews, Principles of Civil Procedure (London, 1994), 11-056. 142 As Lord Hoffmann explained in Taylor v. Serious Fraud Office [1999] 2 AC 177, 207, HL. 143 Bowman v. Fels [2005] EWCA Civ 226; [2005] 1 WLR 3083, at [88], per Brooke LJ. 144 cf, under the pre-CPR practice, ‘collateral’ use had included certain uses in same action: Milano Assicurazioni SpA v. Walbrook Insurance Co Ltd [1994] 1 WLR 977; and Omar v. Omar [1995] 1 WLR 1428; respectively, proposed amendments to writ or statement of claim. 145 SmithKline Beecham Biologicals SA v. Connaught Laboratories Inc [1999] 4 All ER 498, CA. 146 CPR 31.22; even in situation (a) however, the court can make a special order restricting or prohibiting use of a document: CPR 31.22(2); McBride v. The Body Shop International plc [2007] EWHC 1658 (QB), noting Lilly Icos Ltd v. Pfizer Ltd [2002] 1 WLR 2253, CA; AF Noonan (Architectural Practice) Ltd v. Bournemouth and Boscombe ACFC Ltd [2007] EWCA Civ 848; [2007] 1 WLR 2615, at [10], [15], [18], [19]. 147 For example, Omar v. Omar [1995] 1 WLR 1428; Watkins v. AJ Wright (Electrical) Ltd [1996] 3 All ER 31; Miller v. Scorey [1996] 1 WLR 1122; S.M.C. Gibbons, ‘Subsequent Use of Documents Obtained Through Disclosure in Civil Proceedings,’ 20 (2001): 303.

70

3

First Instance Proceedings

3.14 Privileges in General 3.37 ‘Evidential privileges’ in English law confer upon the privilege holder (which can be a person, company or organisation) immunity (a ‘trump card’ justifying non-disclosure) against legal compulsion to supply information, whether at trial or at some other stage of the legal process. 3.38 Privilege and ‘Confidentiality’: As for confidentiality in general, the Court of Appeal has recently reviewed this topic in Imerman v. Tchenguiz (2010),148 and there are several leading treatises.149 The main point here is that not all confidential information is privileged. For example, confidential discussion between a person and a priest or religious advisor, or between a patient and doctor, and in many other professional relationships, is undoubtedly subject to legal protection through injunctions and pecuniary relief. But the holder of those types of confidentiality cannot invoke privilege if ordered by the court to give evidence or produce documents relating to this information. In short, privilege is confidentiality admitted to a higher level of legal protection; but not all confidential relations are raised to that level.

148

[2010] EWCA Civ 908; [2011] Fam 116, at [54] ff (Lord Neuberger MR); see also the recent discussion in Gray v. News Group Newspapers Ltd [2011] EWHC 349 (Ch); [2011] 2 All ER 725, at [65] ff, per Vos J; other leading judicial discussions of ‘confidentiality’ and ‘privacy’ include: (i) Douglas v. Hello! Ltd [2007] UKHL 21; [2008] 1 AC 1, at [272]; (ii) Browne v. Associated Newspapers Ltd [2007] EWCA Civ 295; [2008] QB 103; (iii) McKennit v. Ash [2006] EWCA Civ 1714; [2008] QB 73; (iv) HRH The Prince of Wales v. Associated Newspapers Limited [2006] EWCA Civ 1776; [2008] Chap. 57; (v) Murray v. Express Newspapers plc [2008] EWCA 446; [2009] Ch 481. Earlier seminal cases on confidentiality are: Prince Albert v. Strange (1849) 2 De G & Sm 652; Duchess of Argyle v. Duke of Argyle [1967] Ch 302; Coco v. Clark (Engineers) Ltd [1969] RPC 41 and Fraser v. Evans [1969] 1 QB 349. On privacy and use of injunctions, see 3.09 noting Re Guardian News & Media Ltd [2010] UKSC 1; [2010] 2 AC 697; JIH v. News Group Newspapers Ltd [2011] EWCA Civ 42; [2011] 2 All ER 324; Imerman v. Tchenguiz [2010] EWCA Civ 908; [2011] 1 All ER 555. An important Strasbourg decision is Mosley v. UK (10 May 2011: Application 48009/08), where the European Court of Human Rights noted that The News of the World exposure of a ‘sex party’ involving Mosley and five women had already been the subject of a court order awarding compensation (£60,000) for breach of privacy under Article 8 and English domestic law, and that UK law was not defective in requiring the Press to give pre-publication notification to persons whose privacy might be violated (thereby, according to Mosley’s lawyers, enabling the ‘victim’ to seek a pre-publication injunction). The European Court of Human Rights said at [132]: having regard to the chilling effect to which a pre-notification requirement risks giving rise, to the significant doubts as to the effectiveness of any pre-notification requirement and to the wide margin of appreciation in this area, the Court is of the view that Article 8 does not require a legally binding pre-notification requirement. 149 R.G. Toulson and C.M. Phipps, Confidentiality (2nd edn, London: Sweet & Maxwell, 2006; 3rd edn, 2012); P. Stanley, Confidentiality: A Restatement (Oxford: Hart, 2008); R. Pattenden, The Law of Professional–Client Confidentiality: Regulating the Disclosure of Confidential Personal Information (Oxford University Press, 2003).

3.15

Legal Advice Privilege

71

3.15 Legal Advice Privilege150 3.39 Undoubtedly the most important of the family of privileges, legal advice privilege operates as an absolute protection because (i) it cannot be disapplied by exercise of judicial discretion151 ; and (ii) unless this privilege is waived by a privilege holder (or his authorised agent),152 protection endures beyond the immediate occasion or context of the privileged communications.153 3.40 The leading English decision on legal advice privilege is Three Rivers District Council v. Governor etc of the Bank of England (No 6) (2004).154 Baroness Hale said that ‘legal advice is not confined to telling the client the law. It must include advice as to what should prudently and sensibly be done in the relevant context.’155 She added156 : We want people to obey the law, enter into valid and effective transactions, settle their affairs responsibly when they separate or divorce, make wills which will withstand the challenge of the disappointed, and present their best case before all kinds of court, tribunal and inquiry in an honest and responsible manner. As I wrote in 1994, ‘modern society accepts that there is an important constitutional value in obtaining “free, confident, and candid” legal consultation.’157 150 Andrews, English Civil Procedure, Chap.’s 27, 28; other sources are Cross and Tapper on Evidence (12th edn, Oxford: Oxford University Press, 2010), 435 ff; I. Dennis, The Law of Evidence (4th edn, London: Sweet & Maxwell, 2010), Chap. 10; Hollander, Documentary Evidence, Chap.’s 11–15, especially 13, 14; Matthews and Malek, Disclosure, Chap. 11; Phipson on Evidence (17th edn, London: Sweet & Maxwell, 2009), Chap. 23; C. Passmore, Privilege (2nd edn, London, 2006), Chap. 2; B. Thanki, ed., The Law of Privilege (Oxford University Press, 2006); Zuckerman on Civil Procedure, Chap. 15; J. Auburn, Legal Professional Privilege: Law & Theory (Oxford: Hart, 2000); H.L. Ho, ‘History and Judicial Theories of Legal Professional Privilege,’ Sing J L Studies (1995): 558. 151 R v. Derby Magistrates’ Court, Ex p B [1996] AC 487, HL; B v. Auckland District Law Society [2003] UKPC 38; [2003] 2 AC 736, PC, at [50] to [56], per Lord Millett; B. Thanki, ed., ibid., at 1.26 to 1.30. 152 Andrews, English Civil Procedure, Chap. 28. 153 B v. Auckland District Law Society [2003] UKPC 38; [2003] 2 AC 736, PC at [44]; B. Thanki, ed., ibid., at 1.52 to 1.58. 154 [2004] UKHL 48; (2005) 1 AC 610; noted Neil Andrews, Civil Justice Quarterly (2005): 185; S. Partington and J. Ward [2005] JBL 231; J. Seymour [2005] Cambridge Law Journal 54; C. Tapper (2005) 121 Law Quarterly Review 181; the leading historical survey conducted by an English court is Lord Taylor of Gosforth CJ’s remarkable speech in R v. Derby Magistrates Court, Ex p B [1996] AC 487, HL; and see H.L. Ho, ‘History & Judicial Theories of Legal Professional Privilege,’ 558. 155 [2004] UKHL 48; [2005] 1 AC 610, at [62], referring to Taylor LJ’s statement in Balabel v. Air India [1988] Ch 317, 330, CA. 156 [2004] UKHL 48; [2005] 1 AC 610, at [62]. 157 Andrews, Principles of Civil Procedure, 12-009.

72

3

First Instance Proceedings

3.41 According to the House of Lords in the Three Rivers case (2004), legal advice privilege must arise from a ‘relevant legal context’, including ‘presentational’ advice for participation in an inquiry.158 Legal advice privilege does not extend to a lawyer’s advice or assistance in a general commercial capacity if the same can be provided equally well by a non-lawyer. This last point is known as the ‘mere man of business’ limitation.159 And so there must be a distinctive ‘legal input’ to differentiate the lawyer’s advice from commercial advice given by a banker, surveyor, property developer, or insurer. 3.42 Defining the Client in the Case of Corporations or Large Associations: The lawyer must be a barrister or solicitor. The Court of Appeal in R (Prudential plc) v. Special Commissioner of Income Tax (2010)160 held that accountants are not lawyers for the purpose of legal advice privilege, even if the accountant in question is a tax specialist. However, in 2011 the UK Supreme Court gave permission for this decision to proceed to final appeal.161 3.43 Of related significance is the long-awaited but (from an English perspective) disappointing European Court of Justice decision concerning in-house counsel and legal advice privilege, Akzo Nobel (2010),162 which confirmed that an in-house lawyer’s advice does not attract legal advice privilege for the purpose of EU competition law (for details, 2.11 to 2.14). By contrast, English law has recognised that in-house counsel can give privileged legal advice. This has been the position for a very long time. In the leading case, Alfred Crompton Amusement Machines Ltd v. Customs & Excise Commissioners (No 2) (CA, 1972),163 the Court of Appeal unhesitatingly endorsed a long-standing practice,164 which can be traced to at least the early part of the nineteenth century (in the case of the Treasury Solicitor, the main body of lawyers responsible for conducting much of the litigation affecting the government). According to this practice, salaried in-house counsel can be relied upon to maintain independence and professional probity when advising their client-employer in legal matters. The same respect has been extended to private sector in-house lawyers. 158

Three Rivers (No 6) [2004] UKHL 48; [2005] 1 AC 610, at [120]. Ibid., at [38]; on this problematic topic, Thanki, ed., The Law of Privilege, 2–115 ff. 160 [2010] EWCA Civ 1094; noted K. Hughes [2011] Cambridge Law Journal 19. 161 (2011) New Law Journal 565; the Law Society for England and Wales will intervene in the appeal. 162 Akzo Nobel ECJ Case C-550/07 (decision of 14 Sept 2010); noted A. Higgins, Civil Justice Quarterly (2011): 113; and L. Bastin, ‘Should ‘Independence’ of In-House Counsel be a Condition Precedent to a Claim of Legal Professional Privilege. . .?’ Civil Justice Quarterly 30 (2011): 33. 163 [1972] 2 QB 102, 129, CA; not challenged on appeal, [1974] AC 405, 430–1, HL. 164 [1972] 2 QB 102, 120, CA, arguendo, citing the Revenue Solicitors Act 1828, the Attorneys and Solicitors Act 1874 and the Solicitors Act 1932. 159

3.15

Legal Advice Privilege

73

3.44 A ‘lawyer’165 -‘client’ relationship is normally easy to identify when the client is an individual. However, in the corporate context, the scope of a lawyer-client relationship is subject to the problematic Court of Appeal decision in Three Rivers (No 5).166 That case concerned communications occurring during internal investigation within the Bank of England, designed to furnish material to place before the Bingham Inquiry into the collapse of the BCCI bank. The Court of Appeal held that when an event involving or affecting a company (or other organisation) is being investigated or considered, and lawyers are being used to gather the facts surrounding the relevant event, the ‘client’ should be defined narrowly to comprise only a small segment of the company or organisation who have been chosen to carry out and supervise the internal investigation. Sometimes legal consultation beyond this ‘core’ client group might be privileged on the basis of ‘litigation’ privilege, but that head of privilege is confined to confidential communications in relation to ‘adversarial’ proceedings, as distinct from an inquiry.167 The Court of Appeal’s decision in Three Rivers (No 5)168 thus reflects judicial anxiety that companies should not gain too extensive protection. But the decision creates uncertainty. On balance, it would be better to define the client as ‘the company’ in all cases. But that is not English law. 3.45 By contrast, the US Supreme Court in Upjohn Co v. United States (1981) adopted a broader approach than the English Court of Appeal’s (on which see the preceding paragraph) to the question of a ‘corporate client’.169 The House of Lords in Three Rivers (No 6) chose not to decide 165 ‘Lawyer’, in England and Wales, includes an ‘in house lawyer’ (Passmore, Privilege, 4.041 to 4.046): but not under the law of the EU, A M & S Europe Ltd v. Commission of the EC [1987] QB, ECJ, Thanki, ed., The Law of Privilege, 1.41 to 1.44, and C. Passmore, ibid., 4.047 ff; in England, legal advice privilege has been extended to trade mark and patent agents, and certain other ‘quasi-legal’ advisors, mostly by statute, for references see Andrews, English Civil Procedure, 27.03 at nn 10–15 and B. Thanki, ed., ibid., at 1.40 to 1.51, Passmore, ibid., 1.144. In Bolkiah v. KPMG [1999] 2 AC 222, HL, privilege arose in the dealings between ‘forensic accountants’ and potential witnesses; but this seems to have been rooted in litigation privilege, C. Passmore, ibid., 1.145. 166 Three Rivers DC v. Governor and Company of the Bank of England (No 5) [2003] EWCA Civ 474; [2003] QB 1556; distinguished in BBGP Managing General Partner Ltd & Ors v. Babcock & Brown Global Partners [2010] EWHC 2176 (Ch); [2011] 2 All ER 297; [2010] 2 CLC 248, at [42], per Norris J (agent entering into retainer with law firm and obtaining legal advice on behalf of its principal, a partnership; whole partnership a client, and not the agent). 167 Re L [1997] AC 16, HL. 168 [2003] EWCA Civ 474; [2003] QB 1556. 169 449 US 383 (1981); cf the US material collected at Zuckerman on Civil Procedure, 15.43 ff, at nn 70–82, also noting J. Sexton, ‘A Post-Upjohn Consideration of CorporateClient Privilege,’ NYULR 57 (1982): 442; on the danger of corporate ‘cloaking’, Thanki, ed., The Law of Privilege, 2.28 n 73, noting Australian discussion in Esso v. Federal Commissioner of Taxation (1999) 201 CLR 49.

74

3

First Instance Proceedings

whether they regarded the American decision in the Upjohn case (1981) as attractive. English commentators are divided on this point. 3.46 Three other limitations on legal advice privilege must be noted. First, the House of Lords in the Three Rivers case (2004) assumed (although without proper analysis) that this type of privilege will apply only if the dominant purpose of that communication was the eliciting or giving of legal advice.170 Secondly, a few statutes have overridden this head of privilege in specific contexts.171 For this purpose, however, only clear legislation can suppress privilege.172 The House of Lords in McE v. Prison Service of Northern Ireland (2009)173 held that a statute174 had clearly overridden legal advice privilege. The relevant statute authorised covert surveillance of suspects held within custody. A majority of the House of Lords held that the statute was clear enough. Its effect was that covert surveillance was not unlawful even if it involved recording or eaves-dropping on confidential discussion between a person held in custody (at a police-station or in prison) and his lawyer. Amongst the majority, Baroness Hale said the relevant statute175 : ‘does permit the covert surveillance of communications between lawyers and their clients, even though these may be covered by legal professional privilege and notwithstanding the various statutory rights of people in custody to consult privately with their lawyers. This is an unpalatable conclusion, but one to which I am driven both by the plain words of the Act and by the history of legislation on this subject. In a nutshell, section 27(1) of the Regulation of Investigatory Powers Act 2000 states that covert surveillance which is carried out in accordance with the Act “shall be lawful for all purposes”.’ There was a solitary dissent. Lord Phillips held that the statute did not clearly enough authorise the

170 [2005] 1 AC 610; [2004] UKHL 48 at [35], per Lord Scott, at [57], per Lord Rodger, at [70] and [73], per Lord Carswell, also citing the Court of Appeal in Three Rivers (No 5) [2003] QB 1556, CA, at [35], per Longmore LJ. 171 Thanki, ed., The Law of Privilege, 4.73–4.77; Andrews, English Civil Procedure, 26.17–27.18; note also the distinction between innocent consultation with a lawyer to parry a charge or meet an accusation, and nefarious attempts to conceal and stifle legal investigation or destroy evidence or concoct false or misleading evidence; on that distinction see Derby & Co Ltd v. Weldon (No 7) [1990] 1 WLR 1156, 1174 E-G, per Vinelott J; O’Rourke v. Darbishire [1920] AC 681, 613, HL, per Lord Sumner. 172 R (on the Application of Morgan Grenfell & Co Ltd) v. Special Commissioners of Income Tax [2002] UKHL 21; [2003] 1 AC 563 (legal advice privilege available against a tax inspector’s demand for documents); statutory suppression of this privilege requires explicit language or ‘necessary implication’: Morgan Grenfell case, ibid., at [45], [46], and remarks by Lord Millett in B v. Auckland District Law Society [2003] UKPC 38; [2003] 2 AC 736, PC at [57] ff, and by Brooke LJ in Bowman v. Fels [2005] EWCA Civ 226; [2005] 1 WLR 3083 at [85] ff. 173 [2009] UKHL 15; [2009] 1 AC 908. 174 ss 27, 28, 32, Regulation of Investigatory Powers Act 2000, especially s 27(1) 175 [2009] UKHL 15; [2009] 1 AC 908, at [67] and [68].

3.16

Litigation Privilege

75

suppression of a related right, itself protected by statute,176 namely that those suspected of having committed criminal offences had a right to private consultation with a lawyer. The right to consult in private a lawyer is anterior to, but connected with, the right to have the communicative fruit of that legal consultation protected by legal advice privilege. Thirdly, the rule in R v. Cox & Railton (1884)177 prevents privilege from attaching to legal advice or assistance concerning the client’s intended commission of a crime or ‘fraud’. ‘Fraud’ in this context includes, it seems, all species of dishonest conduct, but does not extend to (i) breaches of contract, or (ii) the torts of conversion of goods or trespass. This is because (i) and (ii) ordinarily lack the taint of dishonesty or sufficiently reprehensible ‘iniquity’.178 Nor does privilege apply where the client is being manipulated for fraudulent purposes by a third party.179

3.16 Litigation Privilege180 3.47 This privilege shields a party’s (or lawyer’s) attempt to prepare a case for litigation conducted inter partes. Each party’s (or prospective party’s, see element (ii) next paragraph) private investigation into the case’s facts and background can be conducted in the knowledge that an opponent cannot discover either the target or fruit (or empty handedness) of the other party’s forensic investigation. There is no general duty, therefore, to reveal ‘bad points’ discovered during this process. However, a litigant or lawyer must not positively mislead the court. 3.48 The elements of ‘litigation privilege’ are181 : it covers (i) confidential182 communication (including the creation of documentary material) between third parties and either the client or lawyer; (ii) the communication must have occurred, or this material must have been created, for

176

[2009] UKHL 15; [2009] 1 AC 908, at [20] to [23] for details. (1884) 14 QBD 153, Stephen J; Passmore, Privilege, Chap. 8. 178 Thanki, ed., The Law of Privilege (Oxford: Oxford University Press, 2006), 4.33– 4.63; Andrews, English Civil Procedure, 26.19–27.20. 179 R v. Central Criminal Court, ex p Francis & Francis [1989] AC 346, HL. 180 Andrews, English Civil Procedure, 27–21 ff; Dennis, The Law of Evidence, 10.27 ff; Hollander, Documentary Evidence, Chap. 14; Thanki, ed., The Law of Privilege, Chap. 3; Zuckerman on Civil Procedure, Chap. 15; Matthews and Malek, Disclosure, Chap. 11. 181 Axa Seguros SA v. Allianz Insurance plc [2011] EWHC 268 (Comm), Christopher Clarke J, at [13] to [16], [40] to [41], [49] to [52]. 182 An unsolicited communication with a potential witness would be privileged even if the witness has not indicated that he intends to respect confidence: ISTIL Group Inc v. Zahoor [2003] 2 All ER 252; [2003] EWHC 165 (Ch), at [63] per Lawrence Collins J; Thanki, ed., The Law of Privilege, 3.35. On the question of loss of confidentiality in this context, Axa Seguros SA v. Allianz Insurance plc [2011] EWHC 268 (Comm), Christopher Clarke J, at [49] to [52]. 177

76

3

First Instance Proceedings

the dominant purpose183 of use in pending or anticipated proceedings; if not already commenced, the relevant proceedings must be in reasonable prospect184 ; (iii) the proceedings for which the communication was intended can be criminal or civil, foreign185 or domestic, and involve courts, tribunals or arbitration (but see the next restriction); however, (iv) the proceedings must be adversarial in nature, as distinct from an inquisitorial procedure.186 This last aspect appears to prevent this head of privilege attaching to communications with third parties relating to any type of ‘inquiry’. Such communications can only be protected under the aegis of ‘legal advice privilege’. However, legal advice privilege only applies to direct communications between a ‘client’ and lawyer. It is submitted that element (iv), the ‘inquisitorial’ proceeding bar upon litigation privilege, needs to be re-examined, as a matter of principle.187 3.49 What is the relationship between legal advice and litigation privileges? Legal advice privilege applies to lawyer-client consultation, whether or not the relevant advice concerns litigation. Litigation privilege concerns confidential discussion or investigation outside the lawyer/client relationship.188 The better view is that there is no overlap between these 183 On the ‘dominant purpose’ test, Axa Seguros SA v. Allianz Insurance plc [2011] EWHC 268 (Comm), Christopher Clarke J, at [13] to [16], [40] to [41], [49] to [52]; Thanki, ed., The Law of Privilege, 3–73 ff. 184 A ‘real prospect’ rather than a ‘mere possibility’: USA v. Philip Morris Inc (No 1) [2004] EWCA Civ 330; [2004] 1 CLC 811; Brooke LJ at [66] to [69]; Axa Seguros SA v. Allianz Insurance plc [2011] EWHC 268 (Comm), Christopher Clarke J, at [13] to [16], [40] to [41], [49] to [52]; Thanki, ed., The Law of Privilege, 3.47 ff. 185 Re Duncan [1968] P 306; Minnesota Mining and Manufacturing Co v. Rennicks (UK) Ltd [1991] FSR 97, 99; Société Francaise Hoechst v. Allied Colloids Ltd [1992] FSR 66; International Computers (Ltd) v. Phoenix International Computers Ltd [1995] 1 All ER 413, 427 ff. 186 Re L [1997] AC 16, HL. 187 In the Three Rivers litigation, counsel for the Bank had conceded that the Bingham Inquiry was not an ‘adversarial’ procedure and that ‘litigation privilege’ could not, therefore, apply (on the basis of Re L [1997] AC 16, HL); with respect, it might be contended that the special context of that case—child protection proceedings—should be taken to restrict the ambit of that decision; however, that concession appears to have been later supported by Lord Scott in the Three Rivers appeal [2004] UKHL 48; [2005] 1 AC 610, at [10]; cf, Lord Rodger, ibid., at [53], who suggested that the ‘adversarial’ and ‘inquisitorial’ distinction might require further examination (also noting that Lord Nicholls, a dissentient in Re L, ibid., at 31 G to 32 L, had cautioned against a rigid distinction); Zuckerman on Civil Procedure, 15.110 ff; Thanki, ed., The Law of Privilege, 3.57 to 3.65; Passmore, Privilege, 3.058 ff. 188 Several Law Lords in Three Rivers (No 6) [2004] UKHL 48; [2005] 1 AC 610 acknowledged this distinction between legal advice and litigation privilege: see Lord Scott at [10], Lord Rodger at [50] and [51], and Lord Carswell at [65] and [72]; Lord Rodger at [51] noted that Lord Edmund-Davies in Waugh v. BR Board [1980] AC 521, 541–2, HL, had said that this distinction had not always been borne in mind, and that lawyers had sometimes loosely spoken of a global ‘legal professional privilege’ doctrine; in Waugh’s case it

3.16

Litigation Privilege

77

privileges.189 A communication or document should be analysed as privileged under one head rather than the other, and not as privileged under both.190 3.50 Finally, it should be noted that litigation privilege has become controversial. There are two main arguments in its favour.191 (i) adversarial preparation in a protected zone: Each litigant (or prospective litigant), in preparation for the case (or prospective action), should be free to communicate confidentially with third parties (notably potential witnesses, experts, or non-legal advisors), without fear that the opponent will invade, feed off, or take advantage of, such exploratory communication. (ii) third parties’ candour to be promoted: Potential witnesses and experts, no less than clients, should feel secure that they can state their recollection of the relevant events, or venture their opinion, ‘fully and candidly’.192 There are also subsidiary arguments supporting litigation privilege.193 was also made clear that litigation privilege is subject to a ‘dominant purpose’ test; the House of Lords in the Three Rivers case assumed that a ‘dominant purpose’ test also applies to legal advice privilege; on this last issue, Thanki, ed., The Law of Privilege, 2–169 ff. 189 B. Thanki, ed., ibid., 1-08, 3-08 to 3-09; Passmore, Privilege, 3.002 ff. 190 Cf. the contention that there is overlap: Zuckerman on Civil Procedure, 15.17. 191 For example ‘. . . as you have no right to see your adversary’s brief, you have no right to see that which comes into existence merely as materials for the brief’: Anderson v. Bank of British Columbia (1876) 2 Chap. D 644, 656, per James LJ; cited with approval by Lord Simon of Glaisdale in Waugh v. British Railways Board [1980] AC 521, 537, HL. 192 As for argument (i), besides the judicial statements listed at Andrews, English Civil Procedure, 27.25–27.27 (notably, Simon Brown LJ in Robert Hitchins Ltd v. International Computers Ltd [1996] EWCA Civ 1163, also cited in Passmore, Privilege, 3.205 ff) see the remarks of Lord Rodger in the Three Rivers (No 6) case [2004] UKHL 48; [2005] 1 AC 610, at [52], who offered strong support for this head of privilege: ‘Litigation privilege. . .is based on the idea that legal proceedings take the form of a contest in which each of the opposing parties assembles his own body of evidence and uses it to try to defeat the other. . . . In such a system each party should be free to prepare his case as fully as possible without the risk that his opponent will be able to recover the material generated by his preparations.’ He also approved a leading American discussion of this privilege: ‘In the words of Justice Jackson in Hickman v. Taylor [US Supreme Court, 329 US 495, 516 (1947)], “Discovery was hardly intended to enable a learned profession to perform its functions either without wits or on wits borrowed from the adversary.”’ Charles J has also supported this privilege, doubting the cogency of the judicial dicta attacking litigation privilege: S v. B [2000] Fam 76, as noted by C. Passmore, ibid., at 3.019. Argument (ii) is noted by C. Passmore, ibid., 3.018, citing Lord Wilberforce in Waugh v. BR Board [1980] AC 521, 531, HL, and ibid., at 3.117, citing in the context of experts, Lord Denning MR in Re Saxton [1962] 1 WLR 968, 972, CA and Canadian decisions. 193 Additional, although perhaps subsidiary, arguments are: the prospect of nit picking cross-examination concerning the drafting of witness statements, Thanki, ed., op. cit., at 3–128, and the financial free-rider problem, Andrews, English Civil Procedure, 27–34 ff.

78

3

First Instance Proceedings

3.51 But in modern times some judges have expressed scepticism, for these two reasons. First, some emphasise the value of intensifying the programme of ‘(all) cards [face-up] on the table’ (a point made by Sir Lawrence Collins in the Istil case (2003),194 and by others).195 The second attack rests on the radical suggestion that litigation privilege is a chimera, a doctrinal impostor having no convincing claim to independent existence. According to this view, legal advice privilege (confidential lawyer-client consultation) is the only true basis for protection in this context (see dicta of Lord Scott in the Three Rivers DC case (2004),196 and earlier as Scott V-C in Secretary of State for Trade and Industry v. Baker (No 2) (1998)197 ; and the statement by Sir Lawrence Collins, already cited).198 194

ISTIL Group Inc v. Zahoor [2003] 2 All ER 252; [2003] EWHC 165 (Ch), at [56] and [57] per Lawrence Collins J: ‘[56] The rationale for litigation privilege was said to be that ‘. . . the solicitor is preparing for the defence or for bringing the action, and all communications he makes for that purpose, and the communications made to him for the purpose of giving him the information, are, in fact, the brief in the action, and ought to be protected’ (Wheeler v. Le Marchant (1881) 17 Ch D 675, 684–5, per Cotton LJ) or ‘. . . as you have no right to see your adversary’s brief, you have no right to see that which comes into existence merely as materials for the brief’ (Anderson v. Bank of British Columbia (1876) 2 Ch D 644 at 656, per James LJ, cited with approval by Lord Simon of Glaisdale in Waugh v. British Railways Board [1980] AC 521, 537). [57] That rationale is not very attractive, and is perhaps ripe for reconsideration in the light of reforms which are designed to make litigation more open and less like a game of poker. More attractive as a rationale is the consideration that preparation of a case is inextricably linked with the advice to the client on whether to fight or to settle, and if so, on what terms.’ 195 For these and other judicial statements on this issue, Thanki, ed., The Law of Privilege, 3.110 to 3.129 and in Andrews, English Civil Procedure, 27.29 to 27.32; as Zuckerman on Civil Procedure, 15.30 and Thanki, ed., op. cit., at 3.88 to 3–90 observe, preparations for trial by a litigant in person should be privileged. 196 [2005] 1 AC 610; [2004] UKHL 48 at [29], ‘I do not. . .agree that [litigation privilege is easily justified] in relation to those documents which although having the requisite degree of connection with litigation neither constitute nor disclose the seeking or giving of legal advice.’ 197 [1998] Ch 356, 362–71 (on which, Andrews, English Civil Procedure, 27.29–27.41). Sir Richard Scott V-C said: ‘. . . documents brought into being by solicitors for the purposes of litigation were afforded privilege because of the light they might cast on the client’s instructions to the solicitor or the solicitor’s advice to the client regarding the conduct of the case or of the client’s prospects. There was no general privilege that attached to documents brought into existence for the purposes of litigation independent of the need to keep inviolate communications between client and legal adviser. If documents for which privilege was sought did not relate in some fashion to communications between client and legal adviser, there was no element of public interest that could override the ordinary rights of discovery and no privilege. So, for example, an unsolicited communication from a third party, a potential witness, about the facts of the case would not, on this view, have been privileged. And why should it be? What public interest is served by according privilege to such a communication?’ 198 ISTIL Group Inc v. Zahoor [2003] 2 All ER 252; [2003] EWHC 165 (Ch), at [57] per Lawrence Collins J: ‘More attractive as a rationale is the consideration that preparation of a case is inextricably linked with the advice to the client on whether to fight or to settle, and if so, on what terms.’

3.16

Litigation Privilege

79

3.52 Arguably there is a via media between outright abolition of litigation privilege and maintaining the present law without modification.199 Zuckerman has attractively suggested that evidence given at civil trial should be open to ‘probing’ beyond the limits currently set.200 My own conclusion on this point is as follows201 : Arguably, root-and-branch abolition of litigation privilege is unjustified. Instead measures [for details of which, see the next two footnotes] should be taken to promote greater openness or ‘transparency’ in the exchange and presentation of factual202 or expert203 evidence by litigants. These proposed measures would tend to protect the integrity of witness statements and expert reports by countering the vices of ‘witness coaching’, ‘expert shopping’, and ‘interference with experts’. These proposed changes would. . .restrict opportunity for misleading presentation.

3.53 Members of the profession would resent this intrusion into the process of eliciting factual and expert draft evidence. But is that not merely an expression of conservatism? It might also be feared that these types 199

Neil Andrews, English Civil Justice and Remedies: Progress and Challenges: Nagoya Lectures (Tokyo: Shinzan Sha Publishers, 2007), 7.28–7.40. 200 Zuckerman on Civil Procedure, 15.73. 201 Neil Andrews, English Civil Justice and Remedies: Progress and Challenges: Nagoya Lectures (Tokyo: Shinzan Sha Publishers, 2007), 7–41. 202 Andrews, Nagoya Lectures, ibid., at 7–39: The author suggests that the law should be changed to require that a ‘witness statement’ must contain the following declaration: that the witness has not received any assistance in writing the statement; where he has received assistance, he should further state whether this concerned the ‘contents’ or ‘matters of spelling, grammar and punctuation’. For judicial support for a more scrupulous approach to witness statement preparation, see Aquarius Financial Enterprises Inc v. Certain Underwriters at Lloyd’s (The Delphine) [2001] 2 Lloyd’s Rep 542, at [49], per Toulson J, cited in Commercial and Mercantile Courts Litigation Practice, eds. S. Sugar and R. Wilson (2004), 9.27; the Solicitors’ Code of Conduct (2007), issued by the Solicitors Regulation Authority: Rule 11.01, Guidance, at point (12)(e), prohibits a solicitor from ‘attempting to influence a witness, when taking a statement from that witness, with regard to the contents of their statement. . . . 203 Andrews, Nagoya Lectures, ibid., at 7–40: (1) The instructing party should reveal to the expert (‘the chosen expert’): any previous report or comments received by the instructing party from another expert in connection with the present litigation; the reason why the instructing party chose not to use any other expert previously instructed to produce a report with a view to it being used in evidence. (2) The matters mentioned at (1) will become part of the ‘range of opinion’ which the chosen expert must consider in his report. (3) The chosen expert must state in his report whether he has received information from the instructing party for the purpose of (1) above; if so, details should be given; if not, a ‘nil return’ explicitly made. (4) The expert should also state in his report whether he has amended his report, to satisfy the instructing party’s suggestion; if he has, he should indicate whether the change concerned the content of his report or merely its language and presentation; if the content, he should give details by reference to specific paragraphs of his report and append the relevant portion of the earlier draft.’

80

3

First Instance Proceedings

of measure would add to the cost and delay of civil litigation by enabling each side to present challenges to the authenticity and independence of the opponent’s expert or factual witnesses. 3.54 At the root of this issue are the questions: first, how seriously does the civil process regard the danger of factual witness or expert witness bias, inaccuracy and exaggeration; and, secondly, is the role of the neutral and experienced judge an adequate counter-weight against that danger?

3.17 Experts204 3.55 Experts are needed in the civil process because (as a non-judge has had the temerity to suggest) ‘no judge is omniscient’ and ‘we cannot demand of the judges that they have knowledge of every branch of science, of every art and of the mysteries of every profession.’205 This chapter

204

Neil Andrews, The Modern Civil Process (Tübingen, Germany: Mohr & Siebeck, 2008), Chap. 7; Neil Andrews, Contracts and English Dispute Resolution (Tokyo, 2010), Chap. 17; Andrews, English Civil Procedure, Chap. 32; L. Blom-Cooper, ed., Experts in Civil Courts (Oxford: Oxford University Press, 2006); S. Burn, Successful Use of Expert Witnesses in Civil Disputes (London: Bond Solon Training, 2005); Cross and Tapper on Evidence (12th edn, Oxford: Oxford University Press, 2010), 540 ff; D. Dwyer, The Judicial Assessment of Expert Evidence (Cambridge: Cambridge University Press, 2008); D. Dwyer and R. Jacob, in Civil Procedure Rules: Ten Years On, ed. D. Dwyer (Oxford: Oxford University Press, 2009), Chaps. 16, 17, respectively; I.R. Freckleton, The Trial of the Expert (Oxford: Oxford University Press, 1987); T. Hodgkinson and M. James, Expert Evidence: Law and Practice (3rd edn, London: Sweet & Maxwell, 2010) (the leading English discussion); Hollander, Documentary Evidence, Chap. 24; M. Iller, Civil Evidence: The Essential Guide (London: Sweet & Maxwell, 2006), Chap. 12; Phipson on Evidence (16th edn, London: Sweet & Maxwell, 2005), Chap. 33; Zuckerman on Civil Procedure, Chap. 20; other discussion includes, A. Edis, ‘Privilege and Immunity: Problems of Expert Evidence,’ Civil Justice Quarterly 26 (2007): 40, and D.M. Dwyer, ‘The Duties of Expert Witnesses of Fact and Opinion,’ E & P 7 (2003): 264; Dwyer, ‘Changing Approaches to Expert Evidence in England and Italy’, (2003) International Commentary on Evidence (http://www.bepress.com/ice/vol1/iss2/ art4/); Dwyer, ‘The Causes and Manifestations of Bias in Civil Expert Evidence,’ Civil Justice Quarterly 26 (2007): 425; D.M. Dwyer, ‘The Effective Management of Bias in Civil Expert Evidence,’ Civil Justice Quarterly 26 (2007): 57 on the history of expert witnesses, Blom-Cooper, ed., Experts in Civil Courts, Chap. 1; D.M. Dwyer, ‘Expert Evidence in the English Civil Courts 1550–1800’ Jo of Legal History; Law Reform Committee’s 17th Report ‘Evidence of Opinion and Expert Evidence’ (Cmnd 4489, 1970); Lord Woolf, Access to Justice, Interim Report (1995), Chap. 23, and Access to Justice, Final Report (1996), Chap. 13: both available on-line at: http://www.dca.gov.uk/ civil/reportfr.htm. 205 J.A. Jolowicz, On Civil Procedure (Cambridge: Cambridge University Press, 2000), 225.

3.17 Experts

81

concerns expert witnesses in English court proceedings206 (and apart from court assessors)207 rather than background expert advisors to litigants. Advisory consultation with experts is not covered by the CPR regime, that is, where a litigant obtains an opinion from an expert, but that opinion is not for use as evidence in the case (see further below).208 3.56 The CPR aims to curb the perceived excesses of the partyappointed ‘battle of experts’. The three problems experienced before the CPR system were: first, the tendency for expert witnesses hired by a litigant to lose objectivity and tailor their report to suit that party’s case; secondly, the need to control the number of experts involved in a particular case, especially with a view to achieving proportionality between their use and the case’s value or importance209 ; thirdly, the need to promote ‘equality of arms’ between rich and poor parties. Under the CPR system the main rule is that no expert evidence can be presented in a case unless the court has granted permission.210 This control is a facet of the court’s case management powers. Under the CPR, there are three ways in which the ordinary civil courts can receive expert opinion: by a ‘single, joint expert’, partyappointed experts, and court assessors.211 These will be introduced in turn in the ensuing discussion.

206

Experts arealso important in arbitration; they can be party-appointed, or appointed by the arbitral tribunal; see M. Mustill and S. Boyd, Commercial Arbitration: 2001 Companion Volume (London: Butterworths, 2001), 311–2, or J. Tackaberry and A. Marriott, Bernstein’s Handbook of Arbitration and Dispute Resolution Practice (4th edn, London: Sweet & Maxwell, 2003), 2–845 ff (a perceptive overview): both works also comment on s 37, Arbitration Act 1996 (England and Wales), which empowers the tribunal (unless the parties otherwise agree) to appoint ‘experts, legal advisers or assessors’, but it requires the tribunal to afford the parties opportunity to comment on their reports or opinion; such a tribunal-appointed expert etc can be used to supplement party-appointed expert opinion, Bernstein’s Handbook 2–858; in arbitration proceedings, instructions to experts are not covered by the CPR regime. 207 For court assessors, see below. 208 For example ‘Protocol for the Instruction of Experts to Give Evidence in Civil Claims’ (Civil Justice Council, 2005), which supplements CPR Part 35 and PD 35, covers ‘steps taken for the purpose of civil proceedings by experts or those who instruct them on or after 5th September 2005’, provided the relevant experts are ‘governed by Part 35’ (see, Protocol, at 5.1); however, it does not cover experts who are not instructed to give evidence ‘for the purpose of civil proceedings in a Court in England and Wales’. See also ‘Guidance on Instructing Experts’, Annex C to Practice Direction-Pre-Action Conduct. 209 CPR 35.1 states: ‘Expert evidence shall be restricted to that which is reasonably required to resolve the proceedings.’ 210 CPR 35.4(1) to (3). 211 The decision-making members of the relevant tribunal might themselves be ‘expert’: cf the constitution of Coroners Courts, medical appeal tribunals, etc. This specialisation is not available amongst the ordinary judiciary.

82

3

First Instance Proceedings

3.18 Roles of the Court and Experts 3.57 All expert witnesses in civil proceedings owe a duty to the court ‘to help the court on the matters within his expertise’.212 This duty ‘to help the court’ overrides any obligation owed by the expert to the instructing party.213 In short, experts must exercise independent judgement. They must not become the pawns of litigants. Nor should they become, or at least remain, attached to their own dogmas. 3.58 An expert can file a written request to the court for ‘directions to assist him in carrying out his function as an expert’.214 Because they enjoy direct access to the court in this manner, this rule elevates expert witnesses into a higher category of witness. So far, however, experts have seldom sought such direct contact.215 The expert’s report must ‘contain a statement that the expert understands his duty to the court, and has complied with that duty’.216 The expert has been styled a ‘quasi-officer of the court’, who can be ordered to pay the other side’s wasted costs if his opinion is wrong or exaggerated as a result of reckless or gross dereliction of his duty.217 In his report, the expert must sign a special ‘statement of truth’: I confirm that I have made clear which facts and matters referred to in this report are within my own knowledge and which are not. Those that are within my own knowledge I confirm to be true. The opinions I have expressed represent my true and complete professional opinions on the matters to which they refer.218 3.59 The leading textbook distinguishes four main categories of expert evidence, although the expert might give evidence under more than one of these heads: ‘opinion on facts adduced before the court’; ‘[evidence]

212

CPR 35.3(1); in Anglo Group plc, Winter Brown & Co Ltd v. Winter Brown & Co Ltd, BML (Office Computers) Ltd, Anglo Group plc, BML (Office Computers) Ltd [2000] EWHC Technology 127 (8th March, 2000), at [108] to [110], Judge Toulmin QC, summarised ‘The Ikarian Reefer’ guidelines (‘The Ikarian Reefer’ [1993] 2 Lloyds Rep 68, at 81–2, per Cresswell J); Judge Toulmin added: ‘It is clear from the Judgment of Lord Woolf MR in Stevens v. Gullis [2000] 1 All ER 527, CA that the new Civil Procedure Rules underline the existing duty which an expert owes to the Court as well as to the party which he represents’; on the expert’s duty to the court, Blom-Cooper, ed, Experts in Civil Courts, Chap. 11. 213 Or duty owed to ‘the instructing parties’, in the case of a ‘single, joint witness’ under CPR 35.7(2); or ‘any obligation’ owed by the expert to the person ‘by whom [the expert] is paid’); see CPR 35.3. 214 CPR 35.14(1). 215 Master John Leslie, Queen’s Bench Division, states (2007) that he has only encountered two instances since April 1999; in one case the problem arose between a litigant in person and his appointed expert. 216 CPR 35.10(2). 217 Phillips v. Symes (No 2) [2005] 1 WLR 2043, Peter Smith J. 218 PD (35), para 3.3.

3.18 Roles of the Court and Experts

83

to explain technical subjects or technical words’; ‘evidence of fact only observable, comprehensible, or open to description by experts’; ‘admissible hearsay of a specialist nature’.219 The Civil Justice Council’s Protocol (on Experts) states that experts should be capable of ‘addressing questions of fact and opinion’, even ‘material facts in dispute’, but it exhorts experts to keep issues of fact and opinion ‘separate and discrete’.220 The following indicates the range of possible topics: ‘is the claimant suffering from illness X?’; ‘is it likely that the relevant collision would have caused injury to Y?’; ‘what are the chances of P recovering fully from this injury, and when?’; ‘is this manner of accounting recognised as good practice amongst the British accounting profession?’; ‘what is the range of rents for this type of property in this district of London, if the property is subject to these planning restrictions?’ Expertise can be focused, therefore, upon past, present or future physical events or states or matters of social perception (‘what is professionally acceptable in this context?’).221 3.60 It is established that the court has the ultimate say on matters of expertise. Brooke LJ recently approved the remark that ‘we do not have trial by expert in this country; we have trial by judge.’222 This comment encapsulates two interrelated points: (i) experts are not infallible; (ii) the judge is the final arbiter. It follows from (ii) that the judge must not delegate to others his fact-finding and evaluative power. If ultimate decision-making were ceded by the judge to the expert, this would involve a ‘usurpation [by the expert] of the constitutional function of the judge’.223 The court should give a reason for preferring one expert’s evidence to another’s,224 or for not acting on a single, joint expert’s opinion. But although the judge 219 Hodgkinson and James, Expert Evidence: Law and Practice, 1–012; adding that sometimes an expert can refer to facts as a necessary preliminary to his expert evidence. 220 ‘Protocol for the Instruction of Experts to Give Evidence in Civil Claims’ (Civil Justice Council, 2005), 13.9 to 13.11. 221 For discussion of this range, see Law Reform Committee’s 17th Report, ‘Evidence of Opinion and Expert Evidence’ (Cmnd 4489, 1970), 1 ff; Jolowicz, On Civil Procedure, 224–5; P.L. Murray and R. Stürner, German Civil Justice (Durham, NC: Carolina Academic Press, 2004), 280–2; in Morgan Chase Bank v. Springwell Navigation Corporation [2006] EWHC 2755 (Comm), Aikens J noted, at [30] to [32], that expert evidence will not be admissible from a lawyer on construction of commercial contracts which are subject to English law; this is a question of (English) law for the court; unless the parties have used technical expressions outside the expertise of the judge; e.g., Kingscroft Insurance Co Ltd v. Nissan Fire & Marine Insurance Co Ltd (No 2) [1999] Lloyd’s Insurance and Reinsurance Reports, 603 at 622, per Moore-Bick J. 222 Armstrong v. First York Ltd [2005] 1 WLR 2751, CA; [2005] EWCA Civ 277 at [28], approving Liddell v. Middleton [1996] PIQR P36 at p. 43. 223 Law Reform Committee’s 17th Report, ‘Evidence of Opinion and Expert Evidence’ (Cmnd 4489, 1970), p. 5. 224 Generally on judicial reasons and compliance with Art 6(1) of the European Convention on Human Rights and for a survey of the English case law, Andrews, English Civil Procedure, 5.39 ff.

84

3

First Instance Proceedings

cannot remain mute, he need not become loquacious. His explanation need not be technical.225 It is enough to say, for example, that expert Y seemed to be more ‘cogent’ or ‘persuasive’ than expert X. Such a reason is necessary rather than the judge simply invoking the burden of proof to resolve a mental impasse.226 For example, the Court of Appeal in one case avoided a heavy-handed approach to this matter.227 This approach seems to be justified for two reasons. First, it is unrealistic to expect judges to provide elaborate ratiocination on arcane and technical matters. Secondly, often a judge’s preference for one side’s expert is a matter of well-educated ‘impression’.

3.19 The ‘Single, Joint Expert’ System 3.61 In relatively straightforward claims, or peripheral matters in large litigation,228 the expert will be a ‘single, joint expert’, appointed to act for both parties.229 The parties can agree on the relevant individual, failing which the court can select him from rival lists supplied and briefly

225

Arden LJ in Armstrong v. First York Ltd [2005] 1 WLR 2751, CA at [33], noting the leading decision English v. Emery Reimbold and Strick [2002] 1 WLR 2409, CA at [20] (in the English case the CA stated at [20] that the judge should ‘simply provide an explanation as to why he has accepted the evidence of one expert and rejected that of another. It may be that the evidence of one or the other accorded more satisfactorily with facts found by the Judge. It may be that the explanation of one was more inherently credible than that of the other. It may simply be that one was better qualified, or manifestly more objective, than the other. Whatever the explanation may be, it should be apparent from the judgment.’ And at [21] it said: ‘The essential requirement is that the terms of the judgment should enable the parties and any appellate tribunal readily to analyse the reasoning that was essential to the Judge’s decision.’ 226 For a judge’s unjustified resort to the burden of proof to resolve a conflict of expert evidence: Stephens v. Cannon [2005] EWCA Civ 222; CP Rep 31. 227 DN v. London Borough of Greenwich [2004] EWCA Civ 1659, at [28] to [30], where the Court of Appeal was unimpressed by the judge’s statement of reasons on a point of rival expert opinion, but declined to order a new trial. 228 Sometimes proportionality will justify use of a ‘single, joint expert’ on a relatively short issue which forms only a part of a more substantial litigation; for example, the quantification of liability in an action for professional negligence against a defendant accountant might be the subject of a single, joint expert’s report, but the (prior) question of liability might be the subject of party-appointed experts; I am grateful to Master John Leslie, Queen’s Bench Division, for this observation. 229 L. Blom-Cooper, ed., Experts in Civil Courts, Chap. 5; Hodgkinson and James, Expert Evidence: Law and Practice, Chap. 5; as CPR 35.7 mentions, this presupposes that more than one party wishes to adduce expert evidence on a particular issue.

3.19

The ‘Single, Joint Expert’ System

85

annotated by each party.230 The parties share the cost of the expert.231 Each party has an opportunity to instruct the expert and to ask written questions. Such an expert should not communicate, meet, or discuss the case or his evidence with one party, independently of the opponent.232 3.62 The single, joint expert’s report must summarise the ‘range of opinion’ (if there is one, where there is a range of opinion on the matters dealt with in the report) (if there is one) on the relevant issue and give reasons for preferring the view adopted.233 In the interest of economy,234 the courts at first expressed a strong disinclination to hear oral evidence from such an expert. But the Court of Appeal has since confirmed that a court can give permission for a ‘single, joint expert’ to be crossexamined.235 3.63 The ‘single, joint expert’ system carries the risk of inaccuracy.236 This is because the court receives no adversarial debate. And so it might become beguiled by the single, joint expert’s opinion. The court might be sceptical, or sense that it should have doubts, but have no means of obtaining assurance or ventilating its doubts. The fact that this is the only expert opinion at first available, and the danger that it might be inaccurate and so mislead the decision-maker, explain the English courts’ willingness,

230

I am grateful to Master John Leslie, Queen’s Bench Division, for the following insight into this practice: ‘If the parties cannot agree on a “single, joint expert”, I direct that they are to exchange the CVs of three (or some other number) experts, each party listing them in their order of preference; that they are then to send in written reasons as to why they do not accept the opponent’s proposed experts and why they say that their own are to be preferred and justifying their order of preference.’ 231 A cheaper ‘single, joint expert’ might be appointed, if the more expensive expert’s fees are disproportionate to the case’s value: Kranidotes v. Paschali [2001] EWCA Civ 357; [2001] CP Rep 81; Hodgkinson and James, Expert Evidence: Law and Practice, 4-018. 232 Peet v. Mid-Kent Care Healthcare Trust [2002] 1 WLR 210 at [24]; ‘Protocol for the Instruction of Experts to Give Evidence in Civil Claims’ (Civil Justice Council, 2005), at 17.12. 233 PD (35), para 2.2(6). 234 Daniels v. Walker [2000] 1 WLR 1382, 1388 A, CA, where Lord Woolf admitted that cross-examination of a single, joint evidence is a possibility; similarly, Peet v. Mid-Kent Care Healthcare Trust [2002] 1 WLR 210, at [28], per Lord Woolf CJ. 235 R v. R [2002] EWCA Civ 409 at [14] to [18], per Ward LJ; L. Blom-Cooper, eds., Experts in Civil Courts, 5.37 to 5.39 noting also remarks in Popel v. National Westminster Bank plc [2002] EWCA Civ 42; [2002] CPLR 370, at [28] and [29], per Dyson LJ, and Austen v. Oxfordshire County Council [2002] All D 97 (CA); 17 April 2002 (noting that it is settled law that where a single expert has been appointed, there is no general need for that expert’s evidence to be amplified by oral evidence or tested in crossexamination; but the Court of Appeal said that the court might permit cross-examination where the need arose; in the unusual circumstances of this case, cross-examination was allowed). 236 Dwyer, ‘The Effective Management of Bias in Civil Expert Evidence,’ 57, 78.

86

3

First Instance Proceedings

in appropriate circumstances, to allow such evidence to be challenged by resort to party-appointed experts. 3.64 The court will give permission for a party to adduce supplementary party-appointed expert evidence if (i) that party can show reasons which are ‘not fanciful’ for supplementing the ‘single, joint expert’ report; and (ii) use of a party-appointed experts will not result in disproportionate costs. It should also be noted that the party who seeks the court’s permission to adduce additional expert evidence will be expected already to have asked written questions of the expert and to have received manifestly unsatisfactory answers.237 The approach just explained was established in Daniels v. Walker (2000)238 and further explained in Peet v. Mid-Kent Healthcare Trust (2002).239 Lord Woolf CJ there noted that Part One of the CPR (‘the Overriding Objective’) is relevant. CPR Part One’s broad procedural ‘directives’ ensure that the courts must be constantly mindful of the need for ‘proportionality’ and speediness, at the same time taking into account still broader questions of fairness (which must include the search for accurate decisions).240 3.65 In most cases the court will adopt the opinion of the ‘single joint expert’, but a judge can reject it if it appears to be unsound. As the Civil Justice Council’s Protocol states: ‘It is for the court to determine the facts.’241 The Court of Appeal affirmed this point in Armstrong v. First York Ltd (2005), where Brooke LJ said: ‘we do not have trial by expert in this

237

Practice reported to author by Master John Leslie, Queen’s Bench Division. [2000] 1 WLR 1382 CA; Andrews, English Civil Procedure, 32.68 to 32.74; Cosgrove v. Pattison [2001] CP Rep 68; The Times 13 February 2001, Neuberger J, on which S. Burn and B. Thompson, in Experts in Civil Courts, ed. L. Blom-Cooper (Oxford: Oxford University Press, 2006), 5.21; Neuberger J suggested eight factors; and Stallwood v. David [2006] EWHC 2600 (QB); [2007] 1 All ER 206, Teare J, at [32] (case noted A. Zuckerman, Civil Justice Quarterly 26 (2007): 159). 239 [2002] 1 WLR 210, CA, at [28]; his Lordship emphasised that these matters of discretion are governed by the ‘Overriding Objective’ in CPR Part 1; this discretion applies to the following issues: whether to use such an expert; whether to allow further clarification of his report by written answers beyond the ‘once only’ scope of CPR 35.6(2); whether to supplement his report by appointing party-nominated experts; and whether to allow a ‘single, joint expert’ to appear and be cross-examined at trial; this discretion is emphasised at [14] of the Peet case. 240 [2002] 1 WLR 210, CA, at [28]; his Lordship emphasised that these matters of discretion are governed by the ‘Overriding Objective’ in CPR Part 1; this discretion applies to the following issues: whether to use such an expert; whether to allow further clarification of his report by written answers beyond the ‘once only’ scope of CPR 35.6(2); whether to supplement his report by appointing party-nominated experts; and whether to allow a ‘single, joint expert’ to appear and be cross-examined at trial; this discretion is emphasised at [14] of the Peet case. 241 ‘Protocol for the Instruction of Experts to Give Evidence in Civil Claims’ (Civil Justice Council, 2005), at 17.14; this document, which does not have the force of law, ibid., at 2.1, supplements CPR Part 35 and PD 35. 238

3.20 Court Assessors

87

country; we have trial by judge’ (see also below).242 The Court of Appeal held that the court is likely to adopt the ‘single, joint expert’ report when it is the only evidence on a matter of a technical nature, such as the valuation of a property.243 However, it noted that the trial judge is not bound by an expert’s opinion, even that of a single, joint expert, when it contradicts the factual evidence given by one party. The judge can here decide to prefer the party’s factual evidence, even if the same judge lacks the technical capacity to repudiate the expert’s evidence.244

3.20 Court Assessors245 3.66 Assessors are mainly used in cases concerning maritime collisions, some patent litigation, and occasional appeals concerning technical questions of costs. Thus English courts have not adopted this model of court-annexed ‘expertise’ for all types of technical issues. By contrast, in civilian systems, court-appointed experts are used extensively. Indeed several such regimes might operate within each jurisdiction.246 In England the assessor’s task is to advise the judge on evaluation of disputed matters of fact. For example, it has been said: ‘The nautical assessor’s function is to enlarge the field of matters of which the judge may take judicial notice so as to include matters of navigation and general seamanship.’247 Assessors’ advice must be disclosed to the parties. After the parties have had their say, it would be wrong for assessors to retire with the judge to present further comment. To do so would infringe the right of the parties to contradict all relevant issues or matters of opinion.248

242

Brooke LJ in Armstrong v. First York Ltd [2005] 1 WLR 2751, CA; [2005] EWCA Civ 277 at [28], approving a comment in Liddell v. Middleton [1996] PIQR P36 at 43. 243 [2005] 1 WLR 2751, CA; [2005] EWCA Civ 277. 244 For other cases on this topic: Jakto Transport v. Derek Hall [2005] EWCA Civ 1327; Montracon v. Whalley [2005] EWCA Civ 1383; Montoya v. Hackney London Borough Council (unreported). 245 CPR 35.15; PD (35) 7.1 to 7.4; see the observations of Lord Bingham in T. Bingham, The Business of Judging (Oxford: Oxford University Press, 2000), 19–24; Andrews, English Civil Procedure, 32–76 to 32–77; Blom-Cooper, ed., Experts in Civil Courts, Chap. 8; D.M. Dwyer, ‘The Future of Assessors under the CPR,’ Civil Justice Quarterly 25 (2006): 219; Hodgkinson and James, Expert Evidence: Law and Practice, 5-012 ff. 246 Jolowicz, On Civil Procedure, Chap. 12; L. Cadiet et E. Jeuland, Droit Judiciare Privé (6th edn, Litec, Paris, 2009), 428 ff; Murray and Stürner, German Civil Justice, 280 ff. 247 Law Reform Committee’s 17th Report, ‘Evidence of Opinion and Expert Evidence’ (Cmnd 4489, 1970), p. 6. 248 Owners of the Ship Bow Spring [2005] 1 WLR 144, CA.

88

3

First Instance Proceedings

3.21 Party-Appointed Experts 3.67 In complex or relatively large claims, each party will seek permission to appoint his own expert or experts. If permission is granted, the court will also order the parties to exchange their reports. Although partyappointed experts are required to be impartial and must acknowledge that they owe an overriding duty to the court, it has often been suspected that their evidence might be tailored to suit the appointing party. As Lord Bingham (as he now is) commented in a 1996 decision: For whatever reason, and whether consciously or unconsciously, the fact is that expert witnesses instructed on behalf of parties to litigation often tend, if called as witnesses at all, to espouse the cause of those instructing them to a greater or lesser extent, on occasion becoming more partisan than the parties.249 3.68 But the problem of lack of neutrality is easily exaggerated. It should be recalled that the court has the final say. The party-appointed expert system injects often salutary scepticism, debate, and ‘intellectual honesty’, into the process of taking a ‘view’ on debatable matters of opinion. This is acknowledged in Professor Hazard Jr’s comment in the American Law Institute/UNIDROIT’s Principles of Transnational Civil Procedure250 : . . .Court appointment of a neutral expert is the practice in most civil-law systems and in some common-law systems. However, party-appointed experts can provide valuable assistance in the analysis of difficult factual issues. Fear that party appointment of experts will devolve into a ‘battle of experts’ and thereby obscure the issues is generally misplaced. In any event, this risk is offset by the value of such evidence. . . 3.69 Certainly, many English litigation lawyers wish to retain the party-appointed expert system in order to exert some influence over issues of expertise. As Lord Bingham has commented: The [English] neglect of court experts is. . .explicable. The chances and changes of litigation are formidable enough as it is, but parties do at least feel able (sometimes. . .mistakenly) to rely with confidence on their expert saying what he has committed himself to say. They are naturally reluctant to forgo this assurance for an independent expert whom they do not engage,

249 Sir M.R. Thomas Bingham in Abbey National Mortgages plc v. Key Surveyors Ltd [1996] 1 WLR 1534, 1542, CA (a pre-CPR case concerning appointment of a court expert under the old RSC Ord 40); on the question of party expert partiality and the question of transparency, besides discussion elsewhere in this book of litigation privilege and partyappointed experts, see Edis, ‘Privilege and Immunity: Problems of Expert Evidence, 40, and Dwyer, ‘The Effective Management of Bias in Civil Expert Evidence,’ 57. 250 Principle 22.4; accessible at: http://www.unidroit.org/english/principles/ civilprocedure/main.htm. Also published as American Law Institute/UNIDROIT’s Principles of Transnational Civil Procedure (Cambridge: Cambridge University Press, 2006).

3.22 Selection and Approval of Party-Appointed Experts

89

do not directly pay, cannot decline to call if his opinion is entirely hostile and cannot, perhaps, cross-examine so effectively.251 3.70 Furthermore, Lord Woolf in his 1996 report on the civil justice system said that: in large and strongly contested cases the full adversarial system, including oral cross-examination of opposing experts, is the best way of producing a result. That will apply particularly to issues on which there are several tenable schools of thought, or where the boundaries of knowledge are being extended.252 We now consider the party-appointed expert system in greater detail.

3.22 Selection and Approval of Party-Appointed Experts 3.71 In large claims (or complicated ‘middling actions’), it will be inappropriate to use a ‘single, joint expert’. Instead each party will seek permission from the court to use his own expert or experts as a witness in the case. The court’s permission will be expressed either in relation to ‘the expert named’ or ‘the field identified’.253 If permission exists to call a ‘named’ expert, that party must obtain the court’s further permission to substitute another expert.254 But such further permission will be conditional on that party’s disclosing the first expert’s report.255 ‘Transparency’ can then be achieved. However, this condition cannot be imposed if

251

Bingham, The Business of Judging, 23. Lord Woolf, Access to Justice: Final Report (London: Stationery Office, 1996), Chap. 13, at [19]. 253 CPR 35.4(2); generally on ‘court management’ of experts, Blom-Cooper, ed., Experts in Civil Courts, Chap. 4; in Morgan Chase Bank v. Springwell Navigation Corporation [2006] EWHC 2755 (Comm) Aikens J noted, at [30] to [32], that expert evidence will not be admissible from a lawyer on construction of commercial contracts (subject to English law); this is a question of law for the court; unless the parties have used technical expressions outside the expertise of the judge; e.g., Kingscroft Insurance Co Ltd v. Nissan Fire & Marine Insurance Co Ltd (No 2) [1999] Lloyd’s Insurance and Reinsurance Reports page 603 at 622, per Moore-Bick J. 254 Vasiliou v. Hajigeorgiou [2005] EWCA Civ 236; [2005] 1 WLR 2195, CA: applying Beck v. Ministry of Defence [2003] EWCA Civ 1043; [2005] 1 WLR 2206 (note), even though in the Beck case the relevant order had not mentioned an expert by name. 255 Vasiliou case (applying Beck case) ibid. Edwards-Tubb v. JD Weatherspoon plc [2011] EWCA Civ 136; [2011] 1 WLR 1371, at [30] to [33] extends this approach to this context: a prospective party has nominated an expert (‘X’) before commencement of proceedings, pursuant to the pre-action protocol system; that same party, after commencement of proceedings, wishes to instruct a different expert (‘Y’); the court will grant permission for expert Y to be used only on condition that the privileged report of X (not in fact relied upon, and hence not yet shown to the opponent) should be disclosed to the opponent. 252

90

3

First Instance Proceedings

permission has been expressed in terms of a ‘field’ of expertise.256 In that situation, which is the more common, there is no check upon so-called ‘expert shopping’. 3.72 The CPR covers only experts who give evidence, or prepare to do so.257 A litigant can consult (as distinct from adducing civil evidence from) any number of experts without seeking the court’s permission.258 But the experts’ fees for such consultation will not be recoverable as costs in the action. However, such consultation with experts will be covered by litigation privilege, provided the ‘dominant’ purpose of such consultation was to assist in preparing the pending or contemplated civil case. But one cannot pre-emptively buy up all the prominent experts in a relevant field, depriving the opponent of access to these influential oracles of wisdom. This rule against monopolising leading experts is expressed by the statement that there is ‘no property in a witness’ (and indeed this proposition extends to a ‘witness of fact’).259 Furthermore, the CPR provides: ‘where a party has disclosed an expert’s report, any party may use that expert’s report as evidence at the trial.’260 3.73 The expert selected should be: competent,261 available,262 and free from any potential conflict of interest.263 It is improper to pay an 256 Vasiliou case, ibid., considering CPR 35.4(2)(a); e.g., in a recent High Court case involving very severe brain injury, assessment of the claimant’s mental capacity to conduct the litigation without Court of Protection direction was assessed by six experts: two neurologists, two neuro-psychologists, and two neuro-psychiatrists; I am grateful to Master John Leslie, Queen’s Bench Division, for this illustration. 257 Thus CPR 35.2 provides: ‘a reference to an “expert” in this Part is a reference to an expert who has been instructed to give or prepare evidence for the purpose of court proceedings.’ Nor does the ‘Protocol for the Instruction of Experts to Give Evidence in Civil Claims’ (Civil Justice Council, 2005) cover advisory consultation with experts, for example, where a litigant obtains confidential comments from an expert on a single, joint expert’s report: ibid., at 5.2; Hodgkinson and James, Expert Evidence: Law and Practice, 4-011. 258 Vasiliou v. Hajigeorgiou [2005] 1 WLR 2195, CA, at [20]. 259 Harmony Shipping Co SA v. Davis [1979] 1 WLR 1380, 1384–5, CA, per Lord Denning MR: ‘The reason is because the court has a right to every man’s evidence. Its primary duty is to ascertain the truth. Neither one side nor the other can debar the court from ascertaining the truth either by seeing a witness beforehand or by purchasing his evidence or by making communication with him.’ 260 CPR 35.11. 261 On the question of ‘accreditation’ and ‘training’, Blom-Cooper, ed., Experts in Civil Courts, Chap.’s 2, 12. 262 A party should not instruct an expert who would be unavailable at the trial, because this will cause unacceptable disruption and delay, N. Madge, in Experts in Civil Courts, ed. L. Blom-Cooper (Oxford: Oxford University Press, 2006), 4.33, noting Rollison v. Kimberly Clark [2001] EWCA Civ 1456; [2002] CP Rep 10. 263 ‘Protocol for the Instruction of Experts to Give Evidence in Civil Claims’ (Civil Justice Council, 2005), 7.1; cf Akai Holdings Limited (in compulsory liquidation) v. RSM Robson Rhodes LLP and Another [2007] EWHC 1641, Briggs J (RSM RR contractually

3.23 Disclosure of Party-Appointed Expert Reports

91

expert witness on a conditional or contingency fee basis.264 He should not have any close connection with the appointing party or persons involved in the case. Admittedly, perhaps in the interest of economy, some decisions have permitted expert evidence to be received from a party’s employee. But, if there is a true contest concerning his opinion, the employee’s manifest lack of independence will reduce the weight of his evidence.265

3.23 Disclosure of Party-Appointed Expert Reports 3.74 Expert evidence must be given in a written report, unless the court directs otherwise.266 Pre-trial disclosure of a party’s expert report is also a condition for use of that expert: without such disclosure a party ‘may not use the report at the trial or call the expert to give evidence orally unless the court gives permission’.267 The rules prescribe the form of the expert’s report.268 He must give details of his qualifications in his report.269 He should not exceed his field of expertise.270 If he does, he should make this clear.271 The expert must provide: ‘details of any literature or other material which the expert has relied on in making the report’272 ; additionally, he must ‘summarise the range of opinion [if there is one] and give reasons bound to provide expert advice to applicant in pending civil litigation; in present case, interim injunction sought to restrain RSM RR, accountancy firm, from merging with applicant’s defendant (GT) in those pending proceedings; prospect of conflict of interest; injunction granted). 264 R (Factortame Ltd) v. Secretary of State for the Environment, Transport and the Regions (No 8) [2003] QB 381, CA; [2002] EWCA Civ 932 at [54], [57], [87], [90], [91], per Lord Phillips MR; but an expert not acting as witness can validly agree a percentage return for litigation support: Mansell v. Robinson [2007] EWHC 101 (QB). 265 Field v. Leeds City Council [2000] 1 EGLR 54 CA; R (Factortame Ltd) v. Secretary of State for the Environment, Transport and the Regions (No 8) [2003] QB 381, CA; [2002] EWCA Civ 932, at [70]; on which, Andrews, English Civil Procedure, 32.43 to 32.45; Hodgkinson and James, Expert Evidence: Law and Practice, 1-030 and Dwyer, ‘The Effective Management of Bias in Civil Expert Evidence,’ 57. 266 CPR 35.5; generally on expert reports, Blom-Cooper, ed., Experts in Civil Courts, Chap. 6. 267 CPR 35.13. 268 CPR 35.10 and PD (35) 2.2; ‘Protocol for the Instruction of Experts to Give Evidence in Civil Claims’ (Civil Justice Council, 2005), at 13. 269 PD (35), 2.2(1) for the latter requirement. 270 The need for such delineation of his legitimate field of comment is made clear in: (1) section 3(1), Civil Evidence Act 1972 (‘. . .where a person is called as a witness in any civil proceedings, his opinion on any relevant matter on which he is qualified to give expert evidence shall be admissible in evidence’); and (2) CPR 35.3.1, referring to an expert’s evidence on: ‘. . .matters within his expertise’. 271 PD (35) 1.5(a); for such a failure in the criminal context, see Meadow v. General Medical Council [2006] EWCA Civ 1390; [2007] QB 462, discussed below. 272 PD (35) 2.2(2).

92

3

First Instance Proceedings

for his own opinion’273 ; finally, ‘if the expert is not able to give his opinion without qualification, [he must] state the qualification’.274 3.75 The expert’s report must ‘contain a statement that the expert understands his duty to the court, and has complied with that duty’.275 Because his report can cover matters both of opinion and fact, the rules prescribe a special ‘statement of truth’: I confirm that I have made clear which facts and matters referred to in this report are within my own knowledge and which are not. Those that are within my own knowledge I confirm to be true. The opinions I have expressed represent my true and complete professional opinions on this matter to which they refer.276 3.76 As for amendment of the report at the instructing party’s request, the Civil Justice Council’s Protocol states: experts should not be asked to, and should not, amend, expand, or alter any parts of reports in a manner which distorts their true opinion, but may be invited to amend or expand reports to ensure accuracy, internal consistency, completeness and relevance to the issues and clarity.277 3.77 The court’s order can be for simultaneous or sequential disclosure of reports by the opposing parties.278 Disclosure is confined to ‘the expert’s intended evidence’. It does not extend to ‘earlier and privileged drafts of what might or might not become the expert’s evidence’, unless the final report is ‘on its face’ a ‘partial or incomplete document’.279 Parties can pose written questions for the attention of the other side’s expert witness or the single, joint witness.280 Answers become part of the main report.281 3.78 ‘The expert’s report must state the substance of all material instructions, whether written or oral, on the basis of which the report was written.’282 ‘Instructions’ include ‘material supplied by the instructing party to the expert as the basis on which the expert is being asked to advise’.283 But the expert’s declaration of a summary of these ‘instructions’ will do:

273

Ibid., 2.2(6). Ibid., 2.2(8). 275 CPR 35.10(2). 276 PD (35) 3.3. 277 ‘Protocol for the Instruction of Experts to Give Evidence in Civil Claims’ (Civil Justice Council, 2005), 15.2. 278 Normally the exchange is simultaneous; but fairness and clarity might sometimes justify sequential disclosure: Hodgkinson and James, Expert Evidence: Law and Practice, 4-020. 279 Jackson v. Marley Davenport Ltd [2004] 1 WLR 2926, CA, at [14] and [18]; Longmore LJ commented at [18]: ‘. . .it would in my view be a retrogression and not an advance in our law if earlier reports of experts, upon which they did not intend to rely, had to be routinely disclosed before they could give evidence.’ 280 See PD (35) 5.1 to 5.3. 281 CPR 35.6(3). 282 CPR 35.10(3). 283 Lucas v. Barking, Havering and Redbridge Hospitals NHS Trust [2003] EWCA Civ 1102; [2004] 1 WLR 220, at [34]. 274

3.23 Disclosure of Party-Appointed Expert Reports

93

‘The only obligation on the expert is to set out “material instructions”.’284 These do not include material lying behind a written summary presented to the expert, this summary containing a set of ‘assumed facts’.285 3.79 A litigant, or prospective litigant, enjoys ‘litigation privilege’ in communications between him (or his lawyer) and a prospective expert if the communication is confidential and made for the dominant purpose of use in, or preparation for, criminal or civil litigation286 which is in reasonable prospect.287 There is an exception to litigation privilege if the communication was intended to further or facilitate a crime or fraud, even if the lawyer acts in good faith.288 It is possible that communications between an instructing party and an expert might fall within this exception to litigation privilege.289 However, the cases so far reported have concerned perjury and conspiracies to pervert the course of justice by producing false factual evidence, from non-expert witnesses. Another pertinent rule is that the court will not grant an injunction to retrieve inadvertently disclosed privileged material (containing witness preparation, etc) if there is evidence that the privilege-holder attempted to deceive the court.290 3.80 The CPR has removed litigation privilege in the ‘instructions’, written or oral, provided by the litigant to an expert.291 CPR 35.10(4) states: The instructions referred to in paragraph (3) shall not be privileged against disclosure but the court will not, in relation to those instructions-(a) order disclosure of any specific document; or (b) permit any questioning in court, other than by the party who instructed the expert, unless it is satisfied that there are reasonable grounds to consider the statement of instructions given under paragraph (3) to be 284

Ibid., at [36], per Waller LJ. Morris v. Bank of India (unreported, 15 Nov 2001, Chancery), Hart J; on which Andrews, English Civil Procedure, 32.51 to 31.56; and comments in Lucas v. Barking, Havering and Redbridge Hospitals NHS Trust [2003] EWCA Civ 1102; [2004] 1 WLR 220, at [8]. 286 See, for example, Carlson v. Townsend [2001] 1 WLR 2415, CA; Jackson v. Marley Davenport Ltd [2004] 1 WLR 2926, CA, at [13], [14], [22], cited in Vasiliou v. Hajigeorgiou [2005] 1 WLR 2195, CA, at [28]. 287 On this last element, USA v. Philip Morris [2004] EWCA Civ 330. 288 Kuwait Airways Corpn v. Iraqi Airways Corp [2005] EWCA Civ 286; [2005] 1 WLR 2734, at [42], where Longmore LJ concluded: ‘the fraud exception can apply where there is a claim to litigation privilege as much as where there is a claim to legal advice privilege’. In the Kuwait case, the defendant had committed perjury ‘on a remarkable and unprecedented scale’ (see [40]) and there was clear evidence of this; this destroyed litigation privilege in communications between the claimant and its solicitors. 289 The David Agmashenebeli (2001) CLC 942, Colman J: strong prima facie evidence that claimants had procured a surveyor’s report in order to present false evidence: Thanki, ed., The Law of Privilege, 4.45. 290 ISTIL Group Inc v. Zahoor [2003] EWHC 165 (Ch), [2003] 2 All ER 252, at [112], per Lawrence Collins J: ‘In my judgment the combination of forgery and misleading evidence make this a case where the equitable jurisdiction to restrain breach of confidence gives way to the public interest in the proper administration of justice.’ 291 CPR 35.10(4). 285

94

3

First Instance Proceedings

inaccurate or incomplete. But such loss of privilege occurs only when ‘the party decides that the particular report on which he wishes to rely should be disclosed.’292

3.24 Discussions Between Party-Appointed Experts 3.81 The court can direct that there should be a ‘discussion’293 between party-appointed experts, followed by a ‘joint statement’: the court may direct that following a discussion between the experts they must prepare 292 Jackson v. Marley Davenport Ltd [2004] 1 WLR 2926, CA, at [22], per Peter Gibson LJ; Edis, ‘Privilege and Immunity: Problems of Expert Evidence,’ 40. 293 CPR 35.12; Blom-Cooper, ed., Experts in Civil Courts, Chap. 7.

(1) CPR 35.12 states: The court may, at any stage, direct a discussion between experts for the purpose of requiring the experts to—(a) identify and discuss the expert issues in the proceedings; and (b) where possible, reach an agreed opinion on those issues.(2) The court may specify the issues which the experts must discuss. (3) The court may direct that following a discussion between the experts they must prepare a statement for the court setting out those issues on which—(a) they agree; and (b) they disagree, with a summary of their reasons for disagreeing. (4) The content of the discussion between the experts shall not be referred to at the trial unless the parties agree. (5) Where experts reach agreement on an issue during their discussions, the agreement shall not bind the parties unless the parties expressly agree to be bound by the agreement. (2) Practice Direction (35) states: 9.1 Unless directed by the court discussions between experts are not mandatory. Parties must consider, with their experts, at an early stage, whether there is likely to be any useful purpose in holding an experts’ discussion and if so when. 9.2 The purpose of discussions between experts is not for experts to settle cases but to agree and narrow issues and in particular to identify: (i) the extent of the agreement between them; (ii) the points of and short reasons for any disagreement; (iii) action, if any, which may be taken to resolve any outstanding points of disagreement; and (iv) any further material issues not raised and the extent to which these issues are agreed. 9.3 Where the experts are to meet, the parties must discuss and if possible agree whether an agenda is necessary, and if so attempt to agree one that helps the experts to focus on the issues which need to be discussed. The agenda must not be in the form of leading questions or hostile in tone. 9.4 Unless ordered by the court, or agreed by all parties, and the experts, neither the parties nor their legal representatives may attend experts discussions. 9.5 If the legal representatives do attend—(i) they should not normally intervene in the discussion, except to answer questions put to them by the experts or to advise on the law; and (ii) the experts may if they so wish hold part of their discussions in the absence of the legal representatives.9.6 A statement must be prepared by the experts dealing with paragraphs 9.2(i)–(iv) above. Individual copies of the statements must be signed by the experts at the conclusion of the discussion, or as soon thereafter as practicable, and in any event within 7 days. Copies of the statements must be provided to the parties no later than 14 days after signing.9.7 Experts must give their own opinions to assist the court and do not require the authority of the parties to sign a joint statement.9.8 If an expert significantly alters an opinion, the joint statement must include a note or addendum by that expert explaining the change of opinion.

3.24 Discussions Between Party-Appointed Experts

95

a statement for the court showing: (a) those issues on which they agree; and (b) those issues on which they disagree and a summary of their reasons for disagreeing.294 Such discussions can engender settlement, reduce the adversarial sting of the contest, narrow the scope of the dispute, and produce ideas for further streamlining the dispute. Such a meeting is not contrary to the guarantee in Article 6(1) of the European Convention on Human Rights of a fair trial and process.295 Baroness Hale (as she now is) has suggested that it would be good practice to agree that a legally-qualified chairman, independent of the parties, might preside during expert discussions involving matters of sensitivity.296 The Practice Direction to Part 35 now states that such meetings are not mandatory297 ; that unless the parties agree or the court orders, neither the parties or their lawyers may attend such a discussion298 ; and that, if lawyers do attend, they should not ‘intervene’ except to answer experts’ questions, notably on points of law.299 It is also provided that experts: must give their own opinions to assist the court and do not require the authority of the parties to sign a joint statement.300 Finally, if an expert significantly alters an opinion, the joint statement must include a note or addendum by that expert explaining the change of opinion.301 3.82 Experts’ discussions are privileged, the relevant rule stating simply: the content of the discussion between the experts shall not be referred to at the trial unless the parties agree.302 But the joint statement agreed by rival parties’ experts at the end of such a session is not privileged and in fact becomes available to the court in the proceedings (under CPR 35.12(3), the court can order that the parties’ experts must prepare a statement for the court. . .).303 The joint statement is not formally binding on the parties, but in practice it will be difficult to sidestep. In Jones v. Kaney (2011),304 the United Kingdom Supreme Court (by a majority) held that the immunity of experts against liability should be abolished. This decision reverses the Court of Appeal’s decision in Stanton v. Callaghan (2000),305 which had held that an expert is immune from liability in negligence when agreeing to a joint statement (3.84 on factual witness immunity). Therefore, after

294

CPR 35.12(3). Hubbard v. Lambeth, Southwark and Lewisham AHA [2001] EWCA Civ 1455; The Times, 8 October 2001, at [17], per Tuckey LJ. 296 Hubbard case, ibid., at [29], per Hale LJ. 297 PD 35, para 9.1. 298 PD 35, para 9.4. 299 PD 35, para 9.5. 300 PD 35, para 9.7. 301 PD 35, para 9.8. 302 CPR 35.12(4). 303 Aird v. Prime Meridian Ltd [2006] EWCA Civ 1866, at [3]. 304 [2011] UKSC 13; [2011] 2 WLR 823. 305 [2000] 1 QB 75, CA. 295

96

3

First Instance Proceedings

Jones v. Kaney (2011),306 the instructing party can sue his expert, alleging negligence or fraud.307 The expert is potentially liable to his instructing party for negligence (or perhaps other civil wrongs) (i) in the giving of an opinion, including (ii) the presentation of a report (which is shown to the other side, and to the court), and (iii) for the manner in which he conducts meetings between experts, and (iv) for the giving of his evidence at trial. Jones v. Kaney (2011)308 acknowledges that the expert will not be open to action by the opponent, because no duty of care is owed by the expert to that opponent. The decision in Jones v. Kaney (2011)309 will tend, unfortunately, to induce experts not to make risky or generous concessions during settlement negotiations, for fear of incurring liability to their instructing party. Indeed this was the very context in which Jones v. Kaney (2011) was decided. In March 2001, the claimant suffered physical and psychiatric injuries in a road traffic accident. In May 2003 his lawyer instructed the defendant clinical psychologist to examine him and prepare a report for the purpose of personal injury proceedings in which he claimant alleged that he was suffering from post traumatic stress disorder (‘PTSD’) triggered by the road accident. The defendant expert, commissioned by the claimant, initially provided a supportive report which concluded with her opinion that the claimant was suffering from post-traumatic stress disorder. Proceedings against the negligent driver were issued and liability was admitted. But the amount of damages remained in dispute. The opinion of the defendant’s expert was that the claimant was exaggerating his physical symptoms. In October 2004, a district judge (a first instance county court judge) ordered the experts on both sides to prepare a joint statement. The experts had a telephone discussion on November 2005 (13 months later) and the opposing expert then prepared a draft joint statement, which the defendant signed. The gist of that joint statement was that the claimant psychologist agreed that the claimant had been deceptive and deceitful,310 and 306

[2011] UKSC 13; [2011] 2 WLR 823. [2000] 1 QB 75, CA; the expert discussion in that case preceded the CPR and was not at the court’s direction; nevertheless, the court’s reasoning would seem to apply to CPR 35.12 discussions. 308 [2011] UKSC 13; [2011] 2 WLR 823. 309 Ibid. 310 Paragraph 5 of the joint report was damaging to the claimant: ‘Dr Kaney [the eventual defendant in the negligence action] has found Mr Wynne Jones [the victim of the road traffic accident and the claimant in the action against Dr Kaney in the tort claim for compensation] to be very deceptive and deceitful in his reporting. He denied any previous psychological trouble or past accidents, which is inconsistent with the records or other reports. Despite enquiry he did not report to her the other road traffic accident of 28.02.2001. We therefore agree that such inconsistencies would be suggestive of conscious mechanisms and would raise doubts of whether his subjective reporting was genuine.’ 307

3.24 Discussions Between Party-Appointed Experts

97

did not have any psychiatric disorder. When questioned by the claimant’s solicitors about the discrepancy between the joint statement and her earlier assessment, the defendant said that the joint statement did not reflect what she had agreed but that she had felt under pressure to sign it. The claimant’s application to change his psychiatric expert was refused by the district judge. The claimant then settled his claim. The claimant brought proceedings in negligence against the defendant, claiming that he had settled for significantly less than he would have achieved if the defendant had not signed the unfavourable joint statement. The defendant applied to strike out this claim for negligence, on the basis that Court of Appeal authority (Stanton v. Callaghan, 2000),311 recognised expert immunity in this very context of alleged negligence in the conduct of joint experts’ discussions. On appeal from the striking out decision, a High Court judge issued a certificate (under section 12(1) of the Administration of Justice Act 1969) that the case should proceed directly to the Supreme Court, so that the Court of Appeal authority could be reconsidered. In response to this certificate, the Supreme Court (which retains ultimate control in this matter) furthermore gave permission for the case to proceed. The UK Supreme Court’s decision in Jones v. Kaney (2011)312 thus opens the door to civil claims by disgruntled parties against their chosen expert. The gist of the disgruntled party’s complaint will be that the expert has been professional negligent by failing to ‘fight that party’s corner tooth-and-nail’ and that the expert had deviated from an earlier position. No longer can that party’s chosen expert immediately defend himself by raising the shield of ‘expert witness immunity’, for this has now been removed. Jones v. Kaney (2011) is open to objection for these reasons. First, it injects the element of culpability and antagonism into the relations between the party and his or her expert. It thus induces the expert to be cautious and defensive. It is a step backwards and not an advance. Secondly, it is possible that removal of immunity will reduce the pool of experts willing to act party-appointed experts. Thirdly, it will increase the cost of employing such experts. Fourthly, the expert’s exposure to legal liability will undermine the process of achieving settlement agreements or compromises during meetings held between rival parties’ experts, or at least the opportunity during the same meetings for experts to reduce points of difference. Fifthly, it will generate ‘litigation about litigation’, and thus become a source of satellite litigation. Finally, Jones v. Kaney (2011)313 concerns the position of partyappointed experts and does not address the position of single, joint experts

311

[2000] 1 QB 75, CA. [2011] UKSC 13; [2011] 2 WLR 823. 313 Ibid. 312

98

3

First Instance Proceedings

(3.61 above). However, one commentator314 has suggested that removal of immunity extends to single, joint experts. If this is so, it will become possible for a party to seek to threaten a single, joint expert with a civil claim for negligence if he fails to change or modify his expert opinion. Thus removal of immunity from single, joint experts will create the opportunity for ‘pushy’ or aggressive litigants to apply overt or covert pressure. The courts will need to control such activity. Even if such pressure is not exerted before the single, joint expert submits his final report, removal of immunity will obviously expose that type of expert to the risk of civil actions by an aggrieved litigant. It is possible that the removal of immunity of single, joint experts might have these negative consequences: (i) it might diminish the pool of experts willing to act as single, joint experts or (ii) it might warp the integrity and threaten the transparency of this form of expert opinionwriting; and (iii) it is inevitable that Jones v. Kaney (2011)315 will increase the cost of employing such experts. Even before Jones v. Kaney (2011),316 the Court of Appeal in Meadow v. General Medical Council (2006) had held that an expert (whether he has given evidence in a criminal or civil case) can be later subjected to disciplinary proceedings before his professional body if he is alleged by that body, or some complainant, to have given expert evidence in a thoroughly unsatisfactory way.317 Witness immunity (now abolished in the case of experts, see preceding discussion in this paragraph of this 2011 development) does not protect an expert from such disciplinary proceedings. Sir Anthony Clarke MR said318 : the threat of [professional disciplinary] proceedings. . . helps to deter those who might be tempted to give partisan evidence and not to discharge their obligation to assist the court by giving conscientious and objective evidence and it helps to preserve the integrity of the trial process and public confidence both in the trial process and in the standards of the professions from which expert witnesses come. Also before Jones v. Kaney (2011),319 in Phillips v. Symes (Costs No 2) (2005) Peter Smith J held that a party-appointed expert can be ordered to pay costs wasted by his reckless or grossly negligent advice.320 The judge 314

Mark Solon (2011) New Law Journal 601. [2011] UKSC 13; [2011] 2 WLR 823. 316 Ibid. 317 [2006] EWCA Civ 1390; [2007] QB 462, reversing on the immunity point Collins J in [2006] EWHC 146 (Admin); on the general question of remedies against the defaulting expert, Blom-Cooper, ed., Experts in Civil Courts, Chap. 9 and Dwyer, ‘The Effective Management of Bias in Civil Expert Evidence,’ 57. 318 [2006] EWCA Civ 1390; [2007] QB 462, at [46]; the other members agreed, at [106] and [249]. 319 [2011] UKSC 13; [2011] 2 WLR 823. 320 [2004] EWHC 2330 (Ch); [2005] 1 WLR 2043; noted Neil Andrews [2005] Cambridge Law Journal 566. 315

3.25 Factual Witness Immunity

99

rejected the suggestion that the spectre of wasted costs liability might deter experts from giving evidence. He held that witness immunity should not preclude a wasted costs order against an expert.321 This seems persuasive, for several reasons: experts are nearly always remunerated; the present jurisdiction requires proof of ‘gross dereliction of duty or recklessness’; and the aggrieved party’s primary recourse for financial compensation is against the litigant who hired the expert (‘the hiring party’) who is alleged to have been guilty of gross dereliction of his duty.322 As for this last point, on the facts of the Phillips case, such recourse was not possible because the offending expert’s instructing party was already bankrupt. 3.83 What if one party wishes to substitute a new expert, following this process? In Stallwood v. David (2006) Teare J held that permission for a substitute should be refused, except in three situations: (i) the expert plainly acted beyond his expertise; or (ii) he was incompetent for this task; or (iii), as on the facts of the present case, the application for permission to substitute a party-appointed expert was unjustly conducted (for example, by unsympathetic comments based on the judge’s own personal experience; in the present case, the first instance judge’s autobiographical remarks on his stoical resistance to prolonged back-pain).323 The Stallwood case is attractive. Otherwise, the salutary system of experts’ discussions would soon unravel.

3.25 Factual Witness Immunity 3.84 (For abolition of expert witness immunity see 3.82 above: examining Jones v. Kaney, 2011)324 Lord Hoffmann in Arthur JS Hall v. Simons (2002) said325 : . . .a witness is absolutely immune from liability for anything which he says in court. . . .[He] cannot be sued for libel, malicious falsehood, or conspiring to give false evidence. . .The policy of this rule is to encourage persons who take part in court proceedings to express themselves freely. In the case of defamation, any witness (whether a factual 321

Jones v. Kaney [2011] UKSC 13; [2011] 2 WLR 823 has abolished immunity for civil liability towards the instructing party (see 3.82); on factual witness immunity, Arthur JS Hall v. Simons [2000] UKHL 38; [2002] 1 AC 615; Taylor v. Director of the Serious Fraud Office [1999] 2 AC 177, HL; Darker v. Chief Constable of the West Midlands Police [2000] UKHL 44; [2001] 1 AC 435. 322 For example, Re Colt Telecom Group plc [2002] EWHC 2815 (Ch), at [80] and [110], where Jacob J ordered indemnity costs against a party who selected an expert whose report was seriously defective. 323 [2006] EWHC 2600 (QB); [2007] 1 All ER 206; noted A. Zuckerman, Civil Justice Quarterly 26 (2007): 159. 324 [2011] UKSC 13; [2011] 2 WLR 823. 325 [2000] UKHL 38; [2002] 1 AC 615, 697; Edis, ‘Privilege and Immunity: Problems of Expert Evidence,’ 40; on the scope of the immunity in the context of an affidavit, Martin Walsh v. Paul Staines [2007] EWHC 1814 (Ch).

100

3

First Instance Proceedings

witness or an expert), is absolutely immune from liability for what he says in court, and Jones v. Kaney (2011)326 does not alter this defence (founded on absolute immunity) to defamation actions. 3.85 In Darker v. Chief Constable of the West Midlands Police (2001) the House of Lords distinguished (i) the false presentation of evidence in court, whether deliberately or not (if deliberate the crime of perjury arises), and (ii) out-of-court steps taken to produce false evidence, such as fabrication of evidence and conduct aimed at ‘setting up’ an accused; or destroying evidence.327 Matters falling within (ii) do not attract witness immunity. Subject to that situation, a lie told in the witness box, although attracting criminal liability for perjury, will fall within the scope of witness immunity and so such evidence will not expose the witness to civil liability, for example in tort.

3.26 Trial 3.86 Trial is the beginning of the ‘end-game’ of litigation before the courts. However, the historical centre-piece of the Common Law civil process has been ‘trial’. In the nineteenth century Common Law courts in England, trial was an oral hearing before a judge and jury. In the United States of America civil trial before juries remains a constitutional right. England has been more pragmatic. Nowadays English civil trials are hardly ever before a jury (except in unusual cases concerning defamation claims (and even here there is the possibility of trial by judge alone),328 or actions for compensation involving ‘malicious prosecution’ or ‘false imprisonment’, normally brought against the police).329 Many actions end without trial. But, in a small percentage of cases, trial is the culmination of the process. Thereafter, provided the claim is successful, enforcement proceedings might be brought, for example, to obtain satisfaction of a judgment debt. Enforcement is also possible if judgment in favour of the claimant has been obtained by some other means, for example, by summary process, by ‘default judgment’, or judgment has been obtained because a defence has been dismissed following the defendant’s failure to satisfy an ‘unless order’, or a ‘consent judgment’ has been entered. A final judgment on the merits of the case has a binding effect, as between the parties. The topic of ‘finality’, especially res judicata, is part of this ‘end-game’, therefore. Apart 326

[2011] UKSC 13; [2011] 2 WLR 823. [2001] 1 AC 435, HL; similarly, L (A Child) v. Reading BC [2001] EWCA Civ 346; [2001] 1 WLR 1575, 1593, CA. 328 Fiddes v. Channel Four Television Corpn [2010] EWCA Civ 730; [2010] 1 WLR 2245 (volume of video footage rendering trial by jury inappropriate) 329 Andrews, English Civil Procedure, 34-06 ff. 327

3.26

Trial

101

from appeals, for which permission is required, English law is opposed to unnecessary re-litigation of the same issues and claim. 3.87 In modern times, civil trials in England are almost invariably heard by a judge sitting alone without a jury.330 The judge will have read a ‘trial bundle’ in preparation for the hearing. This will comprise331 : the claim form and statements of case; a case summary; witness statements ‘to be relied on as evidence’ and witness summaries; hearsay evidence notices; plans, photographs etc.332 ; medical reports and responses to them, and other expert reports and responses; any order giving directions as to the conduct of the trial. In large actions, a core bundle must also be prepared.333 It is interesting to note that in Scotland jury trial is still available for personal injury litigation. This has the effect of increasing the amount of some awards.334 3.88 Normally trial (and appeal)335 must be in public.336 To protect a person’s safety,337 the court can order that the identity of a party or of a witness must not be disclosed.338 The courts are prepared to allow a party to give evidence by video-link, normally from abroad.339 330

Jury trial in England is now confined to serious criminal cases (for example, murder, rape, armed robbery) and civil actions for defamation or misconduct by the police (the torts of defamation, malicious prosecution, and false imprisonment): Andrews, English Civil Procedure, 34-06 ff; as long ago as 1966, it became clear that the courts will unwilling to back-track on the modern trend to confine jury trial to these special categories of claim, Ward v. James [1966] 1 QB 273, CA (applied H v. Ministry of Defence [1991] 2 QB 103, CA; Heil v. Rankin [2001] QB 272, CA, at [25]); for the constitutional guarantee of jury trial in most civil claims in the USA, see G. Hazard and M. Taruffo, American Civil Procedure (New Haven, CT: Yale University Press, 1993), 128 ff. 331 PD (39) 3.2. 332 The notice requirement is strict: CPR 33.6(3). 333 PD (39) 3.6. 334 A. Hajducki, Civil Jury Trials (2nd edn, Edinburgh: Avizandum, 2006). 335 Three Rivers DC v. Bank of England [2005] EWCA Civ 933; [2005] CP Rep 47. 336 For exceptions, CPR 39.2(1), CPR 39.2(3), and PD (39) 1.5; the primary source is Senior Courts Act 1981, s 67; J. Jaconelli, Open Justice (Oxford University Press, 2002); J. Jacob, Civil Justice in the Age of Human Rights (Aldershot: Ashgate, 2007), Chap. 2; on the question of exceptional restrictions on publicity in respect of pre-trial hearings and judgments concerning interim decisions, Browne v. Associated Newspapers Ltd [2007] EWCA Civ 295; [2008] QB 103 at [2] to [5]. 337 But the physical frailty of a witness was not a sufficient reason in Three Rivers DC v. Bank of England [2005] EWCA Civ 933; [2005] CP Rep 47. 338 CPR 39.2(4); PD (39) 1.4A emphasises the need to consider the requirement of publicity enshrined in Art 6(1) of the European Convention on Human Rights (incorporated into English law, Human Rights Act 1998, Sch 1). 339 Polanski v. Condé Nast Publications Ltd [2005] UKHL 10; [2005] 1 WLR 637; McGlinn v. Waltham Contractors Ltd [2006] EWHC 2322 (TCC); in neither case was the relevant absentee’s reason for not coming to England held to bar use of video-linking (respectively, avoidance of extradition to the USA, and avoidance of tax liability within the UK).

102

3

First Instance Proceedings

3.89 The trial proceeds as follows: (i) counsel’s opening speech (although this can be dispensed with)340 ; (ii) examination-in-chief of the claimant’s witnesses (although this will not be oral where, as usual, the witness statement is received as a substitute for oral testimony)341 ; (iii) cross-examination of the claimant’s witnesses by the defendant’s counsel; (iv) re-examination of witnesses (at this stage exceptionally the court will dismiss the claim on the basis that the defendant has ‘no case to answer’)342 ; (v) examination-in-chief of defendant’s witnesses (although this will not be oral where, as usual, the witness statement is received as a substitute for oral testimony, see (ii) above); (vi) cross-examination of the same by claimant’s counsel; (vii) re-examination of same; (viii) defendant counsel’s final speech; (ix) claimant counsel’s final speech (the reason this is the last party intervention at trial is that the claimant bears the burden of proof, and so deserves to have the last say); (x) judgment343 ; (xi) an order for costs, including in appropriate cases a summary assessment of costs.344 In the event that the defendant does not appear at trial, judgment might be entered for the claimant, or the court might proceed to consider evidence, despite the defendant’s absence.345 The latter course will be necessary if the amount of damages or other pecuniary relief has still to be determined. The claimant’s lawyers will be required to present arguments favourable to

340

Fast-track: PD (28) 8.2; multi-track: PD (29) 10.2; detailed account: Andrews, English Civil Procedure, 31.21 to 31.24. 341 CPR 32.5(2). 342 In Graham v. Chorley Borough Council [2006] EWCA Civ 92; [2006] CP Rep 24, at [29] ff, Brooke LJ explained (noting Benham Ltd v. Kythira Investments Ltd [2003] EWCA Civ 1794 at [32], [36]) that a ‘no case to answer’ judgment for the defendant without hearing the defendant’s evidence is highly perilous (e.g., in the Graham case, the judge’s decision in favour of the claimant was set aside and a re-trial ordered); cross-examination of the defendant’s witnesses might have strengthened the claimant’s exiguous case; before reaching ‘the no case to answer’ decision, the judge must give appropriate weight to the fact that the defendant elected not to call his own witnesses (drawing ‘adverse inferences’). 343 Or a direction to the jury; on judgments, CPR 40 and PD (40); on the court’s discretion whether to complete the giving of judgment once it has begun to deliver it (or after it has delivered it in draft form) Prudential Assurance Co v. McBains [2000] 1 WLR 2000, CA; on the court’s power to re-open a case before perfecting a judgment, Stewart v. Engel [2000] 1 WLR 2268, CA. 344 CPR 44.3, 44.7(a). 345 Braspetro Oil Services Co v. FPSO Construction Inc [2007] EWHC 1359 (Comm), Cresswell J observing at [32] and [33]: ‘In view of [the defendant’s] non-attendance at the trial, the Court has adopted an approach which reflects the approach followed, for example, in Habib Bank Ltd v. Central Bank of Sudan [2006] EWHC 1767 (Comm); [2006] 2 Lloyd’s Rep 412. I have required [the claimant] to draw to the Court’s attention points, factual or legal, that might be to the benefit of [the defendant]. I am satisfied that [the claimant’s lawyers] have complied with this direction throughout the hearing.’

3.27 Evidence at Trial

103

the other side, in a manner analogous to the applicant’s role during a ‘without notice’ application. The courts continue to exhort counsel to be brief in the composition of ‘skeleton arguments’ and the compilation of written materials in support of trial.346

3.27 Evidence at Trial 3.90 Factual witness testimony is the main source of evidence at trial.347 Witnesses can be compelled to attend a trial (or other hearing) by the issue of a ‘witness summons’.348 The witness must be offered compensation for his travel to and from court, and for loss of time.349 The procedure for receipt of witness evidence is as follows. A proposed witness’s testimony (his so-called ‘evidence-in-chief’) must be prepared in written form, signed, and served on the other parties.350 In support of this ‘witness statement’, the witness or his legal representative must supply a ‘statement of truth’. This is a solemn indication that the contents of the witness statement have been presented honestly. A modified ‘statement of truth’ applies to an expert’s report.351 In all these situations an untruthful ‘statement of truth’ carries serious consequences. It is an act of contempt of court to make, or to cause to be made, a dishonest statement of truth.352 Normally, in the interest of economy, a witness statement will be received as evidence. This will dispense with the need for the witness to give oral evidence on behalf of the party who has called him (so-called ‘examination-in-chief’), although the court can allow the witness orally to amplify his statement and to introduce matters which have subsequently arisen.353 Former Senior Master Robert Turner (at a Cambridge seminar, February 2009) has commented on this process as follows. First he notes that the old system, before use of witness statements, was defective because (i) the witness relied solely on his memory of remote events, lacking the opportunity to compose his thoughts on paper (ii) his account was solely dependent on the selective questioning of his counsel and the opponent’s counsel. A narrative, coherent and perhaps nuanced, did not emerge. As for the system of witness statements, Senior 346

Khader v. Aziz [2010] EWCA 716; 2010] 1 WLR 2673. Andrews, English Civil Procedure, 31.41 to 31.51. 348 This phrase replaces the terms ‘subpoena ad testificandum’ (order to attend to give oral evidence) and ‘subpoena duces tecum’ (order to attend with relevant documents or other items): CPR 34.2. 349 CPR 34.7; PD (34) 3, referring to provisions applicable also to compensation for loss of time in criminal proceedings. 350 CPR 32.10. 351 CPR 22.1(1)(c), 22.3. 352 CPR 32.14. 353 CPR 32.5(2)(3)(4). 347

104

3

First Instance Proceedings

Master Robert Turner suggests: an intelligent judge will ask a witness one or two questions concerning his witness statement. This will show (a) that the judge has read the document (b) help to put the witness at ease (c) valuably supplement the bare written account. 3.91 At the trial, the witness will give evidence on oath (or a secular equivalent, an ‘affirmation’).354 The crime of perjury is committed if false evidence is deliberately given by a witness at trial. Conviction can result in imprisonment or fines. The witness will answer questions posed by that opponent’s lawyer (whether a barrister or other type of advocate). This process of intense questioning is known as ‘cross-examination’. During this oral process, the court does not itself conduct the examination of witnesses. Instead the judge is expected to listen to the parties’ presentation of evidence. However, the judge might intervene to seek clarification, especially to assist a litigant in person (a party who is unassisted by a lawyer). It is a breach of procedure for the judge persistently to interrupt. The Court of Appeal in 2006 affirmed the practice of passive reception of evidence by a judge. The court declared that if the judge were to intervene excessively, he would then ‘arrogate to himself a quasi-inquisitorial role’, something which is ‘entirely at odds with the adversarial system.’355 3.92 The next most important source of evidence is ‘documentary evidence’, which covers paper-based or electronically recorded information. ‘Real evidence’ refers to ‘things’, such as the physical objects or site relevant to the case, or body samples. As for ‘expert evidence’, this has been examined at 3.55 above. 3.93 The court at trial has powers of ‘evidential veto’ in the following respects: ‘the issues on which it requires evidence’, ‘the nature of the evidence which it requires’, ‘the way in which evidence is to be placed before the court’356 ; excluding admissible evidence; limiting crossexamination357 ; restricting the number of witnesses (both lay and expert) used by each party358 ; restricting the time devoted to examining witnesses. These powers must be exercised with caution.359 Preliminary questions of

354

On affirmations, PD (32) 16. Southwark London Borough Council v. Kofi-Adu [2006] EWCA Civ 281; [2006] HLR 33, at [148]. 356 CPR 32.1(1); GKR Karate (UK) Ltd v. Yorkshire Post Newspapers Ltd [2000] 2 All ER 931, CA. 357 CPR 32.1(2)(3); Grobbelaar v. Sun Newspapers Ltd The Times 12 August, 1999, CA (prolix defence in libel action); Three Rivers DC v. Bank of England [2005] EWCA Civ 889; [2005] CP Rep 46 (upholding the Commercial Court judge’s humane restriction in a long-running trial). 358 Fast-track: CPR 28.3(1) and PD (28) 8.4; CPR 32.1 (all tracks). 359 A. Colman (with V. Lyon and P. Hopkins), The Practice and Procedure of the Commercial Court (5th edn, London: Lloyd’s of London Press, 2000), 218–9, especially curtailment of the power to cross-examine the other party’s witnesses; S. Sugar and R. Wilson, eds., Commercial and Mercantile Courts Litigation Practice. 355

3.27 Evidence at Trial

105

law or fact can be separated from other matters, in the interest of economy.360 Appeals are unlikely to succeed against such trial management orders aimed at marshalling the issues.361 3.94 There has been much ‘modernising’ of civil evidence during the last few decades. The impetus for these reforms has been the civil jury’s virtual disappearance in modern English practice.362 And so various ‘exclusionary rules’, designed to protect the civil jury against ‘potentially unreliable’ material, have been removed or profoundly modified. 3.95 These developments are consistent with a perceived global trend towards ‘free evaluation’ of evidence. American Law Institute/UNIDROIT’s Principles of Transnational Civil Procedure has recognised this concept.363 These English evidential changes will now be listed. The English ‘hearsay rule’ used to provide a barrier to admitting relevant evidence. This rule concerned second-hand or remoter reports of oral statements (for example, if the defendant wished to adduce evidence, through one of his witnesses, who proposed to state that ‘the claimant told me that his wife had said, “let’s concoct a claim against these people”’). The hearsay rule also concerned documents composed out-of-court. But there has now been a fundamental change. Since 1995, statute has allowed a party to use out-of-court oral statements, and documents, as evidence: ‘In civil proceedings evidence shall not be excluded on the ground that it is hearsay’, that is, ‘a statement made otherwise than by a person giving oral evidence.’364 Instead, the court must to assess the ‘weight’ to be attached to the hearsay evidence. The judge is here guided by various considerations. These include: ‘whether it would have been reasonable and practicable for the party by whom the [hearsay] evidence was adduced to have produced the maker of the original statement as a witness’ and ‘whether any person involved had any motive to conceal or misrepresent matters’; and ‘whether the original statement was an edited account, or was made in collaboration with another.’365 360

CPR 3.1(2)(j)(l); for the pre-CPR emergence of this aspect of trial management, Ashmore v. Corporation of Lloyd’s [1992] 1 WLR 446, HL; Thermawear Ltd v. Linton The Times 20 October, 1995, CA. 361 Ward v. Guinness Mahon plc [1996] 1 WLR 894, CA, Grupo Torras Sa v. Al Sabah (No 2) The Times 17 April, 1997, CA. 362 On the historical influence of trial by judge and jury, Andrews, English Civil Procedure, 34-06 ff; the jury no longer sits in English civil trials except in actions for defamation, or in claims of false imprisonment or malicious prosecution; see ibid. for details. 363 Rule 25 in American Law Institute/UNIDROIT’s Principles of Transnational Civil Procedure (Cambridge: Cambridge University Press, 2006), 137 ff. 364 Civil Evidence Act 1995, s 1. 365 Ibid., 1995 Act, s 4; in Polanski v. Condé Nast Publications Ltd [2005] UKHL 10; [2005] 1 WLR 637, at [36], Lord Nicholls said: ‘The principle underlying the Civil Evidence Act 1995 is that in general the preferable course is to admit hearsay evidence,

106

3

First Instance Proceedings

3.96 Two other evidential rules have been radically transformed. First, the so-called ‘best evidence rule’ has been abandoned. A person is no longer obliged to produce the original version of a document. He can instead tender a copy. However, he must provide a satisfactory explanation for his inability to produce the original.366 Another change is that ‘similar fact’ evidence is now admissible in civil cases. And so the court can legitimately take into account the fact that very similar events have occurred. Such coincidence can be relevant by tending to weaken a party’s case.367 3.97 What if evidence has been improperly obtained? If evidence (which is not privileged material) has been obtained unlawfully, unfairly, or in violation of a party’s rights, the court will ‘balance’ the heinousness of the way it was collected against its relevance and weight if admitted into evidence. There are no hard-and-fast rules here, as Jones v. University of Warwick (2003) illustrates.368 In this case, the claimant alleged that she had suffered a serious disabling injury to her hand. The defendant did not accept this. Its investigator gained access to the claimant’s home, posing as a market researcher, and took secret video evidence of the claimant’s use of her injured hand in her home.369 Lord Woolf CJ in the Court of Appeal held that, on balance, the evidence should be admitted. In the court’s view, the manner of its collection had not been especially ‘outrageous’.

and let the court attach to the evidence whatever weight may be appropriate, rather than exclude it altogether. This applies to jury trial [in civil cases] as well as trials by judge alone. . ..’; S. Salako, ‘The Hearsay Rule and the Civil Evidence Act 1995: Where are we Now?’ Civil Justice Quarterly 19 (2000): 371. 366 In Springsteen v. Masquerade Music Ltd [2001] EWCA Civ 513; [2001] Entertainment and Media LR 654, CA, Jonathan Parker LJ explained: ‘the time has now come when it can be said with confidence that the best evidence rule, long on its deathbed, has finally expired. In every case where a party seeks to adduce secondary evidence of the contents of a document, it is a matter for the court to decide, in the light of all the circumstances of the case, what (if any) weight to attach to that evidence.’ 367 O’Brien v. Chief Constable of South Wales Police [2005] UKHL 26; [2005] 2 AC 534. 368 [2003] EWCA Civ 151; [2003] 1 WLR 954, CA. 369 This involved a tort (trespass) and an invasion of privacy (as recognised by Article 8 of the European Convention on Human Rights).

Chapter 4

Appeals and Finality

Contents 4.1 Appeals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.2 Res Judicata: ‘Cause of Action Estoppel’ and ‘Issue Estoppel’ . . . . . . . . 4.3 Preclusion of Points That Should Have Been Raised: The Rule in Henderson v. Henderson (1843) . . . . . . . . . . . . . . . . . . . . 4.4 Other Aspects of Finality . . . . . . . . . . . . . . . . . . . . . . . . .

107 115 118 119

4.1 Appeals 4.01 Nearly all appeals require the court to give its permission (formerly known as ‘leave’),1 in response to the appellant’s speedy request to the first instance court (normally within 21 days2 ; a period which cannot be

Neil Andrews, English Civil Procedure (Oxford University Press, 2003), Chap. 38; Sir Henry Brooke, D. di Mambro, and L. di Mambro, eds., Manual of Civil Appeals (2nd edn, London: Lexis Nexis, 2004); J. Leabeater, and others, Civil Appeals: Principle and Procedure (London: Sweet & Maxwell, 2010); CPR Part 52 was examined in Tanfern Ltd v. Cameron-MacDonald [2000] 1 WLR 1311, 1314–21, CA; on the system requiring ‘permission’ in nearly all cases, I.R. Scott (1999) 18 Civil Justice Quarterly 91; for background, Review of the Court of Appeal (Civil Division) (report to Lord Chancellor, September 1997; the ‘Bowman Report’); for US comparison, P.S. Atiyah and R. Summers, Form and Substance in Anglo-American Law (Oxford University Press, 1987), Chap. 10; for reflections on the private and public functions of civil appeals, especially in the highest chamber, reports by J.A. Jolowicz, P.-H. Lindblom, and S. Goldstein in The Role of the Supreme Courts at the National and International Level, ed. P. Yessiou-Faltsi (Thessaloniki, Greece, 1998); for comparative perspectives on appeals, J.A. Jolowicz, On Civil Procedure (Cambridge University Press, 2000), Chap.’s 14 to 16. 1

CPR 52.3(1): except decisions affecting a person’s liberty. CPR 52.4(2); appeals out of time will only exceptionally be permitted: Smith v. Brough [2005] EWCA 261; [2006] CP Rep 17.

2

N. Andrews, The Three Paths of Justice, Ius Gentium: Comparative Perspectives on Law and Justice 10, DOI 10.1007/978-94-007-2294-1_4, C Springer Science+Business Media B.V. 2012

107

108

4 Appeals and Finality

extended by party agreement).3 If the lower court refuses permission, a fresh application for permission can be made to the appeal court. In general,4 an appeal proceeds to the next level of civil judge (district judge to circuit judge, Master to High Court judge, circuit judge to High Court judge, High Court judge to Court of Appeal).5 4.02 There is scope for a second appeal, but only if the appeal ‘would raise an important point of principle or practice’ or there is ‘some other compelling reason’ for the Court of Appeal to hear it.6 A second or even third level of appeal lies from the Court of Appeal to the Supreme Court (formerly the House of Lords). But a leap-frog procedure exists directly from the High Court to the Supreme Court in appropriate cases, notably where there is a precedent binding on the Court of Appeal, both parties assent to the proposed leap-frog, and the point is one of general public importance. For example, in Jones v. Kaney (2010),7 Blake J issued a certificate for the Supreme Court to hear (subject to the Supreme Court itself granting permission), under the leap-frog procedure,8 an appeal concerning the merits of Stanton v. Callaghan (2000, CA), which applies witness immunity to the deliberations and conclusions made by party-appointed experts during a ‘meeting’ of experts under CPR Part 35. 4.03 The United Kingdom Supreme Court,9 established by the Constitutional Reform Act 2005, is the highest appeal court within the

3

CPR 52.6(1) (2). There are special rules allowing some appeals to ‘hop’ a level of appeal and be fastrouted to the Court of Appeal, or even to the UK Supreme Court. 5 PD (52). 6 CPR 52.13; Sir Henry Brooke, di Mambro, and di Mambro, eds., Manual of Civil Appeals (2nd edn, London, 2004), 4.88 ff. 7 [2010] EWHC 61 (QB); [2010] 2 All ER 649; [2010] PNLR 18. 8 s 12, Administration of Justice Act 1969. 9 L. Blom-Cooper, B. Dickson, and G. Drewry, eds., The Judicial House of Lords: 1876– 2009 (Oxford: Oxford University Press, 2009); A. Le Sueur, ed., Building the UK’s New Supreme Court: National and Comparative Perspectives (Oxford: Oxford University Press, 2004); K. Malleson, in Reinventing Britain: Constitutional Change under New Labour, ed. A. McDonald (3rd edn, London: Tottel, 2007), Chap. 6; D. Morgan, ed., Constitutional Innovation: The Creation of a Supreme Court for the United Kingdom (London, 2004) (Special Issue of Legal Studies); D. Oliver, Constitutional Reform in the UK (Oxford: Oxford University Press, 2003), Chap. 18; A. Paterson, The Law Lords (London, 1982); Robert Stevens, The English Judges: Their Role in the Changing Constitution (Oxford: Hart, 2002), Chap.’s 9, 10; Robert Stevens, Law and Politics: the House of Lords as Judicial Body 1800–1976 (London: Weidenfeld & Nicolson, 1979); T. Bingham, ‘The Old Order Changeth,’ Law Quarterly Review 122 (2006): 211; T. Bingham, ‘The Evolving Constitution,’ EHRLR (2002): 1; B. Hale, ‘A Supreme Judicial Leader’, in Tom Bingham and the Transformation of the Law: A Liber Amicorum, eds. M. Andenas and D. Fairgrieve (Oxford: Oxford University Press, 2009), 209; B. Hale, ‘A New Supreme Court for the United Kingdom,’ LS 24 (2004): 36; R. Cooke, ‘The Law Lords: An Endangered Species,’ Law Quarterly Review 119 (2003): 49; J. Steyn, 4

4.1 Appeals

109

United Kingdom, replacing the Appellate Committee of the House of Lords. The Supreme Court sat for the first time in October 2009. It is the highest appellate court for all civil cases within the United Kingdom. It is also the final point of appeal for criminal cases in England, Wales and Northern Ireland (in Scotland, the High Court of Justiciary continues to have ultimate jurisdiction over criminal cases). The Supreme Court has also assumed the devolution jurisdiction of the Judicial Committee of the Privy Council. It has twelve Justices, including a President, currently Lord Phillips. The first Justices were the Law Lords who made up the Appellate Committee of the House of Lords as at July 2009. The new court’s Justices are disqualified from sitting or voting in the Parliamentary debates of the House of Lords. Appointment as a Justice of the new court is made by Her Majesty the Queen following a series of recommendations. The formal criteria of eligibility are: that the appointee should have (at any time) held high judicial office for a period of at least 2 years, or been a qualifying practitioner for a period of at least 15 years.10 It is possible, therefore, for a Justice to be selected from the ranks of the Bar or the solicitor profession. Baroness Hale acknowledged in a 2004 journal article that there is no reason why a Supreme Court Justice should have spent time ‘in the trenches’ as a trial judge.11 She advocated selection from a wider base than the Court of Appeal or the High Court. In May 2011 Jonathan Sumption QC, on his second application (he had withdrawn his first application), was appointed to the United Kingdom Supreme Court straight from the Bar, although he had gained some experience as a judge when sitting as a part-time Deputy High Court judge.12 4.04 The Supreme Court, like its predecessor the House of Lords, has power to declare the law authoritatively for the courts in England and Wales and, in appropriate matters, for other parts of the United Kingdom. The Supreme Court’s decisions will be binding on all lowers courts. But the court is not intended to have any different powers than the House of Lords. As Lord Neuberger says, there was plainly no intention to create a Constitutional Court; that is to say, one that can carry out constitutional judicial review of legislative action, as opposed to executive action. So, it is not intended that the new court should be able to strike down legislation

‘The Case for a Supreme Court,’ Law Quarterly Review 118 (2002): 382; D. Neuberger, ‘The Supreme Court: Is the House of Lords “Losing Part of Itself”’ (2 December 2009; available on line: http://www.judiciary.gov.uk/publications_media/speeches/index.htm); Shimon Shetreet, ‘The Normative Cycle of Shaping Judicial Independence in Domestic and International Law. . ..,’ Chicago Journal of International Law 10 (2009): 275–332. 10 s 25(1), Constitutional Reform Act 2005. 11 Hale, ‘A New Supreme Court for the United Kingdom,’ 36, 41. 12 http://ukscblog.com/supreme-court-appointments-sumption-and-wilson-officiallyconfirmed.

110

4 Appeals and Finality

on the ground of unconstitutionality.13 The Supreme Court will continue to follow decisions of the House of Lords or its own decisions. But there is the safety-valve of the 1966 Practice Statement,14 which permits the highest court to overrule itself if there has been a significant change of legal perception on a decided point. According to Louis Blom-Cooper’s study, between 1966 and 2009 at least 21 House of Lords decisions were overruled or disregarded in accordance with this exceptional licence to deviate from precedent.15 The Supreme Court lacks the power to invalidate an Act of Parliament.16 But the courts can declare a statute to be incompatible with the Human Rights Act 1998 (and it is then the task of Government to take appropriate steps to rectify the provision).17 In A v. Secretary of State for the Home Department (2005) a nine-judge House of Lords held that the provisions of the Anti-terrorism, Crime and Security Act 2001, which gave the Home Secretary power to detain foreign nationals suspected of terrorism without charge or trial, were incompatible with Convention rights.18 4.05 The Supreme Court, however, directly controls the flow of cases to the highest chamber.19 It will grant permission for final appeal only if its appeal panel is persuaded that the case raises an issue of public or other special importance. In Callery v. Gray (Nos 1 and 2) (2002) it declared it would prefer not to become embroiled in matters of ‘practice’, notably in the field of conditional fee agreements, but in Campbell v. MGN (No 2) (2005) it heard such an appeal.20 There is no right of appeal to the Supreme Court. Since 1934, the House of Lords had employed the salutary 13

D. Neuberger and D. Neuberger, ‘The Supreme Court: Is the House of Lords “Losing Part of Itself”’ (2 December 2009; available on line: http://www.judiciary.gov. uk/publications_media/speeches/index.htm), at [19]. 14 L. Blom-Cooper, ‘1966 and All That: The Story of the Practice Statement’, in L. BlomCooper, B. Dickson, and G. Drewry, eds., op. cit., at128; ibid., 239, 271–2. 15 L. Blom-Cooper, ibid., at 143–4; ibid. at 271–2; B. Harris, ‘Final Appellate Courts Overruling Their Own “Wrong” Precedents: The Ongoing Search for Principle,’ Law Quarterly Review 118 (2002): 408; J.W. Harris, ‘Towards Principles of Overruling. . .,’ OJLS 10 (1990): 135. 16 Jackson v. Attorney General [2005] UKHL 56; [2006] 1 AC 262, HL, at [9], per Lord Bingham: the bedrock of the British constitution is. . .the supremacy of the Crown in Parliament [which can]. . . . make or unmake any law it wished. 17 s 4, Human Rights Act 1998; on which D. Feldman, ‘Human Rights’ in L. Blom-Cooper, B. Dickson, and G. Drewry, eds., op. cit., at 558–9. 18 [2004] UKHL 56; [2005] 2 AC 68, HL. 19 B. Dickson, ‘The Processing of Appeals in the House of Lords,’ Law Quarterly Review 123 (2007): 570, especially at 570–88. 20 Callery v. Gray (Nos 1 and 2) [2002] UKHL 28; [2002] 1 WLR 2000, at [8], per Lord Bingham, referring to the conditional fee context: ‘. . .responsibility for monitoring and controlling the developing practice in a field such as this lies with the Court of Appeal and not the House, which should ordinarily be slow to intervene. The House cannot respond to changes in practice with the speed and sensitivity of the Court of Appeal, before which a number of cases are likely over time to come. . .’; and, ibid., at [17], per

4.1 Appeals

111

self-protection of a moat and portcullis: the requirement of ‘leave to appeal’, nowadays known as ‘permission’.21 The practice survives. The Supreme Court will normally decide itself which cases to hear (unless—and this is likely to remain quite rare—the court below has already granted permission). All applications for permission are first received and considered on paper. But an oral hearing of the application can be ordered. Permission can be confined to specified issues.22 If permission is refused, the court gives only formulaic23 reasons for this refusal. The Supreme Court, like its predecessor the House of Lords, is unlikely to hear more than 80 appeals a year. Most of these will concern non-criminal matters. During the last decade of the House of Lords, there was an increase in appeals concerning constitutional or human rights issues, David Feldman calculating that between 2002 and 2008 human rights matter occupied 37.5 per cent of the House’s total case load,24 and Drewry and Blom-Cooper suggesting a figure for public law cases during 2003–7 of 35 per cent.25 The era when a third of the House of Lords’ work concerned tax appeals has long ago ended.26 4.06 Returning to the question of civil appeals in general, a court will allow an appeal when it concludes that the lower court’s decision was ‘wrong’ or ‘unjust because of a serious procedural or other irregularity in the proceedings in the lower court’.27 On matters of law, appellate courts are

Lord Hoffmann: ‘The Court of Appeal is traditionally and rightly responsible for supervising the administration of civil procedure. This is an area in which your Lordships have in the past seldom intervened and, it must be said, the few exceptions to this policy of self-restraint have usually tended to confirm the wisdom of the general practice.’ Campbell v. MGN (No 2) [2005] UKHL 61; [2005] 1WLR 3394; more generally, see the observations of Lord Woolf in Boake Allen Ltd v. Revenue and Customs [2007] UKHL 25 at [28] concerning the House of Lords’ ‘deference’ to the Court of Appeal on questions of ‘practice and procedure’ (‘. . .because the members of the [Court of Appeal] have had more recent experience of those issues than members of this House’); for discussion of the ‘leap-frog’ mechanism, enabling appeals to proceed straight to the House of Lords without a hearing before the Court of Appeal (under ss 12, 13, Administration of Justice Act 1969), R (on the application of Jones) v. Ceredigion County Council [2007] UKHL 24; [2007] 3 All ER 781. 21 Blom-Cooper, Dickson, and Drewry, eds., The Judicial House of Lords: 1876–2009, 52 ff; 235; and on occasional ‘leap-frogging’ from High Court to House of Lords, 57 ff. 22 The Supreme Court Rules 2009 (SI 2009/1603), rule 10. 23 James Vallance White, ‘in the opinion of the Committee the petition did not disclose a point of law which merited an appeal to the House’, in L. Blom-Cooper, B. Dickson, and G. Drewry, eds., op. cit., at 44. 24 D. Feldman, ‘Human Rights,’ in The Judicial House of Lords: 1876–2009, eds. L. BlomCooper, B. Dickson, and G. Drewry (Oxford: Oxford University Press, 2009), 546. 25 Ibid., 53 26 1952–68, tax accounted for more than 30 per cent of the House’s appeals: L. BlomCooper and G. Drewry, op. cit., at Table 11; cited ibid. at 52; but in 2001–7, this work had fallen to 7 per cent, ibid. (2009), 53. 27 CPR 52.11(3).

112

4 Appeals and Finality

fully prepared, indeed obliged, to make corrections. However, in general, the courts are most reluctant to hear appeals on ‘academic’ or ‘hypothetical’ points, namely matters which are of no immediate and direct concern to the parties. But an exception to this can arise if the point of law is of general public importance.28 It has been suggested that video-conferencing should be used for short appeals.29 4.07 As for the appeal courts’ treatment of factual issues, there are three main aspects: (1) the appellate court’s receipt of ‘fresh evidence’; (2) the appellate court’s consideration of factual determinations made at first instance; (3) the appeal court’s unwillingness to receive oral evidence. On this third point, it should be noted that, in general,30 only a first instance court will hear live testimony; for this reason, if it turns out that a just response to questions (1) or (2) requires consideration of oral evidence, the appeal court will normally remit the matter to a first instance court. Questions (1) and (2) will now be elaborated. 4.08 As for ‘fresh evidence’, the court will not normally consider new evidence which was in fact clearly or reasonably available for presentation at trial. The guiding principles are: (i) ‘the evidence could not have been obtained with reasonable diligence for use at the trial’; (ii) the new evidence would ‘probably have an important influence on the result of the case, though it need not be decisive’; (iii) the new evidence must also be ‘credible, though it need not be incontrovertible.’31 4.09 As for the question of possible re-assessment of findings of fact, the appeal court can ‘draw any inference of fact which it considers justified on the evidence’.32 But that court will be slow to reconsider the lower 28

Bowman v. Fels [2005] EWCA Civ 226; [2005] 1 WLR 3083, at [7], where Brooke LJ said of the present appeal: ‘The issue at the heart of the appeal is, however, an issue of public law of very great importance which is causing very great difficulties in solicitors’ offices and barristers’ chambers and in the orderly conduct of contested litigation through the country.’ And Brooke LJ, ibid., noted the following leading decisions: Sun Life Assurance Co of Canada v. Jervis [1944] AC 111, 113–4, HL per Viscount Simon LC and Ainsbury v. Millington (Note) [1987] 1 WLR 379, 381, HL, per Lord Bridge of Harwich; R v. Secretary of State for the Home Department ex p Salem [1999] 1 AC 450, 456 G-H, HL, per Lord Slynn of Hadley. 29 Black v. Pastouna [2005] EWCA Civ 1389; [2006] CP Rep 11, per Brooke LJ. 30 CPR 52.11(2). 31 Passages just cited are re-stated in Riyad Bank v. Ahli United Bank (UK) plc [2005] EWCA Civ 1419 at [26] ff (noting that these ‘Ladd v. Marshall’ (1954) pre-CPR principles were re-adopted in Hamilton v. Al Fayed The Times 13 October, 2000, CA); CPR 52.11(2). In the Riyad case, ibid., at [28] it was added that ‘the Court of Appeal should be particularly cautious where what is intended is to put in, in effect, further cross-examination of a witness, including an expert, where that expert or witness has been cross-examined at a trial.’ On fresh evidence, a fundamental overview is Noble v. Owens [2010] EWCA Civ 224; [2010] 1 WLR 2491; Leabeater, and others, Civil Appeals: Principle and Procedure, 6-024–6-027. 32 CPR 52.11(4).

4.1 Appeals

113

court’s so-called ‘conclusions of primary fact’. The appellate court’s deference to the trial court’s ‘findings of primary fact’, a somewhat complex topic, will now be explained. It has been attractively explained that the appellate court’s capacity to re-open findings of fact depends on the manner in which the first instance court has reached the relevant finding33 : ‘In appeals against conclusions of primary fact the approach of an appellate court will depend upon the weight to be attached to the findings of the judge and that weight will depend upon the extent to which, as the trial judge, the judge has an advantage over the appellate court; the greater that advantage the more reluctant the appellate court should be to interfere.’34 The ‘advantage’ is the lower court’s monopoly (under modern practice) upon hearing live testimony. In the leading analysis of this context, Clarke LJ distinguished various categories of ‘conclusions of primary fact’35 : those based almost entirely upon. . .the oral evidence of the witnesses; or based partly [on] oral evidence and partly [on] analysis of the documents; or based entirely or almost entirely on the documents; or findings reached as the result of inference from direct evidence of such facts; or some conclusions of fact are, however, not conclusions of primary fact but involve an assessment of a number of different factors which have to be weighed against each other; this is an evaluation of the facts and a matter of degree upon which different judges can legitimately differ; such first instance determinations may be closely analogous to the exercise of a discretion and, in my opinion, appellate courts should approach them in a similar way.36 4.10 In dealing with these categories, the correct approach is as follows37 : ‘Once the appellant has shown a real prospect (justifying permission to appeal) that a finding or inference is wrong, the role of an appellate court is to determine whether or not this is so, giving full weight of course to the

33

Datec Electronics Holdings Ltd v. United Parcels Services Ltd [2007] UKHL 23; [2007] 1 WLR 1325, at [46], Lord Mance, quoting Clarke LJ in Assicurazioni Generali SpA v. Arab Insurance Group [2002] EWCA Civ 1642; [2003] 1 All ER (Comm) 140; [2003] 1 WLR 577, CA (in the Datec case itself, the trial judge’s findings of fact were reversed by the Court of Appeal, and the House of Lords held that the Court of Appeal’s decision was justified. 34 Assicurazioni Generali, ibid., at [15], per Clarke LJ. 35 Ibid., at [14], per Clarke LJ. 36 Ibid., at [16], per Clarke LJ; for further observations on exercises of discretion at first instance and decisions requiring the ‘balancing’ of nebulous factors, Browne v. Associated Newspapers Ltd [2007] EWCA Civ 295; [2008] QB 103 at [45], citing five recent authorities; the question whether a set of facts amounts to frustration can sometimes involve a matter of fact within this last sense; and the court’s exercise of certain discretionary tests can involve determinations within this special category. 37 Ibid., at [17], per Clarke LJ, citing Mance LJ in Todd v. Adam (trading as Trelawney Fishing Co) [2002] EWCA Civ 509; [2002] 2 Lloyd’s Rep 293; [2002] 2 All ER (Comm) 97, at [129].

114

4 Appeals and Finality

advantages enjoyed by any judge of first instance who has heard oral evidence.’ For example, the House of Lords’ decision to re-instate the trial judge’s findings of fact in Thorner v. Major (2009), where Lord Rodger said: the judge, who enjoyed ‘those advantages, sometimes broad and sometimes subtle, which are the privilege of the judge who heard and tried the case’ (Clarke v. Edinburgh and District Tramways Co Ltd 1919 SC (HL) 35, 37, per Lord Shaw of Dunfermline), held that it was indeed reasonable for David to understand those remarks in that way and to rely on them by going on working, for nothing, for many years. Not only can I not come to a clear view that the judge was plainly wrong in this conclusion, but I see no reason to doubt that he was right.38 But in the case of category (5), the appellate court ‘is essentially concerned with the correctness of an exercise of evaluation or judgment’, and so the appellate court ‘ought not to interfere unless it is satisfied that the judge’s conclusion lay outside the bounds within which reasonable disagreement is possible.’ In Force India Formula One Team Ltd v. Etihad Airways PJSC (2010) the Court of Appeal,39 reversing the trial judge, held that a Formula One racing team had committed a series of breaches of a sponsorship agreement, and these breaches cumulatively involved repudiation. The sponsor’s names were no longer explicitly associated with the racing team and there had been livery and logo changes. The innocent party, the sponsors, was entitled to terminate the contract and to claim damages. Rix LJ concluded that there had been ‘a series of repeated, or continuing, breaches which were sooner or later but ultimately repudiatory’.40 This involved a complete reversal of the first instance judge’s decision, who had concluded that it was the sponsor who had committed a repudiatory breach. The message is clear: (i) findings of fact are often closely connected with the application of legal tests; (ii) the Court of Appeal can re-visit those factual findings if it is clear that there has been a debatable set of factual findings, provided this review does not require re-opening the question concerning the veracity of witnesses, and provided there is a sufficient documentary basis for the conduct of the review. Rix LJ’s comments, in explanation of this, deserve to be fully quoted. 125 . . . the conclusions to which I have come above do not go beyond the legitimate subject matter of this appeal. Although the grounds were drafted in terms of errors of law, there was no confusion as to the true width of the sponsors’ appeal, of which their lengthy skeleton argument on the basis of which permission to appeal was granted provided further insight. It is, I fear, a common matter for counsel to seek to present complaints about facts as errors of law. Where an appeal comes from a separate specialist tribunal, such as an arbitrator, which has exclusive jurisdiction over the facts and from which an appeal only lies on an error of law, it

38

[2009] UKHL 18; [2009] 1 WLR 776, at [27]. [2010] EWCA Civ 1051; [2011] ETLR 10. 40 Ibid., at [87]. 39

4.2 Res Judicata: ‘Cause of Action Estoppel’ and ‘Issue Estoppel’

115

may be necessary in the final analysis to be strict about what is fact and what is law. Where, however, there is no such jurisdictional problem, it is a question of proper process and fairness as to the extent to which a challenge of fact, perhaps ambitiously presented as a matter of law, can be visited. If it can be properly and fairly visited, then this court will review the judgment with the law as stated in Assicurazioni Generali SpA v. Arab Insurance Group [2002] EWCA Civ 1642; [2003] 1 WLR 577, CA well in mind. 126 In the present case, the judge has erred in law in the respects identified above, but ultimately his principal error to my mind is a mixture of fact and law and consists of a mistaken analysis of undisputed facts, for instance recorded in contemporaneous documents. . .

4.11 The Court of Appeal in Taylor v. Lawrence (2002) held that, in very exceptional situations, it can review, and if necessary rescind or modify, one of its own ostensibly final decisions.41 The CPR has now codified this practice for appeals decided by the High Court or Court of Appeal.42 The same approach will be applied to the question whether to re-open a refusal to grant permission for an appeal.43

4.2 Res Judicata: ‘Cause of Action Estoppel’ and ‘Issue Estoppel’ 4.12 The doctrine of res judicata bars successive litigation of the same claim or issues between the same parties.44 It concerns ‘claim or issue preclusion’.45 The underpinning maxims are: nemo debet bis vexari pro una et eadem causa and interest res publicae ut finis litium sit (‘no one should be disturbed twice in the same matter’ and ‘it is in the public interest that law suits should have an end’). Next one must consider the distinction between ‘cause of action’ and ‘issue estoppel’, the two species of estoppel by res judicata.

41

[2002] EWCA Civ 90; [2003] QB 528, CA; on which see I.R. Scott (2000) 21 Civil Justice Quarterly 194 and Sir Henry Brooke, di Mambro, and di Mambro, eds., Manual of Civil Appeals, 4.118 ff; this decision has been examined in various cases, notably, In re Uddin [2005] EWCA Civ 52; [2005] 1 WLR 2398, CA; Jaffray v. The Society of Lloyds [2007] EWCA Civ 586; First Discount Ltd v. Guinness [2007] EWCA Civ 378; R v. Bow Street Metropolitan Stipendiary Magistrate, Ex p Pinochet Ugarte (No 2) [2000] 1 AC 119, HL. 42 CPR 52.17. 43 Barclays Bank plc v. Guy (No 2) [2010] EWCA Civ 1396; [2011] 1 WLR 681, at [39], per Lord Neuberger MR. 44 The leading work is Spencer Bower, Turner and Handley, The Doctrine of Res Judicata (4th edn, London: Lexis Nexis, 2009). 45 This terminology, current in the USA and in Canada, has been adopted in American Law Institute/UNIDROIT’s Principles of Transnational Civil Procedure (Cambridge: Cambridge University Press, 2006) Principles 28.2, 28.3.

116

4 Appeals and Finality

4.13 ‘Cause of action estoppel’ arises where the cause of action46 in the later proceedings is the same as that adjudicated in the earlier action and the two pieces of litigation were identical both with regard to the parties (or their privies and successors in title) and subject matter.47 This form of estoppel is an absolute bar to re-litigation of points decided in the earlier proceedings, unless fraud or collusion can be established to impugn that decision.48 In R (Coke-Wallis) v. Institute of Chartered Accountants in England and Wales (2011) the Supreme Court declared49 that the question whether there should be a ‘public policy’ exception to this head of res judicata is a matter which only Parliament can determine, based on legislative assessment of the need in particular contexts to protect the public against unfit professionals who have escaped being ‘struck off’ the register only by virtue of some technicality in the first disciplinary proceedings. Cause of action estoppel has six elements50 : (i) the decision, whether domestic or foreign, was judicial in the relevant sense; (ii) it was in fact pronounced; (iii) the tribunal had jurisdiction over the parties and the subject matter; (iv) the decision was—(a) final; (b) on the merits; (v) it determined a question raised in the later litigation; and (vi) the parties are the same or their privies, or the earlier decision was in rem. As for element (i), cause of action estoppels concerns decisions in civil matters (whether a final decision,51 or a relevant type of consent order),52 including disciplinary decisions, by a competent civil court (including foreign courts

46

‘Cause of action’ denotes the set of material facts supporting a recognised legal ground of claim Cooke v. Gill (1873) LR 8 CP 107; Brunsden v. Humphrey (1884) 14 QBD 141, CA; Letang v. Cooper [1965] 1 QB 232, 243, CA; Republic of India v. India Steamship Co Ltd [1993] AC 410, 419, HL; Walkin v. South Manchester Health Authority [1995] 1 WLR 1543, 1547, CA; Brown v. KMR Services Ltd [1995] 4 All ER 598, 640, CA; Paragon Finance v. DB Thakerar & Co [1999] 1 All ER 400, 405–6, CA. 47 Arnold v. National Westminster Bank plc [1991] 2 AC 93, HL; noted Neil Andrews [1991] Cambridge Law Journal 419; for an example of different causes of action, Buehler AG v. Chronos Richardson Ltd [1998] 2 All ER 960, CA. 48 Arnold case [1991] 2 AC 93, 104, HL. 49 [2011] UKCS 1; [2011] 2 WLR 103, at [48] to [51]. 50 Ibid., at [34], citing Spencer Bower and Handley, The Doctrine of Res Judicata, 1-04. 51 Including a final decision of an interim application: R v. Governor of Brixton Prison, ex parte Osman [1991] 1 WLR 281; Possfund v. Diamond [1996] 2 All ER 774, 779, citing Chanel Ltd v. F W Woolworth & Co Ltd [1981] 1 WLR 485, 492–3, CA; for an example of a non-final decision, Buehler AG v. Chronos Richardson Ltd [1998] 2 All ER 960, CA. 52 For example, Palmer v. Durnford Ford [1992] 1 QB 483; Green v. Vickers Defence Systems Ltd [2002] EWCA Civ 904; The Times 1 July 2002, CA; Gairy v. Att-Gen of Grenada [2001] UKPC 30; [2002] 1 AC 167, PC, at [27], per Lord Bingham: ‘a consent order may found a plea of res judicata even though the court has not been asked to investigate and pronounce on the point at issue.’

4.2 Res Judicata: ‘Cause of Action Estoppel’ and ‘Issue Estoppel’

117

recognised under English rules of private international law)53 or tribunals54 (including statutory or non-statutory disciplinary tribunals),55 and arbitration awards.56 This form of estoppel has the effect that such a decision is binding upon the parties (and their privies57 or successors).58 It cannot be the subject of a second action or complaint as between the same parties. 4.14 ‘Issue estoppel’ concerns adjudication of issues forming a necessary element in a cause of action (including foreign adjudication).59 This estoppel applies if one of the parties to that decision seeks to re-open that issue in later proceedings between the same parties involving a different cause of action to which the same issue is relevant.60 Issue estoppel can arise in respect of findings made by a range of courts and tribunals, including arbitrators or arbitral tribunals.61 Unlike cause of action estoppel, issue 53

P.R. Barnett, Res Judicata, Estoppel and Foreign Judgments The Preclusive Effects of Foreign Judgments in Private International Law (Oxford University Press, 2001); P. Rogerson, ‘Issue Estoppel and Abuse of Process in Foreign Judgments,’ Civil Justice Quarterly (1998): 91 (reviewing this and other case law). 54 Green v. Hampshire County Council [1979] ICR 861; Crown Estate Commrs v. Dorset County Council [1990] Ch 297. 55 R (Coke-Wallis) v. Institute of Chartered Accountants in England and Wales [2011] UKCS 1; [2011] 2 WLR 103, at [27] to [31]. 56 As Lord Collins of Mapesbury said in R (Coke-Wallis) v. Institute of Chartered Accountants in England and Wales [2011] UKCS 1; [2011] 2 WLR 103, at [57]: ‘from the earliest times it has been recognised that the principle of finality or res judicata applies to tribunals established by the parties, such as an arbitral tribunal: Dunn v. Murray (1829) 9 B & C 780; Fidelitas Shipping Co Ltd v. V/O Exportchleb [1966] 1 QB 630, 643, CA, per Diplock LJ; the proposition that arbitration gives rise to both cause of action and issue estoppels was also supported by Lord Clarke in the Coke-Wallis case, at [36]; see also Ron Jones (Burton-on-Trent) Ltd v. JS Hall (unreported, 3 August 1999)’. 57 McIlkenny v. Chief Constable of the West Midlands [1980] 1 QB 283, CA; House of Spring Gardens Ltd v. Waite [1991] 1 QB 241, CA; Black v. Yates [1992] 1 QB 526, 545–9. 58 For exmaple, Green v. Vickers Defence Systems Ltd [2002] EWCA Civ 904; The Times 1 July 2002 (consent order between victim of asbestosis and employer; held that terms of settlement included admission of liability for causation; victim’s estate and dependants able to take advantage of this admission in the consent order). 59 Carl Zeiss Stiftung v. Rayner & Keeler Ltd (No 2) [1967] 1 AC 853, HL; Carl Zeiss Stiftung v. Rayner & Keeler Ltd (No 3) [1970] Ch 506; The Sennar (No 2) [1985] 1 WLR 490, 499, HL; see Dicey, Morris, and Collins, The Conflict of Laws (14th edn, London, 2006), 14–110 ff; Rogerson, ‘Issue Estoppel and Abuse of Process in Foreign Judgments,’ 91. 60 Arnold v. National Westminster Bank plc [1991] 2 AC 93, 105, HL; Thoday v. Thoday [1964] P 181, 198, CA; The Sennar (No 2) [1985] 1 WLR 490, 499, HL; Republic of India v. India Steamship Co Ltd (‘The Indian Grace’) [1993] AC 410, 419, HL. 61 In R (Coke-Wallis) v. Institute of Chartered Accountants in England and Wales [2011] UKCS 1; [2011] 2 WLR 103, Lord Clarke said: ‘the parties having chosen an arbitration tribunal to determine the issues, they are bound by an interim arbitration award on specific issues under the principle of issue estoppel. . . . It is implicit in Diplock LJ’s judgment that in such a case. . .cause of action estoppel would apply.’ This refers to

118

4 Appeals and Finality

estoppel can be relaxed in either of these situations: (i) there has been a retrospective change in the law which renders the point covered by issue estoppel ‘plainly’ wrong62 ; or (ii) new evidence has emerged which ‘entirely changes the aspect of the case’, provided that, even if he had displayed ‘reasonable diligence’, the relevant party could not have discovered this evidence at the time of the earlier litigation.63

4.3 Preclusion of Points That Should Have Been Raised: The Rule in Henderson v. Henderson (1843)64 4.15 English law does not restrict itself to barring re-litigation of decided points. It goes further and precludes litigation of points which might conveniently have been included by a party as part of his claim or defence in earlier civil litigation between the same parties. In 2002 the longstanding rule in Henderson v. Henderson (1843)65 was re-stated as follows:

Diplock LJ’s statement in Fidelitas Shipping Co Ltd v. V/O Exportchleb [1966] 1 QB 630, 643 C, CA, per Diplock LJ. 62 Arnold case, [1991] 2 AC 93, 112, HL (and see Arnold case [1990] Ch 573, 598, 600, CA; not disturbed on final appeal); S v. S (Ancillary Relief: Consent Order) [2002] EWHC 223 (Fam); [2003] Fam 1, at [30] ff. 63 Phosphate Sewage Co v. Molleson (1879) 4 App Cas 801, 814, HL; the Phosphate case test applies to the abuse of process doctrine: Hunter v. Chief Constable of West Midlands [1982] AC 529, 545, HL and Smith v. Linskills [1996] 1 WLR 763, 771, CA. 64 Henderson v. Henderson (1843) 3 Hare 100, 115, Wigram V-C; the leading modern examination is Johnson v. Gore Wood & Co [2000] UKHL 65; [2002] 2 AC 1, HL; considered De Crittenden v. Estate of Bayliss [2005] EWCA Civ 547, at [22] to [26] (earlier contract action; second action to plead a tracing action sufficiently closely tied to facts of first action; abuse of process); applied Mohammed Nazmul Hossain v. Sonali Bank and Sonali Bank UK Ltd [2007] EWHC 1431, Eady J; and see the recent discussion cited in Ruttle Plant Hire Ltd v. The Secretary of State for the Environment, Food and Rural Affairs [2007] EWHC 1773 (TCC); for radical comment, G. Watt, ‘The Danger and Deceit of the Rule in Henderson v. Henderson: A New Approach to Successive Civil Actions Arising from the Same Factual Matter,’ Civil Justice Quarterly 19 (2000): 287 and K.R. Handley, ‘A Closer Look at Henderson v. Henderson,’ Law Quarterly Review 118 (2002): 397; in fact (as notified to me by Nicholas Reid), the rule can be traced to the 18th century: Greathead v. Bromley (1798) 7 TR 455, 456; 101 ER 1073, 1074 per Lord Kenyon (a statement very similar to Wigram V-C’s formulation of 1843); and, analogously, see Lord Hardwicke in Gregory v. Molesworth (1747) 3 Atk 626; 26 ER 1160, 1161: ‘if a man in a court of law brings several demands, and he has judgment for one only, it is as much a judgment as if there had been a particular determination on each. A decree can be altered only by a bill of review, either for error on the face of the decree or for new matter not known at the time of the bringing of the first bill.’ 65 (1843) 3 Hare 100, 115, Wigram V-C: In trying this question I believe I state the rule of the Court correctly when I say that, where a given matter becomes the subject of litigation in, and of adjudication by, a court of competent jurisdiction, the Court requires the parties to that litigation to bring forward their whole case, and will not

4.4 Other Aspects of Finality

119

. . .parties who are involved in litigation are expected to put before the court all the issues relevant to that litigation. If they do not, they will not normally be permitted to have a second bite at the cherry.66 The rule applies not only when the first action was concluded by judgment but also when it was compromised out-of-court.67 Unlike res judicata (see above), the Henderson principle, therefore, does not concern adjudicated matters, but non-adjudicated matters. Those matters have only escaped decision because they were not raised, when they might have been, in earlier civil proceedings. In short, the Henderson principle can be regarded as an adjunct to res judicata; but this principle should not be confused as an aspect of res judicata. The House of Lords in Johnson v. Gore Wood & Co (2002) said that the Henderson doctrine should not be applied too zealously or mechanically.68 Lord Millett suggested that this doctrine creates no presumption: the burden should always rest with the defendant [in the second action] to establish that it is oppressive or an abuse of process for him to be subjected to the second action.69 Sometimes litigation might be an abuse of process even when the parties in the second action are not the same as those in the first action.70

4.4 Other Aspects of Finality 4.16 Three other rules or doctrines deserve mention. First, a claimant cannot obtain damages in successive actions in respect of the same cause of action: damages resulting from one and the same cause of action must be (except under special circumstances) permit the same parties to open the same subject of litigation in respect of matter which might have been brought forward as part of the subject in contest, but which was not brought forward, only because they have, from negligence, inadvertence, or even accident, omitted part of their case. The plea of res judicata applies, except in special cases, not only to points upon which the Court was actually required by the parties to form an opinion and pronounce a judgment, but to every point which properly belonged to the subject of litigation, and which the parties, exercising reasonable diligence, might have brought forward at the time. 66 Taylor v. Lawrence [2002] EWCA Civ 90; [2003] QB 528, at [6], per Lord Woolf; it has been (attractively) held that this rule is aimed only at countering re-litigation of points which might have been raised in earlier proceedings, and that the rule should not be stretched to control amendment of pleadings in the original action (on the basis that the point should have been raised sooner): Ruttle Plant Hire Ltd v. The Secretary of State for the Environment, Food and Rural Affairs [2007] EWHC 1773 (TCC), at [30], per Jackson J. 67 Johnson case [2000] UKHL 65; [2002] 2 AC 1, 32–3, 59, HL. 68 [2002] 2 AC 1, 22, 59, HL; Gairy v. Att-Gen of Grenada [2001] UKPC 30; [2002] 1 AC 167, PC, at [26], [27]. 69 Johnson case, [2002] 2 AC 1, 59–60, HL. 70 As suggested in the Johnson case, ibid., at 60; and see Bradford & Bingley Building Society v. Seddon [1999] 1 WLR 1482, 1491–2, CA.

120

4 Appeals and Finality

assessed and recovered once and for all.71 Secondly, a court can strike out as an abuse of process an unjustified collateral attack by civil action upon a criminal conviction72 or civil judgment73 if ‘such re-litigation would. . .bring the administration of justice into disrepute.’74 Thirdly, statute now bars attempts to re-litigate in England certain foreign judgments.75 But this bar can be displaced by agreement, estoppel by convention, or acquiescence.76

71

Brunsden v. Humphrey (1884) 14 QBD 141, 147, CA; LA Collins (1992) 108 Law Quarterly Review 393, 394 (case note); Republic of India v. India Steamship Co Ltd (‘The Indian Grace’) [1993] AC 410, 420–1, HL; Rowner v. Allen & Sons (1936) 41 Com Cas 90; Jaggard v. Sawyer [1995] 1 WLR 269, 284, CA; Deeny v. Gooda Walker Ltd [1995] 1 WLR 1206, 1214 (offering postponement of assessment of damages); but on the need for caution in applying this rule, Barrow v. Bankside Agency Ltd [1996] 1 WLR 257, 269, CA; Cachia v. Faluyi [2001] 1 WLR 1966, CA, at [18] to [20]. 72 The leading case is Hunter v. Chief Constable of West Midlands Police [1982] AC 529, HL (affirming CA sub nom McIlkenny v. Chief Constable of West Midlands Police Force [1980] QB 283); for a luminous re-statement, Smith v. Linskills [1996] 1 WLR 763, CA (Sir Thomas Bingham MR); the Hunter case was applied in Somasunaram v. M Julius Melchior & Co [1988] 1 WLR 1394, CA, noted J.A. Jolowicz [1989] Cambridge Law Journal 196; the Hunter decision was distinguished in Acton v. Graham Pearce & Co [1997] 3 All ER 904, 925 (earlier criminal conviction later set aside by CA, Criminal Division); the Hunter case was also distinguished in Walpole v. Partridge & Wilson [1994] QB 106, CA (collateral attack doctrine inapplicable where possible appeal from criminal conviction not pursued, as a result of a lawyer’s negligence); nor does the Hunter rule against collateral challenge apply when a civil defendant seeks to contradict his criminal conviction, J v. Oyston [1999] 1 WLR 694 (considering Civil Evidence Act 1968, s 11(2)(a)); nor does it apply where proceedings for disqualification of a company director follow a regulatory investigation: Re Barings (No 2) [1999] 1 All ER 311, 335–6, 340, CA; generally on abuse of process, Andrews, English Civil Procedure, Chap. 16; civil actions against persons acquitted in criminal trials, involving the same facts, have been tolerated, although here too the ‘abuse of process’ control can apply; no abuse found on facts in Ashley v. Chief Constable of Sussex Police [2008] UKHL 25; [2008] 3 All ER 573 (per Lords Bingham, Scott, Rodger; dissenting on this point were Lords Carswell and Neuberger); Raja v. van Hoogstraten [2005] EWHC 2890 (Ch). 73 Conlon v. Simms [2006] EWCA Civ 1749; [2007] 3 All ER 802 (containing a long review of authorities). 74 Arthur JS Hall & Co v. Simons [2000] UKHL 38; [2002] 1 AC 615, 685, HL. 75 Civil Jurisdiction and Judgments Act 1982, s 34; Black v. Yates [1992] 1 QB 526; on the necessity for this provision, Republic of India v. India Steamship Co Ltd (‘The Indian Endurance No 1’) [1993] AC 410, 417, HL; for the sequel, Republic of India v. India Steamship Co Ltd (‘The Indian Endurance No 2’) [1998] AC 878, HL. 76 The Indian Endurance No 2 [1998] AC 878, HL.

Chapter 5

Costs

Contents A Time of Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . Costs-Shifting Rule . . . . . . . . . . . . . . . . . . . . . . . . . . . Security for Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.3.1 Factors Relevant to the Exercise of the Discretion to Order Security for Costs . . . . . . . . . . . . . . . . . . . . . . . . 5.3.2 Claimant Resident Outside England and Outside the Territories of the European Union or the Lugano Convention . . . 5.3.3 Security for the Costs of an Appeal . . . . . . . . . . . . . . . . 5.4 Protective Costs Orders and Costs Capping . . . . . . . . . . . . . . . 5.5 Discretionary Costs Decisions . . . . . . . . . . . . . . . . . . . . . . 5.6 Standard and Indemnity Costs . . . . . . . . . . . . . . . . . . . . . 5.7 Costs Against Non-parties . . . . . . . . . . . . . . . . . . . . . . . . 5.8 ‘Wasted Costs’ Orders Against Lawyers and Experts . . . . . . . . . . . 5.9 Conditional Fee Agreements . . . . . . . . . . . . . . . . . . . . . . 5.10 Assessment of the English Conditional Fee System . . . . . . . . . . . . 5.11 Comparison with USA Contingency Fees . . . . . . . . . . . . . . . . . 5.12 The Jackson Report (2009–10) . . . . . . . . . . . . . . . . . . . . . 5.1 5.2 5.3

122 122 123 124 125 126 126 127 128 128 129 130 135 137 138

Generally on costs, Neil Andrews, The Modern Civil Process (Tübingen, Germany, 2008), Chap. 9; Neil Andrews, English Civil Procedure (Oxford University Press, 2003), Chap.’s 35 to 37; M.J. Cook, Cook on Costs (annual editions); M. Friston, Civil Costs (Bristol: Jordans, 2010); Greenslade on Costs (London: Sweet & Maxwell, updated and looseleaf); P. Hurst, Civil Costs (4th edn, Sweet & Maxwell, 2007); A. Zuckerman Civil Procedure (2nd edn, 2006), Chap. 26; C. Hodges, S. Vogenauer, and M. Tulibacka, eds., The Costs and Funding of Civil Litigation: A Comparative Perspective (Hart Publishing, 2010).

N. Andrews, The Three Paths of Justice, Ius Gentium: Comparative Perspectives on Law and Justice 10, DOI 10.1007/978-94-007-2294-1_5, C Springer Science+Business Media B.V. 2012

121

122

5 Costs

5.1 A Time of Change 5.01 Lord Justice Jackson’s ‘Civil Litigation Costs Review’ (2009–10)1 places the whole topic of costs and funding under scrutiny. The ‘Woolf reforms’ were expected to alleviate the problem of the high cost of civil litigation. But the situation has not improved. As Buxton LJ admitted in the Court of Appeal in Willis v. Nicolson (2007)2 : The very high cost of civil litigation in England and Wales is a matter of concern not merely to the parties in a particular case, but for the litigation system as a whole. . . . One element in the present high cost of litigation is undoubtedly the expectations as to annual income of the professionals who conduct it. The costs system as it at present operates cannot do anything about that, because it assesses the proper charge for work on the basis of the market rates charged by the professions, rather than attempting the no doubt difficult task of placing an objective value on the work.

5.2 Costs-Shifting Rule 5.02 The main rule in England is that a victorious party (‘the receiving party’) should recover his ‘standard basis’ costs from the opponent (‘the paying party’).3 The English costs-shifting rule is rooted both in the public policy of deterring bad or spurious claims and defences4 and in the basic fairness of indemnifying the victorious party at the conclusion of litigation. The rule has traditionally operated efficiently on the basis of ‘strict liability’. This is because the losing party is obliged to pay the victorious party irrespective of the vanquished party’s fault, reasonableness or motive.

1

Sir Rupert Jackson, Review of Civil Litigation Costs (December, 2009: London: Stationary Office, 2010); on which A.A.S. Zuckerman, ‘The Jackson Final Report on Costs—Plastering the Cracks to Shore up a Dysfunctional System, Civil Justice Quarterly 29 (2010): 263. 2 Willis v. Nicolson [2007] EWCA Civ 199 at [24]. 3 CPR 44.3(2) states the following ‘general’ rule: that the unsuccessful party will be ordered to pay the costs of the successful party; but the court may make a different order; for discussion in the context of discontinuance by a claimant, Wylde v. Culver [2006] EWHC 1313 (Ch); [2006] 1 WLR 2674; where the issues have concerned both the question of liability and quantum, and a different party has been ‘successful’ under these respective heads, an ‘issues-based costs order’ is appropriate: McGlinn v. Waltham Contractors Ltd [2007] EWHC 698 (TCC). 4 Andrews, English Civil Procedure, 6.31.

5.3 Security for Costs

123

5.3 Security for Costs5 5.03 A defendant can seek an order for security for costs against a claimant. The purpose of such an order is to protect the defendant against the risk that the claimant might not pay the defendant’s costs if the defendant eventually becomes liable, or agrees as a term of a settlement, to pay the defendant’s costs. In fact security for costs is aimed at meeting one of three problems: that the claimant lacks sufficient funds; that he is a shifty litigant manifestly disposed to avoid liability for costs; that the procedural chase against the claimant might be uncertain and difficult because the foreign jurisdiction where he resides does not provide a dependable or straightforward system for enforcing an English costs order. The security might take the form of a payment into court, or a banker’s guarantee, or some other undertaking. A claimant who fails to comply with such an order will find that the action is stayed until security is given, or even that the action is struck out. There is no general right to security for costs: grant of security for costs order is discretionary: it is never available automatically. CPR 25.13(1) states: The court may make an order for security for costs. . . if (a) it is satisfied, having regard to all the circumstances of the case, that it is just to make such an order. An impecunious claimant resident in England or in one of the EU Member States or Lugano Convention States cannot be made to provide such security simply on the basis of his inability to pay costs. This is because to impose security against such a claimant would bar his access to justice. Moore-Bick LJ in Huscroft v. P & O Ferries Ltd (2010) noted the principle that a personal claimant who is resident within the jurisdiction or in one of the other member states of the European Union cannot be required to provide security for costs just because he is impecunious, even though his conduct of the proceedings may be open to criticism. Although it might be argued that the defendant in such a case should be entitled to obtain protection against the risk of being unable to enforce a judgment for costs, a policy decision has been taken to the contrary.6 By contrast, an impecunious corporate claimant enjoys no such favourable treatment. CPR 25.13(2) specifies six grounds (listed below). The defendant must establish any one of these grounds and then further satisfy the court that 5 R. Perkoff, ed., Security for Costs (Bristol: Jordans, 2010); Andrews, English Civil Procedure, Chap. 37; M.J. Cook, Cook on Costs 2011 (London: Lexis Nexis, 2011); P. Hurst, Civil Costs (3rd edn, London: Sweet & Maxwell, 2007) Chap. 15; Zuckerman on Civil Procedure (2006) 9.182 ff; I.S. Goldrein, ed., Commercial Litigation: Pre-emptive Remedies (London: Sweet & Maxwell, 2005) Chap. 4; Dicey, Morris and Collins on the Conflict of Laws (14th edn, London: Sweet & Maxwell, 2006), 8-092 ff. 6 [2010] EWCA Civ 1483; [2011] 1 WLR 939, at [14].

124

5 Costs

security for costs should be awarded in exercise of its discretion (on the latter, see text below)7 : (1) the claimant is resident out of the English and Welsh jurisdiction but not resident in a Member State of the European Union or a Lugano Convention Contracting State; or (2) the claimant is a company or other body (whether incorporated inside or outside Great Britain) and there is reason to believe that it will be unable to pay the defendant’s costs if ordered to do so; or (3) the claimant has changed his address since the claim was commenced with a view to evading the consequence of the litigation; or (4) the claimant failed to give his address on the claim form, or gave an incorrect address in that form; or (5) the claimant is acting as a nominal claimant, other than as a representative claimant under CPR Part 19, and there is reason to believe that he will be unable to pay the defendant’s costs if ordered to do so; or (6) the claimant has taken steps in relation to his assets that would make it difficult to enforce an order for costs against him.8

5.3.1 Factors Relevant to the Exercise of the Discretion to Order Security for Costs The case law has identified the following (non-exhaustive) factors which the court should consider when deciding whether to award security for costs9 : 7

However, in Olatawura v. Abiloye [2002] EWCA Civ 998; [2003] 1 WLR 275, the court recognised a power to make an order for a security payment by an individual claimant who was mostly resident outside the jurisdiction, and having modest financial means; this power subsists independently of the general regime concerning security for costs contained in CPR Part 25, Section II; the exceptional nature of this case was emphasised in Huscroft v. P & O Ferries Ltd [2010] EWCA Civ 1483; [2011] 1 WLR 939, noting also at [15] ff the discussion of Olatawura in Ali v. Hudson [2003] EWCA Civ 1793; [2004] CP Rep 15, CA, especially the summary by Clarke LJ at [40], and also noting at [16] and [19] Rimer J’s decision in Halabi v. Fieldmore Holdings Ltd [2006] EWHC 1965 (Ch). However, in the Huscroft case, Moore –Bick LJ said, at [19], that the court’s power to order payment into court as a condition to an order under CPR 3.1(3) is not confined to cases where there has been a series of procedural failures or bad faith conduct; and he noted, at [17], that CPR 3.1(5) contemplates payment into court in response to past failures to comply with procedural obligations, whereas CPR 3.1(3) looks to the future conduct of the case. 8 Harris v. Wallis (Ch D, 15 March 2006, All England Reporter) on the phrase ‘taken steps in relation to his assets that would make it difficult to enforce an order for costs against him’; no need to show improper motivation by claimant. 9 Sir Lindsay Parkinson v. Triplan Ltd [1973] QB 609 at 626-7, CA, per Lord Denning MR.

5.3 Security for Costs

125

(i) the action is a sham or is made in good faith; (ii) the claimant has a reasonably good prospect of success in the case; (iii) there is an admission by the defendant in the statement of case or elsewhere that the money is due or the claim is otherwise sound; (iv) there is a substantial payment into court or offer to settle; (v) the application is being used by the defendant to stifle an honest and sound claim; (vi) the claimant’s lack of funds has been caused, or aggravated, by the defendant’s failure to pay; (vii) the application for security for costs has been made late.

5.3.2 Claimant Resident Outside England and Outside the Territories of the European Union or the Lugano Convention The foreign residence ground (see above) potentially conflicts with Article 14 of the European Convention on Human Rights (now Schedule 1, Human Rights Act 1998), which prohibits direct or indirect discrimination by reference to: ‘any ground such as sex, race, colour, language, religion, political or other opinion, national or social origin, association with a national minority, property, birth or other status.’ Most non-UK residents are likely to be non-UK citizens. And so the foreign residence ground, cited above, has the potential to infringe Article 14 of the European Convention on Human Rights (indirect discrimination by reference to nationality). For this reason the Court of Appeal in Nasser v. United Bank of Kuwait (2002) held that it would be improper for the English courts to ‘start with any inflexible presumption that any person not resident in a Brussels or Lugano state should provide security for costs.’10 Instead, exercise of this discretion should be based on ‘objectively justified grounds relating to obstacles to or the burden of enforcement in the context of the particular foreign claimant or country concerned’, such as ‘costs or delay, in enforcing an English judgment. . .’11 In the Nasser case, the claimant was resident in the USA. US courts would recognise and enforce the English security for costs order. But this would be more difficult and expensive than if the costs order were enforced in a State within the European Union or Lugano jurisdiction regimes. And so the Court of Appeal found an ‘objective’ justification on these facts to order security for costs against the American claimant.

10 11

[2002] 1 All ER 401, CA. Ibid.

126

5 Costs

5.3.3 Security for the Costs of an Appeal In the Tolstoy case (1995), the defendant author had lost an English libel trial, which had lasted 40 days. He appealed. The Court of Appeal held that he must first provide £ 126,000 as security for the respondent’s costs in conducting this appeal. Tolstoy unsuccessfully challenged this security for costs award before the European Court of Human Rights.12 That court attached weight to various features of the English appeal: (1) the security for costs application had been fully considered by the English Court of Appeal; (2) the English courts had considered the general balance of justice and had assessed the effect of the security for costs order against that background; (3) the European Court of Human Rights jurisprudence requires that any ‘restrictions [on appeal] must pursue a legitimate aim and there must be a reasonable relationship of proportionality between the means employed and the aim sought to be achieved’, for example by reference to time, security, or the prospective appeal’s merits. It was held that the English award satisfied these criteria mentioned at (3).

5.4 Protective Costs Orders and Costs Capping13 5.04 In special cases,14 so far confined to ‘public interest’ litigation (including environmental litigation, in accordance with a European Directive),15 the courts have discretion to protect a claimant or a defendant16 against potential liability for costs. The leading cases establish the following criteria17 : (i) whether the issues raised are of general public importance; (ii) whether the public interest requires that those issues be 12

Tolstoy Miloslavsky v. UK (1995) 20 EHRR 442, ECtHR. The Civil Procedure Rule Committee (CPRC) recently published a consultation paper seeking views on proposals to amend Part 44 of the Civil Procedure Rules to insert rules on costs capping orders; M. Mildred, ‘The Development and Future of Costs Capping,’ Civil Justice Quarterly 28 (2009): 141. 14 ‘Improving Access to Justice Through Collective Actions’ (Civil Justice Council, 2008, Final Report), Appendix I, at 355 ff. http://www.civiljusticecouncil.gov.uk/files/ Improving_Access_to_Justice_through_Collective_Actions.pdf. 15 R (on the application of Edward) v. Environment Agency [2010] UKSC 57; [2011] 1 All ER 785. 16 R (Ministry of Defence) v. Wiltshire and Swindon Coroner [2005] EWHC 889 (Admin); [2006] 1 WLR 134, at [34] ff, per Collins J. 17 R (Corner House Research) v. Secretary of State for Trade and Industry [2005] EWCA Civ 192; [2005] 1 WLR 2600; R (Buglife) v. Thurrock Thames Gateway Corporation [2008] EWCA Civ 1209, considering R (Compton) v. Wiltshire Primary Care [2008] EWCA Civ 749; [2009] 1 All ER 978; R (Burkett) v. Hammersmith London Borough Council [2004] EWCA Civ 1342; R (England) v. Tower Hamlets London Borough Council [2006] EWCA Civ 1742. 13

5.5 Discretionary Costs Decisions

127

resolved; (iii) whether the applicant has any private interest in the matter18 ; (iv) whether the order will be fair when account is taken of the parties’ respective resources and the amount of costs likely to be incurred; (v) whether the claim will be discontinued without the order. The courts can also impose an ex ante ‘cap’ on one party’s capacity to recover costs from the opponent, at least in the context of defamation actions brought under conditional fee agreements without ‘after-the-event’ legal expenses insurance.19 It should be noted that the cap is a limit upon recoverable costs; it does not prohibit the capped party from in fact incurring costs above that cap; but in the latter situation, such excess costs will not be recoverable, because they will lie above the cap. So far the courts have been reluctant to expand this ‘costs capping’ jurisdiction beyond the special context of defamation actions brought under conditional fee agreements without ‘after-the-event’ legal expenses insurance.

5.5 Discretionary Costs Decisions 5.05 The courts possess the discretion to adjust this rule: and so they can decide whether to order one party to pay the other’s costs; and, if so, the court can fix the amount of those costs; and they can decide for which stages of the litigation costs are to be paid. As Lord Woolf MR in AEI Rediffusion Music Ltd v. Phonographic Performance Ltd (1999) explained, attempting to temper the perceived rigidity of the ‘winner takes all’ approach: ‘too robust an application of the “follow the event principle” encourages litigants to increase the costs of litigation’; and he suggested ‘if you recover all your costs as long as you win, you are encouraged to leave no stone unturned in your effort to do so.’20 Assessment of costs can be: by summary assessment (‘on the spot’ assessment at the conclusion of short hearings and trials not exceeding a day; such assessment is often roughand-ready)21 ; by detailed assessment (before costs judges)22 ; in accordance with fixed costs rules (in specific situations)23 ; or in accordance with

18

cf Weir v. Secretary of State for Transport [2005] EWHC 24 (Ch) (claimant making private claim as well as other disinterested claims). 19 King v. Telegraph Group Ltd [2004] EWCA Civ 613; [2005] 1 WLR 2282, especially at [101]. 20 [1999] 1 WLR 1507, 1522-3, CA. 21 CPR 44.7. 22 Ibid.; and CPR Part 47. 23 CPR Part 45.

128

5 Costs

the parties’ agreement.24 In some situations, the only court proceedings concern costs.25 These are known as ‘costs only’ proceedings.

5.6 Standard and Indemnity Costs 5.06 The normal award is for payment to the victorious party of his costs assessed on the ‘standard costs’ basis. However, sometimes, especially where the paying party’s procedural conduct has been reprehensible, costs are assessed in a manner more generous to the ‘receiving party’, namely on the ‘indemnity’ basis. ‘Indemnity costs’ expose the paying party to liability for nearly all costs incurred by the other in the relevant litigation. ‘Standard costs’ are calculated less generously towards the receiving party,26 because the costs claimed by that party must be proportionate overall. Examples of awards of indemnity costs are: a defendant’s unjustified refusal to accept a Part 36 settlement offer; hopeless litigation (or at least seriously unreasonable conduct of litigation)27 ; or a party’s reliance on a seriously defective report from one’s own expert.28

5.7 Costs Against Non-parties 5.07 The English courts have a statutory power to order a non-party to pay costs29 : Non-party costs orders will not normally be made against ‘pure’ funders. These are non-parties whose financial contribution to litigation has

24

CPR 48.3. CPR 44.12A (‘costs-only proceedings’). 26 Virani Ltd v. Manuel Revert y Cia SA [2003] EWCA Civ 1651; [2004] 2 Lloyd’s Rep 14; there is no requirement for the costs to be proportionate on the indemnity basis; Three Rivers DC v. The Governor & Company of the Bank of England [2006] EWHC 816 (Comm), at [14], per Tomlinson J; Fourie v. Le Roux [2007] UKHL 1; [2007] 1 WLR 320, at [8] to [11]; [38] to [40], [46], [49]. 27 EQ Projects v. Alavi [2006] EWHC 29 (TCC), at [38]; Waites Construction Limited v. HGP Greentree Alchurch Evans Limited [2005] EWHC 2174 (TCC); Three Rivers DC v. Bank of England [2006] EWHC 816 (Comm); see the test formulated in National Westminster Bank Plc v. Rabobank Nederland [2007] EWHC 1742 (Comm), at [47]. 28 Re Colt Telecom Group plc [2002] EWHC 2815 (Ch), at [80] and [110], per Jacob J. 29 Senior Courts Act 1981, s 53(1); and similarly s 53(3); a non-party costs order can be made following an original application for such (the more common situation) or as a variation of a costs order following a material change of circumstance or an earlier misrepresentation concerning the paying party’s financial position, Latimer Management Consultants Ltd v. Ellingham Investments Ltd [2006] EWHC 3662 (Ch); [2007] 1 WLR 2569 at [30] and [40]. 25

5.8 ‘Wasted Costs’ Orders Against Lawyers and Experts

129

been actuated by feelings of friendship, natural affection, or political allegiance. The leading illustration is Hamilton v. Al Fayed (No 2) (2002).30 In this case the Court of Appeal refused to make an order for costs against noncommercial funders who had generously supported a defamation action brought by Neil Hamilton, a former Member of Parliament, against Mr Al Fayed, a successful businessman.31 Hamilton’s supporters were a cohort of friends and political well-wishers. Hamilton lost the case, but lacked the funds to satisfy the victorious party’s very large costs order (c £1.3 million). The court held that a prospective litigant’s interest in obtaining access to justice should be given priority over the victorious litigant’s private interest in obtaining practical enforcement of his interest in recovering his costs. As for commercial funders, the Court of Appeal in the Arkin case (2005) decided that such a non-party funder might be liable for costs, to the extent of his financial contribution to the defeated party’s litigation.32 Another important illustration of the jurisdiction to award costs against non-parties is Adris v. Royal Bank of Scotland (2010).33 Here Judge Waksman QC held a solicitor, S, liable as a non-party for costs payable by S’s client, C, to the opponent, RBS, after the substantive claim had failed. S had undertaken to obtain ‘After-the-Event’ (‘ATE’) legal expenses insurance in case the substantive claim failed. S did not do so, and also failed to inform his client (C) that he might, therefore, be personally exposed to costs if the claim failed. When the case was lost, the court held that it was appropriate for S to be in the firing line for costs. S was effectively controlling the litigation. S had culpably exposed C to personal costs liability by failing to obtain the ATE insurance cover.

5.8 ‘Wasted Costs’ Orders Against Lawyers and Experts 5.08 A lawyer might be ordered to pay costs to an opposing party as a result of the lawyer’s improper conduct of the case, or the lawyer might be prevented from recovering costs from his client because of such

30

[2002] EWCA Civ 665; [2003] QB 1175; for comment on Australian discussion of maintenance and champerty, see D. Capper (2007) 26 Civil Justice Quarterly 288, considering Campbell Cash and Carry Pty Ltd v. Fostif Pty Ltd [2006] HCA 41 (High Court of Australia). 31 Owner of Harrods; father of the late Princess Diana’s boy-friend, Dodi, (both died in the Paris car-crash in 1997): on the father, http://en.wikipedia.org/wiki/Mohammed_AlFayed. 32 Arkin v. Borchard Lines Ltd [2005] EWCA Civ 655; [2005] 1 WLR 3055, at [40]: a non-party ‘commercial funder’ of litigation brought by A was found liable to pay the victorious party B’s costs to the extent that the non-party provided finance in that litigation; funding agreement was not champertous. 33 [2010] EWHC 941 (QB); [2010] 4 Costs LR 598.

130

5 Costs

misconduct. ‘Wasted costs’ orders are made in respect of ‘costs incurred by a party (a) as a result of any improper, unreasonable or negligent act or omission on the part of any legal or other representative or any employee of such a representative; or (b) which, in the light of any such act or omission occurring after they were incurred, the court considers it is unreasonable to expect that party to pay.’34

5.9 Conditional Fee Agreements35 5.09 This is the English ‘no win, no fee’ system.36 The Courts and Legal Services Act 1990 introduced conditional fees.37 It was not implemented for personal injury claims until 1995 and for most other claims until 1998). Legislation was necessary because the Common Law (that is the long line of earlier judicial precedents on this topic) is opposed to lawyers having a financial stake in the outcome of their clients’ litigation or arbitration. This traditional objection is based on two related factors. First, the Common Law is concerned to protect the integrity of the lawyer-client relationship. The fear is that the prospect of gain might destroy professional objectivity. The lawyer’s advice might become slanted towards securing his financial ‘stake’, rather than focused solely upon the client’s interests. Secondly, it is necessary to safeguard the integrity of the civil process. Courts rely on the honesty and disinterested professionalism of the parties’ advocates and other legal advisors. But financial inducements to win the case might seduce lawyers into perverting the course of justice. They might be tempted to tailor or suppress evidence, over-influence experts, present half-truths to the court, and engage in other forms of trickery or bad faith.38 5.10 Now it is necessary to consider the three main forms that such potential financial interest might take: (1) the lawyer’s normal fee might be 34

Senior Courts Act 1981, s 51(6)(7)(13), inserted by Courts and Legal Services Act 1990, s 4. 35 Cook, Cook on Costs (annual editions, final chapter); M. Harvey, Guide to Conditional Fee Agreements (2nd edn, 2006); Andrews, English Civil Procedure, Chap. 35. 36 For a judicial over-review, Gloucestershire County Council v. Evans [2008] EWCA Civ 21; [2008] 1 WLR 1883 at [1] to [11] per Dyson LJ. 37 Main provisions: Courts and Legal Services Act 1990, ss 58, 58A (substituted by Access to Justice Act 1999, s 27); Senior Courts Act 1981, s 51(2) (as amended by Access to Justice Act 1981, s 31); Conditional Fee Agreements Order 1998 (SI 1998, No 1860); Conditional Fee Agreements (Revocation) Regulations 2005 (SI 2005/2305); CPR 43.2(1)(a), (l), (m), (o) 44.3A, 44.3B, 44.5, 44.15, 44.16, 48.9; PD (48) 55. 38 A. Walters (2000) 116 Law Quarterly Review 371, 372; on maintenance and champerty, R (Factortame Ltd) v. Secretary of State for the Environment, Transport and the Regions (No 8) [2002] EWCA Civ 932; [2003] QB 381, at [31] to [44]; earlier, Thai Trading Co v. Taylor [1998] QB 781, 785–8, CA, cited in Awwad v. Geraghty & Co [2001] QB 570, 578, CA.

5.9 Conditional Fee Agreements

131

reduced39 or waived40 in the event of his client’s defeat (the ‘speculative fee’ system), so that the normal fee will be payable only if the case is won; (2) additional success fees—calculated by reference to work done—might become payable to the victorious party’s lawyer, that is a ‘bonus’ in addition to ordinary fees; (3) the USA ‘contingency fee system’ (‘USACOFs’), that is, the successful claimant’s lawyer might recover a percentage of his client’s monetary award (or settlement). As for (3), the American ‘contingency fee’ remains unlawful in English law as far as remuneration of lawyers is concerned in respect of contentious work, that is, court41 litigation.42 But (1) and (2) above are now lawful in England if, as will now be explained, the lawyer complies with the statutory scheme.43 Of these two forms, (2) has become the work-horse: the conditional fee agreement system (‘CFA’). 5.11 An English conditional fee agreement specifies that the lawyer can receive a ‘success fee’, as well as his ordinary fee.44 The success element is a ‘percentage increase’.45 This bonus cannot exceed 100 per cent of the normal fee.46 If a claimant wins under a CFA funded action, the defendant will be liable for each of the following three items: first, the claimant’s ordinary costs; secondly, the claimant’s lawyer’s ‘success fee’; thirdly, the claimant’s ‘after-the-event’ (‘ATE’) insurance premiums for legal services. ATE cover is important to cover the claimant’s risk that, if the claim fails, he might have to pay the victorious opponent’s costs—in accordance with the loser must pay principle.47 Of course, if a solicitor fails to obtain ATE cover on his client’s behalf, when he has undertaken to do so, and if he fails further to inform his client of this absence of insurance cover, it is only fair that that lawyer should be personally liable for costs payable when the claim fails. This occurred in Adris v. Royal Bank of Scotland (2010)48 (on which see 5.07 above). In Morris v. Southwark London Borough Council

39 For example, Aratra Potato Co Ltd v. Taylor Joynson Garrett [1995] 4 All ER 695, Garland J (20 percent reduction in fee if claim lost; agreement unlawful at common law because ‘champertous’, viz lawyer having stake in outcome of action; such a fee arrangement is now lawful under Courts and Legal Services Act 1990, s 58(2)(a), as substituted by Access to Justice Act 1999, s 27(1)). 40 For example, Thai Trading Co v. Taylor [1998] QB 781, CA (noted Neil Andrews [1998] Cambridge Law Journal 469); for comment, ‘The Ethics of Conditional Fee Arrangements’ (Society for Advanced Legal Studies, 2001) 2.9.2. 41 It appears that contingency fee agreements are now found in England in the Employment Tribunal system. 42 Callery v. Gray [2001] EWCA Civ 1117; [2001] 1 WLR 2112, 2115, at [6], CA. 43 Courts and Legal Services Act 1990, ss 58 and 58A (as amended). 44 CPR 48.9(2). 45 Ibid. 46 Conditional Fee Agreements Order 1998 (SI 1998, No 1860), Art 4. 47 Access to Justice Act 1999, s 29. 48 [2010] EWHC 941 (QB); [2010] 4 Costs LR 598.

132

5 Costs

(2011)49 the Court of Appeal held that there is no public policy objection, based on the doctrines of champerty and maintenance, in a solicitor providing his client with an indemnity if the case is lost to cover that client’s costs liability to the victorious opponent. The central point in reaching this conclusion was that the law of champerty should not be extended. As Lord Neuberger MR noted, that doctrine concerns arrangements where the nonlitigant (here the client’s lawyer) agrees to gain positively from the relevant litigation. This was not so on the present facts. The lawyer would suffer a loss if the case were lost, because he would have to indemnify his client. Lord Neuberger MR said50 : Inclusion of the indemnity meant that the solicitors had a financial interest in the outcome of the litigation in question, because they would have been likely to have to pay the council’s costs if the claim had failed, whereas they have no such liability as the claim succeeded. However, there is no case where such an arrangement has been held to be champertous. When one examines the cases on champerty, they all involve arrangements whereby there is a gain if the action in question succeeds, and while there may also be a loss if the action fails, what is different about the indemnity is that there is just a loss if the action fails.

The court concluded that there was no sound public policy reason to invalidate the indemnity. This had the consequence that the conditional fee agreement between that client and his lawyer was also valid. The decision is sound. It reflects the modern tendency not to expand the doctrine of champerty; it promotes access to justice; and it involves a pragmatic appreciation of the lawyer’s capacity to maintain professional standards of probity even when conducting a case in which he personally has a real financial interest (in the sense that defeat will involve an aggravated form of loss for his firm). Lord Neuberger MR said51 : Access to justice is an essential ingredient of a modern civilised society, but it is difficult to achieve for the great majority of citizens, especially with the ever reducing availability of legal aid. This has been accompanied by a shift in legislative policy towards favouring the relaxation of previously tight professional ethical constraints, in order to enable a variety of more flexible funding arrangements (which some applaud and others believe give too much weight to consumerism and involve expensive regulation). In these circumstances, I find it hard to accept that, by shouldering the risk of an adverse order for costs against his client, a solicitor is acting contrary to public policy, which is, of course, the basis for the law of champerty. It is one thing to say, in relation to contracts with those who conduct litigation, that the reach of champerty should not be curtailed by the courts. It is quite another to say that, in relation to such contracts, the law of champerty should be expanded.

5.12 The system of conditional fees has raised the stakes of contesting liability, to the prejudice of defendants. In Callery v. Gray (2002) Lord 49

[2011] EWCA Civ 25; [2011] 2 All ER 240. Ibid., at [42]. 51 Ibid., at [49]. 50

5.9 Conditional Fee Agreements

133

Hope spoke frankly of this increase in the economic pressure applied by the CFA system to defendants52 : ‘The new regime is not beyond criticism. . .The burden of meeting the cost of access to justice now falls on liability insurers. It thus falls indirectly on their policy holders, who are likely to have to face increased premiums. . . . It may lead to a culture of incurring additional costs which lacks any incentive on claimants to keep costs down.’ A deeply controversial example of cynical ‘funding tactics’ occurred in Campbell v. MGN (No 2) (2005).53 This litigation concerned a claim by the ‘super-model’, Naomi Campbell, against the defendant newspaper publisher. This action was for breach of confidentiality and ‘privacy’. The trial judge awarded her damages of £ (UK) 3,500, and her costs. The Court of Appeal reversed both aspects. Campbell gained permission to appeal to the House of Lords.54 It was only at this third stage of the litigation that Campbell and her lawyers entered a conditional fee agreement. The House of Lords restored the trial judge’s order for damages and his costs order. The claimant claimed costs of over £1 million from the defendant, which included £ 279,981 in respect of the success fees. The defendant challenged the claimant’s right to obtain the success fee element. The basis of this challenge was that the prospect of paying such a bonus would have a ‘chilling’ effect on newspapers’ freedom of expression, and so constitute a ‘disproportionate’ constraint under Article 10 of the European Convention on Human Rights (incorporated into English law by the Human Rights Act 1998). However, the House of Lords held that resort to a CFA arrangement by a ‘mega-rich’ claimant to increase the costs risk of a newspaper (a defendant in an action alleging breach of privacy) is not a violation of the European Convention right to freedom of expression (contained in Article 10 of the Convention) and, furthermore, there is no common law mechanism to control such use of CFAs. However, the European Court of Human Rights in MGN Ltd v. United Kingdom (2011)55 held that there had been a breach of Article 10. The recoverability of substantial success fees against unsuccessful defendants in civil litigation could be unreasonable and disproportionate, particularly in privacy and defamation cases where it was likely to violate the right to freedom of expression. In the instant case where the defendant’s case had not entirely lacked merit, where the costs had far exceeded the damages awarded and where the claimant was a wealthy celebrity, the requirement on the defendant to pay the success fee was disproportionate to the aim of the success fee system. This seems sound. One can sympathise with

52

Callery v. Gray (Nos 1 and 2) [2002] UKHL 28; [2002] 1 WLR 2000, at [54]. [2005] UKHL 61; [2005] 1WLR 3394. 54 Callery v. Gray (Nos 1 and 2) [2002] UKHL 28; [2002] 1 WLR 2000, at [8], per Lord Bingham. 55 Case (39401/04); [2011] ECHR 66; (2011) 29 BHRC 686, at [219]. 53

134

5 Costs

the House of Lords’ wish not to complicate or impede resort to the legislative CFA scheme. But the case is a disturbing example of a litigant’s cynical use of such fee agreements to increase the costs ‘leverage’ against defendants. 5.13 There has been extensive litigation (indeed a ‘costs war’)56 concerning appropriate levels of both success fees and ATE insurance premiums, although this ‘costs war’ was not anticipated when the relevant legislation rendered the defeated defendant liable for these sums.57 5.14 Because of the position at Common Law, an English CFA is valid only if it complies with the statutory regime. In 2005 Parliament revoked complicated regulations prescribing formalities for valid CFAs.58 Now it is enough that the solicitor should explain [to the prospective client]: ‘the circumstances in which the client may be liable for their own costs and for the other party’s costs; the client’s right to assessment of costs, wherever the solicitor intends to seek payment of any or all of their costs from the client; and any interest59 the solicitor may have in recommending a particular policy or other funding.’60 Defeated defendants’ insurers have seized upon even the most trifling failure by the client’s lawyer to satisfy such formalities. In this way, insurers have tried to escape costs liability for success fees61 and insurance premiums. This was ironic because these formalities

56

Callery v. Gray [2001] EWCA Civ 1117; [2001] 1 WLR 2112, at [54]; Callery v. Gray (Nos 1 and 2) [2002] UKHL 28; [2002] 1 WLR 2000; Sarwar v. Alam [2001] EWCA Civ 1401; [2002] 1 WLR 125 (relationship between ‘before-the-event’ and ‘after-the-event’ legal expenses insurance cover); Rogers v. Merthyr Tydfil County BC [2006] EWCA Civ 1134; [2007] 1 WLR 808 (validity of staged ATE premium); Morris v. Southwark London Borough Council [2011] EWCA Civ 25; [2011] 2 All ER 240 (validity of solicitor’s costs indemnity to client: see 5.11). 57 Noted by Herbert M. Kritzer, ‘Fee Regimes and the Cost of Civil Justice,’ Civil Justice Quarterly (2009): 344, 365, n 66: ‘Richard Abel’s detailed account of the passage of the Access to Justice Act 1999 makes no reference to any concerns about the potential for litigation over costs issues; see English Lawyers Between Market and State: The Politics of Professionalism (Oxford: Oxford University Press, 2003), 316–55. 58 Conditional Fee Agreements (Revocation) Regulations 2005 (SI 2005/2305): revoking, notably, Conditional Fee Agreements Regulations 2000 (SI 2000/692). 59 For an unsuccessful challenge on that basis, Tankard v. John Fredericks Plastics Ltd [2008] EWCA Civ 1375; [2009] 1 WLR 1731. 60 The Solicitors’ Practice (Client Care) Amendment Rule (2005) amending the Law Society’s ‘Solicitors’ ‘Costs Information and Client Care Code’ (1999); receiving party’s lawyer’s failure to give receiving party a costs estimate does not relieve paying party of liability for costs, Garbutt case, ibid. 61 The Solicitors’ Practice (Client Care) Amendment Rule (2005) amending the Law Society’s ‘Solicitors’ ‘Costs Information and Client Care Code’ (1999); receiving party’s lawyer’s failure to give receiving party a costs estimate does not relieve paying party of liability for costs, Garbutt case, ibid.

5.10

Assessment of the English Conditional Fee System

135

were originally intended as a form of consumer protection to protect the party undertaking a CFA claim or defence, and not as a means of exonerating defendant insurers from liability to pay costs. Such challenges had become part of an intense ‘costs-war’.62 But that ‘war’ seems now to have abated.

5.10 Assessment of the English Conditional Fee System 5.15

Benefits of the CFA System: The CFA system confers these benefits:

a. its main benefit is that it provides effective access to justice: it has unlocked the door to civil litigation, enabling poor, middle-income individuals, and small businesses to go to court; and the access is speedier because the CFA system avoids bureaucratic delay in obtaining a legal aid decision; b. because the conditional fee system offers privatised economic access to justice, it avoids public expense on legal aid; c. this same system acts as a sieve which excludes unmeritorious claims: claimant solicitors do this sifting, because they will agree to a CFA only if reasonably assured of its eventual success; a practical problem for solicitors is that they can continue to offer after-the-event insurance only if they maintain a reasonable record of successful claims; insurance companies will make the sensible commercial decision simply to ‘drop’ solicitors who consistently over-optimistically take on weak claims on a CFA basis, backing ‘horses that lose’; solicitors are fully aware of this reality; therefore, insurers can indirectly but powerfully exert an important commercial restraint upon pursuit of unusually risky cases.63 5.16 But the CFA system presents dangers and difficulties: Three problems arise. First, there is the problem of ‘over-charging’ by lawyers and insurance companies and an overall increase in the cost of the legal process. Conditional fees agreements remove from claimants and their lawyers

62

On this overall ‘war’, see, e.g., Claims Direct Test Cases [2003] EWCA Civ 136; [2003] 4 All ER 508, at [226]; ‘battles’ include Garbutt v. Edwards [2005] EWCA Civ 1206; [2006] 1 WLR 2907; Garrett v. Halton BC [2006] EWCA Civ 1017; [2007] 1 WLR 554; Nizami v. Butt [2006] EWHC 159 (QB); [2006] 1 WLR 3307; Myatt v. NCB (No 2) [2007] EWCA Civ 307; [2007] 1 WLR 1559. 63 On this insurance market, see ‘The Ethics of Conditional Fee Arrangements’ (Society for Advanced Legal Studies, London, 2001), paras 2.59 to 2.70.

136

5 Costs

the incentive to control costs.64 A second problem engendered by the CFA system (and indeed by the USA system of contingency fee arrangements) concerns conflicts of interest and duty65 : a lawyer’s wish to secure a conditional fee might seduce him into placing his interests ahead of both his client’s interest and the wider demands of justice. A third problem is cynical use of a CFA by very wealthy claimants to exert increased financial pressure upon defendants. As we have seen (5.12), the decision by the European Court of Human Rights in the Campbell litigation has partly remedied this last problem, but only in the context of litigation against the media (MGN Ltd v. United Kingdom, 2011).66 5.17 In that case the European Court of Human Rights summarised67 the following four-fold criticism of the CFA system, drawing upon the Jackson report (2010) (Sir Rupert Jackson’s ‘Civil Litigation Costs Review’).68 The first flaw of the recoverable success fee regime was the lack of focus of the regime and the lack of any qualifying requirements for claimants who would be allowed to enter into a CFA. He highlighted certain anomalies flowing from this. Secondly, Jackson LJ considered . . . that there was no incentive on the part of a claimant to control the incurring of legal costs on his or her behalf and that judges assessed those costs only at the end of the case, when it was considered too late to control what had been spent. The third flaw was the ‘blackmail’ or ‘chilling’ effect of the system of recoverable success fees. The costs burden on the opposing parties was so excessive that often a party was driven to settle early despite good prospects of a successful defence. The fourth flaw was the fact that the regime provided. . .the opportunity. . .to ‘cherry pick’ winning cases to conduct on CFAs with success fees. The Court considers it significant that this. . .would imply that recoverable success fees did not achieve the intended objective of extending access to justice to the broadest range of persons: instead of lawyers relying on success fees gained in successful cases to fund their representation of clients with arguably less clearly meritorious cases, lawyers had the opportunity to pursue meritorious cases only with CFAs/success fees and to avoid claimants whose claims were less meritorious but which were still deserving of being heard.

64

Callery v. Gray [2001] EWCA Civ 1117; [2001] 1 WLR 2112, at [95]; similar comments were made in Callery v. Gray (Nos 1 and 2) [2002] UKHL 28; [2002] 1 WLR 2000. 65 ‘The Ethics of Conditional Fee Arrangements’ (Society for Advanced Legal Studies, London, 2001), Chap.’s 3, 4 and P. Kunzlik, ‘Conditional Fees-the Ethical and Organisational Impact on the Bar,’ Modern Law Review 62 (1999): 850. 66 Case (39401/04); [2011] ECHR 66; (2011) 29 BHRC 686, at [219]. 67 Ibid., at [206]ff. 68 Sir Rupert Jackson, Review of Civil Litigation Costs; on which A.A.S. Zuckerman, ‘The Jackson Final Report on Costs—Plastering the Cracks to Shore up a Dysfunctional System,’ 263.

5.11 Comparison with USA Contingency Fees

137

5.11 Comparison with USA Contingency Fees69 5.18 Michael Zander (London School of Economics) has presented various arguments in support of the contention that England should go further and adopt the US system of contingency fees (USACOFs).70 His main arguments are: (1) the percentage of the attorney’s USACOF remuneration is necessarily ‘proportionate’ to the value of the client’s damages; (2) the USACOF system provides an incentive for the attorney to maximise damages recovery; (3) USACOFs do not provide an economic incentive for attorneys to run up hourly costs; he contrasts this with the English CFA system, under which the bonus is reckoned by the hours worked in winning the case. This last point is Zander’s best challenge to the English system of CFAs. The English practice of billing by the hour enables CFA-sponsoring law firms to generate quite disproportionate amounts of costs.71 This is because the firm is not restrained by the need to justify a costs bill to its client. Ex post facto costs assessments are an expensive and uncertain check upon such CFA fee ‘churning’ (the practice of spinning out the case to maximise fee income). And ‘costs-capping’ has yet to become a general feature of English practice (according to the case law, costs-caps are confined to defamation actions). Furthermore, the courts might not become aware of the size of the problem, because cases are often settled between the parties 69

Improving Access to Justice: Contingency Fees: A Study of their operation in the United States of America: A Research Paper informing the Review of Costs (November 2008), by Professor Richard Moorhead, Cardiff Law School, Cardiff University and Senior Costs Judge Peter Hurst, edited by Robert Musgrove at Part 1, ‘key finding 10’: the paper can be viewed on the CJC website at www.civiljusticecouncil.gov.uk/files/cjccontingency-fees-report-11-11-08.pdf Moorhead and Hurst, ibid, also contains, at Annex B, a massive bibliography of the USA literature on contingency fees. Of this literature, see notably, T. Rowe, ‘Shift Happens: Pressure on Foreign Attorney-Fee Paradigms from Class Actions,’ Duke Journal of Comparative & International Law 13 (2003): 125; J.G. Fleming, The Contingent Fee and its Effect on American Tort Law (1988); Michael Horowitz, ‘Making Ethics Real, Making Ethics Work: A Proposal for Contingency Fee Reform,’ Emory LJ 44 (1995): 173. 70 M. Zander, ‘Where are We Heading with the Funding of Civil Litigation?’ Civil Justice Quarterly 22 (2003): 23; M. Zander, ‘Will the Revolution in the Funding of Civil Litigation in England Eventually Lead to Contingency Fees?’ DePaul Law Review (2003): 39. It appears that contingency fee agreements are now found in England in the Employment Tribunal system. 71 For example, The Lawyer, 9 February, 2009: reports: ‘Slaughter and May has modified its billing practices to embrace discounts and fixed fees, as in-house lawyers hike the pressure to abandon hourly rates. The firm now mainly uses “value billing”, whereby an estimate is agreed on based on “realistic assumptions”, according to a partner. Slaughters executive partner Graham White said the firm had always offered alternatives to billable hours, but admitted that the use of fixed fees had increased in recent months. “We’ve just responded to what clients have asked us for,” he said. “The model of many City firms was, for a long time, to agree fixed hourly rates. I think in-house counsel have realised over the last couple of years that it’s not necessarily the most efficient model.”’

138

5 Costs

without a costs challenge by the defendant. The result of the settlement system is that many costs matters remain invisible to the courts. 5.19 However, not all the arguments are in favour of the US damagesrelated system of remunerating the successful lawyer. Four problems might be identified: (1) the US attorney’s percentage contingency fee might not be a fair reflection of (a) the small risk of defeat (b) the amount of work done (c) the difficulty of the case; (2) is it right that the US lawyer should subtract a large slice of the client’s damages award? (3) There is pressure within the US damages system for judges and juries to make generous awards; (4) within the United Kingdom, there is widespread anxiety that to import USACOFs would stimulate aggressively ‘entrepreneurial’ activity by prospective claimants’ lawyers.

5.12 The Jackson Report (2009–10) 5.20 As for the future, the complex set of recommendations made by Sir Rupert Jackson in his 2009–10 Review of Civil Litigation Costs: Final Report have been severely criticised by Zuckerman in the Civil Justice Quarterly.72 Jackson’s main recommendations are: a. In personal injury litigation, there should be one way costs shifting, so that only the claimant can become a receiving party in the event of victory; but there would be an exception to this inability to make an award in favour of a victorious defendant in cases where the claimant acted in bad faith, or he has high wealth; b. the success fee and the ATE premium would cease to be recoverable in CFA funded litigation; but there should be a 10 per cent increase in general damages for claimants; c. US-style contingency fee agreements would be lawful, that is, victorious lawyers receiving a percentage slice of the victory cake (limited to a maximum of 25 per cent of damages); but the level of the fee would be regulated; a defeated defendant would be liable to pay the victorious party’s ordinary costs (rather than the percentage success fee); d. there should be greater fixed fee regulation within the fast track.

72

Sir Rupert Jackson’s, Review of Civil Litigation Costs: Final Report (2010).

5.12 The Jackson Report (2009–10)

139

5.21 These recommendations were severely criticised by Zuckerman in the Civil Justice Quarterly.73 His main criticisms were as follows.74 I. Jackson’s scheme of recommendations will fragment the system of costs. A ‘balkanisation’ of topics will emerge. This will introduced complexity, and anti-competitive pockets of ‘niche’ expertise, and generally take the system backwards to the chaotic arrangements pre-Judicature Acts 1873–5.75 II. Jackson’s scheme also fails to provide a system of predictable lawyerclient costs and predictable inter-party recoverable costs; furthermore, its proposals will fail to achieve proportionality between costs and the level of the claim.76 III. The victorious claimant’s lawyer under the one way costs shifting proposal would still recover costs calculated on an hourly basis.77 IV. The victorious claimant’s lawyer under the contingency fee shifting proposal78 would still recover costs calculated on an hourly basis (a point not made by Zuckerman). V. Jackson’s proposal for controlling overall costs by judicially tailored costs budgeting (so-called ‘costs management’ in individual cases by judges) would be expensive and doomed to failure.79 VI. Fixed costs in fast track litigation would be undermined by Jackson’s recommendation that the court might relax these figures in exceptional situations80 ; and VII. Jackson displays no support for extension of fixed fees to the multitrack; on this point Zuckerman comments caustically, ‘a general fixedcosts scheme is rejected not as a matter of principle, not because it is undesirable, but purely on the ground that those with a vested interest in the continuation of the winner-takes-all system are opposed to the change’.81

73

Zuckerman, ‘The Jackson Final Report on Costs—Plastering the Cracks to Shore up a Dysfunctional System,’ 263. 74 A.A.S. Zuckerman, ibid. 75 Ibid., at 276. 76 Ibid., at 263–4. 77 Ibid., at 266–68; 277. 78 The ‘Ontario model’: ibid, at paras 4.1 ff. 79 Ibid., at 263, 269–76. 80 Ibid., at 268–9. 81 Ibid., at 269.

140

5 Costs

5.22 However, despite these criticisms, and following a general consultation,82 the Government announced in March 2011 (press release of 29 March 2011 by the Ministry of Justice, London) that it would proceed with the implementation of the Jackson Report’s main proposals.83 This is the Government’s summary of the core proposals which have now been accepted. Abolishing recoverability of success fees and associated costs in ‘no win no fee’ conditional fee agreements. Under the current regime, defendants must pay these additional costs (which can be substantial) if they lose. Instead, claimants will have to pay their lawyer’s success fee and will therefore take an interest in controlling the costs being incurred on their behalf. Allowing damages-based agreements (also known as contingency fees) in litigation before the courts. These are another form of ‘no win no fee’ agreement, under which lawyers can take a proportion of the claimants’ damages in fees. This would increase the funding options available to claimants. Introducing a 10 per cent increase in general damages, and introducing a mechanism to protect the vast majority of personal injury claimants from paying a winning defendant’s costs (through qualified one way costs shifting). Other measures including encouraging parties to make and accept reasonable offers, introducing a new test to ensure that overall costs are proportionate and increasing the costs which can be recovered by people who win their cases without representation by lawyers.

82

Proposals for reform of civil litigation funding and costs in England and Wales (Consultation Paper 13/10: November 2010: Cm 7947). http://www.justice.gov.uk/docs/ jackson-consultation-paper.pdf. 83 http://www.justice.gov.uk/news/press-release-290311a.htm.

Chapter 6

Enforcement of Court Judgments and Orders

Contents 6.1 Money Judgments . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.2 Enforcement of Injunctions . . . . . . . . . . . . . . . . . . . . . . . .

141 145

6.1 Money Judgments 6.01 The Tribunals, Courts and Enforcement Act 2007, (Parts 3–5), which received Royal Assent on 19 July 2007, modifies the law of enforcement as follows (however, this Act has yet to be implemented at the time of writing, March 2011). First, it introduces a new regime for ‘taking control of goods’, replacing the system of ‘seizure of goods’.1 Secondly, it creates new methods of obtaining information concerning debtor’s assets and indebtedness.2 Thirdly, it ‘introduces a package of measures to help those who are willing and able to pay off their debts over time and a new personal insolvency procedure for some people who have fallen into debt but have no foreseeable way out of it’ (see the various categories of protection in Part 5 of the Act).3 The Government announced in March 2011 (press

C. Sandbrook, Enforcement of a Judgment (11th edn, London: Sweet & Maxwell, 2011). 1

Tribunals, Courts and Enforcement Act, sections 62 to 70, Schs 12 and 13. Ibid., sections 95 to 105. 3 The following background materials are available at http://www.dca.gov.uk/legist/ tribenforce.htm#b. ‘Effective Enforcement: improved methods of recovery for civil court debt and commercial rent and a single regulatory regime for warrant enforcement agents’, White Paper, LC Dept (Cm 5744, 2003); ‘A Choice of Paths: better options to manage over-indebtedness and multiple debt’ (Consultation Paper, DCA: CP23/04, 2004); ‘Relief for the Indebted: an Alternative to Bankruptcy’ (Consultation Paper:, Insolvency Service, 2005). 2

N. Andrews, The Three Paths of Justice, Ius Gentium: Comparative Perspectives on Law and Justice 10, DOI 10.1007/978-94-007-2294-1_6, C Springer Science+Business Media B.V. 2012

141

142

6 Enforcement of Court Judgments and Orders

release of 29 March 2011 by the Ministry of Justice, London)4 that it aimed to implement reforms to the enforcement system. It said5 : More effective enforcement: Research points to ‘inefficient enforcement processes’ as a weakness of the small claims system. Today’s consultation therefore contains proposals which will ensure the court can tackle those debtors who won’t pay their debts, whilst ensuring that those who can’t pay are protected. We are proposing introducing Information Orders and Requests to enable the courts to access independent information about a debtor’s status and assets. We also propose a number of ways to tighten enforcement techniques – for example making it more difficult for debtors to stop money from being frozen by putting it in different accounts.

6.02 It remains an axiom of this procedural area that judgment creditors are free to choose from the portfolio of available enforcement methods.6 Money judgments can be enforced by: (i) a writ of fieri facias or warrant of execution7 ; these are re-named ‘writs of control’ and ‘warrants of control’ by the Tribunals, Courts and Enforcement Act 2007 (‘TCE Act’)8 ; (ii) a third party debt order9 ; (iii) a charging order (against land), stop order (against securities or funds in court), or a stop notice (against securities)10 ; or (iv) by appointment of a receiver.11 Some types of pecuniary enforcement are available only in county courts: (v) attachment of earnings orders12 and (vi) ‘administration orders’13 (Part 5 of the TCE Act introduces various categories of protection for debtors). Enforcement of non-money judgments is unaffected by the new legislation. Such judgments can be enforced as follows: goods, by warrants of specific delivery or delivery (in county courts)14 and writs of specific delivery or of delivery (in the High Court)15 ; land, by warrants of possession (in county courts)16 ; and writs of possession (in the High Court)17 ; injunctions and other orders, by

4

http://www.justice.gov.uk/news/press-release-290311a.htm http://www.justice.gov.uk/news/press-release-290311a.htm 6 CPR 70.2(2). 7 RSC Ord 46 and 47 and CCR Ord 26, in Schs 1 and 2, CPR. 8 Tribunals, Courts and Enforcement Act, sections 62 to 70, Schs 12 and 13. 9 CPR Part 72. 10 CPR Part 73. 11 See RSC Orders 30 and 51, in Sch 1, CPR, which apply both in the High Court and county courts. 12 CCR Ord 27, in Sch 2, CPR. 13 County Courts Act 1984, s 112; such an order prevents named creditors from petitioning for bankruptcy against the judgment debtor, and makes provision for payment of creditors by instalments; the order can last for three years. 14 CCR Ord 26, r 16 in Sch 2, CPR. 15 RSC Ord 45, r 4 in Sch 1, CPR. 16 CCR Ord 26, r 17 in Sch 2, CPR; or by summary proceedings for the recovery of land against trespassers, CCR Ord 24 (see Sch 2, CPR) and CPR Part 55. 17 RSC Ord 45, r 3 in Sch 1, CPR. 5

6.1 Money Judgments

143

committal proceedings.18 Judgment creditors can apply for an order compelling a judgment debtor (or in the case of a company, one of its officers) to attend the court and to supply information concerning the debtor’s means and financial commitments.19 If the judgment debtor is a company, CPR Part 71 enables an order to be made for information to be supplied by the company’s officers. But the House of Lords held in Masri v. Consolidated Contractors International Co SAL (2009) that CPR Part 71 does not enable an order for examination to be made against an officer who is outside the jurisdiction, and that CPR Part 6 provides no basis for service out of the jurisdiction of any such order, had it been possible to make one.20 (The TCE Act creates new methods of obtaining information concerning debtor’s assets and indebtedness: sections 95 to 105). The main methods of enforcement will now be explained. 6.03 Seizure of Goods: Now to be re-named ‘taking control of goods’ by the TCE Act, this is the most common form of enforcement. The traditional operation of this method of enforcement has been (i) to seize or physically secure the debtor’s goods and (ii) to sell them at public auction, or threaten to sell them, (iii) in order to satisfy the judgment debt. Elements (ii) and (iii) will not be affected by the TCE Act. But this Act introduces a new approach to element (i), which will now be summarised.21 High Court sheriffs and county court bailiffs are re-named ‘enforcement agents’. The High Court writ of fieri facias is renamed a ‘writ of control’ and county court warrants of execution become ‘warrants of control’. Property in all the debtor’s goods (defined to cover all ‘property of any description, other than land’) will become ‘bound’ by the writ or warrant once that document is received by the enforcement agent. However, innocent third party purchasers can obtain good title to such goods if they acquired the debtor’s goods ‘in good faith’, ‘for valuable consideration’, and ‘without notice’. Enforcement officers can gain physical ‘control’ of goods. ‘Control’ involves physically ‘securing’ them (including removing them) or entering into a ‘controlled goods agreement’ with the debtor. Before gaining ‘control’, the enforcement agent must give the debtor ‘notice’. Enforcement agents can use reasonable force to enter premises, including domestic premises. Force, however, is not to be exercised against a person. ‘Exempt goods’ will be defined by regulations.

18

RSC Ord 45 and 52; CCR Ord 25, 29 in Schs 1 and 2, CPR. CPR Part 71; PD (71). 20 [2009] UKHL 43; [2009] 3 WLR 385; [2009] Bus LR 1269; [2009] 4 All ER 847; [2009] 2 Lloyd’s Rep 473; [2009] CP Rep 47. 21 Tribunals, Courts and Enforcement Act, ss 62 to 70, Schs 12 and 13. 19

144

6 Enforcement of Court Judgments and Orders

6.04 ‘Third party debt orders’22 : These were previously known as ‘garnishee orders’. This form of enforcement enables a judgment creditor to divert or intercept money payable to the judgment debtor, for example money held to his order in a bank or building society.23 In one case this process was used to obtain an order for a non-party bank to pay costs incurred in proceedings against an unincorporated association.24 The procedure concerns ‘any amount of any debt due, or accruing due, to the judgment debtor from the third party.’25 The court must make both an interim26 and a final order.27 The process is not exercisable against debts ‘situated’ outside England and Wales,28 even if the foreign jurisdiction is within the Brussels or Lugano jurisdictional system.29 The relevant non-party must also be ‘within the [English] jurisdiction’.30 6.05 Charging orders31 : This type of order can be made in respect of a money judgment, including one expressed in terms of a foreign currency.32 CPR Part 73 governs charging orders against the judgment debtor’s land or interest in land; or ‘stop orders’ preventing various dealings in respect of securities or funds in court; or ‘stop notices’ preventing various dealings in respect of securities.33 A judgment debtor’s interest in jointly held real 22

CPR Part 72; PD (72); on jurisdictional aspects of this topic, T. Hartley, ‘Jurisdiction in Conflict of Laws: Disclosure, Third-Party Debt and Freezing Orders,’ Law Quarterly Review 126 (2010): 194, 206–9. 23 CPR 72.1(2): provided the bank or building society ‘lawfully accepts deposits in the United Kingdom’; banks and building societies can become subject to obligations to reveal details of all accounts which the judgment debtor holds with them: CPR 72.6; for money in court standing to the credit of the judgment debtor, CPR 72.10; on the threshold level of proof that a bank etc account exists, Alawiye v. Mahmood [2006] EWHC 277 (Ch); [2007] 1 WLR 79. 24 Huntingdon Life Sciences Group plc v. Stop Huntingdon Animal Cruelty [2005] EWHC 2233 (QB). 25 CPR 72.2(1)(a). 26 Alawiye v. Mahmood [2006] EWHC 277 (Ch); [2007] 1 WLR 79. 27 CPR 72.2(2). 28 Kuwait Oil Tanker Company SAK v. UBS AG [2003] UKHL 31; [2004] 1 AC 300 (third party debt-a bank account in defendant’s name—‘situated’ in Switzerland; English judgment debt; third party bank having branch in London); Société Eram Shipping Company Ltd v. Hong Kong and Shanghai Banking Corporation Ltd [2003] UKHL 30; [2004] 1 AC 260 (third party debt—also a bank account—‘situated’ in Hong Kong; French judgment debt, recognized in England; third party bank having branch in London); reasoning criticised by P. Rogerson [2003] Cambridge Law Journal 576. 29 As in the Kuwait case [2003] UKHL; [2004] 1 AC 300. 30 CPR 72.1(1). 31 CPR Part 73; PD (73); Charging Orders Act 1979. 32 Carnegie v. Giessen [2005] EWCA Civ 191; [2005] 1 WLR 2510, CA (English judgment payable in US dollars; valid charging order). 33 Charging Orders Act 1979, s 2(2)(a) to (c) respectively; CPR 73, Sections I to III; notable decisions on trusts, subrogation and restitution law in this context are Boscawen

6.2 Enforcement of Injunctions

145

property can be the subject of a charge.34 A charging order can also be applied against the proceeds of sale of land held under a trust for sale.35 In all these situations, the procedure involves an interim and a final order. The criteria for making a final charging order include36 : ‘(a) the personal circumstances of the debtor and (b) whether any other creditor would be likely to be unduly prejudiced by the making of the Order.’ No final order will be made if the judgment debtor becomes insolvent after the interim order. This is because such an order in that situation would disturb the insolvency legislation’s scheme of distribution.37 Final orders against interests in land should be registered.38

6.2 Enforcement of Injunctions 6.06 Injunctions must be backed by credible threats.39 The injunction was devised by the Court of Chancery. Before the 1870s that court had administered a separate procedure and set of rules and remedies, so-called ‘Equity’. The ‘Common Law’ courts had a separate jurisdiction. But the Supreme Court of Judicature Acts of 1873 and 1875 amalgamated these procedural systems. The Lord Chancellors, and other Court of Chancery judges administering this ‘equitable’ jurisdiction, had not been reluctant to enforce an injunction (effectively, an ‘equitable order’) by applying quasicriminal sanctions against those who failed to comply with such an order. This tough approach towards breach of injunctions has survived the procedural changes of the 1870s, just mentioned. And so a person will be guilty of contempt of court if he breaches an injunction addressed to him. It is also an act of contempt to fail to comply with an order for disclosure of assets within a freezing injunction,40 or to fail to honour an undertaking made by a litigant (whether expressly or impliedly, under well-established rules) to the

v. Bajwa [1996] 1 WLR 328, CA; Banque Financière de la Cité v. Parc (Battersea) Ltd [1999] 1 AC 221, HL; for the types of disposition prevented by stop orders, CPR 73.13 (funds in court) and 73.14 (securities); for the types of dealing prevented by stop notices, see CPR 73.18 (securities). 34 Charging Orders Act 1979, s 2(1)(b)(iii). 35 National Westminster Bank Ltd v. Stockman [1981] 1 WLR 67. 36 Charging Orders Act 1979, s 1(5). 37 Roberts Petroleum Ltd v. Bernard Kenny [1983] AC 192, HL. 38 On the effect of registration, Clark v. Chief Land Registrar [1994] Ch 370, CA. 39 RSC Ord 45 & 52; CCR Ord 25, 29: appended to CPR; Arlidge, Eady and Smith on Contempt (3rd edn, London, 2005). 40 Raja v. Van Hoogstraten [2004] EWCA Civ 968; [2004] 4 All ER 793; information disclosed (including in response to cross-examination) under a disclosure order ancillary to a freezing order can be used for contempt purposes, Dadourian Group International Inc v. Simms [2006] EWCA Civ 1745; [2007] 2 All ER 329.

146

6 Enforcement of Court Judgments and Orders

court.41 The representative mechanism can be used for effective injunctive relief against a disruptive unincorporated association (a ‘protest group’).42 In these various situations, non-compliance need not be deliberate or calculated.43 It is normally enough that the act or omission is not accidental.44 A party who disobeys an injunction will be guilty of contempt even if he later persuades the court to set aside the relevant order or injunction.45 Nor is this coercive regime confined to litigants. A non-party who receives notice of an injunction is guilty of contempt if he aids or abets breach of that injunction, or acts independently to undermine it.46 6.07 A company is in contempt of court if it breaches an order because of the conduct of its employee. This is so even if the company expressly prohibited such conduct. It is enough that the employee’s conduct took place within the course of his employment.47

41

Fore example, the implied undertaking applicable to information disclosed under compulsory disclosure powers, CPR 31.22; instances of contempt in that context are Miller v. Scorey [1996] 3 All ER 18 and Watkins v. AJ Wright (Electrical) Ltd [1996] 3 All ER 31; or the various undertakings imposed pursuant to freezing injunctions or search orders; for emphatic affirmation that breach of an undertaking is as serious as breach of an injunction, Cobra Golf Inc v. Rata [1998] Ch 109, 128, 163, per Rimer J, citing authority; on the court’s discretion to release a party from an undertaking, Di Placito v. Slater [2003] EWCA Civ 1863; [2004] 1 WLR 1605, at [27] ff. 42 Oxford University v. Webb [2006] EWHC 2490 (QB) Irwin J applying CPR 19.6, and considering, at [56] ff, M Michaels (Furriers) Limited v. Askew (CA, unreported, 23 June 1983) and other authorities. 43 Miller v. Scorey [1996] 3 All ER 18; Watkins v. AJ Wright (Electrical) Ltd [1996] 3 All ER 31 (both concerning breaches of the implied undertaking protecting information disclosed during discovery under CPR 31.22). 44 Heatons Transport (St Helens) Ltd v. Transport and General Workers Union [1973] AC 15, 109, HL; applied in Z Bank v. D1 [1974] 1 Lloyd’s Rep 656, Colman J; Director General of Fair Trading v. Pioneer Concrete Ltd [1995] 1 AC 456, 478, HL; in Bird v. Hadkinson The Times 4 March, 1999, Neuberger J refused to follow the test of deliberate breach adopted in Irtelli v. Squatriti [1993] QB 83, CA. 45 Motorola Credit Corporation v. Uzan (No 2) [2003] EWCA Civ 752; [2004] 1 WLR 113, at [148] to [156] (considered in Raja v. Van Hoogstraten [2004] EWCA Civ 968; [2004] 4 All ER 793); Isaacs v. Robertson [1985] AC 97, PC; Bhimji v. Chatwani [1991] 1 WLR 989; Wardle Fabrics Ltd v. Myristis (G) Ltd [1984] FSR 263. 46 Seaward v. Paterson [1897] 1 Ch 545; Elliott v. Klinger [1967] 1 WLR 1165; Z Ltd v. A-Z and AA-LL [1982] QB 558, CA (containing a good survey of the principles); Attorney-General v. Times Newspapers Ltd [1992] AC 191, HL; Att-Gen v. Punch Ltd [2002] UKHL 50; [2003] 1 AC 1046. 47 Re Supply of Ready Mixed Concrete (No 2) [1995] 1 AC 456, HL; the question of corporate criminal liability was considered in Attorney-General’s Reference (No 2) of 1999 [2000] QB 796, CA, also noting: Meridian Global Funds Management Asia Ltd v. Securities Commission [1995] 2 AC 500; R v. British Steel plc [1995] 1 WLR 1356; R v. Associated Octel Ltd [1996] 1 WLR 1543; R v. Gateway Foodmarkets Ltd [1997] ICR 382.

6.2 Enforcement of Injunctions

147

6.08 A contemnor can be committed (that is, become subject to committal proceedings) for contempt of court.48 Civil contempt is classified as a quasi-criminal wrong. The standard of proof is ‘beyond reasonable doubt’ rather than the lower civil standard of proof ‘on the balance of probabilities’.49 In JSC BTA Bank v. Solodchenko (No 2) (2010) the court noted that, although the burden of proof is upon the party bringing the committal proceedings to prove that there has been contempt, and to prove all disputed facts concerning its effect, the contemnor has the burden on the balance of probabilities of demonstrating that he has purged his contempt.50 Hearsay evidence is admissible51 as well as statements made in earlier proceedings under compulsion.52 A person found guilty of contempt can be imprisoned for up to 2 years53 or fined. A custodial sentence can be suspended.54 The object of the penalty is to punish for defiance of the court’s order, but it can also be aimed at coercing the contemnor into complying with the order, to the extent that this remains possible.55 In the case of both individuals56

48

Arlidge, Eady and Smith on Contempt (3rd edn, London: Sweet & Maxwell, 2005); RSC Ord 52, Sch 1, CPR; CCR Ord 29, Sch 2, CPR; on the need for due process to protect contemnors, Raja v. Van Hoogstraten [2004] EWCA Civ 968; [2004] 4 All ER 793, conclusion at [106]; Newman v. Modern Bookbinders Ltd [2000] 1 WLR 2559, CA; for discussion of the court’s willingness to commit a contemnor, despite technical procedural defects, see Bell v. Tuohy [2002] EWCA Civ 423; [2002] 3 All ER 975, CA, at [31] to [59], examining Nicholls v. Nicholls [1997] 1 WLR 314, 326, CA; and for problems of overlapping criminal and civil proceedings, Lomas v. Parle [2003] EWCA Civ 1804; [2004] 1 WLR 1642. 49 Z Bank v. D1 [1974] 1 Lloyd’s Rep 656, 660, Colman J. 50 JSC BTA Bank v. Solodchenko (No 2) [2010] EWHC 2843; [2011] 1 WLR 906, Proudman J. 51 Daltel Europe Ltd v. Makki [2006] EWCA Civ 94; [2006] 1 WLR 2704. 52 Dadourian Group International Inc v. Simms [2006] EWCA Civ 1745; [2007] 2 All ER 329; Lexi Holdings plc v. Shaid Luqman [2007] EWHC 1508 (Ch). 53 Harris v. Harris [2001] EWCA Civ 1645; [2002] Fam 253, CA, at [12] to [14], noting Contempt of Court Act 1981, s 14(1), restricting the period to a maximum of two years’ imprisonment; also noting the statutory duty to release a contemnor who has served half of a term of less than 12 months: Criminal Justice Act 1991, s 45(3); in Lexi Holdings plc v. Shaid Luqman [2007] EWHC 1508 (Ch), at [182] ff, a party was imprisoned for 18 months for failure to deliver up his passport and other documents, preserve evidence, disclose property assets and provide information regarding the location of funds and assets and, further, dealing with certain property and assets which fell within the ambit of the freezing order; for another instance of imprisonment, UK (Aid) Ltd v. Martin Mitchell [2007] EWHC 1940. 54 JSC BTA Bank v. Solodchenko (No 2) [2010] EWHC 2843; [2011] 1 WLR 906, at [16], per Proudman J. 55 Ibid., at [17], per Proudman J, citing authorities. 56 Raja v. Van Hoogstraten [2004] EWCA Civ 968; [2004] 4 All ER 793 at [71] ff; although the court has such jurisdiction against individuals who are contemnors, the order was procedurally defective on the facts, see [105].

148

6 Enforcement of Court Judgments and Orders

and companies, the court can order ‘sequestration’ of their assets.57 This involves ‘sequestrators’ (officers of the court, often appointed specially for the present case) seizing the contemnor’s property, including land,58 and eventually selling it.59 6.09 For sentencing purposes the courts have articulated a range of factors. Besides those listed in JSC BTA Bank v. Solodchenko (No 2) (2010),60 factors include: (i) whether the contemnor has ‘contumaciously’ flouted the law61 ; (ii) whether it has become evident that he will not accept the court’s authority; (iii) the contemnor has already received adequate punishment62 ; (iv) or he has ‘purged’ his contempt63 ; (v) whether his conduct or omission was deliberate or negligent.64 As for this last consideration, inadvertent breach of an injunction will not normally

57

Sch 1, CPR, at RSC Ord 45, rr 3 (1)(c), 4(2)(c), 5(1)(b)(i)(ii); RSC Ord 46, r 5; on the court’s inherent power, Webster v. Southwark London Borough Council [1983] QB 698. 58 Mir v. Mir [1992] Fam 79. 59 On sequestrators’ potential liability for negligence, IRC v. Hoogstraten [1985] QB 1077, CA; and see Raja v. Van Hoogstraten [2007] EWHC 1743 (Ch). 60 JSC BTA Bank v. Solodchenko (No 2) [2010] EWHC 2843; [2011] 1 WLR 906, per Proudman J: at [18] ‘I must take into account for sentencing purposes the factors considered by Lawrence Collins J in Crystal Mew v. Metterick [2006] EWHC 3087 (Ch), at [13]. In brief: whether the claimant is prejudiced by virtue of the contempt and whether the prejudice is capable of remedy; the extent to which the contemnor has acted under pressure; whether the breach of the order was deliberate or unintentional; the degree of culpability; whether the contemnor was placed in breach by reason of the conduct of others; whether the contemnor appreciated the seriousness of the breach; whether the contemnor has co-operated; a genuine offer following judgment but before sentence to co-operate in the provision of information is capable of being a serious mitigating factor.’ and [19]: ‘I would add to these factors the following: whether the contemnor has admitted his contempt and has entered the equivalent of a guilty plea; by analogy with sentencing in criminal cases, the earlier the admission is made the more credit the contemnor is entitled to be given; whether the contemnor has made a sincere apology for his contempt; the contemnor’s previous good character and antecedents; any personal mitigation advanced on his behalf.’ 61 Bhimji v. Chatwani [1991] 1 WLR 989; good illustrations are X v. Y [1988] 2 All ER 648, 666 and Watkins v. AJ Wright (Electrical) Ltd [1996] 3 All ER 31; on the question when a litigant’s defiance in open court of a judicial or court order will justify imprisonment for contempt, Bell v. Tuohy [2002] EWCA Civ 423; [2002] 3 All ER 975, CA, at [60] to [66]. 62 Re Barrell Enterprises [1973] 1 WLR 19, CA; RSC Ord 52, r 8, Sch 1, CPR. 63 The court’s flexibility is not without limit: Harris v. Harris [2001] EWCA Civ 1645; [2002] Fam 253, CA (court lacks power to permit release of contemnor from prison on condition that he does not commit fresh contempt). 64 Guildford BC v. Valler The Times 15 October 1993, CA.

6.2 Enforcement of Injunctions

149

justify punishment.65 The court might instead make a disciplinary costs order66 ; or strike out the contemnor’s claim or defence; or bar him from bringing an appeal,67 although in these last two respects caution is now required.68

65 For example, Adam Phones Ltd v. Gideon Goldschmidt (unreported, 9 July 1999) (innocent failure to comply with a court order for delivery up of materials). 66 Miller v. Scorey [1996] 3 All ER 18; Watkins v. AJ Wright (Electrical) Ltd [1996] 3 All ER 31. 67 Raja v. Van Hoogstraten [2004] EWCA Civ 968; [2004] 4 All ER 793 at [81] to [83], [112]; and see the authorities (not all of which were cited in the Raja case), noted at Neil Andrews, English Civil Procedure (Oxford: Oxford University Press, 2003), 39.63. 68 Motorola Credit Corporation v. Uzan (No 2) [2003] EWCA Civ 752; [2004] 1 WLR 113, at [81] to [83]; Days Healthcare UK Ltd v. Pihsiang MM Co Ltd [2006] EWHC 1444 (Comm); [2007] CP Rep 1.

This is Blank Page Integra

vi

Chapter 7

Protective Relief

Contents 7.1 7.2 7.3 7.4

Introduction . . . . . . . . . . . . Freezing Relief . . . . . . . . . . . Search Orders . . . . . . . . . . . Civil Orders for Custody of Passports

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

151 152 161 165

7.1 Introduction 7.01 The courts fashioned the injunction to induce recalcitrant parties to satisfy their legal duties. English judges are trusted to use their severe contempt of court powers against a person who breaches an injunction: fines, imprisonment, or seizure of personal or corporate assets (these decisions being subject to appeal). 7.02 Perhaps the most common forms of injunction are orders requiring defendants to discontinue a trespass, or not to molest an ex-wife or former partner, or to compel a landowner to complete an agreement for sale of real property (this last is known as ‘specific performance’). But the general statutory power to issue injunctions,1 that is, orders backed by powerful threats, has been a fertile source of judicial creativity.2 7.03 This remedy has been adopted to counter many types of misconduct, including wrongs threatening to sap or frustrate the civil process. Injunctions in these procedural contexts are intended to ensure

1

s 37, Senior Courts Act 1981. Neil Andrews, ‘Development in English Civil Procedure: How Far Can the English Courts Reform their Own Procedure?’ Zeitschrift für Zivilprozess International 2 (1997): 3–29.

2

N. Andrews, The Three Paths of Justice, Ius Gentium: Comparative Perspectives on Law and Justice 10, DOI 10.1007/978-94-007-2294-1_7, C Springer Science+Business Media B.V. 2012

151

152

7 Protective Relief

that attempts to vindicate substantive justice are not thwarted by cynical obstructive tactics—most commonly dissipating assets, destroying evidence, or personally absconding from the jurisdiction.

7.2 Freezing Relief 3 7.04 Nature: This is an in personam order requiring a respondent to refrain from dealing with his assets. This relief does not give the applicant any proprietary interest in the defendant’s assets.4 ‘Freezing injunctions’,5 formerly called Mareva injunctions, are draconian.6 And so they can normally7 be granted only by puisne judges in the High Court, rather than by Masters in the High Court or by judges in the county courts. The injunction operates at first ‘without notice’ (ex parte), usually before the main proceedings have commenced (for the standard form, see the Annex to the Practice Direction in CPR Part 25).8 Its essence is a surprise procedural strike. The merits of the order are reviewed at an inter partes hearing. The court will then decide whether to continue the order. This order, applicable usually to the defendant’s bank account assets, provides that a portion of those assets, above a protected sum, should remain ‘unfrozen’. It also restrains non-parties, such as the defendant’s bank, from acting to undermine the main freezing order. As examined by the Supreme Court in Re Guardian News & Media Ltd (2010),9 statute allows freezing injunctions to be sought by the Government under anti-terrorism legislation. In that case

3

The leading work is S. Gee, Commercial Injunctions (London: Sweet & Maxwell, 2004); Neil Andrews, English Civil Procedure (New York: Oxford University Press, 2003), Chap. 17; Zuckerman on Civil Procedure (London, 2006), 9.139 ff; I.S. Goldrein, ed., Commercial Litigation: Pre-emptive Remedies (London: International Edition, 2005), Chap. 2; I.S. Goldrein, ed., Commercial Litigation: Pre-emptive Remedies (Updater service, 2010); for extensive bibliographical details on this topic, see Andrews, op. cit., at 17.01 at n 7 and Neil Andrews, ‘Provisional and Protective Measures: Towards a Uniform Provisional Order,’ Uniform L Rev (Rev dr unif) VI (2001): 931–49 (this article contains analysis of a possible ‘blue-print’ for an international code or practice relating to freezing relief, preservation of evidence, and asset disclosure orders). See also D. Bean, Injunctions (10th edn, London: Sweet & Maxwell, 2010); L.A. Sheridan, Injunctions and Similar Orders (Chichester: Barry Rose, 1999). 4 Cretanor Maritime Co Ltd v. Irish Marine Maritime Ltd [1978] 3 All ER 164, CA; Capital Cameras Ltd v. Harold Lines Ltd [1991] 1 WLR 54; Flightline v. Edwards [2003] 1 WLR 1200, CA. 5 CPR 25.1(1)(f) renames the injunction (which had been earlier ratified by s 37(3), Senior Courts Act 1981). 6 Fourie v. Le Roux [2007] UKHL 1; [2007] 1 WLR 320 recently emphasised this feature. 7 PD (25): Masters or District judges can make such orders only in special cases. 8 PD (25A): accessible at http://www.justice.gov.uk/civil/procrules_fin/menus/rules.htm. 9 [2010] UKSC 1; [2010] 2 AC 697.

7.2

Freezing Relief

153

the court removed anonymity (granted by the lower courts) from alleged terrorists who were London-based and who had been subject to this form of relief. 7.05 The Court of Appeal in JSC BTA Bank v. Solodchenko (2010)10 held that the standard form of the freezing order contained in the Admiralty and Commercial Court Guide11 is wider than the standard form used by other branches of the High Court.12 The distinctive aspect of the Commercial Court Guide is that it catches assets even if the respondent is merely a trustee or nominee of those assets for a third party, so that the respondent does not have more than bare title in the assets, and lacks beneficial interest in them. The court recommended that this dissonance in the wording of the High Court’s various standard forms should be addressed. It also cautioned against over-zealous use of the Commercial Court’s wider form of wording in situations where there was no clear reason to suspect that the respondent was acting other than as a good faith nominee or trustee for others. The following passages are illuminating13 : (1) Nothing in this judgment is intended to cast any doubt upon the established principles which underlie the grant of all freezing orders. I refer in particular to the fact that the only purpose of such an injunction is to prevent the dissipation of assets which would otherwise be available to meet a judgment. The inclusion of trust assets is therefore only justifiable if there are proper grounds for believing that assets ostensibly held by the defendant on trust or as a nominee for a third party in fact belong to him (or to another person whose assets are also frozen). Absent such circumstances, I can see no possible justification for including in the order assets which belong beneficially to a third party and are not therefore the property of the defendant. (2) A judge who is asked to grant an injunction in this form should be concerned to minimise the impact of the order on third party beneficiaries under genuine trusts. This will require expedition in resolving any issues of title on an application by a defendant or beneficiary to vary the order and active consideration being given to the form of the cross-undertaking. It will usually be appropriate for the cross-undertaking [the applicant’s implied promise to compensate non-parties] to be extended in terms to cover the purported beneficiary for any loss which is caused by an injunction which is subsequently varied or discharged in respect of the trust assets.

10

[2010] EWCA Civ 1436; [2011] 1 WLR 888. The Admiralty and Commercial Courts Guide (9th edn, 2011), Appendix 5 at para 6 (the relevant words are now stated to be open to insertion on a ‘case by case basis’). 12 As Longmore LJ commented, in JSC BTA Bank v. Solodchenko [2010] EWCA Civ 1436; [2011] 1 WLR 888, at [55]: ‘The standard form of injunction in use for the last quarter of the last century [PD (25A0, annex] only requires the defendant to identify “his” assets. That phrase was held by the Court of Appeal in Federal Bank of the Middle East Ltd v. Hadkinson [200] 1 WLR 1695, not to include assets of which the defendant was a trustee (with legal ownership) but held in trust for other persons such as (in that case) clients who had allegedly given him the funds for investment.’ 13 JSC BTA Bank v. Solodchenko [2010] EWCA Civ 1436; [2011] 1 WLR 888, at [49], per Patten LJ. 11

154

7 Protective Relief

7.06 Interest in this form of protective relief is not confined to English and British Commonwealth jurisdictions (see the literature within the international commercial arbitration14 and comparative communities).15 Furthermore, the American Law Institute/UNIDROIT’s canon of ‘transnational’ principles of civil litigation acknowledges the importance of such relief.16 7.07 Assets Disclosure Orders: A freezing injunction is nearly always supplemented by an asset disclosure order. This compels the respondent to disclose details of his assets in England (or, where appropriate, elsewhere).17 A non-party can be compelled to provide certain information if he has assisted, even innocently, another’s wrongdoing.18 Breach of such an order will render the guilty party, or non-party, liable to punishment for contempt of court, as discussed in JSC BTA Bank v. Solodchenko (No 2)

14

A. Redfern, ‘Interim Measures,’ in The Leading Arbitrators’ Guide to International Arbitration, eds. L.W. Newman and R.D. Hill (Bern: Juris, 2004), at 217 ff and F. Knoepfler, ‘Les Mésures Provisoires et l’Arbitrage,’ in Médiation et Arbitrage: Alternative Dispute Resolution-Alternative a la justice ou justice alternative? Perspectives Comparatives, eds. L. Cadiet, E. Jeuland, and T. Clay (Litec, Paris: Lexis Nexis, 2005); M. Mustill and S. Boyd, Commercial Arbitration: 2001 Companion Volume (London: Butterworths, 2001), 314–6, 323–4; the High Court has power under s 44, 1996 Act, to award (ex parte) freezing relief or a search order in support of pending or contemplated arbitration proceedings, if the matter is ‘urgent’ (Mobil Cerro Negro Ltd v. Petroleos De Venezuela SA (2008), noted at 7.19); therefore, the arbitral tribunal itself lacks power to award ex parte freezing relief or search orders; H. van Houtte, ‘Ten Reasons Against a Proposal for Ex Parte Interim Measures of Protection in Arbitration,’ Arbitration International 20 (2004): 85; A. Baykitch and J. Truong, ‘Innovations in International Commercial Arbitration: Interim Measures a Way Forward or Back to the Future,’ The Arbitrator and Mediator 25 (2005): 95; N. Trocker, ‘Provisional Remedies in Transnational Litigation: The Issue of Jurisdiction: A Comparative Outline,’ Int’l Lis (2009): 48–56. 15 Andrews, ‘Provisional and Protective Measures: Towards an Uniform Provisional Order,’ 931; Stephen Goldstein, ‘Revisiting Preliminary Relief in Light of the ALI/UNIDROIT Principles and the New Israeli Rules,’ in Studia in Honorem: Pelayia Yessiou-Faltsi (Athens: Sakkoulas Publications, 2007), 273–96. 16 American Law Institute/UNIDROIT’s Principles of Transnational Civil Procedure (Cambridge: Cambridge University Press, 2006), principle 8; on which Stephen Goldstein, ibid. 17 Derby & Co Ltd v. Weldon (No 1) [1990] Ch 48, CA; Derby & Co Ltd v. Weldon (Nos 3 & 4) [1990] Ch 65, 86, 94–5, CA; Bank of Crete SA v. Koskotas [1991] 2 Lloyd’s Rep 587, CA; LA Collins (1989) 105 Law Quarterly Review 262, 286 ff; C. McLachlan, ‘The Jurisdictional Limits of Disclosure Orders: Transnational Fraud Litigation,’ International and Comparative Law Quarterly (1998): 3. 18 On the ‘mere witness’ rule, see Norwich Pharmacal Co v. Customs and Excise [1974] AC 133, HL and, in the present context, Bankers Trust Co v. Shapira [1980] 1 WLR 1274, CA, Arab Monetary Fund v. Hashim (No 5) [1992] 2 All ER 911, Hoffmann J; Andrews, English Civil Procedure, 26.102–26.128.

7.2

Freezing Relief

155

(2010) (on this case and generally on contempt of court, 6.08 ff).19 There is also the possibility of the court using ‘unless’ and ‘debarring’ orders.20 7.08 Protection of the Respondent: Duties of the Court and Applicant During the Ex Parte Hearing: The court must be cautious. Furthermore, an applicant must reveal to the court all material considerations and facts.21 Failure to make full disclosure will normally cause the injunction to be summarily set aside, unless the failure probably made no difference to the decision to grant the injunction. 22 7.09 Criteria for Grant of Freezing Injunctions23 : These are: 19

JSC BTA Bank v. Solodchenko (No 2) [2010] EWHC 2843; [2011] 1 WLR 906, Proudman J. 20 JSC BTA Bank v. Ablyazov [2011] EWHC 470 (Comm), Christopher Clarke J (breach by failure to obtain a notarised response; but it would be disproportionate to permit applicant to enter judgment for $1 billion in response to this default). Although not cited in this case, see also on ‘unless’ and ‘debarring’ orders Marcan Shipping (London) Ltd v Kefelas [2007] EWCA Civ 463; [2007] 1 WLR 1864, [14], [28] to [30], [33] to [36]; noted A.A.S. Zuckerman, ‘How Seriously Should Unless Orders Be Taken?’ Civil Justice Quarterly 27 (2008): 1–7; in Marco Gambazzi v. Daimler-Chrysler Canada Inc and CIBC Mellon Trust Company (Case C-394/07) 2 April 2009, the European Court of Justice held: the court of the State in which enforcement is sought may take into account, with regard to the public policy clause referred to in Article 27(1) of the Brussels Convention (1968), the fact that the court of the State of origin ruled on the applicant’s claims without hearing the defendant who entered appearance before it but who was excluded from the proceedings by order on the ground that he had not complied with the obligations imposed by an order made earlier in the same proceedings, if, following a comprehensive assessment of the proceedings and in the light of all the circumstances, it appears to it that that exclusion measure constituted a manifest and disproportionate infringement of the defendant’s right to be heard. The Italian courts, in 2011, applying this guidance, just cited, held that Gambazzi could not succeed in impugning the English default judgment. 21 Brink’s Mat Ltd v. Elcombe [1988] 1 WLR 1350, CA; Lloyds Bowmaker Ltd v. Britannia Arrow Holdings plc [1988] 1 WLR 1337, CA; Behbehani v. Salem [1989] 1 WLR 723, CA; and (an important survey) Memory Corporation plc v. Sidhu (No 2) [2000] 1 WLR 1443, 1453–6, CA, per Robert Walker LJ; Re S (A Child) (Family Division: Without Notice Orders) [2001] 1 WLR 211, 219, 222–3 Munby J; Knauf UK GmbH v. British Gypsum Ltd [2002] 1 WLR 907, CA; cf for an instance where the applicant for an interim injunction had lied, Browne v. Associated Newspapers Ltd [2007] EWCA Civ 295; [2008] QB 103, at [66] ff; for failure to reveal to a Singaporean court the salient principles of English case law, Swift-Fortune Ltd v. Magnifica Marine SA (Capaz Duckling) [2007] EWHC 1630 (Comm). 22 Brink’s Mat Ltd v. Elcombe [1988] 1 WLR 1350, 1358, CA; Lloyds Bowmaker Ltd v. Britannia Arrow Holdings plc [1988] 1 WLR 1337, 1347, CA; Behbehani v. Salem [1989] 1 WLR 723, CA; Gulf Interstate Oil Corpn LLC v. Ant Trade & Transport Ltd of Malta (‘The Giovanna’) [1999] 1 Lloyd’s Rep 867; Memory Corporation plc v. Sidhu (No 2) [2000] 1 WLR 1443, 1454 CA; Laemthong International Lines Co Ltd v. ARTIS [2005] 1 Lloyd’s Rep 100; [2004] 2 All ER (Comm) 797. 23 Flightwise Travel Service Ltd v. Gill The Times 5 December 2003, Neuberger J; [2003] EWHC 3082 (Ch), at [18] to end (re-statement of forms of protection aimed at ensuring that freezing relief is applied fairly).

156

7 Protective Relief

a good arguable case that the applicant is entitled to substantive relief24 : in Fourie v. Le Roux (2007) the House of Lords held that freezing relief had been unjustified because the applicant had failed to indicate the nature of its substantive claim25 ; the substantive cause of action must have ‘accrued’26 ; there must also be a real risk that the respondent’s assets will be otherwise removed27 ; without the injunction, the applicant will be unable to receive satisfaction of the claim28 ; if—later in the proceedings—the ex parte freezing order is not upheld, the respondent will be adequately protected: ‘. . .the court [must be] satisfied that any damage which the respondent may suffer through having to comply with the order is compensatable under the cross-undertaking or that the risk of uncompensatable loss is clearly outweighed by the risk of injustice to the applicant if the order is not made.’29

7.10 The injunction’s standard provisions require the applicant to indemnify the respondent if the injunction is wrongly granted.30 He must also issue and serve his claim form straightaway, unless the main proceedings are to take place, or are pending, in another jurisdiction. Another requirement is that he must return to court for the ‘inter partes review’. 24 Ninemia Maritime Corpn v. Trave [1983] 2 Lloyd’s Rep 600, per Mustill J (approved [1983] 1 WLR 1412, CA, per Kerr LJ); on different perceptions of an applicant’s claim by successive Commercial Court judges, see the facts of Laemthong International Lines Co Ltd v. ARTIS [2005] 1 Lloyd’s Rep 100; [2004] 2 All ER (Comm) 797, Colman J. 25 Fourie v. Le Roux [2007] UKHL 1; [2007] 1 WLR 320. 26 Veracruz Transportation Inc v. VC Shipping Co Inc (‘The Veracruz’) [1992] 1 Lloyd’s Rep 353, CA, noted LA Collins (1992) 108 Law Quarterly Review 175–81; Zucker v. Tyndall Holdings plc [1992] 1 WLR 1127, CA, noted R. Harrison (1992) New LJ 1511–2; Dicey, Morris and Collins on the Conflict of Laws (14th edn, London, 2006), 8-009 (also 8-022 ff) criticise the Veracruz case; W. Kennett, The Enforcement of Judgments in Europe (New York: Oxford University Press, 2000), 161, n 97, notes that the Veracruz position is not adopted in Austria, Germany, and Belgium; Swift-Fortune Ltd v. Magnifica Marine SA (Capaz Duckling) [2007] EWHC 1630 (Comm). 27 Refco Inc v. Eastern Trading Co [1999] 1 Lloyd’s Rep 159, 171, CA, per Morritt LJ (no such risk on the facts). 28 Etablissements Esefka International Anstalt v. Central Bank of Nigeria [1979] 1 Lloyd’s Rep 445. 29 Re First Express Ltd The Times 8 October, 1991, Hoffmann J. 30 Annex to PD (25), Sch B at (1); generally on the cross-undertaking, which is not peculiar to this form of non-final injunction, F Hoffmann—La Roche & Co AG v. Secretary of State for Trade & Industry [1975] AC 295, 360–1, HL, American Cyanamid Co v. Ethicon Ltd [1975] AC 396, 407–9, HL; see S. Ralston (2010) Civil Justice Quarterly 29 Civil Justice Quarterly 19 on the controversial decision not to apply the crossundertaking to a non-English state enforcing authority, in US Securities & Exchange Commission v. Manterfield [2009] EWCA Civ 27; [2009] 2 All ER 1009; on enforcement of the cross-undertaking, Cheltenham & Gloucester Building Society v. Ricketts [1993] 1 WLR 1545, CA, Goldman Sachs International v. Philip Lyons The Times 28 February, 1995, CA, Barratt Manchester Ltd v. Bolton MBC [1998] 1 WLR 1003, CA, Customs & Excise Commissioners v. Anchor Foods Ltd [1999] 1 WLR 1139.

7.2

Freezing Relief

157

The court will then decide (in the presence of the respondent) whether to continue the injunction. The respondent also has ‘a right to ask the Court to vary or discharge’ the injunction.31 7.11 Contempt by the Respondent: A respondent will be in contempt of court if he breaches an injunction,32 even if his breach involved no deliberate disobedience but merely gross or prolonged negligence. If his breach is aggravated (‘contumacious’), he can be fined, imprisoned or suffer sequestration of assets (see discussion of contempt of court, in such a context in JSC BTA Bank v. Solodchenko (No 2) (2010), 6.08 ff).33 7.12 Non-Parties: It is common to notify the respondent’s bank of the injunction even before he receives notice. Once notified, the bank, even though a non-party, will face penalties for contempt of court34 (for example, fines payable to the court) if it ‘knowingly’ undermines operation of the injunction.35 At this stage, therefore, it cannot continue to honour its client’s cheques and instructions, except where such dealings are permitted by the order.36 Non-parties are entitled to an indemnity from the applicant for expenses incurred in carrying out the injunction.37 But the non-complying bank will not be liable to compensate the applicant on the basis of negligence. This is because the bank owes the applicant no tortious (or ‘delictual’) duty of care: they remain strangers, as the House of Lords made clear in Customs & Excise Commissioners v. Barclays Bank plc (2006).38 Explaining this result, Lord Bingham first noted that no duty is owed by a litigating party to its opponent. And so, he said, it would be strange and anomalous if the bank, itself only ‘bolted on’ as a nonparty to the claim between the claimant and its debtor, were liable to the claimant.39 As for this last point, he said that it would be very odd: if an action in negligence lay against a [non-party—the bank] who allowed the horse to escape from the stable but not against the owner [the debtor] who rode it out.

31

Annex to PD (25). Motorola Credit Corpn v. Uzan (No 2) [2003] EWCA Civ 752; [2004] 1 WLR 113, CA, at [45] to [58], [148] to [156]; Federal Bank of the Middle East Ltd v. Hadkinson [2000] 2 All ER 395, 411, CA. 33 JSC BTA Bank v. Solodchenko (No 2) [2010] EWHC 2843; [2011] 1 WLR 906, Proudman J. 34 Annex to PD (25); Z Ltd v. A [1982] QB 558, 567, CA, per Eveleigh LJ; cf, consistently, Re Supply of Ready Mixed Concrete (No 2) [1995] 1 AC 456, HL; and Att-Gen v. Newspaper Publishing plc [1997] 3 All ER 159, 169, CA. 35 Annex to PD (25). 36 Z Ltd v. A [1982] QB 558, CA. 37 Annex to PD (25); earlier, Searose Ltd v. Seatrain (UK) Ltd [1981] 1 WLR 894, CA. 38 [2006] UKHL 28; [2007] 1 AC 181, HL (reversing [2004] EWCA Civ 1555; [2005] 1 WLR 2082). 39 Ibid., at [18], [19] and [23]. 32

158

7 Protective Relief

7.13 Foreign Assets40 : ‘Worldwide’ freezing injunctions are now common.41 The applicant can gain both an in personam order affecting the relevant foreign assets and a disclosure order compelling the respondent to provide information relating to such assets. The ‘worldwide’ disclosure order is of greater practical and tactical importance than the main freezing injunction.42 This is because the latter is merely a ‘holding operation’ to give the claimant time to apply to the relevant foreign court(s) for appropriate supplementary or substantive relief.43 Trevor Hartley (2010) has summarised the impact of freezing injunctions on assets, information, or persons outside England and Wales.44 As for the use of freezing injunctions outside the English jurisdiction, the English courts have fashioned three regimes designed to protect respondents and non-parties from oppression or injustice. 7.14 First, the Guidelines in Dadourian Group International Inc v. Simms (2006) protect the defendant against oppressive enforcement of a worldwide English freezing order in a foreign jurisdiction.45 Guidelines 1, 4, and 5 are especially important: permission should be just and convenient . . . and . . . not oppressive to the parties to the English proceedings or to third parties who may be joined to the foreign proceedings; permission should not normally be given in terms that would enable the applicant to obtain relief in the foreign proceedings which is superior to the relief given by the [English order];

40

C. McLachlan, ‘Extraterritorial Court Orders Affecting Bank Deposits,’ in Extraterritorial Jurisdiction in Theory and Practice: Symposium Held at Dresden on 8–10 October 1993, ed. K. Meessen (Deventer: Kluwer, 1996). 41 Annex to PD (25); Babanaft Co SA v. Bassatne [1990] Ch 13, CA; Republic of Haiti v. Duvalier [1990] QB 202, CA; Derby & Co v. Weldon (No 1) [1990] Ch 48, CA; Derby & Co Ltd v. Weldon (Nos 3 & 4) [1990] Ch 65, CA; L.A. Collins, ‘The Territorial Reach of Mareva Injunctions,’ Law Quarterly Review 105 (1989): 262–99; LA Collins, Chap.’s VIII and IX, in Essays in International Litigation (Oxford: Oxford University Press, 1993); Dicey, Morris and Collins on the Conflict of Laws, 8-011 ff; the English Court cannot grant worldwide relief in the context of post-judgment relief under Art 47(1), Jurisdiction Regulation No 44/2001, Banco Nacional De Comercio Exterior SNC v. Empresa De Telecomunicationes De Cuba SA [2007] EWCA Civ 662 (reversing Steel J in [2006] EWHC 19 (Comm)); noted L. Merrett [2007] Cambridge Law Journal 495–8. 42 Dicey, Morris and Collins on the Conflict of Laws, 8-011 ff; Crédit Suisse Fides Trust SA v. Cuoghi [1998] QB 818, 827–8, CA, per Millett LJ. 43 Babanaft International Co SA v. Bassatne [1990] Ch 13, 41, CA, per Nicholls LJ. 44 T. Hartley, ‘Jurisdiction in Conflict of Laws: Disclosure, Third-Party Debt and Freezing Orders,’ Law Quarterly Review 126 (2010): 194, 201–5 (disclosure), 210–221 (freezing injunctions). PD (25): Masters or District judges can make such orders only in special cases. 45 [2006] EWCA Civ 399; [2006] 1 WLR 2499; [2006] CP Rep 31, at [25] with commentary on each at [26] ff; noted T. Rutherford (2006) New Law Journal 837.

7.2

Freezing Relief

159

evidence in support of the application for permission should contain all the information. . . necessary to make the judge to reach an informed decision, including evidence as to the applicable law and practice in the foreign court, evidence as to the nature of the proposed proceedings to be commenced and evidence as to the assets believed to be located in the jurisdiction of the foreign court and the names of the parties by whom such assets are held.

7.15 Secondly, non-parties resident in other jurisdictions are also protected by the so-called, ‘Babanaft proviso’46 : The terms of this Order do not affect or concern anyone outside the jurisdiction of this Court until it is declared enforceable or is enforced by a Court in the relevant country and then it shall affect him only to the extent it has been declared enforceable or has been enforced UNLESS such person is: a person to whom this Order is addressed or an officer of or an agent appointed by a power of attorney of such a person; or a person who is subject to the jurisdiction of this Court and (a) has been given written notice of this Order at his residence or place of business within the jurisdiction of this Court and (b) is able to prevent acts or omissions outside the jurisdiction of this Court which constitute or assist in the breach of the terms of this order.

7.16 Thirdly, and concerning possible conflict between the English freezing injunction and foreign law, the so-called, ‘Baltic proviso’ states47 : . . . nothing in this order shall, in respect of assets located outside England or Wales, prevent [the non-party bank] or any of its subsidiaries from complying with what it reasonably believes to be its obligations, contractual or otherwise, under the laws and obligations of the country or state in which those assets are situated or under the proper law of any bank account in question; and any orders of the courts of that country or state provided reasonable notice of any application for such an order by [the non-party bank] or any of its subsidiaries (to the extent such notice is permitted by the criminal law of such country or state), is given to the claimant’s solicitors.

7.17 Supporting Primary Litigation Pending or Contemplated in Foreign Jurisdictions48 : The English High Court can grant freezing injunctions (and connected orders for disclosure of assets) in support of pending or prospective49 substantive civil proceedings throughout the world. This 46

Incorporated in the Annex to PD (25), at (19); this protection originated in Babanaft Co SA v. Bassatne [1990] Ch 13, CA. 47 [2002] 1 All ER 717, CA; noting the proviso’s genesis in Baltic Shipping v. Translink Shipping Ltd [1995] 1 Lloyd’s Rep 673, Clarke J; the proviso is now incorporated in the Annex to PD (25), at (20). 48 Dicey, Morris and Collins on the Conflict of Laws, 8-024; G. Maher and B.J. Rodger, ‘Provisional and Protective Remedies: The British Experience of the Brussels Convention,’ International and Comparative Law Quarterly 48 (1999): 302 (a detailed account; also examining Scots decisions); Andrews and Johnson two notes below. 49 ‘. . .proceedings have been or are to be commenced in a [Brussels or Lugano] Contracting State [or a Member State]’: s 25(2), 1982 Act: and see next note. In C-104/03, St Paul Dairy Industries NV v. Unibel Exser BVBA [2005] ECR I-3481 the ECJ held that the Jurisdiction Regulation’s definition of provisional or protective measures in

160

7 Protective Relief

supportive English jurisdiction applies whether or not the relevant foreign jurisdiction is party to the Brussels or Lugano jurisdictional regimes.50 The Court of Appeal in Motorola Credit Corporation v. Uzan (2004) identified various restraining factors in this context.51 The main factors are: whether the making of the [English supportive] order will interfere with the management of the case in the primary [foreign] court; whether it is the policy in the primary jurisdiction not itself to make worldwide freezing/disclosure orders; whether at the time the order is sought there is likely to be a potential conflict as to jurisdiction rendering it inappropriate and inexpedient to make a worldwide order; whether in a case where jurisdiction is resisted and disobedience is to be expected, the court will be making an order which it cannot enforce.

7.18 In the Motorola case, this last factor justified discharging freezing relief aimed at two co-defendants resident in Turkey, who did not have assets in England.52 However, because the other co-defendants did have residential and proprietary connections with England, the court maintained freezing relief against these.53 7.19 What of freezing relief and arbitration? In Mobil Cerro Negro Ltd v. Petroleos De Venezuela SA (2008)54 Walker J emphasised that worldwide freezing orders are made ‘only sparingly’ in support of arbitration and, usually, only where there is ‘compelling evidence of serious international Article 31 (formerly Art 24 of the Brussels Convention 1968) does not include a Dutch preliminary procedure for taking of evidence with a view to determining whether a case might be brought: in the words of the ECJ: ‘a measure ordering the hearing of a witness for the purpose of enabling the applicant to decide whether to bring a case, determine whether it would be well founded and assess the relevance of evidence which might be adduced in that regard is not covered by the notion of provisional, including protective, measures.’ 50 Civil Jurisdiction and Judgments Act 1982 s 25; Civil Jurisdiction and Judgments Act 1982 (Interim Relief) Order 1997 (SI 1997, No 302) (the 1982 Act, s 25, gives effect to the United Kingdom’s obligation to effectuate Article 24 of the 1968 Brussels Convention (now Art 31, Jurisdiction Regulation No 44/2001); from 1 April, 1997, the English High Court’s jurisdiction to grant interim relief under the 1982 Act was extended to include non-Convention and non-Member States; and to apply to civil proceedings outside the rather restricted scope of Article 1 of the Brussels Convention and its successor, the Jurisdiction Regulation: (EC) No 44/2001 of 22 December 2000 on ‘jurisdiction and the recognition and enforcement of judgments in civil and commercial matters’: [2001] OJ L 12/1. 51 [2004] 1 WLR 113, CA, at [115]; on earlier case law Andrews, English Civil Procedure, 17.74 ff and Adam Johnson, ‘Interim Measures,’ in The Future of Transnational Civil Litigation, eds. Mads Andenas, Neil Andrews, and Renato Nazzini (reprinted London: British Institute of International and Comparative Law, 2006), Chap. 11. 52 [2004] 1 WLR 113, CA, at [125] and [126]. 53 Ibid., at [127] and [128]. 54 [2008] EWHC 532 (Comm); noted Adam Johnson (2008) Civil Justice Quarterly 433–44.

7.3 Search Orders

161

fraud.’55 In January 2008, the English court had granted Mobil Cerro Negro (Mobil) a temporary worldwide freezing order covering assets of up to $ (US) 12 billion against the Venezuelan national oil company, Petroleos de Venezuela SA (PDVSA). This order was to support International Chamber of Commerce arbitration taking place between Mobil and PDVSA. The seat of the arbitration was New York, and the parties were Bahamian and Venezuelan. The governing law of the main contract was Venezuelan. PDVSA successfully applied to set aside the freezing order. Walker J found that there was no evidence that the respondent was likely to dissipate its assets. But he gave three additional reasons for setting aside the freezing injunction56 : Mobil cannot surmount the. . .hurdle [in section 44(3) of the Arbitration Act 1996 (England and Wales) and] show that the case is one of ‘urgency’; ‘in the absence of any exceptional feature such as fraud, [Mobil] would have had to demonstrate a link with this jurisdiction in the form of substantial assets of PDV located here’ but ‘Mobil cannot demonstrate such a link’; in the absence of any exceptional feature such as fraud, and in the absence of substantial assets of PDV located here, the fact that the seat of the arbitration is not here makes it inappropriate to grant an order under section 2(3) of the Arbitration Act 1996 (England and Wales). . . .

7.3 Search Orders57 7.20 Nature: Search orders are ancillary injunctions requiring the respondent to permit the applicant to inspect premises and to remove or secure evidence of any alleged wrongdoing (formerly known as ‘Anton Piller orders’).58 This relief has been especially useful in tackling breaches of intellectual property rights and confidentiality. Civil search orders are not nearly as common as freezing injunctions. The standard form appears in the Annex to the Practice Direction in CPR Part 25. The order is made ex parte. Its essence is surprise. It is designed to pre-empt destruction of evidence. More generally, deliberate destruction by a prospective defendant

55

Ibid., at [5]. Ibid., at [28]. 57 Re-named as such, CPR 25.1(1)(h); the standard order is set out in the Annex to PD (25); Gee, Commercial Injunctions; Andrews, English Civil Procedure, Chap. 17; Zuckerman on Civil Procedure, 14.175 ff; I.S. Goldrein, (ed.), Commercial Litigation: Pre-emptive Remedies (International Edition: Sweet & Maxwell, 2005), Chap. 3. See also D. Bean, Injunctions (10th edn, London: Sweet & Maxwell, 2010); Sheridan, Injunctions and Similar Orders. 58 Anton Piller v. Manufacturing Processes [1976] Ch 55, CA is the eponymous decision. 56

162

7 Protective Relief

of documents or deletion of e-mails can involve criminal liability, as Morritt V-C held in Douglas v. Hello! Ltd (2003),59 noting an Australian decision.60 7.21 The search order authorises a limited number of persons, normally the applicant or his lawyer and the ‘supervising solicitor’ (someone who is independent of the parties), to enter the respondent’s premises. The premises or vehicle must be situated in England or Wales. Only the High Court can issue such an order.61 The search is conducted under the control of the supervising solicitor. The scope of the search is confined to evidence, property or other material encompassed by the order. After the respondent is served with the order, he has 2 h within which to consult a lawyer, during which time he must allow the applicant and independent solicitor to enter the premises to ‘keep watch’. Otherwise the respondent commits a contempt of court.62 Once the detailed search begins, the applicant is entitled to take copies, samples, or make records of to remove the material so that it can be safeguarded.63 7.22 Protecting the Respondent: Search orders and freezing injunctions share many procedural features: see discussion above of the applicant’s undertaking to indemnify the respondent if the order is later held to have been wrongly granted and of his duty to make full disclosure of material facts before receiving the order. The respondent need not disclose material protected by legal professional privilege. 7.23 Criteria for Award: These are: the applicant must have a very strong prima facie case on the substance of the main complaint64 ; an order cannot be made as a means of fishing for a cause of action65 ; and there must be a very serious risk of damage to the applicant’s interests unless this special order is granted66 ; and the respondent must be shown to be likely to destroy relevant material unless subjected to a surprise search67 ; and it must also be shown at the ex parte application that if—later in the proceedings—the ex parte freezing order is not upheld, the respondent will be adequately protected: the harm likely to be caused by the execution of the. . . order

59

[2003] 1 All ER 1087 (brief note); [2003] EWHC 55 (Ch), at [86]. Ibid., at [173]. 61 s 7(8), Civil Procedure Act 1997. 62 PD (25). 63 s 7(4)(b), Civil Procedure Act 1997. 64 Anton Piller KG v. Manufacturing Processes Ltd [1976] Ch 55, 62, CA, per Ormrod LJ. 65 Hy-trac v. Conveyors International [1983] 1 WLR 44, CA. 66 Anton Piller KG v. Manufacturing Processes Ltd [1976] Ch 55, 62, CA. 67 Ibid., at 59–60, per Lord Denning: ‘grave danger that vital evidence will be destroyed’. 60

7.3 Search Orders

163

to the respondent and his business affairs must not be excessive or out of proportion to the legitimate object of the order.68

7.24 Privilege Against Self-Incrimination: This is defined by section 14 of the Civil Evidence Act 1968 as follows69 : ‘The right of a person in any legal proceedings other than criminal proceedings to refuse to answer any question or produce any document or thing if to do so would tend to expose that person [or his or her spouse] to proceedings for an offence or for the recovery of a penalty [under UK law].’ 7.25 However, a majority of the Court of Appeal in C plc v. P (2007)70 held that there is no privilege in things or documents existing prior to the order compelling their production, applying the European Court of Human Rights’ decision in Saunders v. UK (1996).71 In C plc v. P (2007)72 Lawrence Collins LJ, in the minority, observed that the majority’s decision in this case, although supported by a line of Strasbourg jurisprudence, could not be reconciled with settled House of Lords’ authority. This tension has not been resolved, because the House of Lords in this litigation did not hear argument (it had earlier given permission for the appeal to be conducted). The case leaves, therefore, a loose-end. (See 2.15 ff for further discussion of the European Court of Human Rights (Strasbourg) analysis of this privilege, and the influence of the Strasbourg court’s approach upon English law). 7.26 Statutory provisions override that privilege in the context of criminal offences fraud,73 or in civil proceedings concerning intellectual property or confidential information having commercial value,74 or in matrimonial proceedings in which details of assets must be disclosed.75 In these situations, the respondent is obliged to reveal incriminating information or 68

Criterion proposed by the report into ‘Anton Piller Orders’, (Consultation Paper, Lord Chancellor’s Department, 1992), 2.8, following Columbia Picture Industries v. Robinson [1987] 1 Ch 38, 76, and Lock International plc v. Beswick [1989] 1 WLR 1268, 1281. 69 C plc v. P [2007] EWCA Civ 493; [2008] Ch 1. Generally on the privilege against selfincrimination: Andrews, English Civil Procedure, 29.24–29.28 and (on possible reform), 29.56 ff; B. Thanki, ed., The Law of Privilege (Oxford: Oxford University Press, 2006), Chap. 8; Cross and Tapper on Evidence (12th edn, Oxford: Oxford University Press, 2010), 417 ff; I.H. Dennis, The Law of Evidence (2nd edn, London: Sweet & Maxwell, 2002), Chap. 5; C. Hollander, Documentary Evidence (10th edn, London: Sweet & Maxwell, 2009), Chap. 17; P. Matthews and H. Malek, Disclosure (3rd edn, London: Sweet & Maxwell, 2010); Phipson on Evidence (17th edn, 2010), 24–60 ff; Zuckerman on Civil Procedure (2nd edn, London: Sweet & Maxwell, 2006), Chap. 17. 70 [2007] EWCA Civ 493; [2008] 1 Chap. 1, at [26] to [38], per Longmore LJ, and Sir Martin Nourse at [74]; noted R. Moules [2007] Cambridge Law Journal 528. 71 (1996) 23 EHRR 313, at [69]. 72 [2007] EWCA Civ 493; [2008] 1 Chap. 1, at [63] to [73]. 73 s 13, Fraud Act 2006 (considered in Kensington International Ltd v. Republic of the Congo [2007] EWCA Civ 1128; [2008] 1 WLR 1144). 74 s 72, Senior Courts Act 1981. 75 R v. K (A) [2009] EWCA Crim 1640; [2010] QB 343, at [19] to [32].

164

7 Protective Relief

documents, but this information or material cannot be used against him in a criminal prosecution for the fraud or (criminal) infringement of intellectual property. Thus in the civil context, the privilege against self-incrimination is subject to section 72, Senior Courts Act 1981 (concerning claims relating to infringement of intellectual property rights, including confidential information having a commercial value),76 and section 13 of the Fraud Act 2006. This last provision states: A person is not to be excused from—(a) answering any question put to him in proceedings relating to property, or (b) complying with any order made in proceedings relating to property, on the ground that doing so may incriminate him . . . of an offence under this Act or a related offence. But, in proceedings for an offence under this Act or a related offence, a statement or admission made by the person in—(a) answering such a question, or (b) complying with such an order, is not admissible in evidence against him . . . ‘Proceedings relating to property’ means any proceedings for—(a) the recovery or administration of any property, (b) the execution of a trust, or (c) an account of any property or dealings with property, and ‘property’ means money or other property whether real or personal (including things in action and other intangible property). ‘Related offence’ means—(a) conspiracy to defraud; (b) any other offence involving any form of fraudulent conduct or purpose.

7.27 Two main points emerge from that provision: (1) under the Fraud Act 2006, a person cannot refuse an English civil order for disclosure of information or documents, even though the effect might be to incriminate him for fraud, if the order is given in civil proceedings concerned with the recovery of property, including money; (2) information obtained under compulsory civil process cannot, however, be used against that person or his spouse in criminal proceedings for fraud. This provision was considered by the Court of Appeal in Kensington International Limited v. Republic of Congo (2007).77

76

s 72(5), Senior Courts Act 1981 contains a wide definition; this provision states that ‘“intellectual property” means any patent, trade mark, copyright, [design right], registered design, technical or commercial information or other intellectual property’; Vos J in Gray v. News Group Newspapers Ltd [2011] EWHC 349 (Ch); [2011] 2 All ER 725 held that the underlined words (‘commercial information’) extend broadly to encompass confidential information having a commercial value; on the facts, this covered unlawfully intercepted SMS or text messages between sports celebrities and their agents. 77 [2007] EWCA Civ 1128; [2008] 1 WLR 1144.

7.4 Civil Orders for Custody of Passports

165

7.4 Civil Orders for Custody of Passports 7.28 The English courts can restrain a defendant, or prospective defendant, from leaving the jurisdiction and compel him to surrender his passport(s) (‘Bayer v. Winter orders’).78

78 Neil Andrews, Principles of Procedure (London: Sweet & Maxwell, 1994), 8-50–8053; Dicey, Morris and Collins on the Conflict of Laws, 8-010, 19-022; L. Anderson, ‘Antiquity in Action. . .,’ Law Quarterly Review 103 (1987): 246; for Israeli abandonment of this protective remedy, Goldstein, ‘Revisiting Preliminary Relief in Light of the ALI/UNIDROIT Principles and the New Israeli Rules,’ 273–96.

This is Blank Page Integra

vi

Chapter 8

Multi-party Litigation

Contents 8.1 8.2 8.3 8.4 8.5

Three Forms of English Multi-party Litigation . . . . . . . Representative Proceedings (‘Opt Out’) . . . . . . . . . . Group Litigation Orders (‘Opt In’) . . . . . . . . . . . . English Rejection (2009) of Generic ‘Opt Out’ Class Action Conclusion . . . . . . . . . . . . . . . . . . . . . . . .

. . . . .

. . . . .

. . . . .

. . . . .

. . . . .

. . . . .

. . . . .

. . . . .

168 169 178 184 186

Neil Andrews, The Modern Civil Process: Judicial and Alternative Forms of Dispute Resolution in England (Tübingen, Germany: Mohr Siebeck, 2008), Chap. 14.02 ff; Neil Andrews, Contracts and English Dispute Resolution (Tokyo, 2010), Chap. 20; Neil Andrews, English Civil Procedure (Oxford University Press, 2003), 41.57 ff; Neil Andrews, ‘Multi-party Proceedings in England: Representative and Group Actions,’ Duke Journal of Comparative & International Law (2001): 249, 250–7; P. Cashman, Class Action: Law and Practice (Sydney, 2007); S. Degeling and J. Seymour, ‘Collective Claims in Unjust Enrichment,’ Civil Justice Quarterly 29 (2010): 449; C. Hodges, Multi-party Actions (Oxford University Press, 2001); C. Hodges, ‘The Europeanisation of Civil Justice: Trends and Issues,’ Civil Justice Quarterly 26 (2007): 96; C. Hodges, The Reform of Class and Representative Actions in European Legal Systems (Oxford: Hart, 2008); Susan M.C. Gibbons, ‘Group Litigation, Class Actions and Lord Woolf’s Three Objectives—A Critical Analysis,’ Civil Justice Quarterly (2008): 208; M. Mildred, ‘Group Actions,’ in The Law of Product Liability, ed. G.G. Howells (2001); R. Mulheron, The Class Action in Common Law Systems: A Comparative Perspective (Oxford: Hart, 2004); R. Mulheron, ‘Some Difficulties with Group Litigation Orders—And Why a Class Action is Superior,’ Civil Justice Quarterly 24 (2005): 40; R. Mulheron, ‘From Representative Rule to Class Action: Steps Rather than Leaps,’ Civil Justice Quarterly 24 (2005): 424; R. Mulheron, ‘Justice Enhanced: Framing an Opt-out Class Action for England,’ Modern Law Review 70 (2007): 550–80; Rachael Mulheron’s 2008 paper on ‘Reform of Collective Redress in England and Wales’ www.civiljusticecouncil.gov.uk/files/ collective_redress.pdf; R. Mulheron, ‘A Missed Gem of an Opportunity,’ Euro Business LR (2011): forthcoming; R. Mulheron, ‘Recent Milestones in Class Actions Reform in England: A Critique and a Proposal,’ Law Quarterly Review 127 (2011): 288–315; Jillaine Seymour, ‘Representative Proceedings and the Future of Multi-Party Actions,’ Modern Law Review 62 (1999): 564–84; G. Wagner, ‘Collective Redress—Categories of Loss and Legislative Options,’ Law Quarterly Review 127 (2011): 55–82; Lord Woolf, ‘Access to Justice: Final Report’ (June 1996) 223–248; Zuckerman on Civil Procedure (London, 2006) 12.20 ff. N. Andrews, The Three Paths of Justice, Ius Gentium: Comparative Perspectives on Law and Justice 10, DOI 10.1007/978-94-007-2294-1_8, C Springer Science+Business Media B.V. 2012

167

168

8

Multi-party Litigation

8.1 Three Forms of English Multi-party Litigation 8.01 English ‘multi-party’ litigation can take one of three forms: (I) representative proceedings1 ; (II) mass claims under a ‘group litigation order’2 ; or (III) consolidated litigation.3 The ensuing discussion will focus on the first two of these, and conclude with reflections on the suggestion that England might consider adopting an ‘opt out’ system of ‘collective redress’. 8.02 Representative proceedings in England differ from II and III (see above) because the representative claimant brings an action on behalf of himself and others (the represented class). He is the only claimant. Members of that represented class are not parties to the action. Nevertheless, those class members will receive the benefits of a res judicata decision (or be subject to that decision), for example the benefit of a favourable declaration of legal entitlement. This form of proceeding is, therefore, characterised as an opt-out system. Modern English cases show this device’s utility as a means of obtaining declaratory relief: a declaration in favour of a large class of represented person can be a powerful and often decisive element in securing individual redress.4 Furthermore, recent decisions emphasise that the representative proceeding mechanism should be used in a more flexible way to facilitate multi-party claims for monetary redress. 8.03 Group Litigation Order actions have quickly become the main, but not the exclusive, means of handling claims for compensation involving large groups of similarly affected persons or entities. Group Litigation Orders are characterised by high levels of case management at all stages

1

CPR 19, Section II; Neil Andrews, The Modern Civil Process: Judicial and Alternative Forms of Dispute Resolution in England (Tübingen, Germany: Mohr Siebeck, 2008), 14.02 ff; Neil Andrews, English Civil Procedure (Oxford: Oxford University Press, 2003), 41.57 ff; Neil Andrews, ‘Multi-party Proceedings in England: Representative and Group Actions,’ Duke Journal of Comparative & International Law (2001): 249, 250–7. 2 CPR 19, Section III; and Practice Direction 19B; Andrews, The Modern Civil Process: Judicial and Alternative Forms of Dispute Resolution in England, 14.09 ff; Andrews, English Civil Procedure, 41.10 ff. 3 Andrews, ‘Multi-party Proceedings in England: Representative and Group Actions,’ 249, 257; noting CPR 3.1(2)(g); 19.1; 19.2(3); ordinary joinder of co-claimants in Lubbe v. Cape plc [2000] 1 WLR 1545, HL, resulted in over 3,000 claimants seeking personal injury damages against a multi-national company concerning its manufacturing activities in South Africa. 4 Declaratory relief has been obtained in complex litigation brought by a Government agency under statutory powers. This litigation is of potential benefit to millions of individuals. It concerns the validity of charges made by ‘high street banks’ in respect of overdrawn current accounts. This is a matter falling within European consumer legislation. Thus in the bank charges litigation, the Court of Appeal has declared that charges for unauthorised overdrafts on current bank accounts are subject to the Unfair Terms in Consumer Contracts Regulations (1999): Abbey National plc v. Office of Fair Trading [2009] 2 WLR 1286. This case shows how declaratory relief obtained on behalf of a very large community of interested persons can become the foundation of individual redress or adjustment of rights.

8.2 Representative Proceedings (‘Opt Out’)

169

of the proceedings. Such judicial control, well prescribed in the rules governing this specific type of procedure, will be exercised in the interests of focus, expedition, and fairness to both sides, and fairness to all members and segments of the interested group of claimants. Furthermore, the judges involved in this procedure are experienced in this type of litigation. The GLO procedure is an opt-in system. There is no limit to the number of parties who might register their names in a Group Litigation Order action. 8.04 The Government in July 2009 rejected the proposal made by the Civil Justice Council that there should be a generic opt-out class action in England for compensatory claims, etc.5 This rejection is explained more fully at 8.23 below. 8.05 Consolidation or joinder of co-claimants is an established means of accommodating multi-party actions. There is no limit on the number of co-claimants who can use this form of procedure. For example, in Weir v. Secretary of State for Transport (No 1),6 the ‘Railtrack’ case, a group of claimants from formed an ‘action committee’. This committee brought a single action in which a very large group of co-claimants (nearly 50,000 shareholders in that case) were full parties to the proceedings. These claimants sought monetary redress against a defendant company. Consolidated procedure is an opt-in system of multi-party litigation.

8.2 Representative Proceedings (‘Opt Out’) 8.06 In this style of procedure, only the ‘representative’ is a ‘party’ in the full sense.7 Representative proceedings are relatively uncommon in England.8 The current English rule (CPR 19.6) provides9 : 5

Ministry of Justice July 2009: the Government’s Response to the Civil Justice Council’s Report Improving Access to Justice Through Collective Actions. 6 [2005] EWHC 812 (Ch). 7 Andrews, English Civil Procedure, 41.62 ff. 8 On the position in European countries, C. Hodges, The Reform of Class and Representative Actions in European Legal Systems (Oxford: Hart, 2008); C. Hodges, ‘The Europeanisation of Civil Justice: Trends and Issues,’ Civil Justice Quarterly 26 (2007): 96, 114 ff; C. Hodges, ‘Collective Redress in Europe: The New Model,’ Civil Justice Quarterly 29 (2010): 370; as for the position elsewhere in the common law world, R. Mulheron, The Class Action in Common Law Systems: A Comparative Perspective (Oxford: Hart, 2004); for possible English changes in the context of consumer claims for compensation, see the Department of Trade and Industry’s ‘Representative Actions in Consumer Legislation’, consultation paper, 2006; on line at www.dti.gov. uk/consultations/page30259.html (contemplating representative proceedings by designated bodies to obtain damages on behalf of named individuals, rather than a class of consumers in general); for a succinct comparative set of reflections, E. Silvestri, ‘The Difficult Art of Legal Transplants: The Case of Class Actions,’ Revista de Processo 187 (2010): 99–112. 9 CPR 19.6; on CPR 19.6(4), see Huntingdon Life Sciences Group plc v. Stop Huntingdon Animal Cruelty (SHAC) [2007] EWHC 522 (QB).

170

8

Multi-party Litigation

(1) Where more than one person has the same interest in a claim–a. the claim may be begun; or b. the court may order that the claim be continued, by or against any one or more of the persons who have the same interest as representatives of any other persons who have that interest. . . .(4) Unless the court otherwise directs any judgment or order given in a claim in which a party is acting as a representative under this rule–a. is binding on all persons represented in the claim; but b. may only be enforced by or against a person who is not a party to the claim with the permission of the court.

Representative proceedings can provide an efficient means of gaining ‘closure’ of a dispute affecting a host of persons. A good example is the Equitable Life case (2002), where a defendant life insurance company sponsored a representative action. Ultimately, the House of Lords issued a declaration in this action.10 That declaration established the true interpretation of a clause in the defendant company’s life assurance policy. Ninety thousand policy-holders were bound by this decision. The representative mechanism can also be used for effective injunctive relief against a disruptive unincorporated association (a ‘protest group’).11 8.07 However, representative proceedings remain distinctly marginal in England, for two reasons. First, there is the claimant’s personal ‘costs risk’. As mentioned above, represented parties are not fully-fledged ‘parties’ to the action. Therefore, they are not subject as parties to liability for costs12 (furthermore, proceedings can be commenced without their consent13 ; and the action can be settled without their approval).14 It follows that a representative must bear the entire cost of the litigation if the case is lost, paying also the defendant’s costs. Even if the representative wins the case, there is the risk that he might not succeed in recovering all his costs from the losing opponent. This costs ‘short-fall’ might ultimately be borne by the representative if he cannot persuade his fellow represented parties to 10

Equitable Life Assurance Society v. Hyman [2002] 1 AC 408, HL; on which, Andrews, English Civil Procedure, 41.83. 11 Oxford University v. Webb [2006] EWHC 2490 (QB), Irwin J applying CPR 19.6, and considering, at [56] ff, M Michael’s (Furrier’s) Limited v. Askew (CA, unreported, 23 June 1983) and other authorities; Huntingdon Life Sciences Group plc v. Stop Huntingdon Animal Cruelty (SHAC) [2007] EWHC 522 (QB). 12 The costs point was been affirmed in Howells v. Dominion Insurance Co Ltd [2005] EWHC 552 (QB), on which J. Seymour (2005) 24 Civil Justice Quarterly 309–315; Andrews, English Civil Procedure, 41.63, 41.89 noting Price v. Rhondda UDC [1923] WN 228; (1923) 130 LT 156, Eve J; for the suggestion that the approach underlying these decisions should be re-considered, Waller J in Bank of America National Trust and Savings Association v. John Taylor [1992] 1 Lloyd’s Rep 484, 495. 13 R. Mulheron, ‘From Representative Rule to Class Action: Steps Rather Than Leaps,’ Civil Justice Quarterly 24 (2005): 424, 442–3, noting Independiente Ltd v. Music Trading On-Line (HK) Ltd [2003] EWHC 470 (Ch), at [32] and Howells v. Dominion Insurance Co Ltd [2005] EWHC 552 (QB), at [26]. 14 On the ‘non-party’ status of represented persons, Andrews, English Civil Procedure, 41.62 ff.

8.2 Representative Proceedings (‘Opt Out’)

171

share the burden equitably. For these reasons, prospective representative claimants will be apprehensive about their personal liability for costs. 8.08 The second impediment concerns the courts’ narrow interpretation of the notion of a common interest (‘same interest’). It is very rare for English representative proceedings to culminate in a damages award in favour of the represented class. This is to be contrasted with the class action in the USA.15 As John Sorabji notes16 : ‘Federal Courts Rules of Procedure. . .Rule 23(a) sets out four conditions which have to be satisfied in order to certify an action as a class action: (i) numerosity, i.e., that

15

American Law Institute, ‘Principles of the Law of Aggregate Litigation’ (Discussion draft, 2007): reporter Samuel Issacharoff (New York University); associate reporters Robert H. Klonoff (Missouri-Kansas Law Schools), Richard A. Nagareda (Vanderbilt Univ L School), Charles Silver (University of Texas L School, Austin)— Chap. 1 ‘Definitions and General Principles’, Chap. 2 ‘Aggregate Treatment of Common Issues’, Chap. 3 ‘Aggregate Settlements’; this document contains substantial references to US literature); J. Bronsteen and O. Fiss, ‘The Class Action Rule,’ Notre Dame L R 78 (2006): 1419; Stephen B. Burbank, ‘The Class Action in American Securities Regulation,’ Zeitschrift für Zivilprozess International 4 (1999): 321 (esp at 322–6, 332–6, on the history and prospects of federal class actions in the US); Oscar Chase, et al., Civil Procedure in Comparative Context (St. Paul, MN: Thomson West, 2007), 390 ff; the Duke Law School symposium (co-ordinated by T Rowe): ‘Debates Over Group Litigation in Comparative Perspective’ (Duke/Geneva symposium, 2000): (2001) 11 Duke Jo of Int & Comp Law 157–421: Jack B. Weinstein (USA); Deborah H. Hensler (USA); Edward H. Cooper (USA); H. Erichson, ‘Doing Good, Doing Well,’ Vand L R 57 (2004): 2087; B. Hay and D. Rosenberg, ‘“Sweetheart” and “Blackmail” Settlement in Class Actions: Reality and Remedy,’ Notre Dame L R 75 (2000): 1377; E.D. Hensler, ‘The New Social Policy Torts: Litigation as a Legislative Strategy. . .,’ DePaul Law Review 51 (2001): 493; R.L. Marcus, ‘Reassessing the Magnetic Pull of Megacases on Procedure,’ DePaul Law Review 51 (2001): 457 (considering complex commercial, public law and mass tort litigation); A. Miller, ‘Of Frankenstein Monsters and Shining Knights: Myth, Reality and the “Class Action Problem”,’ Harv LR 92 (1979): 664; Pennsylvania, University of: Symposium on Class Actions and Mass Torts: Edward H. Cooper, ‘Aggregation and Settlement of Mass Torts,’ University of Pennsylvania Law Review 148 (2000): 1943; Edward R. Becker and Jerome M. Marcus, ‘Penn Law School Mass Torts Symposium: A Response to Professor Cooper’, ibid., 2001; Richard L. Marcus, ‘Benign Neglect Reconsidered’, ibid. 2009; David L. Shapiro, ‘Class Actions: The Class as Party and Client,’ Notre Dame L Rev 73 (1998): 913 (considered by Silberman, see citation in this note, below, at 210–2); J. Resnik, ‘From Cases to Litigation,’ Law and Contemporary Problems 54 (1991): 5; R. Phillips, ‘Class Action & Joinder in Mississippi,’ Miss LJ 71 (2001): 447; P. Schuck, Agent Orange on Trial: Mass Toxic Disasters in Courts (Harvard University Press, 1986); E. Sherman, ‘Consumer Class Actions: Who Are the Real Winners?’ Me L Rev 56 (2004): 223; Linda Silberman, ‘The Vicissitudes of the American Class Action— With a Comparative Eye,’ Tulane J Int Comp Law 7 (1999): 201; Charles Silver, ‘Class Actions. . .,’ in Encyclopaedia of Law and Economics, eds. B. Bouckaert and G. De Geest (Edward Elgar Publishing, 2000),vol V, 194 ff; S.C. Yeazell, From Mediaeval Group Litigation to the Modern Class Action (New Haven, CT: Yale University Press, 1987) (historical survey of representative proceedings in England and the US). 16 J. Sorabji, ‘The Hidden Class Action in English Civil Procedure,’ Civil Justice Quarterly (2009): 498, 511.

172

8

Multi-party Litigation

there are so many class members that joinder of them all is impracticable; (ii) commonality, i.e., there must be a common question of law or fact; (iii) typicality; the claims or defences of the representative parties are typical of the class, i.e., that the representative’s complaint is typical of the classes complaint, in other words that the representative is a member of the represented class; and (iv) the representative parties fairly and adequately protect the interests of the class.’ 8.09 The English stumbling-block has been the courts’ literal and narrow interpretation of the statutory phrase, where more than one person has the same interest in a claim.17 The major obstruction to the award of damages in representative proceedings is (perhaps, post-CR once might say now ‘was’) the Court of Appeal’s (majority) analysis in Markt & Co Ltd v. Knight SS Co Ltd (1910).18 The court held that it is not enough that the suggested class of claimants is suing in respect of the same cause of action (for example, in contract or in the tort of negligence); nor that their claims raise strikingly similar factual issues, perhaps arising from the same incident. The presence, or even the possible presence, of different defences (for example, individual contractual clauses imposing limitations upon liability or, in the case of negligence claims in tort, the possible presence of different degrees of contributory negligence), would preclude a representative claim. However, it is submitted that the post-CPR law should move beyond this crabbed and unsatisfactory authority. Rachel Mulheron19 and John Sorabji20 have critically examined the Markt SS line of cases.

17

CPR 19.6(1). Markt case, [1910] 2 KB 1021, 1030, 1035, 1040, CA; In the Markt case, [1910] 2 KB 1021, the Court of Appeal stated, in terms which are technically obiter dicta (on that point, Neil Andrews, Principles of Civil Procedure (1994) 7-005), that the claims for compensation by 44 cargo-owners against the defendant carrier, based on alleged breach of separate contracts, could not proceed by representative proceedings. Vaughan-Williams LJ, ibid., at 1030, emphasised the possibly heterogeneous nature of the set of (contractual) bills of lading applicable between the cargo-owners and the carrier. Fletcher-Moulton LJ, ibid. at 1035, took the severe view that an individual claim for damages (whether or not founded on breach of contract) is by definition not a claim for common relief, and therefore incompatible with the spirit of representative proceedings, as earlier expressed by Lord Macnaghten in Duke of Bedford v. Ellis [1901] AC 1, 8, HL, who said: ‘Given a common interest and a common grievance, a representative suit was in order if the relief sought was in its nature beneficial to all whom the plaintiff proposed to represent.’ The dissentient on the representative action point in the Markt case, Buckley LJ, [1910] 2 KB 1021, 1048, considered that a representative action could proceed on the basis of a declaration of liability for breach of contract; Buckley LJ’s suggestion foreshadowed Vinelott J’s decision in the Prudential case, [1981] Ch 229, on which see below. 19 Mulheron, ‘From Representative Rule to Class Action: Steps Rather Than Leaps,’ 424, 426–31, 433–5, 437, esp 428–30; R. Mulheron, ‘Emerald Supplies Ltd v. British Airways plc: A Century Later, the Ghost of Markt Lives On,’ Comp L (2009) 159–79. 20 Sorabji, ‘The Hidden Class Action in English Civil Procedure,’ 498. 18

8.2 Representative Proceedings (‘Opt Out’)

173

8.10 Pecuniary Relief Occasionally Awarded in Representative Proceedings Even Before the CPR (1998): Although representative proceedings have seldom been used in claims for compensation, there are some reported instances of successful damages claims in such proceedings: (i) where the global amount owing to the represented class is known, and the individuals’ shares are readily ascertainable (as where a ship sinks and the values of individual cargo-owners’ interests are already known: Monarch SS case, 1947, House of Lords)21 ; or (ii) EMI Records Ltd v. Riley (1981), Dillon J, where the members of the class are content for their damages to be worked out in a post-judgment ‘inquiry’ and then to be paid to a special fund (in the case itself, the defendants’ total liability could be reckoned by discovering how many copyright infringements he had made, and their value, and the defendant would then be ordered to pay the total sum into a professional fund).22 It will be seen, therefore, that these are unusual situations. These decisions show that the court needs to know the size of the whole damages cake, and either the size of each potential slice (as in the Monarch SS case) or that the collective owners of the cake are indifferent as to how the cake is to be cut, or indeed whether they will individually receive any portion of it (as in EMI v. Riley). 8.11 Pecuniary Relief is Now Available in Representative Proceedings under the CPR (1998): Perhaps a more flexible approach would now be available under the new procedural code. The courts now place emphasis on the notion of a common interest, as distinct from an identical set of claims. There are some signs that the courts will now be more sensitive (than 100 years ago) to the wider procedural aim of promoting efficient administration of justice. This more liberal approach to using representative proceedings is indicated in 2003 case, decided 4 years after the CPR new procedural code had taken effect, Independiente Ltd v. Music Trading On-Line (HK) Ltd (2003). Morritt V-C, said23 : provisions of the civil procedure rules. . .emphasise the need to interpret the phrase ‘the same interest’ and to apply the provisions of CPR Rule 19.6 both flexibly and in conformity with the overriding objective [in CPR Part 1]. Accordingly there are three questions: do the [suggested class members] have (1) a common interest, (2) a common grievance and (3) is the relief sought by the claimants in its nature beneficial to the [class members]? The claim in that case was for both an injunction and pecuniary relief, in respect of breach of class members’ copyright. It is likely that the courts will endorse

21

As in the claim for economic loss resulting from a maritime collision (the claimants’ total loss, already incurred, was ascertained at the time of the litigation): Monarch SS Co Ltd v. Greystoke Castle (Cargo Owners) [1947] AC 265, HL. 22 EMI Records Ltd v. Riley [1981] 1 WLR 923, 926, Dillon J. 23 [2003] EWHC 470 (Ch), Morritt V-C, at [23].

174

8

Multi-party Litigation

this liberal tendency. The defendant operated a website at www.cd-wow. com through which it sold CD’s which had been released for sale outside of the European Economic Area with the full permission of the copyright owners. The representative claimants contended that the importation of those CD’s into the United Kingdom amounted to infringing acts in respect of those artists which it represented. The claimant maintained that it and its co-claimants had a mandate to act on behalf of all the members of the British Phonographic Industry Ltd, BPI, and Phonographic Performance Ltd, PPL. Sir Andrew Morritt C held: (i) there was here a common interest: the question whether the supply of CD’s via the website in question was an infringement of the UK copyright in the relevant sound recording was a matter common to all members since the same method was used for all the supplies made; (ii) the fact that no authority had been given to I, BPI or PPL to act in a representative capacity was immaterial as a matter of law; (iii) nor should the representative proceedings be halted, in exercise of the court’s discretion: it could not be inferred that the members of British Phonographic Industry Ltd, BPI, and Phonographic Performance Ltd, PPL, were unaware of the proceedings; nor could it be inferred that they were prepared to accept the continuing parallel importation of products in relation to which they held a valid UK copyright. 21. The right of a claimant to represent another person in the sense of suing on his behalf arises if, in the terms of CPR Rule 19.6, both have ‘the same interest in [the] claim’. The requirement that both should have ‘the same interest’ is the same as that previously contained in RSC Order 15 r 12. It is common ground that the general principles applicable under the old rule are also applicable under the new. . .. 27. . . .The common interest arises from the fact that the claim as pleaded is made in respect of the UK copyright in a sound recording to which any Relevant Member is entitled as owner or exclusive licensee. The common grievance arises from the facts pleaded regarding the operation of the CD-WOW site. . .. 28. The relevant relief is injunctive or pecuniary. As far as pecuniary relief is concerned it is in its nature equally beneficial to Relevant Members as to the individual claimants. What they do with any money recovered in the action is a matter for them, not the defendants. The letter of 4th October 2002 from BPI to the claimants is not of itself binding on the claimants, let alone any Relevant Members. If the Relevant Members are content that the money should go to BPI that is a matter for them. Their wishes in that regard do not prevent the pecuniary relief being in its nature equally beneficial to all. ...

8.2 Representative Proceedings (‘Opt Out’)

175

30. For these reasons I conclude that the claimants and the Relevant Members, as defined in the particulars of claim, all have the same interest in the claim. 32. It follows that in my judgment the claim is capable of being brought in a representative capacity because the claimants and the Relevant Members have the same interest in the claim. 8.12 Problems in establishing the relevant class: Group Litigation Orders available as a safety-net: In Emerald Supplies Ltd v. British Airways plc (2010),24 nearly 200 claimants wished to bring a claim against airlines allegedly engaged in a cartel concerning airfreight charges. The problem concerning representative proceedings in that case arose because the list of suggested financial ‘victims’ of the wrong depended on whether individual over-charged companies had passed on the alleged over-charge to other companies. At first instance, Sir Andrew Morritt held that a proposed representative action could not be framed adequately at the commencement of the relevant proceedings: class members could not be identified at the commencement of the proceedings.25 He suggested, therefore, that a Group Litigation Order would be available to permit identifiable parties to bring a co-ordinated action. In that action. The decision that representative proceedings could not be brought on these facts was upheld on appeal by the Court of Appeal in 2010.26 A speculative class (as distinct from a merely fluctuating class with a solid core) could not satisfy the representative rule. Mummery LJ, giving the court’s judgment, said27 : Judgment in the action for a declaration [concerning liability] would have to be obtained before it could be said of any person that they would qualify as someone entitled to damages. . .It defies logic and common sense to treat as representative an action if the issue of liability to the claimants sought to be represented would have to be decided before it could be known whether or not a person was a member of the represented class bound by the judgment. On this point, he concluded28 : the requirement of identity of interest of the members of the represented class for the proper constitution of the action means that it must be representative at every stage, not just at the end point of judgment. And he noted further that29 : the members of the represented class do not have the same interest in recovering damages for breach of competition law if a defence is available in answer

24

[2010] EWCA Civ 1284; [2011] 2 WLR 203. [2009] EWHC 741 (Ch); [2009] CP Rep 32, at [38]. 26 [2010] EWCA Civ 1284; [2011] 2 WLR 203. 27 Ibid., at [63]. 28 Ibid., at [65]. 29 Ibid., at [64]. 25

176

8

Multi-party Litigation

to the claims of some of them [namely, that they have passed on an element of over-charging to purchasers below them in the chain], but not to the claimants of others [because they have not passed on that element of over-charge]. The claimants in the Emerald case have withdrawn their application to the UK Supreme Court for permission for the Emerald case to proceed to a final appeal. And so the Court of Appeal’s refusal to permit representative proceedings on these facts is final. 8.13 Rachael Mulheron has criticised the reasoning in the Emerald case.30 She contends that the Emerald litigation was similar to Prudential Assurance Co Ltd v. Newman Industries Ltd (No 1) (1981)31 (see discussion below). This is because in both cases the class members were seeking to identify ‘common ingredients’ and to obtain non-final declaratory relief. If favourable, that declaration would fix liability in principle. It would then be possible for interested class members to prove actual damage and then recover damages in follow-on and separate piece of litigation. Thus Mulheron says: Hence, essentially, the first ground of the Court of Appeal’s reasoning in Emerald turned upon one key feature: whether the Court was prepared to endorse a bifurcated, Prudential-type approach, which equated ‘same interest’ with a more utilitarian ‘common issues’. On the question of different defences, Mulheron says that the Emerald case is in conflict with ‘the Court of Appeal decision in Irish Shipping Ltd v. Commercial Union Assurance Co Ltd (The Irish Rowan) (1991),32 which had expressly countenanced the possibility of separate defences under the representative rule’. In The Irish Rowan (1991) Purchas LJ33 said that the presence of possible different defences should not obstruct representative proceedings. And Mulheron adds that ‘various techniques’ could have been used in the Emerald case to cope with any conflict arising from the defendants’ wish to raise the passing-on defence, namely: ‘subclassing,34 class re-definition,35 permitting class members to opt-out if they considered that the representative action was not in their interests,36 or

30 R. Mulheron, ‘A Missed Gem of an Opportunity,’ Euro Business LR (2011): forthcoming. 31 Prudential Assurance Co Ltd v. Newman Industries Ltd (No 1) [1981] Ch 229, Vinelott J (not disturbed on this point on appeal, [1982] 1 Chaps. 204, 222–4, CA); on Vinelott J’s 2-stage procedure, Andrews, English Civil Procedure 41.75 ff; J.A. Jolowicz [1980] Cambridge Law Journal 237. 32 [1991] 2 QB 206 (CA); Independiente Ltd v. Music Trading On-Line (HK) Ltd [2003] EWHC 470 (Ch), at [29]. 33 Ibid., 234–35. 34 For example, Duke of Bedford v. Ellis [1901] AC 1, HL; The Kyriaki [1992] 1 Lloyd’s Rep 484, CA. 35 John v. Rees [1970] Ch 345, 371. 36 R. Mulheron, ‘Opting In, Opting Out, and Closing the Class:. . .,’ Canadian Business LJ 50 (2010): 376, 388–391.

8.2 Representative Proceedings (‘Opt Out’)

177

leaving the question of the application of the passing-on defence to be determined outside the context of the representative action altogether (as in the Prudential case. . .)’. 8.14 However, even if fresh flexibility might be exhibited in due course on the interpretation of ‘same interest’, it is unlikely that a torrent of litigation will ensue. This is because the costs problem (see above) will continue to inhibit recourse to this procedure. Indeed judicial crafting by Vinelott J in Prudential Assurance Co Ltd v. Newman Industries Ltd (No 1) (1981) of a two-stage procedure—(I) representative action establishing the defendant’s liability towards members of the represented class, with (II) individual claims by members of that class to quantify their recoverable loss—did not stimulate significant use of representative proceedings.37 8.15 Summary Regarding Damages or other Pecuniary Relief: The true position, it is suggested, is this: (i) it is now questionable whether the presence of different possible defences will preclude representative proceedings (see comments above concerning the Irish Shipping case); (ii) nor does, or should, it matter that the represented parties’ causes of action arise under different contracts (same case); (iii) nor is the award of compensatory damages outside the scope of representative proceedings (see the Monarch SS case, 1947, and EMI v. Riley, 1981). (iv) Instead the true question is whether: (a) the representative proceedings are designed to provide the legal platform for a subsequent set of individual claims for damages, or other pecuniary relief: Prudential Assurance Co Ltd v. Newman Industries Ltd (No 1) (1981); (b) if not (see (a) above)—where damages, or other pecuniary relief, are sought in representative proceedings, the court should be able (I) to determine the total for such an award and (II) either (A) be further able to determine individual entitlements or shares (as in the Monarch SS case, 1947); or (B) allow the entire ‘pot’ of monetary relief to be paid to the representative for equitable distribution by reference to ascertained criteria within that association or, with the represented parties’ consent, by reference to members’ 37 Prudential Assurance Co Ltd v. Newman Industries Ltd (No 1) [1981] Ch 229, Vinelott J (not disturbed on this point on appeal, [1982] 1 Chaps. 204, 222–4, CA); on Vinelott J’s 2-stage procedure, Andrews, English Civil Procedure, 41.75 ff; J.A. Jolowicz [1980] Cambridge Law Journal 237.

178

8

Multi-party Litigation

wishes which will be discovered and implemented fairly by that association (for these fluid possibilities see the EMI v. Riley, 1981, and Independiente case, 2003).

8.3 Group Litigation Orders (‘Opt In’)38 8.16 Such orders (‘GLOs’) are the mainstay of the English system’s treatment of multi-party litigation (an ‘opt-in’ system). A GLO is a special form of multiple joinder, by listing of claims on a group register. The Senior Master and the Law Society maintain a list of GLOs. 8.17 The main components of the GLO system are.39 First, the court must approve a group litigation order. Secondly, group litigation involves ‘opting-in’ by each individual. Thirdly, a group member enjoys both membership of the group and the general status of a fully-fledged ‘party to civil proceedings’. Fourthly, during the progress of the GLO, the court will exercise extensive case management and issue directions. The court’s directions can include the following40 : providing for one or more claims on the group register to proceed as test claims41 ; appointing the solicitor of one or more parties to be the lead solicitor for the claimants or defendants42 ; specifying the details to be included in a statement of case in order to show that the criteria for entry of the claim on the group register have been met43 ; or 38

R. Mulheron, ‘Some Difficulties with Group Litigation Orders—And Why a Class Action is Superior,’ Civil Justice Quarterly 24 (2005): 40, 45 neatly lists six prerequisites for a GLO: (1) a number of claims; (2) common or related issues of fact or law; (3) consistency with CPR Part 1, the ‘Overriding Objective’; (4) consent of the Lord Chief Justice, Vice-Chancellor or Head of Civil Justice; (5) neither consolidation nor representative proceedings would be appropriate; (6) class needs to be defined; on this last point Mulheron notes PD 19B, paras 3.2(2), (3), where the text refers, respectively, to the need to specify the ‘number and nature of claims already issued’ and ‘the number of parties likely to be involved’; Mulheron Report (2008) (‘Reform of Collective Redress in England and Wales’ www.civiljusticecouncil.gov.uk/files/collective_redress.pdf) pp. 9 ff; 144 ff. 39 See also the summary by Lord Walker in Autologic Holdings plc v. Commissioners of Inland Revenue [2005] UKHL 54; [2006] 1 AC 118, at [86]: ‘The key features and normal effect of any GLO are that it identifies the common issues which are a pre-condition for participation in a GLO; it provides for the establishment and maintenance of a register of GLO claims; it gives the managing court wide powers of case management, including the selection of test claims and the appointment of a lead solicitor for the claimants or the defendants, as appropriate; it provides for judgments on test claims to be binding on the other parties on the group register; and it makes special provision for costs orders.’ 40 For greater detail, C. Hodges, Multi-party Actions (Oxford: Oxford University Press, 2001), 5.06 and 5.07. 41 CPR 19.13(b). 42 Ibid. (c). 43 Ibid. (d); on this question, Lord Woolf in Boake Allen Ltd v. Revenue and Customs [2007] UKHL 25 at [33].

8.3

Group Litigation Orders (‘Opt In’)

179

specifying a date after which no claim may be added to the group register unless the court gives permission.44 8.18 Fifthly, if the group loses the case, each group member is liable to the victorious party both for that member’s share of the common costs of the proceedings and for any individual costs specifically incurred with respect to his claim; but if the group is victorious, the defeated party is liable to pay costs attributable both to the ‘common costs’ and the ‘individual costs’.45 8.19 Finally, decisions on ‘common’ issues are binding on, and in favour of, the group. A party who is adversely affected by a judgment or order can seek permission to appeal.46 Such a ‘common’ issue will normally concern questions of liability or the availability of a particular head of loss. Thereafter, however, each claimant must establish that he has suffered personal loss.47 English law does not award damages without proof of actual loss suffered by individual claimants. Exemplary damages are not awarded for breach of contract.48 The categories of exemplary damages for tort claims are restricted to oppressive, arbitrary or unconstitutional conduct by public servants, or private persons’ (or corporate) wrongdoing cynically calculated to achieve a gain, or to statutory instances of punitive damages.49 8.20 ‘Funding’ is a fundamental problem in the field of multi-party litigation. In civil litigation in general, ‘economic access to justice’50 in 44

Ibid. (e). Subtleties, including the position of (i) discontinuing or (ii) settling or (iii) dismissing individual claimants, were considered in Sayers v. Merck & SmithKline Beecham plc [2002] 1 WLR 2274, CA; noted M. Goldberg (2002) New LJ 437–8 and M. Mildred (2002) 65 Modern Law Review 597. 46 CPR 19.12(2). 47 CPR 19.12(1)(a): a judgment or order made in a claim on the group register in respect of a common issue (a ‘GLO issue’) binds all the parties to ‘other claims that are on the group register at the time the judgment is given or the order is made unless the court orders otherwise’. 48 Addis v. Gramophone Co Ltd [1909] AC 488, HL; Perera v. Vandiyar [1953] 1 WLR 672, CA; Kenny v. Preen [1963] 1 QB 499, CA; Lord Lloyd in Ruxley Electronics and Construction Ltd v. Forsyth [1996] 1 AC 344, 373 E, HL; ‘Aggravated, Exemplary and Restitutionary Damages’, (Law Commission Report No 247, 1997), 5.71–5.73; cf Design Progression Ltd v. Thurloe Properties Ltd [2004] EWHC 324 (Ch); [2005] 1 WLR 1, Peter Smith J (exemplary damages against a landlord for statutory wrong; and remarks ibid at [137] ff); R. Cunningham, ‘Should Punitive Damages be Part of the Judicial Arsenal in Contract Cases?’ LS 26 (2006): 369. 49 Kuddus v. Chief Constable of Leicerstershire [2001] UKHL 29; [2002] 2 AC 122 (noting Rookes v. Barnard [1964] AC 1129, 1223, 1227, HL, per Lord Devlin). 50 The distinction between formal and economic or ‘effective’ access to justice was acknowledged in Hamilton v. Fayed (No 2) [2002] 3 All ER 641, CA, at [65], by Chadwick LJ, and [81], by Hale LJ; on ‘access to justice’ and conditional fees and the decline of legal aid, see Andrews, English Civil Procedure, Chaps.’s 9, 35; for observations in the 45

180

8

Multi-party Litigation

England is no longer significantly supported by public expenditure on legal aid. Instead there has been a major shift towards the ‘privatised’ conditional fee system (‘CFA’).51 This ‘privatised’ system of CFA-funding has also affected multi-party litigation. Formally, the rules and guidance permit public financial support of unusually deserving group litigation.52 In fact public funding for group litigation is seldom granted.53 8.21 The Group Litigation Order system is a versatile and wideranging procedure. There is no restriction on the subject-matter of the relevant claims capable of being framed as a Group Litigation Order. All forms of civil wrongdoing and dishonest misconduct can form the basis of ‘common issues’ in a Group Litigation Order. All that it is necessary to show is that there are ‘common or related issues of fact or law’. Thus the rules state (CPR 19.10): ‘A Group Litigation Order (“GLO”) means an order. . .to provide for the case management of claims which give rise to common or related issues of fact or law (the “GLO issues”).’ There is an official website list of Group Litigation Orders authorised by the English courts since 2000 (see Appendix (1) to this Opinion for this list).54 This official web-site also contains very brief explanations of the nature of these group litigation claims. It is clear from these summaries that the Group Litigation Order system has been used extensively to enable various types of claims for pure financial loss to be brought against major companies. This procedure can accommodate allegations of fraudulent dealing or misrepresentation, breach of contract, breach of trust, breach of fiduciary duty, and violations of securities law. A helpful illustration is the High Court decision (given on January 22, 2010) concerning a Group Litigation Order. In Tew v. Bank of

context of multi-party proceedings, Hodges, ‘The Europeanisation of Civil Justice: Trends and Issues,’ 96, 98 ff. 51 Andrews, The Modern Civil Process: Judicial and Alternative Forms of Dispute Resolution in England, Chap. 9 at 9.19 ff. 52 See ‘The Funding Code’, Part B, at section D, issued by the Community Legal Services Commission: at http://www.legalservices.gov.uk/civil/guidance/funding_code.asp. 53 Besides the Mulheron Report (2008), Chap. 11, at p. 74 (on which see n 48 below); see the following comment by Dr C. Hodges at the 2006 Oxford conference on multi-party actions is cited with his permission: ‘The funding of large cases remains complex and controversial. The size of the funding required and the ‘loser pays’ rule require sophisticated arrangements to be put in place in order both to fund ongoing costs and to cover the risk of losing. There is an impasse over how complex cases should be run in future. The previous freedom with which Legal Aid was dispensed has disappeared. Public funding is restricted, made available for cases only on a prioritised basis, and subject to considerable bureaucracy. The Legal Services Commission is now very wary of funding large cases, and prefers to fund test cases. Only one case (Sabril, alleged visual field constriction, made by Sanofi-Aventis) is currently funded by the LSC: the action is proceeding with test cases.’ 54 Reproducing the list at http://hmcourts_service.gov.uk/cms/150.htm.

8.3

Group Litigation Orders (‘Opt In’)

181

Scotland and Barclay’s Bank (Shared Appreciation Mortgages) (2010),55 Mann J (a High Court judge sitting in the Chancery Division, in London) upheld a decision to authorise a Group Litigation Order concerning alleged unfairness in the provision of a certain type of mortgage. This is clearly a very substantial piece of litigation brought by many claimants against a set of defendants. The judge’s summary of the case’s background is cited here for convenience. [1] This litigation involves shared appreciation mortgages (‘SAMs’). The SAMs are mortgages which were offered for a period in 1997 and 1998 by certain lenders (Bank of Scotland (‘BoS’) and Barclays Bank) which are unconventional in relation to their interest payments and redemption terms. For present purposes they can be grouped into two categories which share a common feature. The common feature is that the loans are not repayable at any fixed time. They are repayable in the event of a sale, or the death of the mortgagor. On redemption the mortgagor pays the principal outstanding and a specified percentage of any increase in value of the property over the purchase costs. That percentage is a multiple of the loan to value ratio. The multiple varies depending on the category into which the mortgage falls. One category has no interest charge. In those cases the multiple is usually 3 times loan to value ratio. The other category has a fixed interest charge, and in this case the multiple is 1. [2] In these actions various claimants seek to challenge the fairness of those terms under the Unfair Terms in Consumer Contracts Regulations 1994 and the fairness of the relationship under sections 140A to 140C of the Consumer Credit Act 1974. When I say ‘these actions’ I refer to over 100 which have been commenced and where a first pleading, or equivalent, has been served. There may be as many as another couple of hundred claimants who wish to make claims, but apparently subject to the making of a GLO. There has been a wide range of GLOs. They have included: (1) claims for personal injury arising from pharmaceutical drugs56 ; and (2) corporation tax allegedly overpaid to the UK Revenue57 ; and (3) loss of corporate ‘group tax relief’: some idea of the sophistication of this type of group litigation order is conveyed by this statement by Lord Nicholls in the House

55

[2010] EWHC 203 (Ch). Sayers v. Merck & SmithKline Beecham plc [2001] EWCA Civ 2017; [2002] 1 WLR 2274, CA. 57 Boake Allen Ltd v. Revenue and Customs [2007] UKHL 25; [2007] 1 WLR 1386. 56

182

8

Multi-party Litigation

of Lords58 : six groups of companies have been selected as test cases. They represent a large number of claimant companies in proceedings started in the Chancery Division against the Commissioners of Inland Revenue. This litigation is currently being managed under a group litigation order made by the Chief Chancery Master in May 2003. And the former Senior Master, Robert Turner, in a report sent to the author in 2007, stated that he had recently dealt with the following GLOs59 : A hotel in Spain to which tour operators sent parties long after they allegedly knew of the serious risk of food poisoning that existed. The Alder Hey hospital organ removal litigation involving hundreds of deceased young children and their grieving families. The (then) Senior Master of the Queen’s Bench Division sent this to mediation with huge success (as Andrews has explained elsewhere).60 The hot drinks claims against McDonalds. These claims failed (in England). Long distance flight thrombosis claims.61 Removal of indigenous inhabitants from the Chagos Islands in the Indian Ocean.62 The unexploded shells cases from the Army’s training areas in Kenya. 58

Autologic Holdings plc v. Commissioners of Inland Revenue [2005] UKHL 54; [2006] 1 AC 118, at [2]. 59 Other collectively suffered wrongs which might produce (in some instance have already produced) such claims are: defective pharmaceutical drugs; insidious industrial injuries; child abuse cases affecting large numbers, often spread over many years; defective educational, health, or other public services; over-charging or defective provision of banking, financial, or pensions services (however, here there is good access to justice provided by various ombudsmen; but multiple claims against the banks are pending in England (2008), see Mulheron Report (2008), Chap. 17 (‘Reform of Collective Redress in England and Wales’ www.civiljusticecouncil.gov.uk/files/collective_redress.pdf); ibid. at Chap.’s 8, 9, 10, she notes the moderate success of consumer protection initiated by the Office of Fair Trading or the Consumer Association under the Competition and Unfair Terms legislation or Regulations. 60 Andrews, The Modern Civil Process: Judicial and Alternative Forms of Dispute Resolution in England, 10.13: ‘An example of mediation’s flexibility concerns a group litigation action brought by parents of deceased children against a children’s hospital trust (Liverpool: Alder Hey Hospital). The hospital had removed organs from dead children without their parents’ permission. The claim for damages proceeded for some time. The procedural judge (Senior Master Robert Turner) then successfully recommended mediation before an outsider. A settlement was agreed, consisting of five elements: a very modest amount of compensation; a grant by the hospital towards relevant research; an undertaking by the Government to issue better guidelines for hospitals; a memorial to the children; a public apology by the doctors concerned.’ 61 Deep Vein Thrombosis and Air Travel Group Litigation [2005] UKHL 72; [2006] 1 AC 495. 62 G. Scanlan, ‘The Chagos Islanders’ Case-a Question of Limitation?’ Civil Justice Quarterly 26 (2007): 292.

8.3

Group Litigation Orders (‘Opt In’)

183

Pension cases where long-serving employees were allegedly cheated out of their final salary pension entitlements. The Buncefield disaster (explosion at oil depot; devastation of vicinity; property claims; 3,400 claimants). Ivory Coast contamination claims, involving oil dumping. 8.22 Tew v. Bank of Scotland and Barclay’s Bank (Shared Appreciation Mortgages) (2010)63 also show that the Group Litigation Order system can flexibly accommodate different ‘categories’ of claimant and claims arising from the same or related set of facts, and the case also shows that different defendants can also be validly party to a Group Litigation Order procedure. Furthermore, the following passages from Mann J’s judgment in Tew v. Bank of Scotland and Barclay’s Bank (Shared Appreciation Mortgages) (2010, 2011),64 demonstrate the English courts’ determination to ensure that the Group Litigation Order procedure is used speedily, effectively, with proper focus, and appropriately (as he concluded it could and should be so used in this case). [36] . . .it seems to me that a Group Litigation Order remains an appropriate vehicle for the case management of these proceedings. It has some advantages in automatically binding all participants in relation to the genuinely common issues, and provides a useful umbrella for controlling other claims by means of stays. There may be advantages in dealing with costs, too. [37] Subject to its proving possible to settle the terms of the Group Litigation Order issues appropriately, I shall therefore provide for a Group Litigation Order in this case. The Group Litigation Order issues will be defined in such a way as to describe claims made by borrowers under shared appreciation mortgages against the banks which involve allegations of unfairness under the relevant statutory legislation, and expressly to include the Regulation 3 point. There are certainly related issues of fact there if they are not common. The precise form of wording can be discussed and (I hope) agreed between the parties, but in the event of disagreement I will rule on it. I shall also give directions for the trial of lead cases in order to get the fairness issues decided, and possibly a direction that the Regulation 3 point be taken as a preliminary issue. Again, the parties, having reflected on this judgment, can try to reach agreement on that point, failing which I will rule on it. It is my intention to finalise these things swiftly.

63 64

[2010] EWHC 203 (Ch). Ibid.

184

8

Multi-party Litigation

Furthermore, there has been clear judicial comment on the relative speediness of Group Litigation Order actions. As the author cited in his 2008 book, the Senior Master of the Queen’s Bench Division stated: ‘in the Group Litigation Orders with which I have been involved we have achieved settlement or decisions in half or a third of the time that normal litigation might have taken.’65

8.4 English Rejection (2009) of Generic ‘Opt Out’ Class Action 8.23 As mentioned at 8.04, the Government in July 2009 rejected the proposal made by the Civil Justice Council that there should be a generic opt-out class action in England for compensatory claims, etc.66 Instead the Government, in its July 2009 response, proposed that possible reform should proceed on a ‘sector by sector’ basis, and that an opt-out class action device should be introduced only if, in the relevant context, such a litigation tool would be justified as cost-effective and proportionate, and superior to regulatory powers.67 The Financial Services Bill 2009 contained such an opt-out instrument in favour of shareholders who had suffered loss from dealings in the financial services market.68 But these proposals were excised from the final legislation.69 Earlier, Rachael Mulheron’s paper on ‘Reform of Collective Redress in England and Wales’, presented to the Civil Justice Council in February 2008 (Professor Mulheron, an Australian, is a professor at the University of London),70 had been endorsed by the CJC: ‘Improving Access to Justice Through Collective Actions’ (‘CJC’s 2008 Final Report’—November 2008).71 8.24 Rachael Mulheron in her 2008 report72 had noted that there have been relatively few (only 63) Group Litigation Orders since their introduction in 2000.73 She suggests that this figure is low, when comparison

65 Statement by Senior Master Robert Turner, cited in Andrews, The Modern Civil Process: Judicial and Alternative Forms of Dispute Resolution in England, 302. 66 Ministry of Justice July 2009: the Government’s Response to the Civil Justice Council’s Report Improving Access to Justice Through Collective Actions. 67 Ibid., at [11]. 68 Financial Services Bill HL Bill 26(2009/10), clauses 18–25. 69 Financial Services Act 2010. 70 ‘Reform of Collective Redress in England and Wales’ www.civiljusticecouncil.gov.uk/ files/collective_redress.pdf 71 http://www.civiljusticecouncil.gov.uk/files/Improving_Access_to_Justice_through_ Collective_Actions.pdf 72 Mulheron Report (2008), ibid., at pp. 9 ff; 144 ff. 73 Ibid., Chap. 3.

8.4 English Rejection (2009) of Generic ‘Opt Out’ Class Action

185

is made with common law jurisdictions (notably Ontario and Australia)74 offering ‘opt-out’ systems. The English GLO figures (an ‘opt in’ system) are perhaps disconcerting if one takes an absolutist approach to ‘access to justice’. But the figures are not surprising, because large-scale litigation will not be brought unless there is substantial private funding or public support. As for the private source, it would appear that the conditional fee system has not worked in this context. This seems to be attributable to the absence (in this especially risky context) of ATE (‘After-the-Event’) legal expenses insurance to cover the claimants’ risk of liability for the defendant’s costs. As for the public source, Mulheron notes the sharp decline in public funding of such litigation since the pre-2000 peak.75 She noted many reasons why potential group litigation litigants are reluctant to join such collective litigation, that is, to ‘opt in’.76 These barriers to participation include (i) economic anxiety, that they will become substantially liable for costs; (ii) psychological considerations, that they will be exposed to a rough-and-tumble experience; (iii) fear of reprisals, normally by employers; and (iv) basic misunderstanding of the system of civil compensation. Mulheron compared the ‘take up’ levels by victims of wrongdoing who are able to ‘follow on’ success on the question of liability in the class action (‘opt out’) systems used in some common law jurisdictions (notably the USA, Ontario, and Australia).77 And she noted the rise of the class action (‘opt out’) mechanism in some European jurisdictions: Norway,78 Denmark,79 the Netherlands,80 and Portugal81 (and Spain)82 and now Italy.83 Hodges

74

Ibid., Chap. 12. Ibid., Chap. 11 at p. 74 she notes that the Legal Services Commission funded 133 multi-party actions in 2000; in 2002/3 this had fallen to 45; in 2006/7 it had fallen to 4; and of the 293 actions since 2000, 156 had concerned child abuse, 34 health matters including pharmaceutical problems, and 27 prisoner claims. 76 Ibid., Chap. 7. 77 Ibid., Chap. 20. 78 Ibid., Chap. 14. 79 Ibid. 80 Ibid. 81 Ibid., Chap. 13. 82 At the April 2008 meeting in Turin, Professor Isabel Tapia Fernandez explained the Spanish position since 2000: and she cited a case where hundreds of vehicle owners were enabled to claim loss resulting from being trapped on a toll-road for a very long period. 83 S. Modenesi and G. Gross, ‘The Lawyer’ 21 April 2008 p. 29, noting Art 140B, amending the Italian Consumer Code; effective end of June 2008; an opt-in device (including possibility of joining after judgment and pending an appeal); 16 accredited consumer protection associations can initiate; need for court permission; no punitive damages; scope for conciliation over the payment of damages to individuals if judgment given against defendant; causes of action not confined to contract claims. 75

186

8

Multi-party Litigation

has made a study of these European developments.84 As a result of the suggested evidence in Mulheron’s report that the English system of civil procedure had scored low in its delivery of effective access to justice in this context,85 the Civil Justice Council in 2008 issued a major document entitled ‘Improving Access to Justice Through Collective Actions’ (‘the CJC’s 2008 Final Report’).86 Its major recommendation was that England and Wales should adopt an opt-out system of collective action, capable of awarding aggregate damages.

8.5 Conclusion 8.25 There are dangers in adopting an ‘opt out’ system: potentially aggressive attempts to bring collective litigation; the prospect of very large gains being made by law firms; the fear of commercial and public entities being exposed to expensive and protracted litigation; inevitable increases in the cost of potential defendants’ defensive measures; in particular, consumers and businesses paying more for insurance cover. It is apparent that the 2009 Government had no stomach for collective big money litigation.87 Mulheron (2011) remains unimpressed by this decision.88 However, a generic opt-out class action for damages would have involved claimants’ rights being championed by the joint enterprise of law firms (including foreign firms fishing in England for work) and commercial funders (or syndicates of funders) interested in profiting from others’ litigation.

84

C. Hodges, The Reform of Class and Representative Actions in European Legal Systems (Oxford: Hart, 2008). 85 Mulheron Report (2008), Chap. 21. 86 http://www.civiljusticecouncil.gov.uk/files/Improving_Access_to_Justice_through_ Collective_Actions.pdf 87 Ministry of Justice July 2009: the Government’s Response to the Civil Justice Council’s Report Improving Access to Justice Through Collective Actions. 88 R. Mulheron, ‘Recent Milestones in Class Actions Reform in England: A Critique and a Proposal,’ Law Quarterly Review 127 (2011): 288–315.

Chapter 9

Mediation

Contents 9.1 9.2 9.3 9.4 9.5 9.6 9.7 9.8 9.9 9.10 9.11 9.12

The Spectrum of ADR . . . . . . . . . . . . . . . . . . . . . Disputants’ Duty to Consider Mediation . . . . . . . . . . . . Mediation’s Growth in England . . . . . . . . . . . . . . . . Mediation and Settlement Scepticism . . . . . . . . . . . . . Mediation Agreements . . . . . . . . . . . . . . . . . . . . Pre-action Duty of Parties to Consider ADR . . . . . . . . . . Occasions for Judicial Encouragement of Mediation . . . . . . Judicial Order to ‘Stay’ Court Proceedings to Facilitate Mediation Costs Sanctions for Failure to Pursue Mediation . . . . . . . . Privileged Mediation Discussion . . . . . . . . . . . . . . . . English Reception of the European Mediation Directive . . . . . Concluding Remarks . . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . .

. . . . . . . . . . . .

. . . . . . . . . . . .

. . . . . . . . . . . .

. . . . . . . . . . . .

187 191 193 197 201 203 204 205 206 211 214 215

9.1 The Spectrum of ADR 9.01 The three main ‘alternatives’ to civil litigation before the English courts are: (i) party-to-party negotiation leading to settlement: this is the most common way in which a dispute or claim is terminated; (ii) mediation or conciliation: these will be discussed in this chapter; (iii) arbitration (see next chapter for this); arbitration tends to be a rather formal style of proceeding; commercial arbitration conducted in England can replicate many aspects of High Court commercial litigation, although this tendency is regrettable, has been lamented, and should be resisted. As for (i), party-to-arty negotiation, leading to settlement, a few remarks will suffice. Settlement is by far the most common way in which civil disputes truly contested on the merits (that is, claims other than straightforward debt enforcement actions, where there is no real defence) are concluded

N. Andrews, The Three Paths of Justice, Ius Gentium: Comparative Perspectives on Law and Justice 10, DOI 10.1007/978-94-007-2294-1_9, C Springer Science+Business Media B.V. 2012

187

188

9 Mediation

in England.1 Of the matters in which civil proceedings are commenced in England, a very high percentage do not proceed to trial2 (the decline of civil trials in the USA has also attracted comment).3 This is because most English actions culminate not in judgment on the merits, following examination of witnesses and documents at trial, or consideration of the merits during a summary proceeding (3.15 ff), but in an agreement of compromise or settlement between the parties. 9.02 A third party neutral can intervene in various ways. He might (1) act minimally as a shuttle-cock messenger: he will then be a ‘go-between’, passing messages between parties who cannot any longer communicate directly with each other. Or (2) he might act as a mutual confidant to the parties, for the purpose of brokering a settlement, without commenting on the merits of the parties’ respective positions; getting the parties, especially their leading figures, to sit together and articulate their sides of the disagreement might be a major step towards establishing the platform for an eventual settlement. Or (3) he might act as an evaluator: the mediator might make a non-binding, perhaps persuasive, evaluation of one or more of the parties’ claims or position (whether at the request of the parties, or of his own accord). As Stitt has commented, ‘a facilitative mediator tries to enable the disputants to reach consensus on what they think is a

1

Neil Andrews, English Civil Procedure (Oxford: Oxford University Press, 2003), Chaps. 23, 24, 25; H. Genn, ‘Understanding Civil Justice,’ Current Legal Problems 48 (1997): 155, 177 ff; S. Roberts, ‘Settlement as Civil Justice,’ Modern Law Review 63 (2000): 739–47 (and earlier ‘Alternative Dispute Resolution and Civil Justice. . .,’ Modern Law Review 56 (1993): 452; ‘The Paths of Negotiation,’ Current Legal Problems 49 (1996): 97–109; for his study of ‘ADR’, M. Palmer and S. Roberts, Dispute Processes (1998), and M. Galanter and M. Cahill, ‘Most Cases Settle: Judicial Promotion and Regulation of Settlements,’ Stanford L Rev 46 (1994): 1329 (on the USA practice); a highly detailed practitioner manual is D. Foskett, The Law and Practice of Compromise (7th edn, London: Sweet & Maxwell, 2010). 2 For example, Sir Leonard Hoffmann, ‘Changing Perspectives on Civil Litigation,’ Modern Law Review 56 (1993): 297, noting the increasing resort to pre-trial summary procedures, pre-action disclosure, witness statements, and provisional and protective relief; since 1998, to this list must be added, ‘pre-action protocols’, expansion of preaction disclosure orders, the CPR’s imposition of case-management, and judicial stays and costs orders to promote mediation. 3 For example, M. Galanter, ‘The Vanishing Trial. . .in Federal and State Courts,’ J Empirical Legal Studies 1 (2004): 451; J. Resnik, ‘For Owen M Fiss: Some Reflections on the Triumph and Death of Adjudication,’ Miami U L Rev 58 (2003): 173; J. Resnik, ‘Whither and Whether Adjudication,’ Boston ULRev 86 (2006): 1101, 1123 ff; J. Resnik, ‘Uncovering, Discovering and Disclosing How the Public Dimensions of Court-Based Processes are at Risk,’ Chicago-Kent LR 81 (2006): 521 and J. Resnik and D.E. Curtis, ‘From ‘Rites’ to ‘Rights’ of Audience: The Utilities and Contingencies of the Public’s Role in Court Business,’ in Representation of Justice, eds. A. Masson and K. O’Connor (Brussels, 2007); A. Miller, ‘The Pre-trial Rush to Judgment: Are the ‘Litigation Explosion’, ‘Liability Crisis’, and Efficiency Cliches Eroding our Day in Court and Jury Commitments?’ NYULRev 78 (2003): 982.

9.1 The Spectrum of ADR

189

fair outcome, while an evaluative mediator tries to lead [them] to his. . .own assessment of what is fair’.4 He might even (4) exhort the parties to settle on suggested terms: here the neutral applies pressure, (perhaps by virtue of his office), to the parties with the aim of inducing them to accept a settlement on specified or suggested terms. Or (5) the neutral third party might have a power of decision: he might then impose a binding decision: here the neutral acts plainly as an arbitrator appointed, by agreement, to decide a specific dispute by issuing a binding award, and clothed with full statutory powers under the Arbitration Act 1996 (England and Wales)5 (see next chapter). 9.03 In this chapter we are concerned with matters falling within (1) to (4). The mediator’s role is to act as an independent and disinterested third party and encourage the parties to talk and to move towards a possible agreed settlement. Paul Newman (not the famous actor) has suggested that a truly effective mediator should display the following six qualities6 : ‘empathy—the ability to get on with the parties, understand their position, even if he does not agree with them, and the ability to deflect parties from their fixed views’; ‘patience—the ability to wait for the parties to make movements in their own time’; ‘self-assurance—the ability to inspire confidence in the parties, with a game plan of what is to be achieved without obviously leading the parties’; ‘clarity of thought—the ability to ask questions which are intelligent and result in new information and perspectives’; ‘ingenuity—the capacity to bring in new ideas when the discussion appears to be flagging or on the point of failing, including the power to think laterally and propose novel solutions for the parties to think about and promote as their own ideas’; ‘stamina—the mediation sessions may take place over an extended period of time, and there may be less scope for breaks as momentum increases towards possible agreement.’ 9.04 The practice of conducting mediation sessions is fully explained in specialist manuals (or rather suggested methods, since this is a flexible art).7 It is usual for a mediator to be paid jointly by the parties to the dispute. Free-lance mediators do not enjoy security of tenure. 4

A.J. Stitt, Mediation: A Practical Guide (2004) 1.4; D. Spencer and M. Brogan, Mediation: Law and Practice (Cambridge University Press, 2006), 104–7. 5 For example, Russell on Arbitration (22nd edn, by D StJ Sutton and J Gill, 2002); M. Mustill and S. Boyd, Commercial Arbitration (2nd edn, 1989) and M. Mustill and S. Boyd, Commercial Arbitration: 2001 Companion Volume (London, 2001). 6 P. Newman, ‘Commercial ADR,’ in Mediation in Context, ed. M. Liebmann (London and Philadelphia: Jessica Kingsley Publishers, 2000), 183–4. 7 K. Mackie, D. Miles, W. Marsh, and T. Allen, The ADR Practice Guide (3rd edn, London: Tottel, 2007), especially Chap.’s 11 ff; A.J. Stitt, Mediation: A Practical Guide (2004); M. Liebmann, ed., Mediation in Context (London and Philadelphia, 2000); S. Blake, J. Browne, and S. Sime, A Practical Approach to Dispute Resolution (Oxford University Press, 2011); D. Spencer and M. Brogan, Mediation: Law and Practice (Cambridge University Press, 2006), especially Chap. 2.

190

9 Mediation

9.05 Many UK mediators are ‘accredited’ having received professional training from various private organisations.8 Mediation is not yet a feature of most law degrees. Nor is it an aspect of professional training as a lawyer. There is no need for the mediator to have a legal training or qualification. However, in England many commercial mediators are ‘lawyers’: former barristers, solicitors, or judges, or current lawyers. In 2008 the European Commission issued a directive on the topic9 and a Code of Conduct for mediators.10 There is (as yet) no formal system of centralised regulation of mediators. 9.06 In addition to settlement, mediation and arbitration, just mentioned, four other styles of dispute-resolution should be mentioned. (1) ‘Ombudsmen’11 administer justice, often on a ‘documents-only’ basis, in a range of specific fields, for example, pensions or investments disputes. (2) ‘Expert determination’ concerns a reference to an impartial third party of a technical problem, for example, a request to make a valuation of company assets or commercial property. Statute also allows experts to make swift decisions if disputes arise during the course of a building project; these decisions are initially provisional; they become binding if, within a short period, neither party seeks to re-open the determination (by litigation or arbitration).12 An expert determination clause can be combined with an arbitration clause, as on the facts of the ‘Channel

8

K. Mackie, D. Miles, W. Marsh, and T. Allen, The ADR Practice Guide (2000) 15.3 (not in 2007 edn). 9 Directive 2008/52/EC of the European Parliament and of the Council of 21 May 2008 on certain aspects of mediation in civil and commercial matters. 10 http://europa.eu.int/eur-lex/en/com/pdf/2004/com2004_0718en01.pdf; for the European Code of Conduct for Mediators: http://europa.eu.int/comm/justice_home/ ejn/adr/adr_ec_code_conduct_en.htm. 11 Andrews, English Civil Procedure, 9.27 n 31; on the rise of informal litigation regimes governing disputes in the banking, building societies, investment, insurance, and pensions industries, E. Ferran, ‘Dispute Resolution Mechanisms in the UK Financial Sector,’ Civil Justice Quarterly 21 (2002): 135; R. Nobles, ‘Access to Justice through Ombudsmen: The Courts’ Response to the Pensions Ombudsman,’ Civil Justice Quarterly 21 (2002): Civil Justice Quarterly 94; Lord Woolf, Access to Justice: Interim Report (1995) 111 at [40]. 12 Pegram Shopfitters Ltd v. Tally Weijl [2003] EWCA Civ 1750; [2004] 1 WLR 2082, CA, especially at [1] to [10], on accelerated resolution of construction disputes (so-called ‘adjudication’) under Part II, Housing Grants, Construction and Regeneration Act 1996, and the Scheme for Construction Contracts (England and Wales) Regulations 1998 (SI 1998/649); J. Kendall, C. Freedman, and J. Farrell, Expert Determination (4th edn, Sweet & Maxwell, 2008); on mediation and experts, L. Blom-Cooper, ed., Experts in Civil Courts (Oxford University Press, 2006), Chap. 10.

9.2 Disputants’ Duty to Consider Mediation

191

Tunnel’ construction dispute, Channel Tunnel Group Ltd v. Balfour Beatty Construction Ltd (1993).13 This case is examined at 11.14. (3) ‘Early neutral evaluation’14 involves a neutral third party, often a lawyer, providing a non-binding verdict on the merits of the dispute. In the English Commercial Court, the parties can consent to a High Court judge providing such an ‘early neutral evaluation’.15 (4) ‘Mini-trial’ is an adjunct to mediation; as leading commentators have said: ‘in essence lawyers or other advisors for each party present a “mini” version of their case to a panel consisting of a senior executive of their client and of the other party. . .The procedure may take place without a neutral’s involvement but will usually be more effective if a capable neutral chairs the presentation stage16 ;’ a ‘mini-trial’ can create a ‘stronger feeling of having had a day in court than mediation’, and ‘a better opportunity to assess the performance of key witnesses’.17

9.2 Disputants’ Duty to Consider Mediation18 9.07 Parties can agree that they will go through the mediation door. But even an agreement to mediate, perhaps the highest form of commitment to mediate, can be legally enforced only to the extent that commencement or litigation will be stayed in order to re-open the chance to pursue mediation. Parties might be compelled to consider whether to approach the door (as opposed to peremptorily rejecting this requirement to consider). But the parties should be free—until a binding settlement is made—to withdraw from the mediation process even if they have passed through the door (subject only to the possibility of specific contractual terms, consistent with the doctrine of contractual certainty, such as agreed duties to exchange specific items of information). 9.08 The difference is between a duty to consider mediation (in the sense of a responsible and measured assessment by each party of the chances of its success) and a duty to enter upon and then participate in 13

[1993] AC 334, 345–6, HL (clause 67). K. Mackie, D. Miles, W. Marsh, and T. Allen, The ADR Practice Guide (3rd edn, London: Tottel, 2007), 3.2.2.3. 15 The Admiralty and Commercial Courts Guide (9th edn, 2011), section G2; for comment, Neil Andrews, English Civil Justice and Remedies: Progress and Challenges: Nagoya Lectures (Tokyo: Shinzan Sha Publishers, 2007), 3.23. 16 K. Mackie, D. Miles, W. Marsh, and T. Allen, The ADR Practice Guide (2000), 13.1 (not in 2007 edn). 17 Ibid. (2000), at 13.2. 18 S. Shipman, ‘Compulsory Mediation: the Elephant in the Room,’ Civil Justice Quarterly (2011): 163. 14

192

9 Mediation

mediation before a neutral. The line between the obligation to consider and the obligation to enter and participate is crucial. For it would be folly, and ultimately a recipe for tyranny, to insist on attendance before a mediator or to compel participation in a mediation session. 9.09 In the Halsey case (2004), Dyson LJ commented19 : It is one thing to encourage the parties to agree to mediation, even to encourage them in the strongest terms. It is another to order them to do so. . . . If the court were to compel parties to enter into a mediation to which they objected, that would achieve nothing except to add to the costs to be borne by the parties, possibly postpone the time when the court determines the dispute and damage the perceived effectiveness of the ADR process. If a judge takes the view that the case is suitable for ADR, then he or she is not, of course, obliged to take at face value the expressed opposition of the parties. In such a case, the judge should explore the reasons for any resistance to ADR. But if the parties (or at least one of them) remain intransigently opposed to ADR, then it would be wrong for the court to compel them to embrace it. Parties sometimes need to be encouraged by the court to embark on an ADR. . .But we reiterate that the court’s role is to encourage, not to compel. The form of encouragement may be robust. . .

9.10 When might even this restricted duty to consider mediation arise? The main point is that it does not arise as a general requirement. England has not adopted mandatory mediation as a precondition to commencement or continuation of court litigation. However, automatic referral systems were piloted in some English courts, in recent times, although litigants were allowed to opt back into the court system, on giving reasons. Hazel Genn has made an official study of this series of experiments. She said20 : Automatic Referral to Mediation was not interpreted by most solicitors as compulsory and many regarded opting out [so as to resume litigation] as a mere bureaucratic hurdle. Considered objections for opting out included the timing of the referral, the intransigence of the opponent, the subject matter of the dispute, and a belief that mediation was unnecessary because the case would settle. 9.11 By contrast, the Canadian province of Ontario introduced generic mandatory mediation. However, a study reveals some possible pitfalls: that in many cases this can involve an unnecessary financial burden; that the mediation stage might be premature; that the pool of mediators might be inadequate; and that there can be significant variations in the practice from locality to locality even within the same jurisdiction.21 The European Court

19

Halsey v. Milton Keynes General NHS Trust [2004] EWCA Civ 576; [2004] 1 WLR 3002, at [9] to [11]. 20 H. Genn, ‘Twisting Arms: Court Referred and Court Linked Mediation Under Judicial Pressure’ (Ministry of Justice Research Series, 1/07: London, 2007), at p. iii; H. Genn, Judging Civil Justice (Cambridge University Press, 2010), 107. 21 S. Prince, ‘Mandatory Mediation: The Ontario Experience,’ Civil Justice Quarterly 26 (2007): 79; and the summary by H. Genn, ‘Twisting Arms: Court Referred and Court

9.3

Mediation’s Growth in England

193

of Justice in Allasini v. Telecom Italia SpA (2010)22 held that a national law requiring mandatory recourse to a settlement procedure was not contrary to EU law, the ECJ noting that settlements achieved by using this procedure were not binding on the parties. 9.12 English judges do not themselves conduct mediation during the course of pending court litigation. For the most part, English judges wait for a party to suggest that the dispute should be referred to an external mediator. The court might then endorse this as appropriate for this particular case. If so, the court can place a case in suspense (a ‘stay’) while that alternative process is pursued. The court can also issue a recommendation that mediation be considered. Each party will then have a duty to consider mediation. Occasionally, however, a judge might spontaneously recommend to both parties that mediation should be attempted. Again, the duty to consider will then arise. 9.13 Adverse costs decisions (‘sanctions’) apply if a party fails to satisfy the duty to consider. It will be submitted that such costs sanctions are unjustified unless a party has failed genuinely and for objectively unsatisfactory reasons to consider properly the opportunity for mediation. Shirley Shipman has considered the difficult issue whether the threat of an ‘adverse costs award’ for ‘unreasonable refusal’ to accede to an opponent’s mediation suggestions might be contrary to the right of access to court implicit within Article 6(1) of the European Convention on Human Rights. Her tentative suggestion is that this is no more than a possibility.23

9.3 Mediation’s Growth in England 9.14 Senior Master Robert Turner (now retired) suggested that twentyfirst century English court litigation has become the ‘alternative dispute resolution’ system.24 Similarly, the pre-action protocols state25 : ‘litigation should be a last resort, and claims should not be issued prematurely when

Linked Mediation under Judicial Pressure’ (Ministry of Justice Research Series, 1/07: London, 2007), at p. 10. 22 (C-317/08: 2010). 23 S. Shipman, ‘Alternative Dispute Resolution, the Threat of Adverse Costs, and the Right of Access to Court’, in The Civil Procedure Rules: Ten Years On, ed. D. Dwyer (Oxford University Press, 2010), Chap. 18, especially at 353–4. 24 Senior Master Robert Turner, Queen’s Bench Division, (who retired from that post in 2007, after 20 years), cited K. Mackie, et al., The ADR Practice Guide (3rd edn, London: Tottel, 2007), 5. 25 Andrews, English Civil Procedure, 3.13 to 3.18, 23.07, 26.63 to 26.66; for an empirical study, T. Goriely, R. Moorhead, and P. Abrams, More Civil Justice? The Impact of the Woolf Reforms on Pre-Action Behaviour (Law Society and Civil Justice Council, 2001).

194

9 Mediation

a settlement is still likely. . .’26 Furthermore, the Law Society for England and Wales in 2005 issued a ‘practice advice’ recommending that solicitors should routinely consider whether their clients’ disputes are suitable for ADR.27 Mediation is now better understood by businesses and organisations. In England resort to mediation has increased, including within the heartland of commercial disputes.28 The Ministry of Justice for England and Wales (2010) reported on this29 : ‘There is evidence. . .that the market for mediation in the UK continues to grow. A recent mediation audit carried out by the Centre for Effective Dispute Resolution (CEDR) showed that there had been nearly 6,000 civil and commercial mediations carried out in 2009.30 Based on the outcome of the 2007 Mediation Audit, the 2009 figure showed there was a doubling of mediation activity since 2007.’ 9.15 In part this increase is attributable to the well-known advantages of this technique: confidentiality; choice of mediator; opportunity for flexible agreed solutions; the chance of gaining a relatively speedy and inexpensive conclusion to a dispute. Furthermore, the mediation process is now better understood, especially within the commercial sector. Litigation remains an expensive and problematic means of resolving many types of civil dispute, and Government recognises that ADR permits disputes to be resolved less expensively than civil litigation. The court system also directly encourages litigants to pursue mediation in appropriate cases. 9.16 Costs and expense are in the forefront of most people’s minds whenever litigation becomes even a remote prospect. Certainly in England, the rise of mediation, notably in high value disputes, is largely attributable to the sheer expense of traditional court litigation. Bill Gates himself, and other modern-day descendants of Croesus, would hesitate to run the risk of engaging in protracted and complicated claims heard by the High Court. The ‘Woolf reforms’ of 1999 were expected to alleviate the problem of the high cost of civil litigation. But the situation has not improved. And it has been officially recognised that the new procedural code (the CPR 1998) has not reduced the expense of litigation. As Buxton LJ in the Court of Appeal in Willis v. Nicolson admitted in 200731 :

26

Practice Direction-Protocols, para 4.7. L Soc Gaz (2005) (16 June) 38–9. 28 Mackie, et al., The ADR Practice Guide, especially Chap.’s 5, 6, 7; Neil Andrews, The Modern Civil Process (Tübingen, Germany: Mohr & Siebeck, 2008), Chap. 11; Neil Andrews, Contracts and English Dispute Resolution (Tokyo: Jigakusha Publishing, 2010), Chap. 22. 29 Ministry of Justice, ‘Implementation. . .Paper’ (London, 2010) (a consultation paper), at [10]. 30 http://www.cedr.com/index.php?location=/news/archive/20100513_347.htm. 31 Willis v. Nicolson [2007] EWCA Civ 199, at [24]. 27

9.3

Mediation’s Growth in England

195

The very high cost of civil litigation in England and Wales is a matter of concern not merely to the parties in a particular case, but for the litigation system as a whole. While disputants should be given every encouragement to settle their differences without going to court, that encouragement should not include the making of litigation prohibitively costly so that litigants are deterred irrespective of the merits of their case. One element in the present high cost of litigation is undoubtedly the expectations as to annual income of the professionals who conduct it. The costs system as it at present operates cannot do anything about that, because it assesses the proper charge for work on the basis of the market rates charged by the professions, rather than attempting the no doubt difficult task of placing an objective value on the work.

9.17 The topic of costs is receiving consideration, following Lord Justice Jackson’s ‘Civil Litigation Costs Review’, delivered in December 2009.32 He endorsed the spread of mediation33 : . . .I do not believe that parties should ever be compelled to mediate. What the court can and should do (in appropriate cases) is (a) to encourage mediation and point out its considerable benefits; (b) to direct the parties to meet and/or to discuss mediation; (c) to require an explanation from the party which declines to mediate, such explanation not to be revealed to the court until the conclusion of the case; and (d) to penalise in costs parties which have unreasonably refused to mediate. . .

Other leading judges continue to make speeches extolling mediation, including Lord Phillips, President of the Supreme Court,34 and Lord Clarke, a former Master of the Rolls.35 9.18 Government recognises that mediation permits disputes to be resolved less expensively than civil litigation. Indeed, as we shall see, the English court system directly encourages litigants to pursue mediation in appropriate cases Sue Prince has made a study of these schemes.36 The Ministry of Justice (2010) has summarised the position concerning mediations which arise after civil proceedings have commenced37 :

32

Sir Rupert Jackson, Review of Civil Litigation Costs (December, 2009: London, 2010); on which A.A.S. Zuckerman, ‘The Jackson Final Report on Costs—Plastering the Cracks to Shore up a Dysfunctional System’ (2010) 29 Civil Justice Quarterly 263. 33 Jackson report, ibid., Chap. 36, at para 3.4. 34 Lord Phillips, ‘Alternative Dispute Resolution: An English Viewpoint’ (Judicial Communications office, London, 29 March 2008): http://www.judiciary.gov.uk/NR/ rdonlyres/6BBEAB74-204A-4AED-AC83-0624CC358794/0/lcj_adr_india_290308.pdf. 35 A. Clarke, ‘The Future of Civil Mediation’ (Civil Mediation Council, London, May 2008: http://www.judiciary.gov.uk/NR/rdonlyres/927B0C45-8C4D-4A3B-BDF75FEB7D8A0D1B/0/mr_mediation_conference_may08.pdf. 36 S. Prince, ‘ADR after the CPR. . .’, in The Civil Procedure Rules: Ten Years On, ed. D. Dwyer (Oxford: Oxford University Press, 2010), Chap. 17. 37 Ministry of Justice, ‘Implementation. . .Paper’ (London, 2010) (a consultation paper), at [5] to [9].

196

9 Mediation

National Mediation Helpline: . . .towards the end of 2004, Her Majesty’s Courts Service (HMCS) set up the National Mediation Helpline (NMH)38 to provide an accessible mediation service for higher value civil disputes. Since 2004, the Helpline has been expanded. . .to enable the courts and judiciary to take a more pro-active approach in referring court users to this service. The NMH is served by a mix of local, regional as well as national mediation providers who had been accredited by the Civil Mediation Council (CMC).39 . . .Between January 2007 and December 2009 the NMH arranged 1892 mediations, of which 1,244 settled—a settlement rate of 66%. Small Claims Mediation service: The vast majority of hearings (73%) in the county courts involve small claims40 . The Small Claims Mediation Service is a free service set up to help court users who already have an ongoing small claims case in the county court. Parties are generally unrepresented. In the 12 months to the end of April 2010, the service conducted more than 10,000 mediations, settling 72%, and the vast majority of mediations (>90%) are conducted by telephone, saving parties the time and expense of having to travel to a court building.

9.19 The Government announced in March 2011 (press release of 29 March 2011 by the Ministry of Justice, London)41 that it would like to expand resort to mediation. Its statement proposes this change: Increasing the use of mediation: We are proposing introducing automatic referral to mediation in small claims cases, automatic referral to mediation awareness sessions in higher-value cases and consulting on making mediated settlements enforceable by courts. This is to help people avoid the anxiety and expense of court where possible, although court will still be an option for those who mediation cannot help. . . .Last year, more than three quarters of claims in the civil system were settled after allocation, but before trial. This represents 87,000 cases which could potentially have been resolved earlier if mediation had been used more widely (A consultation paper of 2011 supplies details).42

9.20 In summary, the rise of mediation, not just in England, is largely attributable to six factors: (I) the perception (and nearly always the reality) that court litigation is unpredictable; (2) the court-based adjudicative process (and extensive preparation for the final hearing) involves a heavyhanded fight for justice, which is a source of expense, delay, and anxiety; (3) court litigation offers little scope for direct participation by the parties, as distinct from legal representatives; (4) final judgment normally awards victory to only one winner; (5) trial is open-air justice, visible to mankind in general; (6) litigation is private war—even if judges pretend that it is governed by elaborate rules and conciliatory conventions designed to take the sting out of the contest. In a general and vague sense, the European 38

www.nationalmediationhelpline.com. www.civilmediation.org. 40 When the financial value of the claim does not exceed £5,000. 41 http://www.justice.gov.uk/news/press-release-290311a.htm. 42 ‘Solving disputes in the county courts: creating a simpler, quicker and more proportionate system’ (CP 6/2011: Ministry of Justice: Cm 8045) (29 March 2011). 39

9.4 Mediation and Settlement Scepticism

197

mediation directive sits well with this national and, of course, global trend. But one hardly needs this instrument to underscore the reality of modern dispute resolution.

9.4 Mediation and Settlement Scepticism43 9.21 Some doubt the wisdom of embracing too enthusiastically the growth of mediation. More broadly, some are also sceptical whether promotion of very high levels of settlement, without mediation, is a desirable goal. Colleagues in, for example, Germany and Italy, are surprised by the Anglo-American tradition of very high levels of pre-trial settlement and the relative paucity of adjudication by courts on the merits. Within the Anglo-American academic community, there have been strong criticisms of the trend towards privatised methods of promoting settlement by ordinary negotiation or procuring such compromises following mediation. In particular, in her 2008 Hamlyn Lectures, Hazel Genn44 criticised the assumption that mediation delivers ‘justice’. She prefers the view that mediation involves loss of the opportunity to receive substantive justice through the court system45 : What mediation is offering is simply the opportunity to discount [legal claims] in order to be spared the presumed misery and uncertainty of the adjudication process. Genn questions whether it should be government policy to augment the business of mediators and to reduce court lists. This is her important conclusion46 : ‘. . .there is an interdependency between courts as publicisers of rules backed by coercive power, and the practice of ADR and settlement more generally. Without the background threat of coercion, disputing parties cannot be brought to the negotiating table. Mediation without the credible threat of judicial determination is the sound of one hand clapping. A well-functioning civil justice system should offer a choice of dispute resolution methods.’ And she adds: ‘We need modern, efficient civil courts with appropriate procedures that offer affordable processes for those who would choose judicial determination. This is not impossible. But it requires recognition of the social and economic value of civil justice, an acknowledgement that some cases need to be adjudicated, and a vision for reform that addresses perceived shortcomings rather than simply driving cases away.’

43 H. Genn, Judging Civil Justice (Cambridge: Cambridge University Press, 2010), Chap.’s 1 to 3; H Genn, ‘Understanding Civil Justice,’ Current Legal Problems 50 (1997): 155, 186–7 and Peter L. Murray (Harvard), ‘The Privatization of Civil Justice,’ Zeitschrift für Zivilprozess International 12 (2007): 283–303 (Zeitschrift Für Zivilprozess International: Germany); Peter L. Murray, ‘Mediation and Civil Justice: A Public-Private Partnership?’ Zeitschrift für Zivilprozess International 14 (2009): 241; E. Thornburg, ‘Reaping What we Sow: Anti-Litigation Rhetoric, Limited Budgets, and Declining Support for Civil Courts,’ Civil Justice Quarterly 30 (2011): 74. 44 H. Genn, Judging Civil Justice, Chap. 3. 45 Ibid., 119. 46 Ibid., 125.

198

9 Mediation

Another vigorous and long-standing opponent of the modern rush towards privatised justice is Owen Fiss (Yale Law School). In his polemic, ‘Against Settlement’ (1984), he wrote47 : Settlement is for me the civil analogue of plea bargaining: consent is often coerced; the bargain may be struck by someone without authority. . .Although dockets are trimmed, justice may not be done. He added: Like plea bargaining, settlement is a capitulation to the condition of mass society and should be neither encouraged nor praised. Certainly, the process of settlement is not perfect. Possible objections to settlement (including mediated settlements) are48 : (1) parties to settlement might not fully understand their respective positions; (2) the parties might be significantly unequal in various ways; (3) a party might have procured the settlement by underhand dealing49 ; (4) a party’s full civil entitlement should not be reduced by compromise50 ; (5) assessment of the ‘merits’ must be measured, precise, and exacting51 ; (6) the public search-light at trial should be shone upon serious wrongdoing. As for factors (1) to (5), Hazel Genn has said: . . .studies highlight . . .the ways in which power influences the outcome of settlement negotiations. . .Factors which are important are: legal intelligence— getting the right lawyers and experts; financial resources-paying for the

47

(1984) Yale LJ 1073; re-printed in D. Galligan, ed., Procedure (Aldershot: Dartmouth, 1992), Chap. 16; see also O. Fiss, The Law As It Could Be (New York: University Press, 2003). For references to the debate which Fiss’s 1984 article engendered in the US, O. Fiss and J. Resnik, Adjudication and Its Alternatives (New York: Foundation Press, 2003), 481, 488; and see J. Resnik, ‘For Owen M. Fiss, ‘Some Reflections on the Triumph and Death of Adjudication,’ Miami U L Rev 58 (2003): 173. 48 For a convenient collection of literature addressing these points, H. Genn, ‘Understanding Civil Justice,’ Current Legal Problems 50 (1997): 155, 186–7. 49 For example, an aggrieved party to a compromise ‘threw the contractual book’ at the opponent, in an attempt to overturn the compromise, Halpern v. Halpern (No 2) [2007] EWCA Civ 291(distribution of estate among family members; allegation that not all relevant assets were revealed and that the compromise should be regarded as vitiated on numerous suggested grounds; the report at [2007] 3 All ER 478 concerns a specific aspect of the case; consult the online version at [1] ff for the numerous contractual challenges); cf also for an allegation that a mediated settlement ad been procured by duress, Farm Assist Limited (in liquidation) v. The Secretary of State for the Environment, Food and Rural Affairs (No 2) (2009) [2009] EWHC 1102 (TCC); [2009] BLR 399; 125 Con LR 154, on which 9.46. 50 One of Jeremy Bentham’s anxieties: S. Roberts, ‘Settlement as Civil Justice,’ Modern Law Review 63 (2000): 739, 743 n 11, W. Twining, ‘Alternatives to What?. . .’ Modern Law Review 56 (1993): 380, 384 (examining various theorists’ accounts of the civil process, notably, Bentham, Llewellyn, Fuller, and Damaska). 51 For a stimulating account of accuracy and legality, J.A. Jolowicz, ‘The Dilemmas of Civil Litigation,’ in On Civil Procedure (Cambridge: Cambridge University Press, 2000) Chap. 4.

9.4 Mediation and Settlement Scepticism

199

[same]; and having the psychological, social, and economic ability to endure litigation.52 As for the sixth of these considerations, the openness of civil trial, an American commentator, Paul Carrington, has said:. . .what people bring to court is the refuse of our national and community life. Mendacity, greed, brutality, sloth, and neglect are the materials with which we work. . .53 And Sir Jack Jacob, writing in 1985, before the ADR movement had made a serious impact in mainstream English civil justice, endorsed the ideal of open access to courts for the widest range of disputes54 : It should be a fundamental aim of civil justice to open wide the gates of the Halls of Justice and to provide adequate and effective methods and measures, practices and procedures, reliefs and remedies, to deal with all justiciable claims and complaints. He added: Such an aim would produce greater harmony and concord in society and increase the understanding and respect of the community for law and the system of civil justice. 9.22 But this court-centred view seems debatable. England has not adopted Jacob’s aim. Avoidance of litigation and encouragement of pretrial settlement are the bed-rock assumptions of the modern civil system of justice. Nevertheless, one must acknowledge that it would be regrettable if matters can always be conveniently swept under the carpet by

52

H. Genn, ‘Understanding Civil Justice,’ Current Legal Problems 50 (1997): 155, 179; see also H. Genn, Hard Bargaining: Out of Court Settlement in Personal Injury Actions (Oxford: Oxford University Press, 1987) (reviewed Neil Andrews [1989] Cambridge Law Journal 506 and other studies cited Genn (1997) ibid.; see also H. Genn, The Paths to Justice: What People Do and Think About Going to Law (Oxford: Hart, 1999); H. Genn, ‘Court-Based ADR Initiatives for Non-Family Civil Disputes: The Commercial Court and the Court of Appeal’ (Department for Constitutional Affairs Research Reports 1/2002, 2002): www.hmcourts-service.gov.uk/docs/adr_initiatives.pdf (this last piece in examined briefly in Section 5 of the author’s paper on the Commercial Court and case Management). 53 Paul D. Carrington, ‘Teaching Civil Procedure: A Retrospective View,’ Journal of Legal Education 49 (1999): 311, at 328. 54 J.I.H. Jacob, ‘Justice Between Man and Man,’ Journal of Legal Education 34 (1984): 268 (cited H. Genn, ‘Understanding Civil Justice,’ Current Legal Problems 50 (1997): 155, 185–6; Genn suggests that ‘our future prosperity has more to do with what is going on in offices and factories in the Far East than with whether Lord Woolf’s fast track will achieve its objectives.’ cf also Jacob’s statement in ‘Access to Justice in England’, by the same author, The Reform of Civil Procedural Law (London, 1982), 125, 126–7: ‘In a civilised society, there should be no room for barriers to justice, no second-class access to justice, just as there should be no second-class justice’ (re-printing of his contribution to M. Cappelletti and B. Garth, Access to Justice, a World Survey (Italy: Guiffree and Sijthoff, 1978), vol 1, bk 1); and Jacob’s later statement in The Fabric of English Civil Justice (1987) 277, ‘..there should be, not only equality before the law, but equality of access to the law and legal services. . .alike for rich and poor and those of moderate means, and that such access should extend to all civil claims and defences at all levels of the judicial process, without regard to the nature of the dispute or complaint or the relief or remedy claimed.’

200

9 Mediation

a last-minute settlement designed to avoid adverse publicity. Here are some examples taken from modern Britain: a senior female police-woman complains that her rise within the hierarchy has been obstructed by sexual discrimination55 ; a family wishes to complain that their son’s suicide within the British armed forces was the result of bullying by fellow soldiers56 ; a car-dealer’s standard-term warranty for repair of new vehicles is mischievously declared to have been ‘forfeited’ for a reason which is no longer tenable under competition law57 ; a tenant has failed for many years to induce his landlord, a large charity, to satisfy its repair obligations, and it appears that there have been similar complaints by other tenants against this landlord.58 As mentioned at 9.25, sometimes statute prohibits exclusion of formal recourse to state-administered courts or tribunals. Thus in Clyde & Co v. Bates van Winkelhof (2011)59 the (English) High Court refused to uphold a clause requiring a partner in a law firm to refer any disputes or differences arising from her work for the firm to mediation and then to arbitration. The partner had brought complaints to an Employment Tribunal alleging various statutory breaches by her law firm of equality law, and seeking compensation. Statute60 clearly precludes ‘contracting out’ from this open and public system of adjudication before a tribunal. By contrast, in Fulham FC (1987) Ltd v. Richards (2010)61 Vos J held that an arbitration agreement was in wide terms. It was capable of including a dispute arising from a transfer of a football play club. The agreement to arbitrate did not infringe any element of public policy. Therefore, Vos J decided to stay related court proceedings, commenced under the Company Acts to challenge the activities of the relevant company officials.

55

See the ‘Halford’ affair, July 1992, discussed Neil Andrews, Principles of Civil Procedure (London: Sweet & Maxwell, 1994), 26. 56 Such complaints have received publicity: for Parliamentary comment in 2006 on a QC’s report into one set of incidents, http://www.publications.parliament.uk/pa/ ld199900/ldhansrd/pdvn/lds06/text/60329-05.htm. 57 Typically, customer’s garage failing to fit replacement mechanical part bearing manufacturer’s ‘logo’, even though part in fact fitted has same objective specification as the manufacturer’s named part; facts told to the author: for the legal background to this, see the Office of Fair Trading’s comments at http://www.oft.gov.uk/News/Press+releases/ 2003/PN+170-03.htm. 58 Examples must be legion; e.g., English Churches Housing Group v. Shine [2004] EWCA Civ 434. 59 [2011] EWHC 668 (QB), Slade J. 60 Equality Act 2010, s 120 and the Equality Rights Act 1996, s 203. 61 [2010] EWHC 3111 (Ch); [2011] 2 WLR 1055.

9.5 Mediation Agreements

201

9.5 Mediation Agreements62 9.23 Many corporations now prefer to use international arbitration in combination with other ADR mechanisms. Such a combination of techniques will be specified in a ‘multi-tiered’ dispute resolution clause.63 The leading English decision concerning mediation clauses64 is Cable & Wireless v. IBM United Kingdom Ltd (2002).65 In this case the relevant clause was a so-called ‘tiered’ provision. It initially required the parties to endeavour to negotiate a resolution by considering the relevant dispute within their own organisations. The clause stated that mediation would be obligatory if these negotiations collapsed.66 Thereafter, the parties to this clause contemplated that, if the dispute were still unresolved, proceedings before a court could take place. After negotiation had failed, one party decided to by-pass the stipulated stage of mediation, and prematurely brought a claim before the English High Court. The other party challenged this. Colman J found that there had been a breach of the dispute resolution agreement, because a party had ‘jumped’ the mediation stage and proceeded straight to litigation. To remedy this, the judge placed a ‘stay’ upon those formal court proceedings. The stay would be lifted if a party returned to court and demonstrated that the mediation attempt had been unsuccessful. But, although the stay was appropriate in this case, the judge said that this would not always be so: ‘For example, there may be cases where a reference to ADR would be obviously futile and where the likelihood of a productive mediation taking place would be so slight as not to justify enforcing the agreement. Even in such circumstances ADR would have to be a completely hopeless exercise.’ 9.24 Although in the Cable & Wireless case (2002) the parties had stipulated that mediation should be a mandatory prelude to court proceedings, other dispute resolution clauses might stipulate that mediation should 62 D. Joseph, Jurisdiction and Arbitration Agreements and their Enforcement (2nd edn, London: Sweet & Maxwell, 2010); K. Mackie, et al., The ADR Practice Guide (3rd edn, London: Tottel, 2007), Chap. 9; Centre for Effective Dispute Resolution at: www.cedr.co. uk/library/documents/contract_clauses.pdf; D. Spencer and M. Brogan, Mediation: Law and Practice (Cambridge: Cambridge University Press, 2006), Chap. 12 for Australian material. 63 The School of International Arbitration, Queen Mary, University of London, report (2005), available on-line at: http://www.pwc.com/Extweb/pwcpublications.nsf/ docid/0B3FD76A8551573E85257168005122C8. I am grateful to Stephen York for this reference. 64 Joseph, Jurisdiction and Arbitration Agreements and their Enforcement; Mackie, et al., The ADR Practice Guide, Chap. 9; Centre for Effective Dispute Resolution at: www. cedr.co.uk/library/documents/contract_clauses.pdf; Spencer and Brogan, Mediation: Law and Practice, Chap. 12 for Australian material. 65 [2002] 2 All ER (Comm) 1041, Colman J. 66 Generally, Mackie, et al., The ADR Practice Guide, 9.6.4.

202

9 Mediation

be the compulsory stage before commencement of arbitration proceedings. If so, a similar analysis is possible. The Cable & Wireless case demonstrates that the contractual commitment to mediate is legally enforceable: if a party, in breach of the resolution clause, fails to pursue mediation, and instead prematurely commences arbitration or court proceedings, the court might seek to halt the relevant premature adjudicative process. In fact a court can make one of the following orders: (i) an ‘anti-suit injunction’, that is, an in personam order, which is aimed at stopping the offending party from continuing premature arbitration proceedings67 ; or (ii) an ‘anti-suit injunction’ to halt premature foreign and extra-EU civil proceedings (however the West Tankers case (2009)68 prevents Member State courts from issuing anti-suit injunctions in respect of civil or commercial cases pending before other Member State courts in matters covered by the European Jurisdiction Regulation)69 ; or (iii) a ‘stay’ of premature English civil proceedings (a ‘stay’, as illustrated by the relief granted in the Cable & Wireless case itself,—9.28 above—is an order prohibiting further activity in the English civil proceedings; this bar remains effective until lifted by the court). And the arbitral tribunal which is prematurely seised of a reference, where the parties have undertaken first to attempt to mediate, might in its discretion choose to place the case in suspense, pending resort to arbitration. 9.25 However, in some contexts, statute prohibits exclusion of formal recourse to state-administered courts or tribunals. For example, in Clyde & Co v. Bates van Winkelhof (2011)70 Slade J considered a clause71 within a

67

Joseph, Jurisdiction and Arbitration Agreements and their Enforcement, 12.88 ff. Allianz SpA etc v. West Tankers (C-185/07) [2009] 1 AC 1138; [2009] 1 All ER (Comm) 435; [2009] 1 Lloyd’s Rep 413; [2009] 1 CLC 96; [2009] ILPr 20; The Times, 13 February, 2009. 69 Council Regulation 44/2001 of 22 December 2001 on ‘jurisdiction and the recognition and enforcement of judgments in civil and commercial matters’). 70 [2011] EWHC 668 (QB), Slade J. 71 The relevant clauses stated: 68

41.1 If at any time there is a dispute, difference or question that shall arise between the Members or between the LLP and the Members (including any Outgoing Member or his personal representatives), or any of them, touching the membership of the LLP or the rights and liabilities of the Members (together ‘Referred Matters’), then the Member or Members involved in such dispute, difference or question (‘parties’) shall deal with it as provided in this clause and clause 41.2 below. The matter shall be immediately referred by any of the parties to the Management Board requiring it to meet and to make a decision on the relevant matter within 28 days of the matter being so referred to the Management Board (‘Decision Period’). The Management Board shall meet and discuss the relevant matter with a view to resolving the issue in a sensible and fair manner. If the Management Board reaches agreement with the parties within the Decision

9.6 Pre-action Duty of Parties to Consider ADR

203

partnership deed requiring a partner in a law firm to refer any disputes or differences arising from her work for the firm to mediation and then to arbitration. The partner had brought complaints to an Employment Tribunal alleging various statutory breaches by her law firm of equality law, and seeking compensation. Slade J concluded that the High Court could not grant an injunction compelling her to desist from pursuing these Employment Tribunal proceedings. Statute72 clearly precluded ‘contracting out’ from this tribunal system of rights.

9.6 Pre-action Duty of Parties to Consider ADR 9.26 The CPR states that: ‘the courts increasingly take the view that litigation should be a last resort, and that claims should not be issued prematurely when a settlement is still likely. Therefore, the parties should consider whether some form of alternative dispute settlement would be more suitable than litigation, and if so, endeavour to agree which form to adopt.’73 There is also a general ‘tick box’ invitation in the Allocation Questionnaire, enabling each party to indicate whether mediation might be an option.

Period the Members agree that such agreement be promptly implemented. If the Management Board fails to agree on any matter within the Decision Period or if the dispute is with the Management Board itself then clause 41.2 below shall apply. 41. 2 If a dispute still remains after the application of 41.1 above, including any question regarding the Referred Matters or the application of this dispute resolution procedure, then the parties agree first to refer the matter to the Centre for Dispute Resolution (CEDR) in an attempt to settle the dispute in good faith by Alternative Dispute Resolution (ADR). If the dispute is not settled within 30 days of the request to CEDR by one of the parties, or such further period as the parties shall agree in writing, either party may require that the dispute be referred to and finally resolved under the Rules of the London Court of International Arbitration, which Rules are deemed to be incorporated by reference into this clause 41.2, save that the parties preserve the right to appeal or to refer to the English Courts on questions of law which shall have jurisdiction in such circumstances. The Members and the LLP reserve all their respective rights in the event that no agreed resolution shall be reached in the ADR procedure and none of them shall be deemed to be precluded from taking such interim formal steps as may be considered necessary to protect such person’s position while the ADR procedure is pending. 72 73

Equality Act 2010, s 120 and the Equality Rights Act 1996, s 203. ‘Practice Direction-Protocols’ 4.7.

204

9 Mediation

9.7 Occasions for Judicial Encouragement of Mediation74 9.27 The English courts’ overall responsibility to administer civil justice includes ‘helping the parties to settle the whole or part of the case’75 and ‘encouraging the parties to use an alternative dispute resolution procedure if the court considers that appropriate.’76 In addition to the ‘tick box’ mechanism contained in the Allocation Questionnaire (see preceding paragraph), resort to mediation is a question of direct communication between a judge (notably during the pre-trial stages, but occasionally after judgment during the process of giving permission to appeal). 9.28 In the Commercial Court (a part of the Queen’s Bench Division, in the High Court), the practice is that a judge will not require the parties to mediate unless one party makes such a request and the suggestion seems to the judge to be reasonable. Parties to litigation in that court are regarded as ‘sophisticated’. They enjoy legal advice concerning the range of disputeresolution available to them. It would be unduly heavy-handed, therefore, for a judge to insist on a stay if neither party has an interest in mediation (2009 conversation with a Commercial Court judge). However, wider language appears in the Admiralty and Commercial Court Guide (2011), which does not rule out judicial initiative77 : ‘The Commercial Judges will in appropriate cases invite the parties to consider whether their dispute, or particular issues in it, could be resolved through ADR.’ Where mediation seems appropriate, the court has devised a formula (rather misleadingly called an ‘ADR Order’) designed to achieve consensus on the nomination of a mediator, and to require reasons to be given to the court for failure to proceed78 : On or before [∗ ] the parties shall exchange lists of 3 neutral individuals who are available to conduct ADR procedures in this case prior to [∗ ]. Each party may [in addition] [in the alternative] provide a list identifying the constitution of one or more panels of neutral individuals who are available to conduct ADR procedures in this case prior to [∗ ]. On or before [∗ ] the parties shall in good faith endeavour to agree a neutral individual or panel from the lists so exchanged and provided.

74

For a typology of court-assisted modes of ADR, W.D. Brazil and J. Smith, ‘Choice of Structures. . .,’ Dispute Resolution Magazine 6 (1999): 8, cited in Fiss and Resnik, Adjudication and Its Alternatives, 468: court employs full-time in-house neutrals; or contracts with non-profit making organisations for such a programme; or directly pays firms to serve as neutrals; or orchestrates voluntary mediations; or refers parties to neutrals (whether selected by the court or by the parties) who charge; this last is the general English model, and furthermore, the parties select the neutral. 75 CPR 1.4(2)(f). 76 CPR 1.4(2)(e); Chancery Guide (2005), Chap. 17; The Admiralty and Commercial Courts Guide (9th edn, 2011), section G and appendix 7 (available on the CPR webpage under ‘Guides’). 77 The Admiralty and Commercial Courts Guide (9th edn, 2011), at G1.3. 78 Ibid., Appendix 7.

9.8 Judicial Order to ‘Stay’ Court Proceedings to Facilitate Mediation

205

Failing such agreement by [∗ ] the Case Management Conference will be restored to enable the Court to facilitate agreement on a neutral individual or panel. The parties shall take such serious steps as they may be advised to resolve their disputes by ADR procedures before the neutral individual or panel so chosen by no later than [∗ ]. If the case is not finally settled, the parties shall inform the Court by letter prior to [disclosure of documents/exchange of witness statements/exchange of experts’ reports] what steps towards ADR have been taken and (without prejudice to matters of privilege) why such steps have failed. If the parties have failed to initiate ADR procedures the Case Management Conference is to be restored for further consideration of the case.

9.29

In the Halsey case (2004), Dyson LJ explained79 :

An ADR order made in the Admiralty and Commercial Court in the form set out in Appendix 7 to the Guide is the strongest form of encouragement. It requires the parties to exchange lists of neutral individuals who are available to conduct ‘ADR procedures’, to endeavour in good faith to agree a neutral individual or panel and to take ‘such serious steps as they may be advised to resolve their disputes by ADR procedures before the neutral individual or panel so chosen’. The order also provides that if the case is not settled, ‘the parties shall inform the court . . . what steps towards ADR have been taken and (without prejudice to matters of privilege) why such steps have failed’. It is to be noted, however, that this form of order stops short of actually compelling the parties to undertake an ADR.

9.30 To sum up this aspect: the English position involves selective judicial recommendation of mediation.80

9.8 Judicial Order to ‘Stay’ Court Proceedings to Facilitate Mediation81 9.31 Even in the absence of a mediation agreement, an English court can direct that the proceedings be stayed for a month at a time82 while the parties pursue ADR or other settlement negotiations.83 A stay merely places the proceedings in a state of suspense. Proceedings can be resumed 79

Halsey v. Milton Keynes General NHS Trust [2004] EWCA Civ 576; [2004] 1 WLR 3002, at [30]. 80 For sceptical discussion of any form of mandating or coercing resort to mediation, Matthew Brunsdon-Tully, ‘There is an A in ADR but Does Anyone Know What It Means Anymore?’ Civil Justice Quarterly (2009): 218–36. 81 For a typology of court-assisted modes of ADR, Brazil and Smith, ‘Choice of Structures. . .’, cited in Fiss and Resnik, Adjudication and Its Alternatives, 468: court employs full-time in-house neutrals; or contracts with non-profit making organisations for such a programme; or directly pays firms to serve as neutrals; or orchestrates voluntary mediations; or refers parties to neutrals (whether selected by the court or by the parties) who charge; this last is the general English model, furthermore, the parties select the neutral. 82 CPR 26.4(3). 83 CPR 3.1(2)(f); CPR 26.4(1)(2).

206

9 Mediation

when this becomes appropriate. The stay can be issued either at the parties’ request or on the initiative of the court. The matter is subject to the court’s discretion. There is no automatic right to a stay.

9.9 Costs Sanctions for Failure to Pursue Mediation 9.32 English courts are prepared, where appropriate, to register censure of a party’s unreasonable refusal to engage in mediation. That refusal might be failure to accede to the opponent’s call for mediation, or the court’s own suggestion, that mediation be contemplated. Indeed in the Court of Appeal in the McMillan case (2004) said that if both parties to an appeal spurn the judicial recommendation that mediation be considered, and instead they proceed straight to appeal without attempting mediation, each party will bear its own costs for that stage of the proceeding, with no opportunity for costs-shifting in favour of the victorious party to the appeal.84 9.33 In determining the unreasonableness of a party’s refusal to pursue mediation, the Court of Appeal in Halsey v. Milton Keynes General NHS Trust (2004) listed the following criteria85 : . . . the nature of the dispute; the merits of the case; the extent to which other settlement methods have been attempted; whether the costs of the ADR would be disproportionately high; whether any delay in setting up and attending the ADR would be prejudicial; whether the ADR had a reasonable prospect of success. In the same case, Dyson LJ explained86 : . . .where B has adopted a position of intransigence, A may reasonably take the view that a mediation has no reasonable prospect of success because B is most unlikely to accept a reasonable compromise. That would be a proper basis for concluding that a mediation would have no reasonable prospect of success, and that for this reason A’s refusal to mediate was reasonable. On the other hand, if A has been unreasonably obdurate, the court might well decide, on that account, that a mediation would have had no reasonable prospect of success. But obviously this would not be a proper reason for concluding that A’s refusal to mediate was 84

McMillan Williams v. Range [2004] EWCA Civ 294; [2004] 1 WLR 1858, per Ward LJ: ‘[29] Tuckey LJ gave this information for or directions to the parties when he granted permission to appeal: ‘The costs of further litigating this dispute will be disproportionate to the amount at stake. ADR is strongly recommended.’ . . .The parties should have written to each other along the lines that, ‘Lord Justice Tuckey has very sensibly suggested ADR. My client thinks that is a splendid idea. Please can we get on with it as soon and as cheaply as possible?’. . .[30] . . . In my judgment this is a case where we should condemn the posturing and jockeying for position taken by each side of this dispute and thus direct that each side pay its own costs of their frolic in the Court of Appeal. I would allow the appeal with no order for costs.’ 85 [2004] EWCA Civ 576; [2004] 1 WLR 3002, at [16] ff; for a strong application of this costs regime, in which the Halsey criteria were fully considered, P4 Ltd v. Unite Integrated Solutions plc [2006] EWHC 2924 (TCC), Ramsey J. 86 2004] EWCA Civ 576; [2004] 1 WLR 3002, at [25] to [28].

9.9 Costs Sanctions for Failure to Pursue Mediation

207

reasonable. A successful party cannot rely on his own unreasonableness in such circumstances. . . . Nor should it be overlooked that the potential success of a mediation may not only depend on the willingness of the parties to compromise. Some disputes are inherently more intractable than others. Some mediators are more skilled than others.

Dyson LJ continued: It may therefore sometimes be difficult for the court to decide whether the mediation would have had a reasonable prospect of success. The burden should not be on the refusing party to satisfy the court that mediation had no reasonable prospect of success. As we have already stated, the fundamental question is whether it has been shown by the unsuccessful party that the successful party unreasonably refused to agree to mediation.

9.34 It will be more common to apply a costs sanction against a party who not only refused to consider mediation but who also lost the substantive case (or appeal). This type of ‘refusenik’ might be ordered87 to pay the other side’s costs on an ‘indemnity basis’ rather than ‘standard basis’88 (on this distinction 5.06; indemnity costs, although not punitive, are a full measure of compensatory costs; whereas standard basis costs are a substantial but incomplete measure of such compensation; and the difference between the two measures can be very large, given the high levels of costs incurred by parties in England). 9.35 The courts are increasingly sceptical of the defensive retort that certain types of dispute are not appropriate for mediation. For example, the Court of Appeal has declared that mediation is useful in both building disputes89 and work-related ‘stress’ claims.90 A defendant’ pre-action unwillingness to mediate can be entirely reasonable if the opponent has failed to particularise and clarify his claim, despite the defendant’s requests, as Ward LJ noted in S v. Chapman (2008).91 Furthermore, HH Judge Coulson QC held in Nigel Witham Ltd v. Smith (2008)92 that a party’s very late acceptance of the opponent’s offer to mediate might be equivalent to an absolute refusal to mediate. 9.36 An intermediate situation concerns the party B who has lost in a narrow sense, but who has won most of the points pleaded by the opponent, 87

Virani Ltd v. Manuel Revert y Cia SA [2003] EWCA Civ 1651; [2004] 2 Lloyd’s Rep 14. On the difference between standard basis and indemnity costs, Andrews, The Modern Civil Process, 9.12. 89 Burchell v. Bullard [2005] EWCA Civ 358. 90 For example, Vahidi v. Fairstead House School Ltd [2005] EWCA Civ 765 at [27], per Longmore LJ; the Court of Appeal heard an appeal in an employment dispute in which a teacher had alleged that her employer’s negligence had caused a psychiatric problem; the court suggested that work-related ‘stress’ claims are especially suited to mediation. 91 [2008] EWCA Civ 800, at [49]; noted J Sorabji (2008) 27 Civil Justice Quarterly 427. 92 [2008] EWHC 12 (TCC), at [36]; noted on this point by J Sorabji (2008) 27 Civil Justice Quarterly 427. 88

208

9 Mediation

A. Normally B might expect costs to be weighted in his favour. But he will lose this costs advantage if he has unreasonably spurned party A’s mediation overtures. This occurred in Rolf v. De Guerin (2011).93 The Court of Appeal made a costs decision adverse to a party who spurned an opponent’s mediation overtures. In this case the claimant nominally won the action against a builder, in the sense that she recovered damages from him, but she lost on most of the pleaded contentions. However, the defendant had spurned the claimant’s suggestion that they should seek to resolve their dispute by mediation. The Court of Appeal regarded this last factor as crucial to its decision to declare an overall ‘costs stale-mate’: each party to bear its own costs. It appears that if the claimant had not made mediation overtures, the court would have made an award of costs substantially in favour of the defendant. This would have reflected an issue-by-issue tally of the latter’s overall success in winning key issues at trial. 9.37 As for costs sanctions against a party who has clearly won the relevant court proceedings, the ‘mediation offeror’ (who has lost the case) will bear the burden of showing on the balance of probabilities that the mediation would have had a reasonable prospect of success, assuming the mediation offeree (who eventually won the case) would have participated in the mediation in a co-operative manner.94 Satisfying this burden of proof will be an uphill task. 9.38 And so the question of a costs sanction against a victorious party is more likely to arise when the party to be sanctioned has rejected a judicial recommendation for mediation (as distinct from a suggestion made by the other side). In this context, robust costs sanctions are likely to be applied if the court (notably the Court of Appeal), when granting permission to appeal, has simultaneously indicated that the parties should consider mediation. If one party fails to respond positively to such a judicial recommendation, the appeal court, when considering the question of costs at the conclusion of the appeal, might deny that party the costs of the appeal even if he has been successful on the merits of the appeal. In both Dunnett v. Railtrack plc (2002)95 (discussed in text below) and McMillan Williams v. Range (2004)96 a member of the Court of Appeal (Schiemann LJ in the Dunnett case, and Tuckey LJ in the McMillan case) issued an unsolicited recommendation that, instead of proceeding straight to appeal, both parties should pursue mediation. Dyson LJ in the Halsey case (2004) also noted the

93

[2011] EWCA Civ 78 [2011] NPC 17. Halsey v. Milton Keynes General NHS Trust [2004] EWCA Civ 576; [2004] 1 WLR 3002. 95 [2002] 1 WLR 2434, CA, at [13] ff. 96 [2004] EWCA Civ 294; [2004] 1 WLR 1858, at [29], [30]. 94

9.9 Costs Sanctions for Failure to Pursue Mediation

209

special status of a judicial recommendation97 : Where a successful party refuses to agree to ADR despite the court’s encouragement, that is a factor which the court will take into account when deciding whether his refusal was unreasonable. The court’s encouragement may take different forms. The stronger the encouragement, the easier it will be for the unsuccessful party to discharge the burden of showing that the successful party’s refusal was unreasonable. 9.39 It is submitted that costs sanctions are unjustified if the relevant party to the appeal convinces the court that he has considered properly the opportunity to mediate but he has then chosen to bring or respond to the appeal for objectively satisfactory reasons. Once the court is satisfied that the party did properly consider the mediation option, there should be no scope for sanctions. The party who succeeds in the appeal (the appellant if the appeal is successful, or the respondent if the appeal fails) should receive the costs of that appeal from the defeated opponent, in accordance with the costs-shifting principle: to ‘sanction’ him for failure to attend or participate in a mediation is too heavy-handed and unprincipled. Similarly, the defeated opponent should be ordered to pay costs on the standard basis, and not (by way of ‘sanction’) on the higher indemnity basis (on these different types of costs award, see 9.34). 9.40 But the party who lost the appeal in Dunnett v. Railtrack plc (2002)98 did succeed in persuading the court to disallow the victorious party its costs in the appeal. Or, rather, the Court of Appeal in that case spontaneously imposed a robust costs sanction based on its own impression of the perceived ‘tactical merits’ of the contest. The court held that the twice victorious rail track company (which had successfully defended the claim, both at trial and on appeal) should be denied its costs from Mrs Dunnett. It appears that this denial was confined to the costs of the appeal; and the costs decision stopped short of requiring the defendant company to pay the claimant’s costs—in fact she was not legally represented, and was a ‘litigant-in-person’. In this case the claimant alleged that, as a result of the defendant company’s negligence or other legal breach, her three horses had escaped from their field onto the defendant’s track. They had then been killed by an express train travelling down the defendant’s track. At trial the claimant lost. After the trial, the defeated claimant sought permission to appeal. This application was considered by reference to documents, without an oral hearing. Schiemann LJ granted permission but added a recommendation that the parties should pursue ADR. In response to this suggestion, it appears that Mrs Dunnett, the appellant/claimant, had expressed some willingness to pursue this path. This

97

Halsey v. Milton Keynes General NHS Trust [2004] EWCA Civ 576; [2004] 1 WLR 3002, at [29]. 98 [2002] 1 WLR 2434, CA, at [13] ff.

210

9 Mediation

is not surprising because she had already lost at first instance, had no legal representation, and would be liable for extensive legal costs if she lost a second time, on appeal. However, the defendant/respondent company rejected this recommendation. That company took the view (based on an objective and forensic perspective, no doubt carefully considered by its management, in-house counsel, and external counsel) that the formal legal merits of the dispute were clearly in its favour. Although that company was successful in the appeal, the Court of Appeal considered that this party had unjustifiably refused to engage in judicially-recommended mediation.99 It is submitted that this surprisingly harsh costs decision might be justified only on one of two bases: first, that the litigant had spurned the judicial recommendation as a knee-jerk response, without proper consideration, perhaps even adopting a contumelious attitude (it is very doubtful whether the company had been this foolish!); or, secondly, even though it had won the appeal, the defeated litigant could persuade the court that mediation would have achieved a result and that, objectively, the issue in the legal contest (ostensibly the question of liability to pay compensation) was an irrelevance. 9.41 As for this second possible justification, the costs sanction in this case would have been sound if the claimant had been truly interested only in gaining an apology from the defendant, rather than obtaining compensation. In short, the fairness of the costs decision in that case turns on whether the claimant was mainly interested ‘in the money’ rather than in a symbolic acknowledgement of the rail track company’s (alleged) moral responsibility. It is not apparent to this author that Mrs Dunnett was only interested in an apology. It is more plausible to suppose that the case concerned both money and a wish to demonstrate publicly that the defendant had been culpable. But, if the company was not legally culpable—, and two courts held that had been no legal breach in this case,—it is evident that Mrs Dunnett deserved no legal compensation. Nor would an apology seem appropriate, which presupposes some dereliction of a legal duty or at least a technical legal breach. In the absence of a legal wrong, at most an expression of regret or condolences might be considered fitting, whether sincere or at least for the sake of public relations. It is not clear, therefore, that the company had done anything wrong in either formal legal terms or from the perspective of commercial decency. Neither at the time of the incident, nor during its conduct of the litigation, including its unwillingness to mediate, had the company transgressed. 9.42 Therefore, the Court of Appeal’s censorious approach to the company needs to be explained. The costs decision was a punitive sanction. But

99

Ibid., at [16], per Brooke LJ (in exercise of the broad discretion concerning costs contained in CPR Part 44); for a similar decision, McMillan Williams v. Range [2004] EWCA Civ 294; [2004] 1 WLR 1858.

9.10

Privileged Mediation Discussion

211

its deployment on these facts is puzzling and unconvincing. One senses that this expression of disapproval was driven by the Lords Justices’ vague sense that mediation should expand whenever there is a remote chance of its success. But such a discretionary and unconvincing use of judicial sanctions runs contrary to the voluntary basis of mediation. That technique is a settlement tool. There was no agreement to mediate obliging Mrs Dunnett and Railtrack to use that technique. The judicial recommendation to mediate, made when granting permission to appeal, was not an order to enter into mediation sessions. As discussed (paragraphs 8–12), ‘orders to mediate’ can only be rationalised as orders requiring disputants to consider carefully the merits of mediation as a possible means of enabling them to achieve a consensual resolution of their dispute. But Railtrack seems to have discharged that limited duty to consider was a duty which. If so, there was no legitimate scope for a sanction.

9.10 Privileged Mediation Discussion100 9.43 It has long101 been recognised that non-mediated settlement negotiations can be privileged. This is known as ‘without prejudice’ privilege.102 The UK Supreme Court in Oceanbulk Shipping and Trading SA v. 100 Literature concerning privilege in the context of mediation or conciliation: Andrews, English Civil Procedure, 25.45 to 25.48; Andrews, The Modern Civil Process, 11.49 to 11.61; Neil Andrews, Contracts and English Dispute Resolution, 22.20 ff; H. Brown and A. Marriott, ADR Principles and Practice (3rd edn, London, 2011); Cross and Tapper on Evidence (12th edn, Oxford University Press, 2010), 475; Mackie, et al., The ADR Practice Guide, 7.2 ff; B. Thanki, ed., The Law of Privilege (Oxford: Oxford University Press, 2006), 7.24, 7.38 to 7.39; for USA and Australian sources, Newman, in Mediation in Context, ed. M. Liebmann (London and Philadelphia, 2000), 188; Spencer and Brogan, Mediation: Law and Practice, Chap. 9, noting esp at 329, Australian legislation on this topic; for general comment, Scottish Law Commission’s Report, Evidence: Protection of Family Mediation [1992] SLC 136 (Report) (June 1992) (containing notes on the draft Bill); the Civil Evidence (Family Mediation) (Scotland) Act 1995; symposium in (1988) 12(1) Seton Hall Legis J. 101 On the development of this privilege, D. Vaver, ‘“Without Prejudice” Communications-Their Admissibility and Effect,’ Univ Brit Col L Rev (1974): 85 (cited by Robert Walker LJ in Unilever plc v. The Proctor & Gamble Co [2000] 1 WLR 2436, 2445, CA). 102 Andrews, English Civil Procedure, Chap. 25; Brown and Marriott, ADR Principles and Practice; Cross and Tapper on Evidence (12th edn, Oxford: Oxford University Press, 2010) 470 ff; Foskett, The Law and Practice of Compromise, Chap. 22; C. Hollander, Documentary Evidence (10th edn, London: Sweet & Maxwell 2009), Chap. 16; M. Iller, Civil Evidence: The Essential Guide (London: Sweet & Maxwell, 2006), 8-88–8-104; P. Matthews and H. Malek, Disclosure (3rd edn, London: Sweet & Maxwell, 2010), Chap. 11; Phipson on Evidence (17th edn, 2010), 24–18 ff; C. Passmore, Privilege (2nd edn, London: XPL Law 2006), Chap. 10; Thanki, The Law of Privilege, Chap. 7; Zuckerman on Civil Procedure (2nd edn, 2006), Chap. 16; A.F.C. Koo, ‘Confidentiality of

212

9 Mediation

TMT Asia Ltd (2010)103 held that ‘without prejudice’ negotiations, which resulted in a settlement agreement, can be admitted for the purpose of ascertaining the factual matrix of the relevant agreement. In light of that background material, the court could then interpret the terms of the settlement. To decide otherwise would be to create an unprincipled distinction between interpretation of all other commercial contracts and interpretation of settlement agreements. 9.44 In Cumbria Waste Management Ltd v. Baines Wilson (2008) it was held that mediated settlement discussions between parties X and Y remain privileged if X or Y is unwilling to waive privilege.104 It follows that in subsequent litigation between X and D, the latter cannot obtain disclosure of the mediation discussions between X and Y. 9.45 Brown v. Rice (2007) confirms that a party to a mediated settlement, no less than an unmediated settlement, can adduce the contents of settlement negotiations to prove whether a settlement was reached and to ascertain its terms.105 The court will apply contractual principles to determine whether a binding settlement agreement has arisen during mediation. Mediation agreements, as in Brown v. Rice, often prescribe that a binding settlement must be reduced to writing and signed by the parties, or by their authorised representatives; such a formality clause also governs acceptance of an offer made during the conclusion of the mediation meeting(s) but expressed to be open for acceptance within a specified period after the meeting has ended (unless the need for writing and signature has been varied, waived or consensually overridden by another provision). The parties normally adopt such protection by express agreement, but sometimes privilege rests merely upon implicit consensus.106 9.46 The complex network of rules and doctrines impinging on ‘mediation secrecy’ is a live matter in the English case law: the topic is subtle and developing. Thus in Farm Assist Limited (in liquidation) v. The Secretary of State for the Environment, Food and Rural Affairs (No 2) (2009)107 Ramsey J upheld a witness summons requiring a mediator to give evidence on the question whether a settlement achieved during the relevant

Mediation Communications,’ Civil Justice Quarterly (2011): 192; J. McEwan, ‘“Without Prejudice”: Negotiating the Minefield,’ Civil Justice Quarterly 13 (1994): 133. 103 [2010] UKSC 44; [2010] 3 WLR 1424 (reversing [2010] EWCA Civ 79; [2010] 1 WLR 1803 (Longmore and Stanley Burnton LJJ; Ward LJ dissenting). For another recent discussion R v. K (A) [2009] EWCA Crim 1640; [2010] QB 343, at [44] to [73]. 104 [2008] EWHC 786 (QB) (HH Judge Frances Kirkham sitting as a High Court Judge). 105 [2007] EWHC 625 (Ch) Stuart Isaacs QC. 106 Reed Executive plc v. Reed Business Information Ltd [2004] EWCA Civ 887; [2004] 1 WLR 3026; Aird v. Prime Meridian Ltd [2006] EWCA Civ 1866; Bradford & Bingley plc v. Rashid [2006] UKHL 37; [2006] 1 WLR 2066; Barnetson v. Framlington Group Ltd [2007] EWCA Civ 502; [2007] 1 WLR 2443, at [34]. 107 [2009] EWHC 1102 (TCC); [2009] BLR 399; 125 Con LR 154.

9.10

Privileged Mediation Discussion

213

mediation had been procured by duress by a party to that settlement. He distinguished108 : (1) express confidentiality clause, including a right of confidentiality in favour of a mediator (not the same as a head of privilege); (2) implied rights of confidentiality (not the same as a head of privilege); (3) ‘without prejudice’ communication privilege (a privilege held by the parties, but not by the mediator); and (4) an express clause precluding the parties from calling the mediator as a witness (this was held not to create a separate head of privilege or immunity). When the parties have waived privilege in their mediation communications, and the question concerns assessment of costs in litigation subsequent to an unsuccessful mediation, Jack J in Carleton v. Strutt & Parker (2008) has declared that the courts will consider the ‘unreasonableness’ of positions taken in the mediation.109 9.47 Is the Privilege Shared by the Mediator (Does He Have ‘Autonomous’ Privilege)? Is the mediator compellable to give evidence even if both parties to the mediation agree that he should be permitted to give evidence? The Mediation Directive states that the mediator is compellable if both parties agree otherwise. Article 7 Confidentiality of mediation Given that mediation is intended to take place in a manner which respects confidentiality, Member States shall ensure that, unless the parties agree otherwise, neither mediators nor those involved in the administration of the mediation process shall be compelled to give evidence in civil and commercial judicial proceedings or arbitration regarding information arising out of or in connection with a mediation process, except: where this is necessary for overriding considerations of public policy of the Member State concerned, in particular when required to ensure the protection of the best interests of children or to prevent harm to the physical or psychological integrity of a person; or where disclosure of the content of the agreement resulting from mediation is necessary in order to implement or enforce that agreement. Nothing in paragraph 1 shall preclude Member States from enacting stricter measures to protect the confidentiality of mediation.

9.48 The Directive is right not to accord mediators ‘autonomous’ privilege. Mediators should not have an evidential immunity (exercisable against the parties and against third parties generally) which would continue to protect them even if the parties have already waived privilege in the relevant material. And so, once the parties have waived privilege,110 the

108

Ibid., at [45] ff. [2008] EWHC 424 at [72]; noted on this point by J Sorabji (2008) 27 Civil Justice Quarterly 288, 291–2. 110 Waiver by ‘mutual conduct’ occurred in Hall v. Pertemps Group Ltd [2005] EWHC 3110 (Ch); The Times 23 December 2005, Lewison J; but implied waiver will not be readily inferred, Smiths Group plc v. George Weiss [2002] EWHC 582 (Roger Kaye QC, sitting as a High Court judge). 109

214

9 Mediation

mediator is compellable to give evidence. The reasons for this are: first, the mediator is not empowered in the manner of a judge or arbitrator to make binding determinations (judges enjoy substantive immunity; and arbitrators under English law have a qualified immunity from civil liability)111 ; secondly, autonomous mediator privilege would indirectly shield mediators from substantive liability for misconduct during the proceedings; if such substantive immunity is to be created, its merits should be directly debated and not achieved by an evidential side-wind.

9.11 English Reception of the European Mediation Directive 9.49 Unfortunately, the European Directive on Mediation (2008)112 is of modest significance, for two reasons: its substantive contents are slight; and its ‘cross-border’ scope renders it of marginal significance. Regrettably, this European intervention has consumed countless hours of official time, both at the European hub and among the Member States. On any sensible cost-benefit analysis this exercise in law-making has hardly been worthwhile. However, the Directive does at least draw attention to the widespread phenomenon of mediation. And it incidentally underlines the ‘voluntary’ nature of mediation. This important restatement of fundamental principle occurs in the Preamble to the Directive: (13) The mediation provided for in this Directive should be a voluntary process in the sense that the parties are themselves in charge of the process and may organise it as they wish and terminate it at any time. However, it should be possible under national law for the courts to set time-limits for a mediation process. Moreover, the courts should be able to draw the parties’ attention to the possibility of mediation whenever this is appropriate. (14) Nothing in this Directive should prejudice national legislation making the use of mediation compulsory or subject to incentives or sanctions provided that such legislation does not prevent parties from exercising their right of access to the judicial system. . . 9.50 Thus the authors of the Directive have acknowledged that mediation cannot be thrust upon parties. But the same authors also acknowledge at paragraph (14) that state-controlled incentives and sanctions, ultimately

111

s 29, Arbitration Act 1996 (England and Wales) (this immunity does not extend to conduct or omissions ‘in bad faith’ nor to the consequences of resignation). 112 ‘Directive 2008/52/EC of the European Parliament and of the Council of 21 May 2008 on certain aspects of mediation in civil and commercial matters’: Official Journal L 136, 24/05/2008 P. 0003 – 0008.

9.12 Concluding Remarks

215

administered by civil courts, can be used to encourage resort to mediation. Incentives are unproblematic. Sanctions are more controversial. They should be cautiously administered. A sanction should apply only to support a limited duty: this restricted duty is confined to considering mediation, when this possibility is suggested by the other side or by the court. Other than to exhort Europeans to consider mediation, one wonders why the Directive was introduced at all. Perhaps it is merely a centralist tendency to meddle with something new. Certainly, its scope is very small. Article 2 of the Directive is confined to ‘cross-border’ mediations of ‘civil and commercial’ disputes, that is, where the parties are domiciled or habitually resident in different Member States, or the host Member State is different from the parties’ Member State. This is a small, arguably even a tiny, category. Even approximate figures collected by the English Ministry of Justice (2010) reveal the paucity of such cases113 : . . .mediations of cross-border disputes probably represent a very small minority of the UK mediation workload. Formal advice by the Centre for Effective Dispute Resolution (CEDR), for example, has stated that the number of international mediations carried out by them in 2007 was 64. A breakdown of this figure shows that of the 64 mediations, 41 of them had a party based in a Member State. In 2008, this figure stood at 57 and 34 of those mediations had a party based in a Member State. In 2009, the number of international mediations was 72 and 48 of those mediations had a party based in a Member State.

9.12 Concluding Remarks 9.51 Limits of Alternative Dispute Resolution: The court system of civil litigation is sometimes needed because some types of dispute are unsuitable for the co-operative style of mediation or even the consensually authoritative award-making process of arbitration. This is because courts enjoy much greater coercive powers than arbitrators or mediators, whose powers are subtler and largely moral. Thus state-supported litigation before the civil courts is subject to strong sanctions: courts can compel witnesses to attend, punish perjury, enforce judgments, and apply their contempt of court power if injunctions are flouted; and the court system can protect parties against the other’s non-compliance or bad faith, including provision of protective measures such as freezing injunctions. For these reasons the formal civil process is important, even indispensable, in some contexts.114 Furthermore, the judicial process can establish legal precedents. And it can be used to obtain effective justice against fraudsters and deliberate

113 Ministry of Justice, ‘Implementation. . .Paper’ (London, 2010) (a consultation paper), at [12]. 114 Mackie, et al., The ADR Practice Guide, 3.4.1.

216

9 Mediation

defaulters. Neither category of defendant is likely to participate constructively in mediation, other than as a cynical means of postponing judgment day. Furthermore, civil litigation before the courts, especially trial within the Anglo-American tradition, involves important attributes of ‘public’ justice: an accessible demonstration of forensic integrity and rigour, and the opportunity for wrongdoers to be held publicly accountable.115 9.52 Potential Litigants’ Choice: The legal process operates in a manner which is analogous to the electorate’s choice of parties during a democratic election. If voters prefer one political party to another, they can do so at the ballot-box. If the court system, or a particular type of court, proves unattractively expensive, or its process lacks proper focus, those who have a choice—citizens, companies, including foreign companies, and even public authorities—will elect to go elsewhere. It is for this reason that Committees of ‘Courts Users’ are important. For judges can then receive critical feedback on the quality of their general administration of civil justice—avoiding, of course, official comment on individual cases. Admittedly, not everyone can choose to avoid the court system. But among those with the power of choice, there is a clear tendency for potential litigants in England to prefer to avoid formal civil litigation before the courts by inclusion of arbitration clauses, or mediation clauses, or by ex post facto resort to either technique, and of course the disputants can decide to reach a settlement with or without mediation, arbitration, or adjudication. 9.53 Summary: The main points have been: 1) mediation has become popular in England; 2) this ‘alternative’ form of ‘civil justice’ can operate as a complete substitute for civil litigation, or it can supplement that formal process after court proceedings have begun, and even after judgment has been given but an appeal is pending. 3) the process of mediation and the outcome of that process—a mediated settlement—can be superior to adjudication of the dispute by a court; 4) mediation is possible only if both parties are willing to discuss their dispute, to examine the merits of their position in good faith, and ultimately to consider making concessions, whether tactical or magnanimous (however, a court might sometimes be justified in suggesting mediation even if both parties seem initially opposed to this); 5) the court system encourages pursuit of mediation; the courts can direct to litigants in pending actions or appeals to consider mediation if the parties, or one of them, requests, or if the court itself suggests;

115

For comment (and further references to literature) on the ‘public’ dimensions of the civil court process, H. Genn, ‘Understanding Civil Justice’, 186–7 and Peter L. Murray (Harvard), ‘The Privatization of Civil Justice’; and Peter L. Murray, ‘Mediation and Civil Justice: A Public-Private Partnership?’.

9.12 Concluding Remarks

6) 7) 8)

9) 10)

11)

217

leverage to consider and to pursue mediation takes the form of a ‘stay’ upon current proceedings or the threat of an adverse costs order; an English court will enforce a mediation agreement by ordering a stay of litigation brought in violation of that agreement; Government has a strong interest in promoting ADR because it is less expensive than civil litigation; civil proceedings before the courts are becoming a system of last resort to be pursued only when more civilised and ‘proportionate’ techniques have failed or could never be made to work; court litigation also embodies many values, notably the principle of publicly accessible proceedings and reasoned decisions; confidential communications during mediation are privileged against compulsory production in legal proceedings; however, the mediator does not enjoy any personal immunity against being compelled by a court to provide information or give evidence concerning a mediation; traditional court litigation will continue because it offers a strong form of dispute-resolution; the court’s coercive powers are indispensable in some contexts, especially in claims against fraudulent or uncooperative persons.

This is Blank Page Integra

vi

Chapter 10

Arbitration in England

Contents 10.1 10.2 10.3 10.4 10.5 10.6 10.7 10.8 10.9 10.10 10.11 10.12

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . Party Selection: Of the Panel, Governing Norms, and Arbitral Procedure Arbitration Clauses . . . . . . . . . . . . . . . . . . . . . . . . . Anti-suit Injunctions Concerning Offending Proceedings Outside the European Union . . . . . . . . . . . . . . . . . . . . . Anti-suit Injunctions Concerning Offending Proceedings Within the Europe Union . . . . . . . . . . . . . . . . . . . . . . . . . . Damages for Breach of an Arbitration Clause . . . . . . . . . . . . . Speed and Efficiency . . . . . . . . . . . . . . . . . . . . . . . . Finality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Freezing Relief and Arbitration . . . . . . . . . . . . . . . . . . . Recognition and Enforcement of Arbitration Awards Under the New York Convention (1958) . . . . . . . . . . . . . . . . . . Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

. . . .

219 221 225 227

. 228 . . . . .

231 235 237 237 240

. 241 . 247

10.1 Introduction 10.01 This chapter is concerned with prominent topics within the practice of arbitration in England. These matters include the interplay of arbitration and mediation, and the connections between the arbitration process and the English judicial system. Arbitration in England rests on the Arbitration Act 1996 (England and Wales). This statute reflects the sequence of topics in the UNCITRAL Model Law.1 However, the English 1

UNCITRAL’s web-site records that the following have produced arbitration codes ‘based on’ the Model Law: ‘Armenia (2006), Australia (1989, 2010∗ ), Austria (2005), Azerbaijan

N. Andrews, The Three Paths of Justice, Ius Gentium: Comparative Perspectives on Law and Justice 10, DOI 10.1007/978-94-007-2294-1_10, C Springer Science+Business Media B.V. 2012

219

220

10

Arbitration in England

Act covers a wider range of matters than the Model Law.2 The 2006 ‘Report on the Arbitration Act 1996 (England and Wales)’ reveals that the English legislation is perceived as effective.3 No changes were recommended. 10.02 A 2005 London report stated that companies gave four reasons for preferring international commercial arbitration to court proceedings4 : (1) the confidential nature of the process (see Sect. 10.2), (2) flexibility and party control of procedure (Sect. 10.3), notably the opportunity for parties to select arbitrators (notably, selection of a ‘neutral’ panel for the hearing of a dispute between parties who are based in different jurisdictions), (3) speed and efficiency (Sect. 10.4), (4) swift enforcement of awards including enforcement in foreign jurisdictions, applying the New York Convention,

(1999), Bahrain (1994), Bangladesh (2001), Belarus (1999), Bulgaria (2002), Cambodia (2006), Canada (1986), Chile (2004), China (the Hong Kong Special Administrative Region (1996) and the Macao Special Administrative Region (1998)), Croatia (2001), Cyprus, Denmark (2005), Dominican Republic (2008), Egypt (1994), Estonia (2006), Georgia (2009∗ ), Germany (1998), Greece (1999), Guatemala (1995), Honduras (2000), Hungary (1994), India (1996), Iran (Islamic Republic of) (1997), Ireland (1998, 2010∗ ), Japan (2003), Jordan (2001), Kenya (1995), Lithuania (1996), Madagascar (1998), Malta (1995), Mauritius (2008∗ ), Mexico (1993), New Zealand (1996, 2007∗ ), Nicaragua (2005), Nigeria (1990), Norway (2004), Oman (1997), Paraguay (2002), Peru (1996, 2008∗ ), the Philippines (2004), Poland (2005), the Republic of Korea (1999), the Russian Federation (1993), Rwanda (2008∗ ), Serbia (2006), Singapore (2001), Slovenia (2008∗ ), Spain (2003), Sri Lanka (1995), Thailand (2002), the former Yugoslav Republic of Macedonia (2006), Tunisia (1993), Turkey (2001), Uganda (2000), Ukraine (1994), the United Kingdom of Great Britain and Northern Ireland (Scotland (1990) and Bermuda, an overseas territory of the United Kingdom), the United States of America (the States of California (1996), Connecticut (2000), Florida (2010∗ ), Illinois (1998), Louisiana (2006), Oregon and Texas), Venezuela (Bolivarian Republic of) (1998), Zambia (2000) and Zimbabwe (1996).∗ Indicates legislation based on the text of the UNCITRAL Model Law on International Commercial Arbitration with amendments as adopted in 2006.’ See (21 April 2011): http://www.uncitral.org/uncitral/en/uncitral_texts/ arbitration/1985Model_arbitration.html. 2 M. Mustill and S. Boyd, Commercial Arbitration: 2001 Companion Volume (London: Butterworths, 2001), 14–15; ibid., 7–9 for discussion of the decision not to adopt the Model Law in England, Wales and Northern Ireland, but instead to combine some of the UNCITRAL Model Law’s main ideas and produce a more detailed national arbitration statute. For details of the position in other common law jurisdictions, with regard to the Model law, see K. Uff, ‘Common Law Arbitration-An Overview’ (2004) IDR (Jo of Int Dispute Resolution), 10, 11. 3 2006 ‘Report on the Arbitration Act 1996 (England and Wales)’; report prepared for the Commercial Court Users’ Committee, the British Maritime Law Association, the London Shipping Law Centre, and other bodies (the authors were various barristers, solicitors, and other arbitration specialists—see Appendix A of report for details); for the text, see www.idrc.co.uk/aa96survey/Report_on_Arbitration_Act_1996.pdf. 4 Available on-line at: http://www.pwc.com/Extweb/pwcpublications.nsf/docid/ 0B3FD76A8551573E85257168005122C8.

10.2 Confidentiality

221

1958 (however, for the limits of this see Sect. 10.10).5 In fact arbitration business is reported to be booming in England. The London Chartered Institute of Arbitration comments6 : Increasingly, commercial parties have been resorting to arbitration . . . Most of the disputes involve foreign parties who have chosen to arbitrate in England and Wales as opposed to elsewhere.

10.2 Confidentiality 10.03 This topic was not covered by the Arbitration Act 1996 (England and Wales) because the Departmental Advisory Committee regarded the subject as too fluid for consolidation.7 10.04 As for the traditional assumption that a veil of secrecy will be maintained concerning documents and other information generated for, or disclosed in, arbitration, Redfern and Hunter, International Commercial Arbitration, suggest the need for caution and for express provision, and they also note the tendency for legal systems to recognise only a qualified right to arbitral confidentiality8 : it is increasingly necessary to rely on an express provision of the [relevant] rules (for instance, those of the LCIA or of WIPO) or to enter into a specific confidentiality agreement as part of the agreement to arbitrate or at the outset of proceedings (and it seems that this may be overridden in some jurisdictions if the relevant court considered it to be in the public interest that it should be).

10.05 The Court of Appeal’s decision in Michael Wilson & Partners Ltd v. Emmott (2008)9 confirms that an obligation of confidentiality arises 5

New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958 (in MB (2001), Appendix 3); For background discussion of this topic in the following leading works, but none contains specific reference to the Dallah case (see next note): Redfern and Hunter, International Commercial Arbitration (5th edn, Oxford: Oxford University Press, 2009), 10.32 to 10.91; 11.42 to 11.120; Russell on Arbitration (23rd edn, 2007), 8-020 to 8-046; Mustill and Boyd, Commercial Arbitration (2001 Companion Volume), 82–96; 381–4; R. Merkin, Arbitration Law (2006 update), 19.45 ff. 6 http://www.arbitrators.org/Institute/PR_international_dispute.asp. 7 Ibid. at [61], noting The Departmental Advisory Committee on Arbitration Law, Report on the Arbitration Bill, 1996 (‘the DAC report’) (reprinted inMustill and Boyd, Commercial Arbitration: 2001 Companion Volume, Appendix 1). 8 (5th edn, Oxford University Press, 2009), 2.176. 9 [2008] EWCA Civ 184; [2008] Bus LR 1361; [2008] 1 Lloyd’s Rep 616; noted H. Dundas, ‘Confidentiality in English Arbitration: The Final Word? Emmott v. Michael Wilson & Partners,’ Arbitration 74 (2008): 458–66; for background discussion of this topic in the following: (only (i) contains reference to this recent case): (i) Redfern and Hunter, International Commercial Arbitration, 2.145 to 2.176; (ii) Russell on Arbitration (23rd edn, 2007), 5-172 to 5-180; (iii) Mustill and Boyd, Commercial Arbitration: 2001 Companion Volume, 112–3. For background journal articles: various

222

10

Arbitration in England

as a matter of law (on the basis of an ‘implied term in law’) in arbitration references conducted in accordance with English law. This implied term has been recognised for some time. For example, the Court of Appeal in Ali Shipping Corporation v. Shipyard Trogir (1999)10 had said that this term is an essential corollary of the privacy of arbitration proceedings.11 This implied term governs all documents ‘prepared for’, ‘used’, and ‘disclosed during’ arbitration proceedings governed by English law. In some circumstances, there will also be an intrinsic ground of confidentiality attaching to documents, or information, for example, when the relevant information is a trade secret. It should also be noted that the private nature of arbitration is reflected in the rules governing the conduct of arbitration hearings or judicial hearings relating to arbitration. Lawrence Collins LJ summarised the position as follows12 : there is an obligation, implied by law and arising out of the nature of arbitration, on both parties not to disclose or use for any other purpose any documents prepared for and used in the arbitration, or disclosed or produced in the course of the arbitration, or transcripts or notes of the evidence in the arbitration or the award, and not to disclose in any other way what evidence has been given by any witness in the arbitration. The obligation is not limited to commercially confidential information in the traditional sense. . . . [T]his is in reality a substantive rule of arbitration law reached through the device of an implied term.

10.06 He also noted that the topic was complex because the broad topic of arbitral confidentiality can involve a mix of privacy, procedural confidentiality and ‘intrinsic’ confidentiality, such as in trade secrets13 : Three legal concepts or categories have been in play in these cases. The first is privacy, in the sense that because arbitration is private that privacy would be violated by the publication or dissemination of documents deployed in the arbitration. The second is confidentiality in the sense where it is used to refer to inherent confidentiality in the information in documents, such as trade secrets or other confidential information generated or deployed in arbitration. The third is confidentiality in the sense of an implied agreement that documents disclosed or generated in arbitration can only be used for the purposes of the arbitration. The distinction between the second and third cases may be illustrated by the case (not far from this one) where the relevant documents in the arbitration (such as the

authors, (1995) 11 Arb Int 3, 319; F. Dessemontet, ‘Arbitration and Confidentiality,’ Am Rev Int’l Arb 7 (1996): 299; P. Neill, ‘Confidentiality in Arbitration,’ Arbitration International 12 (1996): 287; A. Rogers and D. Miller, ‘Non-confidential Arbitration Proceedings,’ Arbitration International 12 (1996): 319; M. Pryles, ‘Confidentiality’, in The Leading Arbitrators’ Guide to International Arbitration, eds. L.W. Newman and R.D. Hill (Bern, Switzerland: Juris Publishers, 2004), Chap. 19; K. Noussia, Confidentiality in International Commercial Arbitration (Germany: Springer Verlag, Heidelberg, 2010). 10 [1999] 1 WLR 314, CA. 11 Ibid., at 326 D. 12 [2008] EWCA Civ 184; [2008] Bus LR 1361; [2008] 1 Lloyd’s Rep 616, at [105], [106]. 13 Ibid., at [79].

10.2 Confidentiality

223

defence) do not contain anything in themselves which is confidential: nevertheless the parties are under an obligation not to use it for any purpose other than the arbitration, and that obligation is described in the authorities as an obligation of confidence.

10.07 The judgments in Michael Wilson & Partners Ltd v. Emmott (2008)14 contain rich citation of the English case law,15 and foreign courts’ decisions,16 as well as the relevant rules adopted by leading arbitration bodies17 on the question of ‘privacy of hearings’18 ‘confidentiality 14

[2008] EWCA Civ 184; [2008] Bus LR 1361; [2008] 1 Lloyd’s Rep 616. (in descending order chronologically): Associated Electric and Gas Insurance Services Ltd v. European Reinsurance Co of Zurich [2003] UKPC 11; [2003] 1 WLR 1041; Glidepath BV v. Thompson [2005] 2 Lloyd’s Rep 549, Colman J; Department of Economics, Policy and Development of the City of Moscow v. Bankers Trust Co [2004] EWCA Civ 314; [2005] QB 207; Ali Shipping Corporation v. Shiphard Trogir [1999] 1 WLR 314, CA; Insurance Co v. Lloyd’s Syndicate [1995] 1 Lloyd’s Rep 272; London and Leeds Estates Ltd v. Paribas Ltd [1995] 1 EGLR 102; [1995] EG 134, Mance J; Hassneh Insurance Co of Israel v. Mew [1993] 2 Lloyd’s Rep 242; Dolling-Baker v. Merrett [1990] 1 WLR 1205; Oxford Shipping Co Ltd v. Nippon Kaisha (‘The Eastern Saga’) [1984] 3 All ER 835, Leggatt J. 16 Redfern and Hunter, International Commercial Arbitration, 2.145 ff, noting Esso Australia Resources Ltd v. Plowman (1995) 193 CLR 10, H Ct Aust (criticised Neill, ‘Confidentiality in Arbitration’; Commonwealth of Australia v. Cockatoo Dockyard Pty Ltd (1995) 36 NSWLR 662; on US decisions, Redfern and Hunter, ibid at 2.155; on Swedish law, ibid., 2.162; French law, ibid., 2.164; ICSID decisions, ibid., 2.167 ff; World Intellectual Property Organization decisions, ibid., 2.172 to 2.174; Spanish legislation, ibid., 2.175. Lawrence Collins LJ, in Michael Wilson & Partners Ltd v. Emmott [2008] EWCA Civ 184; [2008] Bus LR 1361, at [74], cited these foreign cases: ‘In United States v. Panhandle Eastern Corpn 1988 US Dist Lexis 1177 it was held, in a civil action by the US Federal Maritime Administration, that the defendant was not entitled to withhold from discovery documents generated in a Swiss ICC arbitration. One of the grounds of the decision was that the defendant had not shown that the effect of the ICC Rules was to impose an obligation of confidentiality: see also Caringal v. Karteria Shipping Ltd 2001 US Dist Lexis 1312; Contship Containerlines Ltd v. PPG Industries, Inc 2003 US Dist Lexis 6857 and Lawrence E Jaffe Pension Plan v. Household International, Inc 2004 US Dist Lexis 16174.’ 17 Michael Wilson & Partners Ltd v. Emmott [2008] EWCA Civ 184; [2008] Bus LR 1361, Lawrence Collins LJ at [66], citing ICC Commission on Arbitration, Forum on ICC Rules/Court: Report on Confidentiality as a Purported Obligation of the Parties in Arbitration (2002); Fouchard, Gaillard, Goldman, International Commercial Arbitration (Dordrecht: Kluwer, 1999), para 1412; J. Lew, L. Mistelis, and S. Kröll, Comparative International Commercial Arbitration (The Hague: Kluwer, 2003), 24–99 ff; for other references, Redfern and Hunter, International Commercial Arbitration, 2.147, 2.148. 18 In Michael Wilson & Partners Ltd v. Emmott [2008] EWCA Civ 184; [2008] Bus LR 1361; [2008] 1 Lloyd’s Rep 616, Lawrence Collins LJ at [64], states: ‘The privacy of arbitration is almost universally recognised by institutional rules. Thus the privacy of the hearings is provided for in Article 19(4) of the Rules of London Court of International Arbitration (“LCIA”); Article 21(3) of the Rules of the Court of Arbitration of the International Chamber of Commerce (“ICC”); Article 53(c) of the arbitration rules of the 15

224

10

Arbitration in England

of documentation’,19 ‘confidentiality of awards’,20 and literature discussing these rules.21 10.08 The English courts recognise various exceptional contexts in which arbitral confidentiality will not prevail. Lawrence Collins LJ summarised the position as follows22 : the principal cases in which disclosure will be permissible are these: the first is where there is consent, express or implied; second, where there is an order, or leave of the court (but that does not mean that the court has a general discretion to lift the obligation of confidentiality); third, where it is reasonably necessary for the protection of the legitimate interests of an arbitrating party23 ; fourth, where the interests of justice require disclosure, and also (perhaps) where the public interest requires disclosure.’ Adding24 : ‘The interests of justice are not confined to the interests of justice in England. The international dimension of the present case demands a broader view.

10.09 In the present case MWP, a law firm specialising in international commercial arbitration, was a party to arbitration in London and party to court litigation in several jurisdictions (Jersey, Colorado, British Virgin World Intellectual Property Organisation (“WIPO”); and Article 25(4) of the UNCITRAL Rules.’ 19 Michael Wilson & Partners Ltd v. Emmott [2008] EWCA Civ 184; [2008] Bus LR 1361, Lawrence Collins LJ at [67] to [70] notes: (1) rules expressly governing this: Article 30.1 of the LCIA Rules; the Swiss Rules of International Arbitration, January 2006, Section VI, Article 43; the World Intellectual Property Organisation Arbitration Rules, Article 52(a)(iii))—concerning ‘intrinsic’ confidentiality protection, and Articles 73, and 74(a) concerning procedural confidentiality. (2) And noting that ‘some important arbitral rules are silent on confidentiality, such as the ICC Rules and the UNCITRAL Rules’. 20 Michael Wilson & Partners Ltd v. Emmott [2008] EWCA Civ 184; [2008] Bus LR 1361, Lawrence Collins LJ at [65], states: The confidentiality of the award is provided for by Article 30(1) of the LCIA Rules and also by the principle of non-publication of the award in Article 30(3); by Article 28(2) of the ICC Rules; by Article 75 of the WIPO Rules; and by Article 32(5) of the UNCITRAL Rules. The Privy Council’s decision in Associated Electric and Gas Insurance Services Ltd v. European Reinsurance Co of Zurich [2003] UKPC 11; [2003] 1 WLR 1041 is also important here; Hassneh Insurance Co of Israel v. Mew [1993] 2 Lloyd’s Rep 242; and Redfern and Hunter, International Commercial Arbitration, 2.158 ff. 21 Michael Wilson & Partners Ltd v. Emmott [2008] EWCA Civ 184; [2008] Bus LR 1361, at [66], per Lawrence Collins LJ, citing (among other sources) Fouchard, Gaillard, Goldman, International Commercial Arbitration (1999), para 1412; J. Lew, L. Mistelis, and S. Kröll, Comparative International Commercial Arbitration. 22 Wilson & Partners Ltd v. Emmott [2008] EWCA Civ 184; [2008] Bus LR 1361, at [107]. 23 Ibid., at [101], per Lawrence Collins LJ: ‘[disclosure is] permissible when, and to the extent to which, it was reasonably necessary for the establishment or protection of an arbitrating party’s legal rights vis-à-vis a third party in order to found a cause of action against that third party or to defend a claim, or counterclaim, brought by that third party. It would be this exception which would apply where insurers have to be informed about the details of arbitral proceedings. . .’ 24 Ibid., at [111].

10.3 Party Selection: Of the Panel, Governing Norms, and Arbitral Procedure

225

Islands, ‘BVI’, and New South Wales, ‘NSW’) involving former associates of MWP, namely E (Emmott), N (Nicholls) and S (Slater). All this litigation concerned the same basic claim by MWP that these former members of its staff had conspired to steal business from MWP. There was an obvious inconsistency, and hence relevance, in the fact that, in the London arbitration, MWP had abandoned allegations of fraud committed by these three, but MWP retained this allegation on the same facts in the NSW and BVI court litigation. The Court of Appeal held that these facts justified permitting E, one of the parties to the English arbitration, to disclose material generated during that arbitration. Such disclosure was justified because of the danger that the NSW and BVI courts might otherwise be misled. It did not matter that E was not party to the relevant foreign court proceedings. It was enough that those proceedings concerned the same ‘substratum of facts’ as the arbitration.

10.3 Party Selection: Of the Panel, Governing Norms, and Arbitral Procedure 10.10 First, party choice is especially evident in the power to select who is to sit as arbitrator (arbitrators often sit alone in English arbitration proceedings) or members of the panel. Arbitrators need not be lawyers (although appointment of a legally qualified chairman is common). They can be selected on the basis of specialist knowledge and experience.25 10.11 The Supreme Court is expected to hear the final appeal in Jivraj v. Hashwani (2010), where the Court of Appeal26 invalidated an arbitration clause containing selection of arbitrators by reference to religious affiliation. The Court of Appeal (2010) held in the Hashwani case that a clause in an arbitration agreement was void because it stipulated that arbitrators were to be drawn from members of a particular religious group (on the facts, the Ismaili community). The Court of Appeal held that this was contrary to the Employment Equality (Religion or Belief) Regulations 2003.27 This context fell outside the exception in Regulation 7 concerning a ‘genuine. . . occupational requirement’.28 J and H had entered into a joint 25 On expertise and arbitration, L. Blom-Cooper, ed., Experts in Civil Courts (Oxford: Oxford University Press, 2006), Chap. 10. 26 [2010] EWCA Civ 712; [2011] 1 All ER 50. 27 Reg 6(1) states: It is unlawful for an employer, in relation to employment by him at an establishment in Great Britain, to discriminate against a person—(a) in the arrangements he makes for the purpose of determining to whom he should offer employment; (b) in the terms on which he offers that person employment; or (c) by refusing to offer, or deliberately not offering, him employment. 28 Reg 7(2) states: This paragraph applies where, having regard to the nature of the employment or the context in which it is carried out—(a) being of a particular religion

226

10

Arbitration in England

venture agreement. It provided for disputes to be referred to three arbitrators. One was to be one appointed by each of the parties. The third was to be appointed by the President of the HH Aga Khan National Council for the United Kingdom. The arbitration clause also stated that all the arbitrators should be respected members of the Ismaili community and holders of high office within the community. The parties terminated their venture. They attempted to divide the assets. H put forward a substantial claim and notified J of the appointment of his arbitrator (C) under art.8 of the agreement. J sought a declaration that the appointment of C was invalid because he was not a member of the Ismaili community. Reversing David Steel J, the Court of Appeal held, first, that the Regulations applied to the appointment of an arbitrator, because a person who appointed another to act in that capacity employed that person to provide a service. ‘Employment’ for those purposes was defined in the Regulations as including any contract personally to do any work and ‘work’ in the context was apt to cover the provision of services of any kind. Since an arbitrator contracted to do work personally, the provision of his services fell within the definition of ‘employment’, and it followed that his appointor was an employer within the meaning of Regulation 6(1). Furthermore, the Court of Appeal decided that as a matter of policy the Regulations and Directive should be given a broad interpretation to cover such arbitral appointments. Secondly, Membership of the Ismaili community was clearly not necessary for the discharge of the arbitrator’s functions under the agreement and therefore the exception provided in Regulation 7 could not be invoked. Finally, the Court of Appeal held that it was not possible to sever the requirement that the arbitrators be members of the Ismaili community, leaving the arbitration clause otherwise intact. Severance would render that which remained substantially different from that which the parties originally intended. Therefore the clause failed in its entirety. The English arbitration legislation also enables the parties to agree whether the substance of the dispute will be subject to (i) English law or (ii) a foreign system of law (the latter can apply even if the ‘seat’ of the

or belief is a genuine and determining occupational requirement; (b) it is proportionate to apply that requirement in the particular case; and (c) either—(i) the person to whom that requirement is applied does not meet it, or (ii) the employer is not satisfied, and in all the circumstances it is reasonable for him not to be satisfied, that that person meets it, and this paragraph applies whether or not the employer has an ethos based on religion or belief. (3) This paragraph applies where an employer has an ethos based on religion or belief and, having regard to that ethos and to the nature of the employment or the context in which it is carried out—(a) being of a particular religion or belief is a genuine occupational requirement for the job; (b) it is proportionate to apply that requirement in the particular case; and (c) either—(i) the person to whom that requirement is applied does not meet it, or (ii) the employer is not satisfied, and in all the circumstances it is reasonable for him not to be satisfied, that that person meets it.

10.4 Arbitration Clauses

227

arbitration is in England) or (iii) norms drawn from general principles of equity or religious law.29 10.12 Party autonomy extends to procedural matters. Thus the procedure adopted in individual arbitration references can be tailor-made to suit the dispute’s specific features. It has been suggested that, where necessary, ‘every case demands its own procedure’.30 But arbitration clauses seldom prescribe detailed matters of procedure.

10.4 Arbitration Clauses 10.13 Arbitration Clauses in General31 : The English Arbitration Act 1996 requires the arbitration agreement to be in writing.32 The arbitration clause might be valid even though the main contract might not be. This notion, the so-called principle of ‘separability’ (contained in section 7 of the Arbitration Act 1996 (England and Wales)), entails that the main transaction, the substantive source of the dispute, normally a contractual

29

(1) (i) and (ii) are covered by the reference to ‘the law chosen by the parties as applicable to the substance of the dispute’ in s 46 (1)(a), Arbitration Act 1996 (England and Wales); (iii) is admitted by the reference in s 46(1)(b), Arbitration Act 1996 (England and Wales) to ‘such other considerations as are agreed by them or determined by the tribunal’; MB (2001), 326–8 (and 124–127). (2) The point at (iii) (non-English and nonforeign state law) renders arbitration practice under English rules more flexible that other contractual choices of law; this was acknowledged in Halpern v. Halpern (No 2) [2007] EWCA Civ 291; [2008] QB 195, at [37]. 30 The need for arbitrators not simply ‘to copy the CPR’ (or Commercial Court Guide) is echoed in a recent report on the operation of the Arbitration Act ‘Report (2006) on the Arbitration Act 1996 (England and Wales)’, at [43] to [45]; report prepared for the Commercial Court Users’ Committee, the British Maritime Law Association, the London Shipping Law Centre, and other bodies; accessible at www.idrc.co.uk/ aa96survey/Report_on_Arbitration_Act_1996.pdf. 31 D. Joseph, Jurisdiction and Arbitration Agreements and their Enforcement (2nd edn, London: Sweet & Maxwell, 2010); an agreement to arbitrate is subject to the traditional analysis of repudiatory breach and ‘acceptance’ by the innocent party: J. Levy (2007) New Law Journal 1036, noting Bea Hotels NV v. Bellway LLC [2007] EWHC 1363 (Comm), Cooke J; and Downing v. Al Tameer Establishment [2002] EWCA Civ 721, at [21], [25], [26], also noting the seminal ‘contractual’ analysis of arbitration agreements in Bremer Vulcan v. South India Shipping Corporation Limited [1981] AC 909, HL; ‘The Hannah Blumenthal’ [1983] 1 AC 854, HL; ‘The Splendid Sun’ [1981] QB 694, CA and ‘The Leonidas D’ [1985] 1 WLR 925, CA (on this stream of authority, MB (2001), 503 ff). Selected Journal Comments: J. Lew, ‘Achieving the Dream: Autonomous Arbitration,’ Arbitration International 22 (2006): 179; R. Park, ‘Determining Arbitral Jurisdiction: Allocation of Tasks Between Courts and Arbitrators,’ Am Rev Int Arb 8 (1997): 133. 32 s 3, Arbitration Act 1996 (England and Wales); MB (2001), 16, 258 ff; for an important discussion of arbitration clauses affecting sovereign states, Svenska Petroleum Exploration AB v. Government of the Republic of Lithuania (No 2) [2006] EWCA Civ 1529; [2007] QB 886, considering s 9(1), State Immunity Act 1978.

228

10

Arbitration in England

document, is separate from the arbitration agreement, even though that clause is (nearly always) included in the same document. In short, the invalidity of the main contract does not necessarily entail the invalidity of the arbitration agreement (see the remarks of Lord Hoffmann in Fiona Trust and Holding Corporation v. Privalov, 2007).33 This detachment of the contract for decision-making (the arbitration clause) from the principal contract enables ‘one stop’ arbitration to occur: the arbitral panel are competent to determine the validity of both the arbitration clause and the main transaction; so-called kompetenz-kompetenz. 10.14 Hybrid Arbitration and Jurisdiction Clauses Nominating Courts: The English High Court has upheld so-called ‘hybrid’ disputeresolution clauses. These enable one party to opt out of court proceedings in England by taking the case to arbitration or, conversely, such a clause can permit a party to opt out of arbitration and instead bring proceedings before an English court.34 10.15 On the question of religious affiliation of arbitrators, and prohibited forms of discrimination in the selection of arbitrators, see 10.11 above (noting that The Supreme Court is expected to hear the final appeal in Jivraj v. Hashwani (2010), where the Court of Appeal struck down an arbitration clause which required arbitrators to be of a certain religious affiliation).35

10.5 Anti-suit Injunctions Concerning Offending Proceedings Outside the European Union 10.16 (On this topic, see also discussion at 11.03). The English courts have a long-established jurisdiction to compel a defendant, over whom the court has jurisdiction, to refrain from commencing, or continuing, foreign civil proceedings, or from participating in arbitration. Such an injunction 33

[2007] UKHL 40; [2007] 4 All ER 951, notably Lord Hoffmann’s speech at [17] to [19]; otherwise known as Premium Nafta Products Ltd v. Fili Shipping Co Ltd. Considered in JSC BTA Bank v. Ablyazov [2011] EWHC 587 (Comm), Christopher Clarke J (granting a stay of English civil proceedings because an arbitration clause had been shown to exist by the party seeking the stay, and the party seeking to oppose the stay had not shown that this clause had been avoided on the ground of non-disclosure). 34 NB Three Shipping Ltd v. Harebell Shipping Ltd [2004] EWHC 2001(Comm); [2005] 1 All ER (Comm) 200; [2005] 1 Lloyd’s Rep 509, Morison J; Law Debenture Trust Corp plc v. Elektrim Finance BV and others [2005] EWHC 1412 (Ch); [2005] 2 All ER (Comm) 476; [2005] 2 Lloyd’s Rep 755, Mann J; on these developments, S. Nesbitt and H. Quinlan, ‘The Status and Operation of Unilateral or Optional Arbitration Clauses,’ Arbitration International 22 (2006): 133; Joseph, Jurisdiction and Arbitration Agreements and their Enforcement; R. Merkin, Arbitration Law (London: Informa Business Publishing, 2006). 35 [2010] EWCA Civ 712; [2010] IRLR 797; [2010] NPC 73.

10.5

Anti-suit Injunctions Concerning Offending Proceedings Outside . . .

229

will be granted if, in particular, that litigious activity will involve a breach of either an exclusive jurisdiction clause nominating England as the only chosen forum. In the House of Lords’ reference to the European Court of Justice, in Turner v. Grovit (2001),36 Lord Hobhouse made these trenchant points concerning the English courts’ power to grant an anti-suit injunction: 22 . . .Certain preconceptions and misunderstandings still tend to persist as to the nature of the type of restraining order made in the present case and the grounds upon which it can be applied for. It is important not to be misled by these misconceptions. 23 The present type of restraining order is commonly referred to as an ‘antisuit’ injunction. This terminology is misleading since it fosters the impression that the order is addressed to and intended to bind another court. It suggests that the jurisdiction of the foreign court is in question and that the injunction is an order that the foreign court desist from exercising the jurisdiction given to it by its own domestic law. None of this is correct. When an English court makes a restraining order, it is making an order which is addressed only to a party which is before it. The order is not directed against the foreign court. . . The order binds only that party, in personam, and is effective only in so far as that party is amenable to the jurisdiction of the English courts so that the order can be enforced against him: ‘an injunction will only be issued restraining a party who is amenable to the jurisdiction of the court, against whom an injunction will be an effective remedy’ 24 The power to make the order is dependent upon there being wrongful conduct of the party to be restrained of which the applicant is entitled to complain and has a legitimate interest in seeking to prevent. . . .The remedy is a personal remedy for the wrongful conduct of an individual. It is essentially a ‘fault’ based remedial concept. . . .Further, since such an order indirectly affects the foreign court, the jurisdiction must be exercised with caution and only if the ends of justice so require. We emphasise that injunctions granted for such purposes are directed against the vexatious party and not the courts of the other jurisdiction 25 . . .Under English law, a person has no right not to be sued in a particular forum, domestic or foreign, unless there is some specific factor which gives him that right. A contractual arbitration or exclusive jurisdiction clause will provide such a ground for seeking to invoke the right to enforce the clause. The applicant does not have to show that the contractual forum is more appropriate than any other; the parties’ contractual agreement does that for him. . . 27 The applicant for a restraining order must have a legitimate interest in making his application and the protection of that interest must make it necessary to make the order. Where the applicant is relying upon a contractual right not to be sued in the foreign country (say because of an exclusive jurisdiction clause or an arbitration clause), then, absent some special circumstance, he has by reason of his contract a legitimate interest in enforcing that right against the other party to the contract. But where he is relying upon conduct of the other person which is unconscionable for some non-contractual reason, English law requires that the legitimate interest must be the existence of proceedings in this country which need to be protected by the grant of a restraining order.

36

[2001] UKHL 65; [2002] 1 WLR 107.

230

10

Arbitration in England

For example, in OT Africa (2005)37 the English Court of Appeal granted an injunction against a party who was litigating in Canada contrary to an exclusive jurisdiction clause nominating the English courts. In this litigation, the Canadian court38 later acknowledged that it should grant a stay of the Canadian proceedings because there was no real connection between the facts and Canada, even though, in the absence of the jurisdiction clause, the Canadian courts had jurisdiction independent of the jurisdiction clause. An anti-suit injunction is also available to counter breach of an arbitration clause. The English Court of Appeal’s decision in C v. D (2007) is an example of an injunction to prevent foreign proceedings and in support of a ‘London arbitration’ clause.39 The court held that an English anti-suit injunction was appropriate to restrain a party from bringing proceedings in New York designed to ‘second guess’ the London arbitration award’s application of New York insurance law (contained in a ‘partial award’). The English Court of Appeal held that it would be improper, and a ‘recipe for chaos’, to allow this award to be challenged in New York proceedings. Instead the English arbitral award could only be challenged in accordance with the judicial remedies prescribed and regulated under the (restrictive) scheme contained in the English Arbitration Act 1996. In short, a choice of seat for the arbitration must be a choice of forum for remedies seeking to attack the award.40 In fact an appeal from an award to the London High Court on a question of law is confined to errors of English law (questions of foreign law not covered).41 As for an appeal based on the allegation that there has been a ‘serious irregularity’ by the arbitration tribunal, the House of 37

OT Africa Line Ltd v. Magic Sportwear Corpn [2005] EWCA Civ 710; [2006] 1 All ER (Comm) 32; [2005] 2 Lloyd’s Rep 170; [2005] 1 CLC 923, Longmore LJ said, at [33]: ‘a party who initiates proceedings in a court other than the court, which has been agreed with the other party as the court for resolution of any dispute, is acting in breach of contract. The normal remedy for this breach of contract is the grant of an injunction to restrain the continuance of proceedings unless it can be shown that damages are an adequate remedy; but damages will not usually be an adequate remedy in fact, since damages will not be easily calculable and can indeed only be calculated by comparing the advantages and disadvantages of the respective fora. This is likely to involve an even graver a breach of comity than the granting of an anti-suit injunction.’ And he said at [38]: ‘In the present case there is no doubt that the Canadian courts have jurisdiction; the only question is whether a party is to be allowed to invoke that undoubted jurisdiction. If he has agreed not to do so, there is no impropriety in his being restrained from so doing.’ 38 OT Africa Line Ltd v. Magic Sportwear Corpn [2006] FCA 284; [2007] 1 Lloyd’s Rep 85 (Federal Court of Appeal, Canada). 39 C v. D [2007] EWCA Civ 1282; [2008] 1 Lloyd’s Rep 239. 40 Ibid., at [17], per Longmore LJ. 41 This is the result of the definition of ‘question of law’ in s 82(1), Arbitration Act 1996 (England and Wales); affecting scope of s 69, Arbitration Act 1996 (England and Wales) (appeal to court on a ‘question of law arising out of an award made in the [arbitration] proceedings’; choice of substantive law covered by s 46(1), 1996 Act.

10.6

Anti-suit Injunctions Concerning Offending Proceedings Within . . .

231

Lords has held in the Lesotho case (2005) that ‘serious irregularity’ is not the same as an error of law.42 10.17 The West Tankers Case (see ensuing discussion) is Confined to Court Litigation Commenced Intra-Europe: The English Commercial Court in Shashoua v. Sharma (2009)43 and the English Court of Appeal in Midgulf International Ltd v. Groupe Chimiche Tunisien (2010)44 have confirmed that the European Court of Justice’s decision in the West Tankers case (Allianz SpA etc v. West Tankers, ‘The Front Comor’ 2009)45 does not preclude use of anti-suit injunctions against parties contemplating bringing, or already actively pursuing, proceedings in the courts of a country which is not a Member State of the European Community or of the Lugano system.

10.6 Anti-suit Injunctions Concerning Offending Proceedings Within the Europe Union 10.18 (On this topic, see also discussion at 11.03). The decision of the European Court of Justice in Allianz SpA etc v. West Tankers, ‘The Front Comor’ (2009)46 has established that English courts can no longer issue ‘anti-suit injunctions’ to restrain a party to an arbitration from continuing such wrongful judicial proceedings in the courts of a Member State within the EU jurisdictional zone (that is, the Members States governed by the 42

s 68, Arbitration Act 1996 (England and Wales) (serious irregularity); an error of law is not an excess of power for the purpose of s 68(2)(b), as Lord Steyn held in Lesotho Highlands Development Authority v. Impregilo SpA [2005] UKHL 43; [2006] 1 AC 221, at [31] and [32] (Lords Scott, Rodger, and Hoffmann concurring on this point; Lord Phillips dissenting). 43 [2009] EWHC 957, at [39]. 44 [2010] EWCA Civ 66; [2010] 1 CLC 113. 45 Allianz SpA etc v. West Tankers (C-185/07) [2009] 1 AC 1138; [2009] 1 All ER (Comm) 435; [2009] 1 Lloyd’s Rep 413; [2009] 1 CLC 96; [2009] ILPr 20; The Times, 13 February, 2009; noted E Peel (2009) 125 Law Quarterly Review 365. 46 Allianz SpA etc v. West Tankers, ‘The Front Comor’ (C-185/07) [2009] 1 AC 1138; [2009] 1 All ER (Comm) 435; [2009] 1 Lloyd’s Rep 413; [2009] 1 CLC 96; [2009] ILPr 20; The Times, 13 February, 2009; noted E Peel (2009) 125 Law Quarterly Review 365; Claudio Consolo, ‘Arbitration and EC Law: an Italian reaction to the Heidelberg Colloquium,’ Lis Int’l (2009): 102–8; H. Seriki, ‘Declaratory Relief and Arbitration: The Aftermath of “The Front Comor”,’ JBL 7 (2010): 541–55; H. Seriki, ‘Anti-suit Injunctions, Arbitration and the ECJ: An Approach Too Far?’ JBL 7 (2010): 24; Peter Schlosser, ‘Europe—Is It Time to Reconsider the Arbitration Exception from the Brussels Regulation?’ Int ALR (2009): 45; Alexis Mourre and Alexandre Vagenheim, ‘The Arbitration Exclusion in Regulation 44/2001 after West Tankers,’ Int ALR (2009): 75; Philip Clifford and Oliver Browne, ‘Lost at Sea or a Storm in a Tea Cup? Antisuit Injunctions after West Tankers,’ Int ALR (2009): 19; Andrew Pullen, ‘The Future of International Arbitration in Europe: West Tankers and the EU Green Paper,’ Int ALR (2009): 56.

232

10

Arbitration in England

Brussels Jurisdiction Regulation (2001).47 In the West Tankers case (2009), the European Court of Justice concluded that: It is incompatible with the Council Regulation (EC) No 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters for a court of a Member State to make an order to restrain a person from commencing or continuing proceedings before the courts of another Member State on the ground that such proceedings would be contrary to an arbitration agreement.

According to this decision, an anti-suit injunction, although directed at the litigant rather than the foreign court, would indirectly strip the foreign court of the power to rule on its own jurisdiction under the same Regulation. This would offend the intra-Europe axiom that every Member State’s court, when seised in a civil or commercial matter concerning the Regulation, must be accorded jurisdiction to determine for itself whether it does in fact have jurisdiction to hear the substantive dispute before it.48 Also underpinning the European Court of Justice’s hostility to antisuit relief might be the pragmatic perception that, even if London High Court judges might unerringly apply anti-suit injunctions only when such relief is clearly justified, the courts of other Member States might not be so reliable.49 A further reason for the European Court of Justice opposing ‘anti-suit’ orders is the prospect of conflicting anti-suit orders from different Member States. On the latter fear, see the following remarks by the European Court of Justice in Turner v. Grovit (2004)50 : The possibility cannot be excluded that, even if an injunction had been issued in one contracting state, a decision might nevertheless be given by a court of another contracting state. Similarly, the possibility cannot be excluded that the courts of two contracting states that allowed such measures might issue contradictory injunctions. Conflicting and Parallel Processes within the EU after the West Tankers Case: What if a Member State EU court decides that it can give judgment on the substance, and rejects the allegation that the dispute is governed by an arbitration clause? If that court has held that there is no arbitration clause precluding the court from reaching its decision, section 32(4), Civil Jurisdiction and Judgments Act 1982 (UK) provides that a substantive judgment (for example, the award of money) rendered by the court of a Member State on a matter falling within the scope of the Jurisdiction Regulation 47

Council Regulation 44/2001 of 22 December 2001 on ‘jurisdiction and the recognition and enforcement of judgments in civil and commercial matters’). 48 Ibid., at [28], [29], citing Erich Gasser GmbH v. Misat Srl Case C-116/02 [2003] 1 ECR 14693; [2005] QB 1; [2004] 1 Lloyd’s Rep 222; Overseas Union Insurance Ltd v. New Hampshire Co Case C-351/89 [1991] 1 ECR I-3317; [1992] QB 434; [1992] 2 All ER 138; [1992] 1 Lloyd’s Rep 204. 49 Observation communicated to the author at a European colloquium. 50 [2005] 1 AC 101; [2004] ECR I-3565, at [30].

10.6

Anti-suit Injunctions Concerning Offending Proceedings Within . . .

233

(2001)51 must be recognized in England in proceedings falling within that Regulation. This was noted by Lawrence Collins LJ in Youell v. La Reunion Aerienne (2009).52 And the Court of Appeal in National Navigation Co v. Endesa Generacion SA (‘The Wadi Sudr’) (2009)53 (reversing Gloster J’s surprising decision54 ) has acknowledged that the English courts will recognize as binding a Member State court’s decision on a preliminary point, concerning the existence, validity, or scope of an arbitration clause, provided this decision is made within the Jurisdiction Regulation (2001).55 Waller LJ explained56 : a judgment on a preliminary ruling is a judgment within the regulation if it takes place in proceedings the main scope of which brings them within the regulation. Moore-Bick LJ in National Navigation Co v. Endesa Generacion SA (‘The Wadi Sudr’) (2009)57 noted that arbitrators would be bound by the procedural principle of issue estoppels to recognize a prior foreign court’s decision, which would be binding as res judicata under common law principles, quite independently of the Jurisdiction Regulation: . . .arbitrators are not therefore bound by the Regulations themselves to recognise judgments of the courts of Member States of the EU, but it does not follow that foreign judgments, whether of the courts of Member States or other countries, can be disregarded in arbitration proceedings. A judgment of a foreign court which is regarded under English of conflicts of laws rules as having jurisdiction and which is final and conclusive on the merits is entitled to recognition at common law: see Dicey and Morris and Collins, The Conflict of Laws, 14th ed. paragraphs 14-027– 14-029. It follows, therefore, that arbitrators applying English law are bound to give effect to that rule. There is nothing new in this; it has long been recognised that a judgment of a foreign court can give rise to estoppel by res judicata – see, for example, The Sennar (No 2) [1985] 1 WLR 490 – and the principle is routinely applied in arbitration proceedings.

This statement invalidates Burton J’s 2008 Commercial Court decision (see 10.19 on CMA SA Hyundai MIPO Dockyard Co Ltd, 2008),58 where he held that London arbitrators are not bound to recognise and give effect to a Member State court decision if that judgment was the culmination of proceedings brought in breach of the arbitration clause. Burton J wrongly took

51

Council Regulation 44/2001 of 22 December 2001 on ‘jurisdiction and the recognition and enforcement of judgments in civil and commercial matters’. 52 [2009] EWCA Civ 175; The Times, 27 March 2009, at [32]. 53 [2009] EWCA Civ 1397. 54 [2009] EWHC 196 (Comm). 55 Council Regulation 44/2001 of 22 December 2001 on ‘jurisdiction and the recognition and enforcement of judgments in civil and commercial matters’. 56 [2009] EWCA Civ 1397, at [46]. 57 [2009] EWCA Civ 1397, at [118]; Seriki, ‘Declaratory Relief and Arbitration: The Aftermath of The Front Comor’. 58 [2008] EWHC 2791(Comm); [2009] Lloyd’s Rep 213.

234

10

Arbitration in England

the view that a Member State’s decision on a disputed aspect of an arbitration clause, arising in a matter falling within the (European) Jurisdiction Regulation,59 is only binding on Member States courts and not binding on arbitrators whose seat lies within the European jurisdictional zone. This overlooks issue estoppel, which renders the relevant foreign decision binding on arbitrators. At the time of writing (April 2011), the European legislature’s response60 to the Allianz SpA etc v. West Tankers, ‘The Front Comor’ (2009)61 problem has yet to be finalised (and is subject to national consultation). The proposed EU change is as follows (draft Article 29, section 4, of the Jurisdiction Regulation)62 : Where the agreed or designated seat of an arbitration is in a Member State, the courts of another Member State whose jurisdiction is contested on the basis of an arbitration agreement shall stay proceedings once the courts of the Member State where the seat of the arbitration or the arbitral tribunal is located have been seised of proceedings to determine, as their main object or as an incidental question, the existence, validity or effects of that arbitration agreement. This paragraph does not prevent the court whose jurisdiction is contested from declining jurisdiction in the situation referred to above if its national law so prescribes. Where the existence, validity or effects of the arbitration agreement are established, the court seised shall decline jurisdiction. How will this work? Suppose P and D’s contract states that disputes concerning it will be arbitrated in London. In breach of this, P sues D in the Paris court. Once D has commenced court proceedings in London seeking a declaration that the arbitration clause is binding, the Paris court will be obliged to stay its proceedings. The English declaration will be binding 59

Council Regulation 44/2001 of 22 December 2001 on ‘jurisdiction and the recognition and enforcement of judgments in civil and commercial matters’. 60 The position arising from the West Tankers case is currently under review by the European Commission: The EU Commission’s Proposal for a Regulation of the European Parliament and of the Council on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters Brussels 14/12/2010 COM (2010) 748 Final 2010/0383 (COD). 61 Allianz SpA etc v. West Tankers, ‘The Front Comor’ (C-185/07) [2009] 1 AC 1138; [2009] 1 All ER (Comm) 435; [2009] 1 Lloyd’s Rep 413; [2009] 1 CLC 96; [2009] ILPr 20; The Times, 13 February, 2009; noted E Peel (2009) 125 Law Quarterly Review 365; Seriki, ‘Declaratory Relief and Arbitration: The Aftermath of “The Front Comor” ’; H. Seriki, ‘Anti-suit Injunctions, Arbitration and the ECJ: An Approach Too Far?’; Peter Schlosser, ‘Europe—Is It Time to Reconsider the Arbitration Exception from the Brussels Regulation?’; Alexis Mourre and Alexandre Vagenheim, ‘The Arbitration Exclusion in Regulation 44/2001 after West Tankers’; Philip Clifford and Oliver Browne, ‘Lost at Sea or a Storm in a Tea Cup? Anti-suit Injunctions after West Tankers’; Andrew Pullen, ‘The Future of International Arbitration in Europe: West Tankers and the EU Green Paper’. 62 The EU Commission’s ‘Proposal for a Regulation of the European Parliament and of the Council on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters Brussels 14/12/2010 COM (2010) 748 Final 2010/0383 (COD).’

10.7 Damages for Breach of an Arbitration Clause

235

on all Member State courts. It will be noted that, although the arbitrators nominated by the relevant clause are free to decide to begin the arbitration, having made their own assessment of the arbitration clause’s validity and effect, nevertheless, for the purpose of the proposed amendment, the arbitrators’ determination of their jurisdiction is not the legal event which triggers the Paris court’s duty to place its proceedings in suspense. The upshot of the proposed amendment is that the kompetenz-kompetenz principle (arbitrators’ provisional capacity to determine whether an arbitration clause exists, is valid, and to fix its scope) is eroded. Instead, under this proposed change, the courts are the main actors determining the validity of arbitration agreements.

10.7 Damages for Breach of an Arbitration Clause 10.19 A party in breach of an arbitration clause can be ordered to pay compensation to the innocent party for the latter’s loss. Thus in CMA SA Hyundai MIPO Dockyard Co Ltd (2008)63 a party to a shipbuilding company (that party having joined as a party to this agreement following novation) was held to have breached an arbitration clause requiring disputes arising from this substantive agreement to be arbitrated in London. That party, in breach of this arbitration clause, continued French court proceedings which had been wrongly commenced before the novation. Burton J in the Commercial Court in London upheld the London arbitrators’ decision on these points: (i) the arbitration clause covered the subject-matter of the French judicial proceedings; (ii) it was, therefore, a breach of the arbitration clause for the relevant party not to discontinue the French proceedings, once it had become privy to this contractual set of arrangements, including the arbitration clause, following the novation process; (iii) the arbitrators were not bound to recognise and give effect to the French court decision, because that decision was the culmination of proceedings brought in breach of the arbitration clause and a Member State’s decision within the (European) Jurisdiction Regulation is only binding on Member States courts and not on arbitrators whose seat lies within the European jurisdictional zone; (iv) the damages to be awarded for breach of the arbitration clause were the amount of the judgment paid by the innocent party in response to the French judgment, the costs of fighting the French proceedings, and management time wasted during those improper proceedings. It is submitted that propositions (i) (ii) and (iv) in the Hyundai case (2008), just examined, are sound (however, proposition (iii) is invalid, as explained above at 10.18, because Burton J failed to note the common law 63

[2008] EWHC 2791(Comm); [2009] Lloyd’s Rep 213.

236

10

Arbitration in England

doctrine of issue estoppel, which renders a foreign court’s decision binding on London arbitrators, for example a foreign decision that that no arbitration clause precludes the present foreign proceedings). In England an arbitration clause is regarded as a species of contract. Breach can expose the guilty party to the usual array of remedies for breach of contract. These remedies include compensatory64 damages. This consequence of breach had been assumed by Colman J at first instance in the West Tankers case).65 Accordingly, (i) an English court would recognise an English arbitral tribunal’s award of compensatory damages for the expenses incurred following breach of an arbitration clause (the cost of defending and seeking to repel foreign proceedings brought in breach of the clause)66 ; or (ii) the award of compensatory damages might be made directly by a court in England. In Mantovani v. Carapelli Spa (1980) the Court of Appeal approved both propositions (i) and (ii).67 As we have seen, the Hyundai case (2008)68 is a recent affirmation of (i). The prospect of compensatory damages for breach of arbitration clauses has become topical, and this issue was raised by the Common Lawyers at the London discussion of experts, May 2009.69 However, Professor Dr Thomas Pfeiffer, University of Heidelberg, at the same meeting, was less sanguine. In his view, the European Court of Justice might regard this as another infringement of ‘mutual trust’, tending to interfere indirectly with Member State courts’ decisions whether to recognise jurisdiction in the relevant substantive matter. It cannot be assumed, therefore, that the civilian members of the European Court of Justice will share the Common Law assumption that breach of an arbitration clause entitles the innocent party to ordinary remedies for breach of contract.

64

Under English law, punitive damages are not available for breach of contract. Colman J in West Tanker case [2005] EWHC 454 (Comm); [2005] 2 Lloyd’s Rep 257 at [66], [67], [69]. 66 Lord Hobhouse was prepared to assume in Donohue v. Armco Inc that in the analogous situation of a breach of an exclusive jurisdiction clause, the innocent party would have a claim for breach of the contract, giving him at any rate compensation for costs not awarded in the relevant foreign jurisdiction: [2001] UKHL 64; [2002] 1 Lloyd’s Rep 425 at [48], [75], and see the passing remark of Steyn LJ in Continental Bank NA v. Aeakos Compania Naviera SA [1994] 1 WLR 588, 598, CA, that, in the case of breach of an exclusive jurisdiction clause, ‘a claim for damages for breach of contract would be a relatively ineffective remedy’. 67 [1980] 1 Lloyd’s Rep 375, CA; CMA CGM SS v. Hyundai Mipo Dockyard Co [2008] EWHC 2791; [2009] 1 Lloyd’s Rep 213, where Burton J awarded damages for breach of an arbitration clause. 68 [2008] EWHC 2791(Comm); [2009] Lloyd’s Rep 213. 69 British Institute of International and Comparative Law, 12 May 2009. 65

10.9

Finality

237

10.8 Speed and Efficiency 10.20 Parties to arbitration hope that the process will be swifter and cheaper, but no less accurate than, English court litigation. The Arbitration Act 1996 (England and Wales) injects the discipline of time-management and cost-effectiveness into the arbitral process, while respecting the parties’ interest in gaining a fair result. It states: The tribunal shall. . . adopt procedures suitable to the circumstance of the particular case, avoiding unnecessary delay or expense, so as to provide a fair means for the resolution of the matters falling to be determined.70 It is likely that this arbitral ‘mission statement’ exerted an intellectual influence on the drafting of a similar ‘Overriding Objective’ in the Civil Procedure Rules of 1998 (it should be recalled that Lord Woolf’s reports, providing the blueprint for the CPR (1998), were composed in 1995 and 1996, when the Arbitration Bill, as it then was, was being debated). However, the arbitral process can be ‘hijacked’ cynically, or it can become bogged down, as a result of improper commencement of court proceedings, in violation of the contractual commitment to arbitrate.

10.9 Finality 10.21 There is a (heavily qualified) power to challenge the award before the High Court (i) on the basis of an error of (English) law.71 Here the High Court acts as the ‘gate-keeper’: unless both parties agree to an appeal on a point of law, the court will apply the restrictive criteria of the statutory ‘filter’ to determine whether to grant permission for such an appeal72 : Leave to appeal shall be given only if the court is satisfied—(a) that the determination of the question will substantially affect the rights of one or more of the parties, (b) that the question is one which the tribunal was asked to determine, (c) that, on the basis of the findings of fact in the award—(i) the decision of the tribunal on the question is obviously wrong, or (ii) the question is one of general public importance and the decision of the tribunal is at least open to serious doubt,

70

s 33(1)(b), Arbitration Act 1996 (England and Wales). s 69(2)(3), Arbitration Act 1996 (England and Wales) 1996; there are many cases on this provision, for example, Flaux J in ASM Shipping Ltd of India v. TTMI Ltd of England, (‘The Amer Energy’) [2009] 1 Lloyd’s Rep 293, at [17] to [19]; the report by V.V. Veeder and A. Sander (2009) notes that the Commercial Court, in London, considered 36 applications in 2006, and granted leave in 9; in 2007, 58, leave granted in 13; in 2008, 57, leave granted in 14; disclosing an average of 50 a year, with leave granted in 12 (noted M. O’Reilly, ‘Provisions on Costs and Appeals: An Assessment from an International Perspective’, paper delivered at the British Institute of International and Comparative Law conference, London, February 2010). 72 s 69, Arbitration Act 1996 (England and Wales)(3), 1996. 71

238

10

Arbitration in England

and (d) that, despite the agreement of the parties to resolve the matter by arbitration, it is just and proper in all the circumstances for the court to determine the question.

10.22 Other possible grounds of challenge before the court are (ii) lack of jurisdiction,73 and (iii) the assertion that the arbitral panel has been guilty of ‘serious irregularity affecting the tribunal, the proceedings or the award’.74 The last is regarded as ‘a long stop, only available in extreme cases where the tribunal has gone so wrong in its conduct of the arbitration that justice calls out for it to be corrected.’75 Grounds (ii) and (iii) are mandatory and thus cannot be excluded by party agreement. There is no appeal against a finding of fact. 10.23 There is no power to appeal from a finding or application of a point of foreign law.76 Furthermore, as the Court of Appeal decided in C v. D

73

s 67, Arbitration Act 1996 (England and Wales) 1996 states: (1) A party to arbitral proceedings may (upon notice to the other parties and to the tribunal) apply to the court—(a) challenging any award of the arbitral tribunal as to its substantive jurisdiction; or (b) for an order declaring an award made by the tribunal on the merits to be of no effect, in whole or in part, because the tribunal did not have substantive jurisdiction. A party may lose the right to object (see section 73) and the right to apply is subject to the restrictions in section 70(2) and (3). (2) The arbitral tribunal may continue the arbitral proceedings and make a further award while an application to the court under this section is pending in relation to an award as to jurisdiction. (3) On an application under this section challenging an award of the arbitral tribunal as to its substantive jurisdiction, the court may by order—(a) confirm the award, (b) vary the award, or (c) set aside the award in whole or in part. (4) The leave of the court is required for any appeal from a decision of the court under this section. 74 s 68, Arbitration Act 1996 (England and Wales) 1996; s 68(2) specifies: Serious irregularity means an irregularity of one or more of the following kinds which the court considers has caused or will cause substantial injustice to the applicant—(a) failure by the tribunal to comply with section 33 (general duty of tribunal); (b) the tribunal exceeding its powers (otherwise than by exceeding its substantive jurisdiction: see section 67); (c) failure by the tribunal to conduct the proceedings in accordance with the procedure agreed by the parties; (d) failure by the tribunal to deal with all the issues that were put to it; (e) any arbitral or other institution or person vested by the parties with powers in relation to the proceedings or the award exceeding its powers; (f) uncertainty or ambiguity as to the effect of the award; (g) the award being obtained by fraud or the award or the way in which it was procured being contrary to public policy; (h) failure to comply with the requirements as to the form of the award; or (i) any irregularity in the conduct of the proceedings or in the award which is admitted by the tribunal or by any arbitral or other institution or person vested by the parties with powers in relation to the proceedings or the award. 75 Lord Steyn in Lesotho Highlands Development Authority v. Impreglio SpS [2006] 1 AC 22, HL. 76 This is the result of the definition of ‘question of law’ in s 82(1), Arbitration Act 1996 (England and Wales); affecting scope of s 69, Arbitration Act 1996 (England and Wales) (appeal to court on a ‘question of law arising out of an award made in the [arbitration] proceedings’; choice of substantive law covered by s 46(1), 1996 Act.

10.9

Finality

239

(2007),77 if the seat of the arbitration is England and Wales, a party cannot evade this last limitation by seeking a declaration from a foreign court that the English award on a point of foreign law involves a misunderstanding or misapplication of that foreign law. 10.24 It is possible to contract out of the curial appeal process concerning points of law, but careful wording must be adopted (see end of this paragraph). Thus Gloster J in Shell Egypt West Manzala GmbH v. Dana Gas Egypt Ltd (2009) held that the formula ‘final, conclusive and binding’, contained in the arbitration clause, and clearly intended to bestow some form of finality on an award, did not render an arbitration award secure from appeal to the High Court on a point of law.78 The words ‘final, conclusive and binding’ merely indicated that the award would be final and binding as a matter of res judicata: that is, findings of fact are binding, with the result that there should be no further litigation on the same factual matters between the same parties. This still leaves the door open to the award being subject to appeal to the High Court on a point of law (if permission to appeal to the High Court can be obtained from a judge under section 69(2)(3), Arbitration Act 1996 (England and Wales)). To exclude this possibility of appeal on a point of English law, it would be necessary explicitly to state that the award would not be subject to appeal or other recourse. Thus the rules of the London Court of International Arbitration (LCIA), Article 26.9, provide: ‘All awards shall be final and binding on the parties. By agreeing to arbitration under these Rules, the parties undertake to carry out any award immediately and without any delay (subject only to Article 27 [which concerns correction of awards by the arbitral tribunal on request by a party or on the initiative of the tribunal]; and the parties also waive irrevocably their right to any form of appeal, review or recourse to any state court or other judicial authority, insofar as such waiver may be validly made.’ Similarly, the ICC (1998) rules (International Chamber of Commerce), Article 28.6, provide: Every award shall be binding on the parties. By submitting the dispute to arbitration under these Rules, the parties undertake to carry out any award without delay and shall be deemed to have waived their rights to any form of recourse insofar as such waiver can validly be made. 10.25 In a related case, Sheffield United Football Club Ltd v. West Ham United Football Club plc (2008),79 Teare J held that an arbitration clause which expressly excludes recourse, review or appeal before a court of law does not by implication ‘create a right of appeal to an upper level arbitration tribunal which has a review or appellate’ function. The High Court has power to issue an anti-suit injunction to restrain resort to this

77

C v. D [2007] EWCA Civ 1282; [2008] 1 Lloyd’s Rep 239. [2009] EWHC 2097 (Comm). 79 [2008] EWHC 2855 (Comm); [2009] 1 Lloyd’s Rep 167. 78

240

10

Arbitration in England

unauthorised further stage of arbitration, provided there is ‘urgency’, and it is not practicable to leave the question of breach to the arbitration tribunal itself. The European Court of Justice’s prohibition on anti-suit relief in the West Tankers case (Allianz SpA (formerly Riunione Adriatica di Sicurta SpA v. West Tankers Inc (C-185-07)80 (on which 10.25) is confined to injunctions concerning intra-Europe court proceedings. And so there is no prohibition upon anti-suit relief aimed at halting or precluding unauthorised arbitration proceedings.

10.10 Freezing Relief and Arbitration 10.26 (On this topic, see also discussion at 11.06). In Mobil Cerro Negro Ltd v. Petroleos De Venezuela SA (2008)81 Walker J emphasised that English worldwide freezing orders (for a summary of such orders see the next paragraph)82 should be made ‘only sparingly’ in support of arbitration and, usually, only where there is ‘compelling evidence of serious international fraud.’83 In January 2008, the English court had granted Mobil Cerro Negro (Mobil) a temporary worldwide freezing order covering assets of up to $12 billion against the Venezuelan national oil company, Petroleos de Venezuela SA (PDVSA). This order was in support of ICC (International Chamber of Commerce) arbitration proceedings between Mobil and PDVSA. The seat of that arbitration was New York. The parties to the arbitration were Bahamian and Venezuelan. The governing law of the main contract was Venezuelan. PDVSA successfully applied to set aside the freezing order. Walker J found that there was no evidence that the respondent was likely to dissipate its assets. That was sufficient to resolve the matter. But he gave three additional reasons for setting aside the freezing injunction84 : (1) Mobil cannot surmount the. . . hurdle [in section 44(3) of the Arbitration Act 1996 (England and Wales) and] show that the case is one of “urgency”; (2) ‘in the absence of any exceptional feature such as fraud, [Mobil] would have had to demonstrate a link with this jurisdiction in the form of substantial assets of PDV located here’ but ‘Mobil cannot demonstrate such a link’; (3) ‘in the absence of any exceptional feature such as fraud, and in the absence of substantial assets of PDV located here, the fact that the seat of the arbitration is not here makes it 80

Allianz SpA etc v. West Tankers (C-185/07) [2009] 1 AC 1138; [2009] 1 All ER (Comm) 435; [2009] 1 Lloyd’s Rep 413; [2009] 1 CLC 96; [2009] ILPr 20; The Times, 13 February, 2009. 81 [2008] EWHC 532 (Comm); noted Adam Johnson (2008) Civil Justice Quarterly 433–44. 82 Neil Andrews, The Modern Civil Process (Tübingen, Germany: Mohr & Siebeck, 2008), 4.03 ff. 83 Ibid., at [5]. 84 Ibid., at [28].

10.11 Recognition and Enforcement of Arbitration Awards Under the . . .

241

inappropriate to grant an order under section 2(3) of the Arbitration Act 1996 (England and Wales). . . . 10.27 There is abundant literature concerning freezing relief within the international commercial arbitration85 and comparative communities.86 Furthermore, the American Law Institute/UNIDROIT’s canon of ‘transnational’ principles of civil litigation acknowledges the importance of such relief.87

10.11 Recognition and Enforcement of Arbitration Awards Under the New York Convention (1958)88 10.28 (On this topic, see also discussion at 11.17). If an award falls for recognition or enforcement under New York Convention principles, English case law (see next paragraph for details) establishes that the court where recognition or enforcement is sought can re-open the disputed issue of law/fact whether the ‘losing party’ in the arbitration was truly a party to the relevant arbitration agreement. This is provided the party resisting such recognition has consistently opposed the arbitrators’ jurisdiction. 10.29 The UK Supreme Court in Dallah Real Estate & Tourism Holding Co v. Pakistan (2010)89 held that a Paris award could not be recognized in England, under the New York Convention (1958), because the French arbitration tribunal had incorrectly determined that the Pakistan 85

A. Redfern, ‘Interim Measures,’ in The Leading Arbitrators’ Guide to International Arbitration, eds. L.W. Newman and R.D. Hill (Bern: Staempfli Verlag, 2004), at 217 ff and F. Knoepfler, ‘Les Mésures Provisoires et l’Arbitrage,’ in Médiation et Arbitrage: Alternative Dispute Resolution-Alternative a la Justice ou Justice Alternative? Perspectives Comparatives, eds. L. Cadiet, E. Jeuland, and T Clay (Litec, Paris: Lexis Nexis, 2005); Mustill and Boyd, Commercial Arbitration: 2001 Companion Volume, 314–6, 323–4; H. van Houtte, ‘Ten Reasons Against a Proposal for Ex Parte Interim Measures of Protection in Arbitration,’ Arbitration International 20 (2004): 85; A. Baykitch and J. Truong, ‘Innovations in International Commercial Arbitration: Interim Measures a Way Forward or Back to the Future,’ The Arbitrator and Mediator 25 (2005): 95. 86 Neil Andrews, ‘Provisional and Protective Measures: Towards an Uniform Provisional Order,’ Uniform L Rev (Rev dr unif) VI (2001): 931; Stephen Goldstein, ‘Revisiting Preliminary Relief in Light of the ALI/UNIDROIT Principles and the New Israeli Rules,’ in Studia in honorem: Pelayia Yessiou-Faltsi (Athens: Sakkoulas Publications, 2007), 273–96. 87 ALI/UNIDROIT: Principles of Transnational Civil Procedure (Cambridge University Press, 2006), principle 8; on which Stephen Goldstein, ibid. 88 Selected Journal Comments: E Gaillard, ‘Enforcement of Awards Set Aside in the Country of Origin,’ ICSID Rev 14 (1999): 16; J. Paulsson, ‘May or Must Under the New York Convention: An Exercise in Syntax and Linguistics,’ Arbitration International 14 (1998): 227; S. Wilske, L. Shore and J.-M. Ahrens, ‘The “Group of Companies Doctrine” – Where is It Heading?’ Am Rev Int Arb 17 (2006): 73. 89 [2010] UKSC 46; [2010] 3 WLR 1472.

242

10

Arbitration in England

Government was a party to the relevant arbitration agreement. The English court held that the arbitration award was flawed because the tribunal had not applied French law to determine whether the Pakistan Government was in fact a party to the arbitration agreement (this being the applicable law to the construction of the arbitration agreement, in default of party choice of another system). 10.30 Under the New York Convention (1958),90 enacted as section 103, Arbitration Act 1996 (England and Wales),91 the question whether a 90

Article V.1, NYC (1958): ‘Recognition and enforcement of the award may be refused, at the request of the party against whom it is invoked, only if that party furnishes to the competent authority where the recognition and enforcement is sought, proof that:

(a) The parties to the agreement referred to in Article II were, under the law applicable to them, under some incapacity, or the said agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law of the country where the award was made; or (b) The party against whom the award is invoked was not given proper notice of the appointment of the arbitrator or of the arbitration proceedings or was otherwise unable to present his case; or (c) The award deals with a difference not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration, provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, that part of the award which contains decisions on matters submitted to arbitration may be recognized and enforced; or (d) The composition of the arbitral authority or the arbitral procedure was not in accordance with the agreement of the parties, or, failing such agreement, was not in accordance with the law of the country where the arbitration took place; or (e) The award has not yet become binding on the parties, or has been set aside or suspended by a competent authority of the country in which, or under the law of which, that award was made.’ 91

s 103, Arbitration Act 1996 (England and Wales) provides: Refusal of recognition or enforcement. (1) Recognition or enforcement of a New York Convention award shall not be refused except in the following cases. (2) Recognition or enforcement of the award may be refused if the person against whom it is invoked proves—(a) that a party to the arbitration agreement was (under the law applicable to him) under some incapacity; (b) that the arbitration agreement was not valid under the law to which the parties subjected it or, failing any indication thereon, under the law of the country where the award was made; (c) that he was not given proper notice of the appointment of the arbitrator or of the arbitration proceedings or was otherwise unable to present his case; (d) that the award deals with a difference not contemplated by or not falling within the terms of the submission to arbitration or contains decisions on matters beyond the scope of the submission to arbitration (but see subsection 4); (e) that the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties or, failing such agreement, with the law of the country in which the arbitration took place; (f)

10.11 Recognition and Enforcement of Arbitration Awards Under the . . .

243

person was in fact party to an arbitration agreement falls to be determined in accordance with either the parties’ chosen law (but in the Dallah case the arbitration agreement did not contain any such choice of law), or the law of the jurisdiction in which the award was made (here French law). Accordingly, French law applied here. Applying the relevant French test for this purpose, the UK Supreme Court was satisfied that the Paris arbitration tribunal had adopted faulty reasoning when concluding that Pakistan was a party to the agreement (even though it had not been named as a party within the arbitration clause, nor had it signed that clause). The correct approach, founded on French law, required investigation whether the parties’ dealings disclosed a common subjective intention (express or implied), shared by Pakistan and the named arbitration parties, that Pakistan would be treated as party to the arbitration agreement. Instead the Paris arbitration tribunal had erred by invoking more general notions of ‘good faith’, insufficiently tied to the question of common intention, to buttress their conclusion that Pakistan was party to this arbitration agreement. The English Court of Appeal (this point was not pursued on further appeal to the Supreme Court) also rejected Dallah’s further argument that the French arbitration tribunal’s decision on the question whether Pakistan was party to the arbitration agreement was binding as a matter of issue estoppel. It was not binding because the French arbitration tribunal had not applied French law to this question, as it should have.92 Furthermore,

that the award has not yet become binding on the parties, or has been set aside or suspended by a competent authority of the country in which, or under the law of which, it was made. (3) Recognition or enforcement of the award may also be refused if the award is in respect of a matter which is not capable of settlement by arbitration, or if it would be contrary to public policy to recognise or enforce the award. (4) An award which contains decisions on matters not submitted to arbitration may be recognised or enforced to the extent that it contains decisions on matters submitted to arbitration which can be separated from those on matters not so submitted. (5) Where an application for the setting aside or suspension of the award has been made to such a competent authority as is mentioned in subsection (2)(f), the court before which the award is sought to be relied upon may, if it considers it proper, adjourn the decision on the recognition or enforcement of the award. It may also on the application of the party claiming recognition or enforcement of the award order the other party to give suitable security. 92

This is the Court of Appeal’s summary of this curious aspect: [24] . . .the [arbitration] tribunal did not accept [that Dubai law or Saudi law governed the arbitration clause], nor did it hold that by choosing arbitration in Paris the parties had made an implied choice of French law. Instead, it held that all issues relating to the validity and scope of clause 23, including the question whether the Government of Pakistan was a party to it, were to be determined by reference to “those transnational general principles and usages which reflect the fundamental requirements of justice in international trade and the concept of good faith in business”. The tribunal. . . held that the Government of Pakistan was a true party to the Agreement, including the arbitration clause. [25]. . .[As for] the tribunal’s reasoning, . . .the two important matters to

244

10

Arbitration in England

it was inconsistent with the New York Convention and section 103 of the Arbitration Act 1996 (England and Wales) for the court in the country where recognition or enforcement is sought to be precluded by issue estoppel from rehearing this question concerning the arbitration clause’s validity and effect.93 Furthermore, the fact that Pakistan had chosen not to challenge the French arbitration award within the French supervisory court system did not raise an estoppel against Pakistan.94 10.31 The Dallah case (2010) (above) shows the extensive scope during foreign enforcement proceedings under the New York Convention (1958) for the enforcing court to rehear the question concerning the validity of the arbitration agreement. On that question, the enforcing court is required to investigate fully (a) whether the arbitration panel has correctly ascertained the applicable law governing the arbitration award’s existence, validity, and effectiveness; (b) secondly the enforcing court must determine whether the test derived from that applicable law has been correctly formulated; (c) thirdly, the enforcing court must then decide for itself whether that test, when meticulously applied to the facts of the case, establishes that the relevant putative party was truly a party to the arbitration agreement; and at this third stage it is not enough merely to rubber-stamp the arbitration tribunal’s analysis, because it is possible for the party resisting emphasise are, first, that it did not purport to apply French law in order to determine the issue before it and, second, that its decision was based mainly, if not entirely, on inferences drawn from the documents. The judge, on the other hand, not only had some additional documents before him, but, more importantly, [as the enforcing court under English arbitration law] he was bound by section 103(2) of the [English] Arbitration Act 1996 to apply French law to the facts as he found them. 93 On this Moore-Bick LJ said at [18]: there is nothing in the [New York] Convention to suggest that the supervisory court [viz the court of the place where the award is made: here the French courts] is intended to have primacy in the sense that enforcing courts are expected, much less required, to treat the award as valid and binding unless and until successfully challenged in the supervisory court. If that had been intended, Article V.1 would have taken a very different form. In particular, it would not have given courts of other jurisdictions an unrestricted power to refuse enforcement in cases where defects in the arbitral process of the kind which it describes could be proved. On the contrary, it is well established . . . that a person against whom an award has been made is not bound to challenge it before the supervisory court in order to challenge its enforcement in another jurisdiction: see Svenska Petroleum Exploration AB v. Lithuania (No 2) [2006] EWCA Civ 1529; [2006] 2 CLC 797 at [104] and the cases there cited. In my view the terms of Article V.1 read as a whole amply bear out the submission of Mr Landau QC that one of the fundamental principles enshrined in the Convention is that such a person is entitled to oppose the enforcement of an award on the grounds that it is not based on a valid agreement to arbitrate. 94 On this Moore-Bick LJ said at [56]: the purpose of Article V.1 of the Convention was to preserve the right of a party to a foreign arbitration award to challenge enforcement [viz in the court where such enforcement is sought: here in England] on grounds that impugn its fundamental validity and integrity. The fact that it has not been challenged or that a challenge has failed in the supervisory court [viz the court of the place where the award is made: here the French courts] does not affect that principle.

10.11 Recognition and Enforcement of Arbitration Awards Under the . . .

245

enforcement to show that there was in fact no proper factual support for the conclusion drawn by the arbitral panel. Furthermore, the present case shows the opportunity for successive appeals within the enforcing state’s hierarchy of courts. Indeed the Supreme Court carried out a full review itself of that evidence at stage rather than merely deferring to the first instance decision on this point by Aikens J in the Commercial Court. The delay and costs generated by these further enforcement processed can be considerable. This episode shows that the New York Convention (1958) is not always the fast route to foreign recognition and enforcement which its architects had hoped to create. 10.32 On the other hand, it is pleasing that the English courts have shown that an arbitration tribunal’s jurisdictional determination that an entity is (in its view) a party to an arbitration agreement should not be lightly ratified by the enforcing court under the NYC 1958, if enforcement of the award is resisted on this basis. The enforcing court’s capacity to conduct a searching review of this matter will have the effect of injecting much greater rigour and accuracy into this fundamental threshold issue. Given the explicit hesitation of two members of the Paris arbitration tribunal in this case on this very jurisdictional issue, it was inevitable that the enforcing court’s search-light would be trained closely at this possible weakness. 10.33 Although the Dallah case is ‘bad news’ for the marketability of international commercial arbitration, it is not a complete disaster. It seems unlikely that this development will seriously damage the overall attractiveness of international commercial arbitration when compared to court litigation. The advantages of confidentiality and selection of arbitrators render arbitration a more comfortable style of dispute-resolution for many commercial parties. However, if jurisdictional wrangles of this scale become more common, it will be necessary to consider whether the New York Convention (1958) should be modified to secure a ‘lighter touch’ style of recognition and enforcement. Even if consensus among interested states were to emerge, the process of implementing such a revision of this international instrument (to which many countries have acceded) will be long and difficult. 10.34 It is right that there should be opportunity for such a ‘final check’ before the relevant enforcing courts authorize enforcement against the award-debtor’s assets. But it is somewhat embarrassing that a French court (Paris Cour d’appel) has recently reached the opposite conclusion: that this award was satisfactory, according to French arbitration principles.95 This decision was made pursuant to Article 1502(1) of the

95

Gouvernement du Pakistan v. Société Dallah Real Estate & Tourism Holding Co, Cour d’appel de Paris, Pôle 1—Chap. 1, no 09/28533 (17 February 2011) (www.practicallaw.com/8-505-0043). On which see both the next note and the comment by White & Case: http://www.whitecase.com/insight-03022011/.

246

10

Arbitration in England

French Code of Civil Procedure. This permits the court to refuse to enforce an award ‘if the arbitrator has ruled upon the matter without an arbitration agreement or [the putative arbitration agreement is in face] a void and lapsed agreement’. It has also been suggested that the French court’s perspective involved posing different criteria (independent of French national law) compared with the criteria adopted by the English courts when purporting to apply French law to the relevant arbitration agreement. 96 The Paris Cour d’appel decision in the Dallah case (2011) follows the Dalico doctrine97 which involves a loosening of conflicts rules in the case of international arbitration. The French court then focused on the parties’ dealings between the parties. It noted that the Pakistan Government negotiated the contract, and that the Trust created by the Government was merely a signatory. The Paris Cour d’appel also noted that the Government was involved in the performance of the contract, and that it effectively controlled the same transactions’ termination. It concluded that the Trust was ‘purely formal’ and that the Government was the true Pakistani party to the transaction. By contrast the English courts had given very considerable weight to the legal separateness of the Trust and had endeavoured to reflect its perception that the arbitration agreement had not merely been signed by the Trust, and made no mention of the Government as an additional party, but that there was no true consensus between the members of this triangle that the Government should be treated as a party to the arbitration agreement. How does this difference of analysis and result leave the relevant award? If a third jurisdiction were to be asked to enforce the Dallah award (made by the arbitration tribunal in Paris), it seems highly likely that it would defer to the French court’s decision, rather than be guided by the UK Supreme Court’s conflicting decision. This is because (a) the French court is situated in the seat of the relevant arbitration and (b) it seems likely that the French court’s flexible and transnational reasoning in this matter would be regarded as more attractive. At any rate, the Dallah sage reveals that the New York Convention (1958) is not the fast-route to cross-border enforcement that enthusiasts for commercial arbitration had expected.

James Clark, http://www.practicallaw.com/4-504-9971?q=&qp=&qo=&qe=: ‘By contrast, the French court did not focus on French law principles and proceeded to a factual enquiry to determine whether the parties had actually consented to go to arbitration. This very practical approach is consistent with French case law. This solution is inspired by the recognised desire of French courts to develop substantive rules for international arbitration that ensure that the outcome of a dispute does not depend on the particularities of a national law. This solution is also consistent with French case law on the extension of arbitration agreements to parties that are non-signatories but have participated in its negotiation and performance.’ 96

James Clark, . . . negotiation and performance. Cour de Cassation, First Civil Chamber, Municipalité de Khoms El Mergeb v. Dalico, 20 December 1993, JDI 1994, 432, note E. Gaillard.

97

10.12 Conclusion

247

10.12 Conclusion 10.35 Commercial parties opt for arbitration primarily to achieve the following: (i) confidentiality, (ii) party selection of the panel, governing norms, and the arbitral procedure (notably selection of a ‘neutral’ panel for the arbitration of disputes between parties who are based in different jurisdictions), (iii) speediness and efficiency, and (iv) finality. We have surveyed English developments under each of those four heads. However, we have also seen (10.29 and following) that when a victorious party seeks to enforce an arbitration award under the New York Convention (1958), that award is open to review by the courts of the state where enforcement is sought, at lest for the purpose of detgerming whether the supposed ‘respondent’ was truly a party to the relevant arbitration clause. And that curial review of the award can cut deep: for, notably, it includes de novo discussion of the legal basis of the arbitral tribunal’s decision on the question whether A or B was truly a party to the relevant award. 10.36 In recent lectures given in Pavia (2009), Sao Paulo, and Curitiba (2010), I referred to ‘Civil Justice’s Double Helix’,98 that is, to the complex interaction, and mutual support, between the court system and the noncourt system. The metaphor expresses the idea that one strand—consisting of ADR, including arbitration and mediation—and the other strand—the court process—are complementary and entwined. This is without doubt the case in the English jurisdiction, where the courts have shown considerable willingness to support and facilitate the process of commercial arbitration. The vitality of civil justice in Europe and elsewhere requires lawyers and policy-makers to strengthen and refine the two parts of this double helix. The saga of the West Tankers case (European Court of Justice, 2009)99 demonstrates the need for European authorities to appreciate the commercial need for private justice to be ‘given a decent chance’ to flourish. We have also seen, in this chapter, the interaction of the systems of arbitration and mediation. Together the two strands of the court process and the alternative processes of dispute resolution have considerable strength. In the final chapter, we will consider the connections between the courts, arbitration, and the processes of mediation and settlement, drawing upon remarks communicated to the author by leading transnational commentators.

98

The ‘Double Helix’ structure of DNA was discovered by Francis Crick and James Dewey Watson (Nobel Prize 1962); the latter is an Honorary Fellow of Clare College, Cambridge, where the author is a Fellow; and there is a sculpture of the Double Helix within the college’s grounds. 99 Allianz SpA etc v. West Tankers (C-185/07) [2009] 1 AC 1138; [2009] 1 All ER (Comm) 435; [2009] 1 Lloyd’s Rep 413; [2009] 1 CLC 96; [2009] ILPr 20; The Times, 13 February, 2009.

This is Blank Page Integra

vi

Chapter 11

Connections Between Courts, Arbitration, Mediation and Settlement: Transnational Observations

Contents 11.1 11.2 11.3 11.4 11.5 11.6 11.7 11.8 11.9 11.10 11.11 11.12 11.13

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . Courts and the Appointment of Arbitrators . . . . . . . . . . . . . Courts and Anti-suit Remedies to Support Arbitration Agreements . Courts and Protective Relief to Support Arbitration . . . . . . . . . Courts Providing Support for the Gathering of Evidence for Use in Arbitration . . . . . . . . . . . . . . . . . . . . . . . Recognition and Enforcement of Foreign Arbitral Awards Under the New York Convention (1958) . . . . . . . . . . . . . . . . . Effect of a National Court’s Annulment of a Domestic Arbitral Award Mediation Before Commencement of Arbitration . . . . . . . . . . Mediation When Arbitration is Pending . . . . . . . . . . . . . . . The Conservative View: Arbitrators Should Not Combine the Function of a Mediator . . . . . . . . . . . . . . . . . . . . . Parties Consenting to Arbitrators Acting Also as Mediators: The Transnational Rise of the Chameleon ‘Neutral’ . . . . . . . . . Institutional Support for Contractually Mandating Arbitrators to Facilitate Settlement . . . . . . . . . . . . . . . . . . . . . . Concluding Remarks . . . . . . . . . . . . . . . . . . . . . . .

. . . .

. . . .

249 251 251 253

. . 259 . . . .

. . . .

261 262 264 265

. . 265 . . 267 . . 271 . . 274

11.1 Introduction 11.01 This is a shifting and dynamic topic. Disputes can be adjudicated by courts, or resolved by arbitration, or they can be settled by mediation, or the parties can spontaneously reach unmediated agreements of settlement. In this sense this paper refers to the ‘four forms of civil justice’: courts, arbitration, mediation, and (unmediated) settlement. In lectures given in Pavia

N. Andrews, The Three Paths of Justice, Ius Gentium: Comparative Perspectives on Law and Justice 10, DOI 10.1007/978-94-007-2294-1_11, C Springer Science+Business Media B.V. 2012

249

250

11 Connections Between Courts, Arbitration, Mediation and . . .

(2009),1 Sao Paulo, and Curitiba (2010), I referred to ‘Civil Justice’s Double Helix’,2 that is, to the complex interaction, and mutual support, between the court system and the non-court system. The metaphor expresses the idea that one strand—consisting of ADR, including arbitration and mediation—and the other strand—the court process—are complementary and entwined. Together the two strands of the court process and the alternative processes of dispute resolution have considerable strength. The first part of this chapter (11.02–11.23) concerns connections between courts and arbitration. The English courts have shown considerable willingness to support and facilitate the process of commercial arbitration. The vitality of civil justice requires lawyers and policy-makers to strengthen and refine the two parts of this double helix. The saga of the West Tankers case (European Court of Justice, 2009)3 demonstrates the need for European authorities4 to appreciate the commercial need for private justice to be ‘given a decent chance’ to flourish. But, as we shall see, there are many other important points of contact between the courts and arbitration, including assistance in the appointment of arbitrators, provision of protective relief, supporting the gathering of evidence for use in the arbitral process, and the annulment or enforcement of arbitration awards. The second part of this chapter (11.24–11.51) is devoted to connections between arbitration and the processes of mediation and settlement. An interesting development, for which there is ample transnational evidence, but by no means unanimous support amongst leading jurisdictions, is the consensual appointment of an arbitrator who is simultaneously clothed to procure settlement by acting as

1

Published now as Neil Andrews, ‘The Modern Civil Process in England: Links between Private and Public Forms of Dispute Resolution,’ Zeitschrift für Zivilprozess International 14 (2009): 3–32 also translated as ‘La “Doppia Elica” della Giustizia Civile: I Legami tra Metodi Privati e Pubblici di Risoluzione delle Controversie’ in Rivista Trimetrale di Diritto e Procedura Civile (2010) 529–48 (I am grateful to Elisabetta Silvestri, Pavia, for this excellent translation). 2 The ‘Double Helix’ structure of DNA was discovered by Francis Crick and James Dewey Watson (Nobel Prize 1962); the latter is an Honorary Fellow of Clare College, Cambridge, where the author is a Fellow; and there is a sculpture of the Double Helix within the College’s grounds. 3 Allianz SpA etc v. West Tankers (C-185/07) [2009] 1 AC 1138; [2009] 1 All ER (Comm) 435; [2009] 1 Lloyd’s Rep 413; [2009] 1 CLC 96; [2009] ILPr 20; The Times, 13 February, 2009. 4 The position arising from the West Tankers case is currently under review by the European Commission: Green Paper on the Review of Council Regulation (EC) No 44/2001 on Jurisdiction and the Recognition and Enforcement of Judgments in Civil and Commercial Matters, Brussels, 21 April 2009, COM (2009) application of the Brussels Regulation) of how to remedy this apparent lacuna between what the ECJ has held and what is seen as practical necessity by the arbitration and legal community of the EU. Following a consultation process which is currently ongoing, the EU is expected to put forth a legislative solution that may provide an exception for arbitration from the Brussels Regulation. How this will actually work remains to be seen.

11.3

Courts and Anti-suit Remedies to Support Arbitration Agreements

251

a mediator. In this brief examination of these various connections, I have drawn upon comments collected for the Heidelberg conference on civil procedure (2011), organised by the International Association of Procedural Law.5 I am grateful to the national reporters (as mentioned in this text) for their detailed remarks on these connections.

11.2 Courts and the Appointment of Arbitrators 11.02 In the event of the parties not achieving a complete constitution of the tribunal (with or without the assistance of an arbitration chamber or institution), national courts are often empowered to cut the Gordian knot and make such an appointment themselves. Pereira and Talamini (Brazil), for example, provide details of the Brazilian statute relevant to this6 ; and Michele Lupoi and Caterina Arrigoni,7 as well as Elena Zucconi explain the Italian regime.8

11.3 Courts and Anti-suit Remedies to Support Arbitration Agreements 11.03 It must be admitted that on the topic of anti-suit relief the Common Law and civilian traditions are at odds. (On this topic, see also discussion at 10.16 ff). 11.04 Thus English law has employed anti-suit injunctions for many years, to the satisfaction of aggrieved parties to arbitration clauses. Canadian courts also grant anti-suit relief, as Nicholas Pengelley notes.9 In the House of Lords’ reference to the European Court of Justice, in Turner v. Grovit (2001),10 Lord Hobhouse trenchantly analysed the English courts’ power to grant an anti-suit injunction. In the West Tankers case, namely

5

The author is a general reporter on the topic of arbitration: International Association of Procedural Law, XV World Congress on Procedural Law (Heidelberg, July 2011). 6 Pereira and Talamini (Brazil): noting Art’s 7, 13(2), 16(2), Arbitration Act (Brazil). 7 Lupoi and Arrigoni (Italy): noting Art’s 810, 814, 815, of the Italian arbitration legislation. 8 Zucconi (Brazil): ‘The choice is generally left to the parties, but it is possible to ask for judicial support when: the parties have provided for an even number of arbitrators; the parties have not established or have not agreed upon the appointment procedures; or a party does not appoint her arbitrator in an established time-limit. Judicial support is also established when it is necessary to replace an arbitrator, only if the parties, or the third appointing party, have not provided; or if the arbitral agreement does not rule the case.’ 9 N Pengelley (Canada): (citing case law). 10 [2001] UKHL 65; [2002] 1 WLR 107.

252

11 Connections Between Courts, Arbitration, Mediation and . . .

Allianz SpA etc v. West Tankers, ‘The Front Comor’ (2009),11 the European Court of Justice held that an order requiring a party to desist from bringing or pursuing civil proceedings in another Member State’s court (within the European Union) runs counter to the principle of ‘mutual trust’. According to that principle, the EU Member State court seised with the substantive matter (in a civil or commercial matter falling within the Jurisdiction Regulation) must itself decide whether there is a valid arbitration clause covering the relevant dispute. If so, that court will decline jurisdiction (the case itself involves commencement of litigation in Italy, on which Luca Passanante’s summary of Italian practice is helpful).12 The matter can then proceed by arbitration. At the time of writing (April 2011), the European legislature’s response13 to the Allianz SpA etc v. West Tankers, ‘The Front Comor’ (2009)14 problem has yet to be finalised (and is subject to national consultation).

11

Allianz SpA etc v. West Tankers, ‘The Front Comor’ (C-185/07) [2009] 1 AC 1138; [2009] 1 All ER (Comm) 435; [2009] 1 Lloyd’s Rep 413; [2009] 1 CLC 96; [2009] ILPr 20; The Times, 13 February, 2009; noted E Peel (2009) 125 Law Quarterly Review 365; H. Seriki, ‘Declaratory Relief and Arbitration: The Aftermath of The Front Comor,‘ JBL 7 (2010): 541–55; H. Seriki, ‘Anti-suit Injunctions, Arbitration and the ECJ: An Approach Too Far?’ JBL 7 (2010): 24; Peter Schlosser, ‘Europe—Is It Time to Reconsider the Arbitration Exception from the Brussels Regulation?’ Int ALR (2009): 45; Alexis Mourre and Alexandre Vagenheim, ‘The Arbitration Exclusion in Regulation 44/2001 After West Tankers,’ Int ALR (2009): 75; Philip Clifford and Oliver Browne, ‘Lost at Sea or a Storm in a Tea Cup? Anti-suit Injunctions After West Tankers,’ Int ALR (2009): 19; Andrew Pullen, ‘The Future of International Arbitration in Europe: West Tankers and the EU Green Paper,’ Int ALR (2009): 56. 12 Luca Passanante (Italy): ‘A party bound by an arbitration agreement cannot commence a Court proceeding to enforce the rights deferred to arbitrators. If the party does so, notwithstanding the arbitration clause, the defendant must raise the issue (exceptio compromissi) in the first pleading; if the defendant does not do that, the Court’s jurisdiction cannot be challenged anymore. If the issue is raised promptly, the judge will investigate the validity of the arbitration agreement, and, if he thinks that the agreement is valid, will decline his jurisdiction and will normally order the losing party to pay the costs to the other party. This is the only sanction for the party that starts an illegitimate court proceeding brought in violation of an agreement to conduct only an arbitration process. According to the Italian law, the fact that the same suit is pending before a public Court does not deprive the arbitrators of jurisdiction, either on the basis of an arbitration clause already existent or on the basis of an arbitration agreement entered into by the parties after the birth of the dispute.’ 13 The position arising from the West Tankers case is currently under review by the European Commission: The EU Commission’s Proposal for a Regulation of the European Parliament and of the Council on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters Brussels 14/12/2010 COM (2010) 748 Final 2010/0383 (COD). 14 Allianz SpA etc v. West Tankers, ‘The Front Comor’ (C-185/07) [2009] 1 AC 1138; [2009] 1 All ER (Comm) 435; [2009] 1 Lloyd’s Rep 413; [2009] 1 CLC 96; [2009] ILPr 20; The Times, 13 February, 2009; noted E Peel (2009) 125 Law Quarterly Review 365; H. Seriki, Declaratory Relief and Arbitration: The Aftermath of “The Front Comor”—; H. Seriki, ‘Anti-suit Injunctions, Arbitration and the ECJ: An Approach Too Far?’; Peter Schlosser, ‘Europe—Is it Time to Reconsider the Arbitration Exception from the Brussels

11.4 Courts and Protective Relief to Support Arbitration

253

11.05 There is an especially categorical rejection of anti-suit relief expressed by the Greek commentators.15 Françoise Vidts and Didier Matray (Belgium) and Roman Khodykin (Russia)16 also report the absence of such relief. But in Austria, Christian Koller reports that there is no clear authority whether anti-suit relief is available.17

11.4 Courts and Protective Relief to Support Arbitration 11.06 (On this topic, see also discussion at 10.26). Protective relief is examined in the literature on both commercial arbitration18 and comparative procedure.19 Such measures (sometimes described as

Regulation?’; Alexis Mourre and Alexandre Vagenheim, ‘The Arbitration Exclusion in Regulation 44/2001 After West Tankers’; Philip Clifford and Oliver Browne, ‘Lost at Sea or a Storm in a Tea Cup? Anti-suit Injunctions after West Tankers’; Andrew Pullen, ‘The Future of International Arbitration in Europe: West Tankers and the EU Green Paper’. 15 Calavros and Babiniotis (Greece): ‘Anti-suit injunctions violate the fundamental constitutional right of access to justice. The defendant in a complaint brought in clear violation of an arbitration agreement must raise the relevant defence before the state court which in turn will refer the dispute to arbitration.’ 16 Khodykin (Russia): ‘Russian law does not impose any specific sanctions for commencement of court proceedings in apparent breach of an arbitration agreement.’ 17 Koller (Austria): ‘The Austrian Supreme Court has not yet decided whether Austrian courts may issue anti-suit injunctions in support of arbitration.’ 18 International commercial arbitration, A. Redfern, ‘Interim Measures,’ in The Leading Arbitrators’ Guide to International Arbitration, eds. L.W. Newman and R.D. Hill (Bern: Juris, 2004), at 217 ff and F. Knoepfler, ‘Les Mésures Provisoires et l’Arbitrage’ in Médiation et Arbitrage: Alternative Dispute Resolution-Alternative a la justice ou justice alternative? Perspectives comparatives, eds. L. Cadiet, E. Jeuland, and T. Clay (Litec, Paris: Lexis Nexis, 2005); for the position in international commercial arbitration, A. Redfern, ‘Interim Measures,’ in L.W. Newman and R.D. Hill, eds., op. cit., 217–43; H. van Houtte, ‘Ten Reasons Against a Proposal for Ex Parte Interim Measures of Protection in Arbitration,’ Arbitration International 20 (2004): 85; A. Baykitch and J. Truong, ‘Innovations in Internaitonal Commercial Arbitration: Interim Measures a Way Forward or Back to the Future,’ The Arbitrator and Mediator 25 (2005): 95; and on the same context, M. Mustill and S. Boyd, Commercial Arbitration: Companion Volume (London: Butterworths, 2001), 314–6, 323–4, considering, respectively, ss 39, 44, Arbitration Act 1996 (England and Wales); see also on those provisions the Departmental Advisory Committee (on the Arbitration legislation), on clauses 39, 44 (the report is reproduced in M. Mustill and S. Boyd, op. cit.); the arbitral tribunal has power under s 39, 1996 Act, but only if the parties consent, to make a ‘provisional’ decision on the substance of the case, for example for an interim payment; the High Court has power under s 44, 1996 Act, to award (ex parte) freezing relief or a search order in support of pending or contemplated arbitration proceedings, if the matter is ‘urgent’; therefore, the arbitral tribunal itself lacks power to award ex parte freezing relief or search orders. 19 Neil Andrews, ‘Provisional and Protective Measures: Towards an Uniform Provisional Order,’ Uniform L Rev (Rev dr unif) VI (2001): 931; Stephen Goldstein, ‘Revisiting Preliminary Relief in Light of the American Law Institute/UNIDROIT Principles and the New Israeli Rules,’ in Studia in Honorem: Pelayia Yessiou-Faltsi, ed. P. Yessiou-Faltsi (Athens: Sakkoulas Publications, 2007), 273–96; N. Trocker, ‘Provisional Remedies in

254

11 Connections Between Courts, Arbitration, Mediation and . . .

‘provisional measures’, and sometimes as ‘interim’ orders) are recognised within the American Law Institute/UNIDROIT’s canon of ‘transnational’ principles of civil litigation.20 Here we are primarily concerned with freezing orders for the preservation of assets (but another common type concerns preliminary steps to preserve important evidence). 11.07 In general, the arbitral tribunal’s lack of imperium (coercive power) creates a gap which only the court’s full panoply of powers can fill. Of course, as Françoise Vidts and Didier Matray (Belgium) note, only the courts are available to provide protective relief if the arbitration has yet to commence. And in both Italian21 and Finnish law only the courts enjoy authority to grant protective relief. As Laura Ervo (Finland) explains: The general court of law is the only forum competent to make a decision on provisional measures. The arbitration tribunal court cannot even decide the cancellation of the precautionary measures.22 The arbitration court does not have jurisdiction even in the situations of a cancellation of a precautionary measure. If the main case is pending in the arbitration court, the same court has to make the decision on the cancellation, which decided the petition on the precautionary measure.23

11.08 Alan Uzelac (Croatia) suggests that even where arbitrators and courts have overlapping powers to issue preliminary forms of relief, the courts’ possession of coercive authority is likely to be the telling point when making such an application: ‘The request for preliminary measures at the competent court is not regarded to be incompatible with the arbitration agreement, and the right to turn to a court is not affected by the eventual possibility to ask the same preliminary measure from the arbitrators.’ 11.09 Rolf Stürner (Germany) offers some interesting remarks on the interplay of court authority and arbitral competence in this regard: The arbitration panel is authorized to adopt provisional measures to secure the subject matter of controversy or to preserve the status quo. If enforcement of this arbitral order is required, a party may apply to the state appeals court for an appropriate court order (see §§ 1041, 1062(1)(3) ZPO). But, nevertheless, before and after commencement of the arbitral proceedings, parties may also apply to state courts for provisional measures under national procedural law (§ 1033 ZPO), which are per se enforceable without a special application for executability. It is seriously disputed whether the arbitration agreement can validly

Transnational Litigation: The Issue of Jurisdiction: A Comparative Outline,’ Int’l Lis (2009): 48–56. 20 American Law Institute/UNIDROIT: Principles of Transnational Civil Procedure (Cambridge University Press, 2006), principle 8; on which Stephen Goldstein, ‘Revisiting Preliminary Relief in Light of the ALI/UNIDROIT Principles and the New Israeli Rules’, 273. 21 Article 818 of the Italian Code of Civil Procedure, as reported by Luca Radicati di Brozolo. 22 E. Havansi, Uusi turvaamistoimilainsäädäntö selityksineen (Helsinki: Lakimiesliiton Kustannus, 1993), 82, 84 and J. Lappalainen, Alioikeusuudistus (1987–1993; 3rd edn, Helsinki: Lakimiesliiton Kustannus, 1994), 279. 23 Havansi, Uusi turvaamistoimilainsäädäntö selityksineen, 156.

11.4 Courts and Protective Relief to Support Arbitration

255

exclude protective measures by state courts to be rendered before commencement of arbitral proceedings. Protective measures by state courts before commencement of arbitral proceedings are an essential element of the human right to a fair and efficient court procedure. Therefore, such anticipatory waivers should be considered void.

11.10 Amendments to the UNCITRAL Model Law (Chap. IVA added in 2006) are designed to enable arbitral tribunals to issue orders in this regard, including ex parte orders, known as ‘preliminary orders’. But it is unclear how effective this can be, for here the ultimate imperium of a court sanction is the only potent weapon. The Model Law contemplates that ‘interim measures’ issued by arbitration tribunals,24 which include measures designed to preserve assets,25 will be enforced by ‘the competent court’26 (although court-issued interim orders are also possible).27 However, ex parte or ‘surprise’ forms of protective relief, known as ‘preliminary orders’ within the UNCITRAL system,28 have a shelf-life of 20 days.29 Thereafter, they can be adopted30 or modified31 or terminated32 by the arbitration tribunal. If adopted, they will be clothed as an ‘interim measure’,33 although before such ratification occurs the respondent will have had an opportunity to challenge this.34 But the rules specifically state35 that ‘a preliminary order shall be binding on the parties but shall not be subject to enforcement by a court. . . Such a preliminary order does not constitute an award.’ It follows that, under the UNCITRAL Model Law scheme, as just explained, there is no obvious source of coercive support for ‘preliminary orders’ issued by arbitration tribunals before such orders are adopted by the arbitration tribunal as ‘interim measures’ and then enforced by a ‘competent court’. As mentioned, the arbitral tribunal’s lack of imperium creates a gap which only the courts can fill. 11.11 Spanish arbitrators are responsive to the demand for protective relief, as Carlos Esplugues notes: ‘Spanish arbitration practice shows a growing demand of provisional measures requested by the parties and a positive attitude of the arbitrator towards this demand.’ Roman Khodykin (Russia) also notes the willingness of Russian arbitral tribunals to issue protective relief.

24

UNCITRAL Model Law, Article 17(1). Ibid., Article 17(2)(c). 26 Ibid., Article 17 H and Article17 I. 27 Ibid., Article 17 J. 28 Ibid., Chap. IV, section 2, Articles 17 B and 17 C. 29 Ibid., Article 17 C(4). 30 Ibid., Articles C(4), 17 D. 31 Ibid., Articles 17 C(4),17 D. 32 Ibid,., Article 17 D. 33 Ibid., Article 17 C(4). 34 Ibid., Article 17 C(2). 35 Ibid., Article 17 C(5). 25

256

11 Connections Between Courts, Arbitration, Mediation and . . .

Under Article 17 of the ICAC (International Commercial Arbitration Court), arbitrators and arbitral tribunals are permitted to award preliminary relief in respect of the subject matter of a dispute in such form as they deem necessary. Arbitral tribunals may order, inter alia, that a party be prohibited from disposing of its assets or require a party to provide a bank guarantee. The ICAC can grant interim relief in the form of interim awards (§36 of the ICAC Rules). An arbitrator does not have to seek the assistance of a court to do so. Under the previous ICAC Rules not only the arbitral tribunal but also the President of the ICAC could order injunctive relief, meaning that measures of protection could be ordered before the arbitral tribunal was constituted. This is no longer the case.

11.12 Common Law courts (with the exception of the USA, see next paragraph) are experienced in awarding freezing relief, in particular, on an ex parte basis, and even before the main proceedings (here contemplated arbitral proceedings) have begun. For reasons of space, reference is made to the mature English principles governing this matter.36 Under English principles, the relief takes the form of an in personam order (i) primarily addressed to the respondent, but also (ii) indirectly constraining non-parties (notably the respondent’s banks, once notified) who must henceforth refrain from acting inconsistently with the order. In either situation (i) or (ii), failure to comply might place the culprit in ‘contempt of court’, and he might then be subject to punitive measures controlled by the (civil) court which issued the relevant order. However, under the Common Law model of freezing relief, the relevant assets remain unsecured, and are not (unlike the approach adopted by some non-Common Law systems) subject to prioritising attachment for the purpose of insolvency rules. By contrast, in Japan Hayakawa and Tamaruya note that protective relief in support of arbitration will operate in rem in accordance with the Germanic style of protection.37 In a London decision, Mobil Cerro Negro Ltd v. Petroleos De Venezuela SA (2008),38 Walker J emphasised that English 36 Neil Andrews, English Civil Procedure (New York: Oxford University Press, 2003), Chap. 17; Zuckerman on Civil Procedure (2nd edn, London, 2006) Chap. 9; I.S. Goldrein, ed., Commercial Litigation: Pre-emptive Remedies (regularly updated, London). 37 Hayakawa and Tamaruya (Japan): ‘Arbitration Law, art 15: It is not incompatible with an arbitration agreement for a party to request, before or during arbitral proceedings, from a court an interim measure of protection and for a court to grant such measure in respect of any civil dispute which is the subject of the arbitration agreement. . . This essentially follows the Model Law, art 9. The measures include an order for freezing assets, though it takes the form of in rem order attaching specific assets that belong to the respondent. Such court support is available whether the place of arbitration is in or outside the territory of Japan (Arbitration Law, art 3(2)). For example,. . . Namsung Shipyard Co Ltd v. Barracuda Co Ltd (9 February 1996) 1610 Hanrei-Jihou 106 (District Court for Asahikawa).’ 38 [2008] EWHC 532 (Comm); [2008] 2 All ER (Comm) 1034; [2008] 1 Lloyd’s Rep 684; [2008] 1 CLC 542; noted Adam Johnson Civil Justice Quarterly (2008): 433–44. In January 2008, the English court had granted Mobil Cerro Negro (Mobil) a temporary worldwide freezing order covering assets of up to $12 billion against the Venezuelan

11.4 Courts and Protective Relief to Support Arbitration

257

worldwide freezing orders39 should be made ‘only sparingly’. He also held that where such a far-reaching injunction is sought in support of arbitration, where the seat is outside England, relief will usually be confined to cases where there is ‘compelling evidence of serious international fraud.’40 11.13 However, the USA has refrained from adopting the ex parte freezing order in general commercial matters,41 except claims based upon equitable proprietary principles, such as a constructive trust, or even unjust enrichment42 (although state law might assist).43 national oil company, Petroleos de Venezuela SA (PDVSA). This order was in support of an International Chamber of Commerce arbitration between Mobil and PDVSA, the seat being New York, and the parties being Bahamian and Venezuelan. The governing law of the main contract was Venezuelan. PDVSA successfully applied to set aside the freezing order. Walker J found that there was no evidence that the respondent was likely to dissipate its assets. That was sufficient to resolve the matter. But he gave three additional reasons for setting aside the freezing injunction:38 (1) Mobil cannot surmount the. . . hurdle [in section 44(3) of the Arbitration Act 1996 (England and Wales) and] show that the case is one of ‘urgency’; (2) in the absence of any exceptional feature such as fraud, [Mobil] would have had to demonstrate a link with this jurisdiction in the form of substantial assets of PDV located here but ‘Mobil cannot demonstrate such a link’; (3) in the absence of any exceptional feature such as fraud, and in the absence of substantial assets of PDV located here, the fact that the seat of the arbitration is not here makes it inappropriate to grant an order under section 2(3) of the Arbitration Act 1996 (England and Wales). . . . 39 Neil Andrews, The Modern Civil Process (Tübingen, Germany: Mohr & Siebeck, 2008), 4.03 ff. 40 Ibid., at [5]. 41 Grupo Mexicano de Desarrolo SA v. Alliance Bond Fund Inc. 527 US 308; 119 S Ct 1961; 144 L Ed 2d 319 (1999) (a bare majority 5–4), followed and considered in, Crédit Agricole Indosuez v. Rossyskiy Kredit Bank 92 NY 2d 541; 729 NE 2d 683, New York Ct of Appeals (2000). 42 USA ex rel Rahman v. Oncology Associates 198 F 3d 489 (4th Cir 1999) (US Ct of Appeals): preliminary injunction granted to freeze assets; injunction justified both on general equitable grounds and under Fed Rules of Civ Proc, r 64 (see Rahman case, at 499); allegation of fraudulent billing by medical entities and doctors; claim for recovery, in equity and unjust enrichment, of $US 12 million; freezing injunction available, if ordinary debt claim inadequate, where claim sounds in equity (all unjust enrichment claims so characterized, para 6), especially for remedies of constructive trust or equitable lien; Decker v. Independence Shares Corp 311 US 282; 61 S Ct 229; 85 L Ed 189 (1940) applied (Rahman case, paras 1 ff, at 436 ff 9); freezing injunction especially justified if—as here—public interest strongly involved (Rahman case, para 3); Grupo Mexicano case distinguished as denying freezing injunction only where claim for debt, LA Collins, (1999) 115 Law Quarterly Review 601–4, has criticized the majority’s reasoning in the Grupo Mexicano case and its discussion of English freezing injunctions as superficial and outmoded; for a sophisticated critique of the Grupo Mexicano case, Stephen B. Burbank, ‘The Bitter with the Sweet: Tradition, History and Limitations on Federal Judicial Power—A Case Study,’ Notre Dame L Rev 75 (2000): 1291–1346 (at 1297–1306, summarizing the facts and judgments). (I am grateful to Linda Silberman, New York University, Law School, for references.) 43 On the legitimacy of state law in this context, see discussion in Rahman case, op. cit., at 499, explaining scope of Fed Rules of Civ Proc, r 64 (in Rahman case, as the second ground of decision, it was held that the Maryland state freezing jurisdiction applied).

258

11 Connections Between Courts, Arbitration, Mediation and . . .

11.14 Finally, an interesting variation on the question of protective relief is the interim injunction, or conservatory measure, sought (but not granted) in the ‘Channel Tunnel’ construction dispute, Channel Tunnel Group Ltd v. Balfour Beatty Construction Ltd (1993).44 In that case, the parties’ dispute-resolution clause included a prior stage of expert determination (9.04),45 and a second stage of arbitration. The salient portion of the dispute resolution clause (clause 67) provided: ‘. . . If any dispute or difference shall arise between the employer and the contractor during the progress of the works. . ., [it] shall at the instance of either the employer or the contractor in the first place be referred . . . to be settled by a panel of three persons (acting as independent experts but not as arbitrators). . . [If] either the employer or the contractor be dissatisfied with any unanimous decision of the [expert] panel. . . [that party] may . . . notify the other party . . . that the dispute or difference is to be referred to arbitration.’ The House of Lords held that it should grant a stay of the London High Court proceedings brought by the employer to seek an interim injunction to prevent the contractor from stopping work on the tunnel project. That stay was available both under the court’s inherent jurisdiction, and under a statutory power.46 Although the House of Lords held that the court’s general power to issue an injunction, including an interim injunction, was available in principle to support a foreign arbitration (the seat of the channel tunnel arbitration would be Brussels, Belgium), and although the consortium of contractors in this transaction were subject to the personal jurisdiction of the English court, Lord Mustill, giving the House of Lords’ main judgment, considered that the relief sought would trench upon the intended arbitral tribunal’s central question: whether there had been a breach of the construction contract and, if so, what remedy should be granted47 : ‘The [English courts have] stayed the action so that the [expert] panel and the arbitrators can decide whether to order a final mandatory injunction. If the [English] court now itself orders an interlocutory mandatory injunction, there will be very little left for the arbitrators to decide.’ Furthermore,

44

[1993] AC 334, 345–6, HL (clause 67). Pegram Shopfitters Ltd v. Tally Weijl [2003] EWCA Civ 1750; [2004] 1 WLR 2082, CA, especially at [1] to [10], on accelerated resolution of construction disputes (so-called ‘adjudication’) under Part II, Housing Grants, Construction and Regeneration Act 1996, and the Scheme for Construction Contracts (England and Wales) Regulations 1998 (SI 1998/649); J. Kendall, C. Freedman, and J. Farrell, Expert Determination (4th edn, London: Sweet & Maxwell, 2008); on mediation and experts, L. Blom-Cooper, ed., Experts in Civil Courts (Oxford: Oxford University Press, 2006), Chap. 10. 46 See now the even clearer statutory power to grant a stay in this context under s 9(1)(2), Arbitration Act 1996 (England and Wales), on which Mustill and Boyd, Commercial Arbitration; Companion Volume, 268 ff. 47 [1993] AC 334, 368, HL, per Lord Mustill. 45

11.5 Courts Providing Support for the Gathering of Evidence for Use . . .

259

if there were to be a judicial grant of interim relief, the more obviously suitable court to issue that relief would be Belgian, because the seat of the arbitration was Brussels48 : A Belgian court must surely be the natural court for the source of interim relief. If the appellants wish the English court to prefer itself to this natural forum it is for them to show the reason why, in the same way as a plaintiff who wishes to pursue a substantive claim otherwise than in a more convenient foreign court. . . They have not done so. Apparently no application for interim relief has been made to the court in Brussels. . . [and] most remarkably, no evidence of Belgian law is before the court. If the appellants had wished to say that the Belgian court would have been unable or unwilling to grant relief, and that the English court is the only avenue of recourse, it was for them to prove it, and they have not done so.

However, Lord Mustill did acknowledge that the privatised dispute mechanism in this case did not appear likely to provide a swift and effective remedy for a short-term and urgent dispute. Even so, in the House of Lords’ opinion, as expressed by Lord Mustill, it would be wrong for the English courts in this case to override the parties’ choice of dispute-resolution49 : This conspicuously neutral, ‘anational’ and extra-judicial structure may well have been the right choice for the special needs of the Channel Tunnel venture. But whether it was right or wrong, it is the choice which the parties have made. The [employer] now regrets that choice. To push their claim for mandatory relief through the mechanisms of clause 67 is too slow and cumbersome to suit their purpose, and they now wish to obtain far reaching relief through the judicial means which they have been so scrupulous to exclude. Notwithstanding that the [English] court can and should in the right case provide reinforcement for the arbitral process by granting interim relief I am quite satisfied that this is not such a case, and that to order an injunction here would be to act contrary both to the general tenor of the construction contract and to the spirit of international arbitration.

11.5 Courts Providing Support for the Gathering of Evidence for Use in Arbitration 11.15 A system of enlightened judicial support seems to prevail in most jurisdictions. For example, Bart Groen comments on the position in the Netherlands: ‘If a witness refuses to appear before the arbitral tribunal, arbitrators can grant the party concerned the right to ask the district court to hear the unwilling witness. Any party can ask the President of the district court to order the other party to produce documents. . . Whether any such request is granted by the President is another matter.’

48 49

Ibid. Ibid.

260

11 Connections Between Courts, Arbitration, Mediation and . . .

11.16 Viktória Harsági (Hungary) makes similar observations concerning practice in Hungary: If conducting the taking of evidence before the arbitral tribunal is likely to entail considerable difficulties or disproportionately high additional costs, upon the request of the arbitral tribunal the local court shall give legal assistance by conducting the taking of evidence as well as by the application of the coercive means necessary for the taking of evidence conducted by the arbitral tribunal.

Luca Passanante (Italy) notes that the courts lack coercive powers in this respect: If conducting the taking of evidence before the arbitral tribunal is likely to entail considerable difficulties or disproportionately high additional costs, upon the request of the arbitral tribunal the local court shall give legal assistance by conducting the taking of evidence as well as by the application of the coercive means necessary for the taking of evidence conducted by the arbitral tribunal.

In the case of a person who fails to comply with a court order to give or produce evidence for use in arbitration, Rolf Stürner (Germany) draws attention to the possibility of the arbitral tribunal drawing adverse inferences, provided he is party to the relevant arbitration: an arbitral tribunal does not have the power to summon and compel the attendance of witnesses or parties or to enforce the production of documents or tangibles or the access to land. However, if an arbitral tribunal or a party to an arbitration proceeding wishes access to proof which is not voluntarily granted by witnesses or third persons, the tribunal or the party with the consent of the tribunal may apply to a state court for assistance in the taking of proof. The court is authorized to grant the assistance requested and to conduct, e.g., a hearing for the reception of proof at which the parties to the arbitration and the arbitrators may also participate and ask questions in the same manner as in a civil case. It should be noted, however, that the German Civil Procedure Code provides direct compulsion (fines, imprisonment) against third persons only, not against parties to litigation. A party’s refusal to cooperate is sanctioned by negative inferences according to which the not produced means of evidence or the party examination may have documented the facts as asserted by the evidence giving party. As a consequence, applications to state courts for compulsory measures against parties make no sense because the arbitral tribunal could draw negative inferences without the state court’s assistance.50

50

Stürner (Germany):

11.6 Recognition and Enforcement of Foreign Arbitral Awards Under . . .

261

11.6 Recognition and Enforcement of Foreign Arbitral Awards Under the New York Convention (1958)51 11.17 (On this topic, see also discussion at 10.28). The arbitral tribunal is not capable of administering coercive or physical assistance in securing enforcement of its awards. Instead the successful party must invoke the enforcement powers of the relevant judicial system, whether this be within the jurisdiction where the arbitration had its ‘seat’ or within a foreign jurisdiction. 11.18 National systems provide for the enforcement of domestic arbitration awards, but these details are too large and fragmentary to justify separate discussion here. And so attention is confined here to judicial recognition and enforcement of foreign arbitral awards under the New York Convention. 11.19 Foreign awards are enforceable in over 140 different countries in accordance with the New York Convention (1958). It is common to regard this instrument as one of the great success stories of modern arbitration. 11.20 For example, in Spain there is a smooth enforcement of foreign awards, as Carlos Esplugues reports.52 But, the UK Supreme Court in Dallah Real Estate & Tourism Holding Co v. Pakistan (2010)53 (see 10.29 ff for greater detail on the UK Supreme Court’s decision and the parallel

51

New York Convention (1958): The grounds for the refusal of recognition and enforcement of an arbitration award are as follows: (a) The parties to the arbitration agreement were under some incapacity or the said agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law of the country where the award was made (Article V.1(a)); (b) A party was not given proper notice of the appointment of the arbitrator or the arbitration proceedings or was otherwise unable to present its case (Article V.1(b)); (c) The award deals with issues not contemplated or not falling within the terms of the submission to arbitration or contains decisions on matters beyond the scope of the submission to arbitration (Article V.1(c)); (d) The composition of the arbitral authority or the arbitral procedure was not in accordance with the agreement of the parties or, failing such agreement, with the law of the country in which the arbitration took place (Article V.1(d)); or (e) The award has not yet become binding on the parties, or has been set aside or suspended by a competent authority of the country in which, or under the law of which, the award has been made (Article V.1(e)).

52

Esplugues (Spain): ‘The attitude maintained by Spanish Courts as regards foreign arbitration awards is very flexible and positive. Recognition is made in application of the New York Convention of 1958 and is granted in most of the cases requested.’ 53 [2010] UKSC 46; [2010] 3 WLR 1472.

262

11 Connections Between Courts, Arbitration, Mediation and . . .

French proceedings) held that a Paris award could not be recognised in England, under the New York Convention (1958), because the French arbitration tribunal had incorrectly determined that the Pakistan Government was a party to the relevant arbitration agreement. All three levels of the English courts in this litigation (the Commercial Court, Court of Appeal, and UK Supreme Court) held that the arbitration award was flawed because the tribunal had not applied French law to determine whether the Pakistan Government was in fact a party to the arbitration agreement (this being the applicable law to the construction of the arbitration agreement, in default of party choice of another system). But it is somewhat embarrassing that a French court (Paris Cour d’appel, 2011) has recently reached the opposite conclusion: that this award was satisfactory, according to French arbitration principles.54 The Dallah sage reveals that the New York Convention (1958) is not always the fast-route to cross-border enforcement of arbitral awards that enthusiasts for commercial arbitration had expected.

11.7 Effect of a National Court’s Annulment of a Domestic Arbitral Award 11.21 This topic has inspired a large literature, including the remarkable study by Emmanuel Gaillard, Legal Theory of International Arbitration (2010).55 Here it is enough to note what Alan Uzelac (Croatia) has referred to the ‘new fashion’ for some state courts to contemplate that a foreign award, even though annulled in the jurisdiction where the arbitration had its ‘seat’, might still be recognised or enforced in another jurisdiction. This possibility exists, according to the jurisprudence of certain national systems, but it is too early to declare that this is likely to become the predominant possibility amongst leading trading nations. Moreover, it should be noted that the New York Convention (1958)56 states that an enforcing court can choose not to recognise or enforce a foreign award if it has been annulled in the courts of the relevant ‘seat’. But this is not regarded as a mandatory ground for refusing to recognise or enforce such an award.

54

Gouvernement du Pakistan v. Société Dallah Real Estate & Tourism Holding Co, Cour d’appel de Paris, Pôle 1 – Chap. 1, no 09/28533 (17 February 2011) (www. practicallaw.com/8-505-0043). On which see both the next note and the comment by White & Case: http://www.whitecase.com/insight-03022011/ 55 (Martinus Nijhoff, Leiden, and Boston, 2010). 56 Article V (10(e)).

11.7 Effect of a National Court’s Annulment of a Domestic Arbitral Award

263

11.22 This topic was recently noted in extensive dicta of Lord Collins in the Dallah case (2010) (on which see discussion in the next subsection),57 noting French and Swiss approaches,58 and contrasting the American approach.59 Christian Koller (Austria) notes that the Austrian Supreme Court has adopted this approach, but in a case not falling within the New York Convention (1958).60 11.23 However, Rolf Stürner (Germany) indicates that this would not be possible in Germany, where the fate of the foreign award would be conclusively determined if it had been annulled by the courts of the relevant ‘seat’: In case of judicial revocation of an arbitral award in the country of its origin, the affected party may apply for revocation of a German decision of executability (§ 1061(§) ZPO) which was rendered in the meantime. Consequently, a revoked foreign arbitral award cannot be acknowledged and executed in Germany, even if the deciding German court does not share the foreign courts point of view regarding the grounds for revocation and non-recognition.

The same is true of Croatia, according to Alan Uzelac. 57

[2010] UKSC 46; [2010] 3 WLR 1472, at [129] and [130]. per Lord Collins, in the Dallah case, [2010] UKSC 46; [2010] 3 WLR 1472: ‘In France the leading decisions are Pabalk Ticaret Sirketi v. Norsolor, Cour de cassation, 9 October 1984, 1985 Rev Crit 431; Hilmarton Ltd v. OTV, Cour de cassation, 23 March 1994 (1995) 20 Yb Comm Arb 663, in which a Swiss award was enforced in France even though it had been set aside in Switzerland: ‘. . . the award rendered in Switzerland is an international award which is not integrated in the legal system of that State, so that it remains in existence even if set aside . . .’ (at p. 665); République arabe d’Egypte v. Chromalloy Aero Services, Paris Cour d’appel, 14 January 1997 (1997) 22 Yb Comm Arb 691. Thus in Soc PT Putrabali Adyamulia v. Soc Rena Holding, Cour de cassation, 29 June 2007 (2007) 32 Yb Comm Arb 299, an award in an arbitration in England which had been set aside by the English court (see PT Putrabali Adyamulia v. Soc Est Epices [2003] 2 Lloyd’s Rep 700) was enforced in France, on the basis that the award was an international award which did not form part of any national legal order. . .: see Born, International Commercial Arbitration (2009), 2677–80; E. Gaillard, ‘Enforcement of Awards Set Aside in the Country of Origin,’ ICSID Rev 14 (1999): 16; and Yukos Capital SARL v. OAO Rosneft, 28 April 2009, Case No 200.005.269/01 Amsterdam Gerechtshof.’ 59 per Lord Collins, in the Dallah case, ibid.: ‘In the United States the courts have refused to enforce awards which have been set aside in the State in which the award was made, on the basis that the award does not exist to be enforced if it has been lawfully set aside by a competent authority in that State: Baker Marine (Nigeria) Ltd v. Chevron (Nigeria) Ltd, 191 F 3d 194 (2d Cir 1999); TermoRio SA ESP v. Electranta SP, 487 F 3d 928 (DC Cir 2007). But an Egyptian award which had been set aside by the Egyptian court was enforced because the parties had agreed that the award would not be the subject of recourse to the local courts: Chromalloy Aeroservices v. Arab Republic of Egypt, 939 F Supp 907 (DDC 1996). That decision was based both on the discretion in the New York Convention, article V(1) and on the power under article VII(1) (see Karaha Bodas Co v. Perusahaan Pertambangan Minyak Dan Gas Bumi Negara, 335 F 3d 357, 367 (5th Cir 2003)) and whether it was correctly decided was left open in TermoRio SA ESP v. Electranta SP , ante, at p. 937.’ 60 Koller (Austria): noting OGH 3 Ob 117/93 and 3 Ob 115/95, YB Comm Arb 1999, 919. 58

264

11 Connections Between Courts, Arbitration, Mediation and . . .

11.8 Mediation Before Commencement of Arbitration 11.24 It has become common for a multi-tier dispute resolution clause to provide that mediation should be attempted before proceeding to arbitration or court litigation.61 The leading English decision concerning mediation clauses is Cable & Wireless v. IBM United Kingdom Ltd (2002), on which 9.23.62 This case concerned the grant of a stay when London High Court proceedings were commenced prematurely. That commencement of court proceedings involved breach of a multi-level dispute clause, requiring the parties first to engage in mediation. It would appear that a similar response—an arbitral stay of arbitration proceedings—would be adopted where the premature activity was unilateral commencement of arbitration proceedings in breach of a multi-level dispute clause, requiring the parties first to engage in mediation. It is also possible that the English courts would be prepared to grant anti-suit injunctions to restrain parties from commencing or continuing foreign (or perhaps English) arbitration if this were a violation of such a clause. 11.25 Michele Lupoi and Caterina Arrigoni (Italy) consider the possibility that sometimes commencement of arbitration might be regarded as premature by reason of a recent statute. They note that Italian law renders mediation a mandatory prior stage in respect of certain categories of dispute: In 2010, decreto legislativo n. 28 introduced a comprehensive legislation on mediation. In particular, according to art. 4, from March 2011, before starting judicial proceedings in several matters (e.g. lease contract, real property, wills and succession, medical liability, libel. . .), mediation must mandatorily be attempted. If such attempt is not performed, the court will adjourn the case and remand the parties to mediation. Apparently this also applies vis à vis arbitration concerning the same types of subject matter. Article 5, para. 5, moreover, expressly states that, when the parties have contractually agreed on mediation before litigation, the arbitrators have to remand the parties to mediation if such attempt has not been performed beforehand.

61

D. Joseph, Jurisdiction and Arbitration Agreements and their Enforcement (2nd edn, London: Sweet & Maxwell, 2010), Part III; K. Mackie, D. Miles, W. Marsh, and T. Allen, The ADR Practice Guide (London: Sweet and Maxwell, 2007) Chap. 9; see also Centre for Effective Dispute Resolution at: www.cedr.co.uk/library/documents/ contract_clauses.pdf; D. Spencer and M. Brogan, Mediation: Law and Practice (Cambridge: Cambridge University Press, 2006), Chap. 12 for Australian material. The School of International Arbitration, Queen Mary, University of London, report (2005), available on-line at: http://www.pwc.com/Extweb/pwcpublications.nsf/docid/ 0B3FD76A8551573E85257168005122C8. 62 [2002] 2 All ER (Comm) 1041, Colman J.

11.10 The Conservative View: Arbitrators Should Not Combine . . .

265

11.9 Mediation When Arbitration is Pending 11.26 David Steward (Ince & Co, London) reports: ‘In our experience, it is not inconvenient to conduct a mediation [by a mediator appointed separately from the arbitrator] while an arbitration is pending, just as in court proceedings. The mediation is often short (a day or two), and need not significantly disrupt the conduct of the arbitration.’ 11.27 There is also experience in London of use of mediation as a possible solution to the common problem of jurisdictional wrangling, arising from disputed arbitration clauses and complex national judicial litigation aimed at determining the validity or scope of such clauses, or challenging the assertion of arbitrators of jurisdiction.63

11.10 The Conservative View: Arbitrators Should Not Combine the Function of a Mediator 11.28 Some commentators consider that it is confusing and undesirable for the arbitration tribunal itself to engage in mediation. Sir Elihu Lauterpacht QC (London) puts the matter pithily: ‘there is a grave danger that if an arbitrator acts like a mediator and the mediation fails that the arbitrator’s final decision may be adversely influenced.’ 11.29 However, as we shall see at 11.36 ff, some national commentators report flexible arrangements permitting an arbitrator to conduct mediation, failing which, the arbitration will continue: but this requires clear party consent, and other appropriate safeguards. 11.30 Hogan Lovells (London) suggest that it is often unsafe to require them to conduct mediation as a preliminary phase. This is because arbitrators are required to act as final decision-makers: an arbitrator has a duty to remain independent and impartial which may be compromised by his involvement in a settlement agreement. In many jurisdictions arbitrators will not attempt to act or play the role of mediator since this may create the appearance, valid or not, that the arbitrator is no longer impartial and independent. David Steward (Ince & Co, London) agrees, and adds: ‘If the arbitrator were to stray into the arena of settlement, he would risk giving the appearance of partiality.’ Art Hinshaw (USA) also concurs. He suggests that ‘proposing settlements for the parties is. . . dicey, not only because of issues relating to role-confusion, but because of the signals that such proposals send to the parties.’ 11.31 In addition, Renato Nazzini (England and Italy) makes the practical point: As far as I know, it is now generally recognized that it would be improper for a mediator to act as arbitrator and vice-versa. Obviously, 63

C v. RHL [2005] EWHC 873 (Comm), Colman J.

266

11 Connections Between Courts, Arbitration, Mediation and . . .

if the parties consent, the problem in principle goes away but, in reality, the parties would not be as candid as they should in the mediation knowing that the mediator would/could then decide the dispute. I would refuse to perform both roles, if asked. 11.32 Furthermore, individual arbitrators are not necessarily wellsuited to change role and become mediators: a competent arbitrator may not always be a competent mediator. . . an arbitrator may not have the suitable skills to enable the parties to reach an agreement, as the goal of arbitration is to get results rather than to bring about a settlement. Even the making by arbitrators of strong settlement suggestions might place an arbitrator in hot water, according to Natalie Moore (London): ‘if they were to start making settlement suggestions, they might even get into trouble with the parties—that is not their role.’ 11.33 As for civil law systems, Alan Uzelac (Croatia) suggests that mediation and arbitration are ‘separate worlds’, despite attempts to promote ‘med-arb’ clauses. He adds the telling remark: ‘early settlements may impede arbitrators from earning their full fees, which might urge some of them to think about the assistance in settlements as a self-destructive action.’ Christian Koller also notes that Austrian law is disinclined to permit a mediator to act as arbitrator within the same dispute.64 11.34 A similar bifurcation of the functions of mediators and arbitrators emerges from comments made by Cahali, Amaral, Wambier (Brazil).65 However, Claudia Perri (Brazil) hints at greater flexibility if the parties so choose, although she admits that the main arbitration institutions adhere to a traditional separation between mediation and arbitration.66

64

Koller (Austria): ‘s 16(1) of the Austrian Mediation Act (Zivilrechts-Mediations-Gesetz, BGBl I 29/2003) provides that the mediator of a conflict cannot become the decisionmaking body in that very conflict and vice versa. It is argued in legal literature that s 16(1) is non-mandatory and therefore the parties may derogate from it. Additionally, the arbitrator that previously acted as a mediator would have to disclose any circumstances that give rise to justifiable doubts as to his or her impartiality or independence. In such cases the parties may, however, waive their right to challenge an arbitrator (for a detailed analysis see M. Pitkowitz and M.-T. Richter, ‘May a Neutral Third Person Serve as Arbitrator and Mediator in the Same Dispute?’ German Arbitration Journal (2009): 228; A. Petsche and M. Platte, The Arbitrator as Dispute Settlement Facilitator (Austrian Arbitration Yearbook, 2007), 87). Provided that the parties’ right to due process (including the arbitrator’s impartiality and independence) is guaranteed, Austrian law does not specifically restrict the arbitrator’s right to encourage settlements between the parties.’ 65 Cahali, Amaral, Wambier (Brazil): ‘In the Arbitration Act, there is an express recommendation to the arbitrator (or arbitration tribunal) to attempt conciliation. However, the development of mediation (as opposed to the conciliation overseen directly by the arbitrator) is carried out independently, in separate proceedings, and handled by a mediator, not by an arbitrator.’ 66 Perri (Brazil): ‘there are certain rules of arbitration institutions expressly establishing that, unless otherwise provided by the parties, the mediator or conciliator acting in the case cannot be appointed as an arbitrator because, during the mediation or conciliation

11.11 Parties Consenting to Arbitrators Acting Also as Mediators: The . . .

267

11.35 In Hungary Viktória Harsági reports that mediators and arbitrators are regarded as engaged in separate activities, but institutional rules can lead to appointment of those who are customarily engaged as arbitrators to act as mediators, on the understanding that this neutral will not combine the functions of mediator and arbitrator.67 The versatile neutral is not a peculiarity of Hungary. No confusion will result if it is clear that the neutral is performing as mediator or as arbitrator, and not simultaneously juggling these two roles.

11.11 Parties Consenting to Arbitrators Acting Also as Mediators: The Transnational Rise of the Chameleon ‘Neutral’ 11.36 Amongst the Common Law jurisdictions, Australia (specifically New South Wales) has embraced the chameleon mediator-arbitrator. Andrew Cannon (Australia) reports that the New South Wales legislation permits an arbitrator to act first as a mediator and then (if necessary) to arbitrate the dispute.68 He explains69 : The process typically commences as an arbitration (so that there is a dispute that can result in an enforceable arbitration award), but then proceeds by way of mediation. If that is unsuccessful then the mediator/arbitrator can then, if the parties consent in writing, move to arbitration. There are concerns that the hybrid process may constrain frankness and flexibility in the mediation phase and risk complaints of bias and lack of due process where private sessions occur in

process, one of the parties may allege that such professional tended to be in favour of the other party’s argumentation, thus lacking the impartiality required from arbitrators. Nevertheless, prohibiting a mediator or conciliator from acting as an arbitrator is not a general rule, as many times the mediator or conciliator may indeed be appointed as arbitrator in view of his personal abilities and the trust the parties may place on him.’ 67 Viktória Harsági (Hungary): ‘With regard to settlements, a new position has become outlined in professional legal literature, according to which “arbitral tribunals do not necessarily have to urge parties to strike a settlement concerning the dispute by all means. A settlement often carries with it the psychical disadvantage that both parties may feel they had to reduce their claims”. The Rules of Proceedings of the Arbitration Court attached to the Hungarian Chamber of Commerce and Industry provide a detailed regulation of the relationship between conciliation-mediation and arbitration proceedings. . . If the parties agree on the conciliation-mediation proceedings, the President of the Arbitration Court shall appoint a conciliator-mediator from the arbitrators listed in the roll of arbitrators. . . At the joint request of the parties, the President of the Arbitration Court shall appoint the conciliator-mediator as sole arbitrator. The sole arbitrator shall render an award containing the agreement reached and signed by the parties. [Rules of Proceedings, Article 52].’ 68 Cannon (Australia): noting s 27 D, Commercial Arbitration Act 2010 (NSW). 69 Cannon (Australia).

268

11 Connections Between Courts, Arbitration, Mediation and . . .

the mediation. However, the requirement of consent before a shift to arbitration and a requirement that the arbitrator then disclose relevant material discussed in private session obviates some of these problems.

11.37 Herbert Smith (London) report a satisfactory instance70 of the parties themselves agreeing that the arbitrator should act as mediator. In the relevant case a settlement was achieved as a result, although caution should be exercised to ensure that this process of mediation does not ‘backfire’.71 11.38 More generally, the Centre for Effective Dispute Resolution (London) notes72 the perils of arbitrators conducting intra-arbitral mediation (‘med-arb’) and then returning to act in the same dispute as arbitrators. The arbitrator will have gained ex parte information during the unsuccessful mediation stage.73 Use of this, or perceived influence by it, might 70

Herbert Smith (London): ‘In our view, in appropriate cases, and provided it is done with the parties’ consent (and with sufficient safeguards in place to minimise the risk of any subsequent challenge to the arbitrators or the Final Award—for example by excluding caucusing from the process), it may be beneficial for the tribunal to facilitate a mediation or settlement process. For example, in one recent case (ICC arbitration with seat in Austria) the tribunal, following the exchange of written submissions, evidence and witness statements, proposed a meeting where they would give preliminary views on the merits of the dispute, and then seek to assist the parties in reaching a settlement. At the meeting, which lasted 2 days, the tribunal spent a number of hours going through their views of the merits of the case (including their views of the documentary evidence) in a fairly forthright manner, before facilitating a mediation process. Whilst this process did not lead to an immediate settlement and the proceedings continued, the reality check it provided to the parties was instrumental in the parties reaching a settlement within a matter of weeks and in advance of the substantive hearings.’ 71 Herbert Smith (London): ‘However, although the process worked well in the case described above, in our view it is only in rare cases that an arbitrator acting as mediator will work in such a positive manner. The roles of arbitrator (a finder of fact and decision maker) and mediator (facilitating the parties reaching their own settlement) are fundamentally different, and one individual (or tribunal) fulfilling both roles presents a number of practical problems, such as: (i) as a party you will be quite guarded in what you choose to say to the arbitrator(s) sitting in any mediation process, whereas with a mediator who will not be a finder of fact and decision maker there will be more confidence in telling the whole story in an informal way. (ii) From the arbitrator’s point of view, there is the danger that one party or another will lose confidence if, in the course of the mediation, the arbitrator expresses views one way or the other about the merits. In conclusion, we believe the role of a mediating arbitrator is something to be approached with caution; but can be a useful (if risky) technique in some cases.’ 72 ‘CEDR Commission on Settlement in International Arbitration’, Final Report, 2009, Appendix 2: http://www.cedr.com/about_us/arbitration_commission/Arbitration_ Commission_Doc_Final.pdf. 73 Ibid., Appendix 2, para 4.

11.11 Parties Consenting to Arbitrators Acting Also as Mediators: The . . .

269

jeopardise the fairness of the arbitration and the validity of the eventual award.74 CEDR suggest that this risk must be explained to the parties ex ante, and at the same stage there should be discussion of possible use of an external mediator.75 11.39 But if the Arbitration Tribunal, or one of its members, is allowed by the parties to engage in mediation, CEDR’s solution is that there must be full and informed party consent, in writing. This is necessary to counter the challenge that the decision made by the former mediator, now resuming his role of as arbitrator, might be influenced by information obtained ex parte during the unsuccessful mediation stage.76 11.40 However, Carsten Kern (Germany) notes that some German arbitral proceedings might proceed subject to an institutional mandate to promote and consider settlement.77 11.41 Rolf Stürner (Germany) endorses this. He develops this point in an interesting passage concerning German adjudication in general, both from the perspective of courts and arbitrators: In all German court proceedings the judge plays an important role in fostering resolutions by agreement. In this role the judge functions under the following statutory admonition: ‘The court shall be mindful at all stages of the proceedings of the potential for an agreed disposition of the legal dispute or individual issues thereof (§ 278(2) ZPO).’ Most German judges take their role as facilitators of settlements very seriously. German civil procedure has the character of a dialogue between court and parties. The judge’s duty to give hints and feedback on the legal and factual sufficiency of the parties’ position is at the core of the judicial function in civil litigation.

Stürner adds: The court has to put the open cards on the table. A court should not render a decision which is unexpected and surprising for the parties. According to the understanding of many legal cultures and especially the Anglo-American legal culture, there is a deep conflict of roles between mediation and decision-making. This is true for legal cultures which define the judge’s role as one of a passive umpire who renders a final decision without a preceding dialogue between court and parties. If, on the other hand, civil procedure is organized on the basis of a dialogue between court and parties to find a correct decision, there is no remarkable conflict of roles between mediation and decision-making, because both settlement and decision are the result of mutual discovery and clarification.

74

Ibid., at para 5. Ibid., at para 6. 76 Ibid., at para 7. 77 Kern (Germany): ‘The DIS Arbitration Rules 1998 expressly provide for a more proactive role of the arbitral tribunal in settling disputes: “Section 32 Settlement: At every stage of the proceedings, the arbitral tribunal should seek to encourage an amicable settlement of the dispute or of individual issues in dispute.” ’ 75

270

11 Connections Between Courts, Arbitration, Mediation and . . .

And he concludes: Against this background of mediatory traditions in German court procedures, it is clear that arbitrators in German arbitration proceedings should also foster resolutions by agreement, and in practice this is done regularly. Arbitrators prefer rights-based mediation. Without the consent of the parties they should not take into consideration facts which were not asserted by the parties as a basis of their claims and defences. Parties could challenge state court judges and arbitrators who try to pierce the parties’ veil with the intention to have a better knowledge of the dispute’s ‘real’ factual basis for the furtherance of an interest-based settlement. Mediatory attempts of arbitrators should be done in the presence of both or all parties without caucusing. This is necessary to avoid an infringement of the right to be heard which is an essential element of the principle of ‘audiatur et altera pars’. In practice, however, arbitrators sometimes negotiate settlement proposals in the absence of the opponent with the opponent’s consent. Caucusing is a questionable technique even in private out-of-court mediation and should not be practised in court proceedings or arbitration. Even if it is done with the parties’ consent, it may damage the parties’ confidence in the arbitrator’s neutrality in later phases of the arbitral proceedings.

11.42 Hayakawa and Tamaruya report that Japanese law permits an arbitrator to act as a mediator only if the parties have expressly consented to this,78 and Hiroshi Tega (Japan) endorses this.79 Laura Ervo (Finland) also states: ‘it is not the task of the arbitrators to push’ settlement proposals.’80 The same approach is reported in Italy by Radicati di Brozolo, and in Spain by Carlos Esplugues (Spain).81 As for the Netherlands, Bart Groen

78

Hayakawa and Tamaruya (Japan): ‘An arbitral tribunal may attempt to settle the dispute subject to the arbitral proceeding, but this is allowed only when the parties consent in writing (Arbitration Law, art 38(4)). . . . Today, certainly in arbitral proceedings involving foreign (non-Japanese) parties, there will be no settlement attempt in the absence of explicit party agreement. . . Rule 47 of the JCAA Commercial Arbitration Rules authorises the arbitral tribunal to settle the dispute in the arbitral proceedings, but only if all of the parties consent. Rule 8 of the JCAA International Commercial Mediation Rules provides for the possibility of a mediator acting as an arbitrator, but only upon party consent.’ 79 Tega (Japan): ‘attempts by arbitral tribunal at settlement may only be made where both parties consent to it (JAL art 38(4)).’ 80 Ervo (Finland), citing Risto Ovaska, Välimiesmenettely—kansallinen ja kansainvälinen riidanratkaisukeino (Helsinki: Edita, 2007), 170; Ervo comments: ‘Ovaska uses the word “push” in Finnish and it describes well the existing attitudes: mediation is not seen as arbitrator’s duty.’ 81 Esplugues (Spain): ‘Spain lacks a real culture of arbitration and negotiation. So far practice shows that some arbitrators at the beginning of the procedure ask parties to try to settle their dispute, but this does not mean that they actually act as mediators. In fact, in so far the parties want their disputes to be subjected to arbitration and they appoint an arbitrator (or arbitrators) in this regard this would prevent him/them to act as a mediator. This will finally be something for the parties to request the arbitrator to perform on mutual agreement basis and not for the arbitrator to be adopted on his own.’

11.12 Institutional Support for Contractually Mandating Arbitrators to . . .

271

reports that a fluid practice exists: arbitrators (with the parties’ consent) feel free to engage in settlement discussions.82 11.43 China appears to stand at the extreme end of this spectrum. Shukun Zhao notes that arbitrators are positively mandated by statute to promote conciliation.83 11.44 Beyond the heartland of commercial disputes, Alan Rycroft (South Africa) notes that there is an intertwining of mediation and arbitration within the practice of labour law dispute resolution.84 Elena Zucconi reports a similar approach in relation to Italian labour disputes.85

11.12 Institutional Support for Contractually Mandating Arbitrators to Facilitate Settlement 11.45 The Centre for Effective Dispute Resolution (London) has issued its CEDR Rules for the Facilitation of Settlement in International Arbitration.86 The same CEDR report collects other national arbitration 82

Groen (Netherlands): ‘Arbitrators may ask the parties if they are interested in a session where the parties try, with possible help of the arbitrators, to consider their differences in a more open way. A session whereby each party is invited to comment in a constructive way on the positions taken by the other party. Arbitrators often do suggest in such sessions, or after the hearing, when each of the parties have let off steam, settlement proposals. Such proposals can end up in an arbitral settlement award, signed by the parties and arbitrators.’ 83 Zhao (China): ‘In China, mediation is a way of solving the disputes even if in arbitration. The Arbitration Act of PRC prescribes the relations between arbitration and mediation. So, the arbitrators behave like mediators and propose their settlement. Article 51: Before giving an award, an arbitration tribunal may first attempt to conciliate. Where the parties apply for conciliation voluntarily, the arbitration tribunal shall conciliate. Where conciliation is unsuccessful, an award shall be made promptly. When a settlement agreement is reached by conciliation, the arbitration tribunal shall prepare the conciliation statement or the award on the basis of the results of the settlement agreement. A conciliation statement shall have the same legal force as that of an award. Article 52: A conciliation statement shall set forth the arbitration claims and the results of the agreement between the parties. The conciliation statement shall be signed by the arbitrators, sealed by the arbitration commission, and served on both parties. A conciliation statement shall have legal effect once signed and accepted by the parties. Where the parties fall back on their words before the conciliation statements is signed and accepted by them, an award shall be made by the arbitration tribunal promptly.’ 84

Rycroft (South Africa): ‘The Labour Relations Act 66 of 1995 encourages informality and recourse to conciliation even during the arbitration.’ 85 Zucconi (Italy): ‘a 2010 law on labour law (l. 183/2010) has established that a special commission can act as a mediator and, subsequently, as an arbitrator on the same issue.’ 86 http://www.cedr.com/about_us/arbitration_commission/Arbitration_Commission_ Doc_Final.pdf.

272

11 Connections Between Courts, Arbitration, Mediation and . . .

rules concerning arbitration and the promotion of settlement.87 For convenience, these are the main points within the CEDR Rules, First, such arrangements can be ‘incorporated on an ad hoc basis by agreement of the Parties, as part of an institution’s rules, or within a contract clause requiring arbitration.’88 Secondly, the arbitral tribunal (with the parties’ agreement) can then take ‘proactive steps’ to ‘assist the parties to reach a negotiated settlement’,89 such as (a) issuing preliminary views on issues and evidence; and making (b) preliminary non-binding findings of law, facts or issue; or (c) suggesting possible terms for further settlement negotiation; and (d) chairing of settlement meetings.90 The Tribunal is empowered to place the arbitration ‘on hold’ if mediation appears to be a possibility91 : the Arbitration Tribunal shall: insert a Mediation Window in the arbitral proceedings when requested to do so by all Parties in order to enable settlement discussions, through mediation or otherwise, to take place; adjourn the arbitral proceedings for a specified period so as to enable mediation to take place when requested to do so by a Party in circumstances where the contract in dispute contains a mandatory mediation provision which requires the Parties to mediate any relevant dispute, and the Parties have failed to do so before the time the issue is raised in the arbitration (provided that such failure was not due to the action or inaction of the Party requesting the adjournment). 11.46 Failure to ‘beat’ a settlement offer, or to comply with a contractual undertaking to mediate or negotiate, or an ‘unreasonable refusal’ to ‘make use of a Mediation Window’ can justify the Tribunal in making an appropriate ‘allocation’ of ‘the costs of the arbitration’.92

87

Ibid., Appendix 4, ‘Table of existing provisions on settlement in arbitration’. CEDR Rules for the Facilitation of Settlement in International Arbitration (‘CEDR Rules’), introduction, para 2. 89 Art 3(2), CEDR Rules. 90 Art 5(1), CEDR Rules: ‘the Arbitral Tribunal may, if it considers it helpful to do so, take one or more of the following steps to facilitate a settlement of part or all of the Parties’ dispute: 88

provide all Parties with the Arbitral Tribunal’s preliminary views on the issues in dispute in the arbitration and what the Arbitral Tribunal considers will be necessary in terms of evidence from each Party in order to prevail on those issues; provide all Parties with preliminary non-binding findings on law or fact on key issues in the arbitration; where requested by the parties in writing, offer suggested terms of settlement as a basis for further negotiation. where requested by the Parties’ in writing, chair one or more settlement meetings attended by representatives of the Parties at which possible terms of settlement may be negotiated.’ 91 92

Art 5(3), CEDR Rules. Art 6, CEDR Rules.

11.12 Institutional Support for Contractually Mandating Arbitrators to . . .

273

11.47 As for Settlement Negotiation Privilege, the Rules provide that93 : Nothing said or done by any Party or its counsel in the course of any settlement discussions, or in the course of any other steps taken by the Arbitral Tribunal to facilitate settlement, shall be used against a Party in the event that the arbitration resumes (save as regards the allocation of costs in accordance with Article 6 [costs provision, see text below] of these Rules).94 11.48 The Rules also state: The Arbitral Tribunal shall not take into account for the purpose of making an award, any substantive matters discussed in settlement meetings or communications, unless such matter has already been introduced in the arbitration. Further, the Arbitral Tribunal shall not judge the credibility of any witness on the basis of either the witness having been a party representative during settlement discussions, or anything said by or about, or attributed to, the witness during settlement discussions.95 11.49 The Tribunal’s impartiality is preserved96 : The Arbitral Tribunal shall not: meet with any Party without all other Parties being present; or obtain information from any Party which is not shared with the other Parties. 11.50 The Arbitral Tribunal must refrain from acting ‘knowingly’ so as to ‘make its award susceptible to a successful challenge’.97 11.51 Finally, a Tribunal (or Tribunal member’s) engagement in settlement efforts will not be used by a Party to seek disqualification of that Tribunal or individual, or as a basis for challenging any award.98 The Parties agree that the Arbitral Tribunal’s facilitation of settlement in accordance with these Rules will not be asserted by any Party as grounds for disqualifying the Arbitral Tribunal (or any member of it) or for challenging any award rendered by the Arbitral Tribunal. If real doubts emerge in this regard, the Arbitrator should resign99 : If, as a consequence of his or her involvement in the facilitation of settlement, any arbitrator develops doubts as to his or her ability to remain impartial or independent in the future course of the arbitration proceedings, that arbitrator shall resign.

93

Art 3(4), 3(5), CEDR Rules. Art 3(4), CEDR Rules. 95 Art 3(5), CEDR Rules. 96 Art 5(2), CEDR Rules. 97 Art 3(1), CEDR Rules. 98 Art 3(3), CEDR Rules. 99 Art 7, CEDR Rules. 94

274

11 Connections Between Courts, Arbitration, Mediation and . . .

11.13 Concluding Remarks 11.52 In this chapter we have seen abundant evidence of the global tendency to foster a convenient co-existence of the state administered court system and the processes of arbitration, mediation, and settlement. Perhaps the most interesting and challenging emerging trend—which is still controversial—is to permit the parties to agree to clothe an arbitrator as a mediator and as a neutral whose main task is to procedure settlement, or to suggest possible ways of achieving such an agreed accommodation, failing which the neutral will revert to his ‘default’ function as an arbitrator. 11.53 The next decade or so will reveal whether the chameleon mediator/arbitrator (a ‘one-stop’ private dispute-resolution neutral) can act in a consistently fair manner. As we have seen, there are sceptics. They advocate a conservative and traditional approach: that the traditional roles of mediator—the man of peace—and the decision-maker—iudex—are more safely performed by separate procedures and different persons.

Bibliography

Civil Litigation: Rules The Civil Procedure Rules (1998) (‘CPR’) are accessible at the following site: http:// www.dca.gov.uk/civil/procrules_fin/menus/rules.htm. Also at the same site: The Admiralty and Commercial Courts Guide (9th edn, 2011).

Architect’s Drawings of the CPR (1998) Woolf, Lord. Access to Justice: Interim Report. London: Stationery Office, June 1995. Woolf, Lord. Access to Justice: Final Report. London: Stationery Office, July 1996.

Detailed Bibliography: Commentaries Blackstone’s Civil Practice (Oxford University Press). Civil Procedure (the White Book) (London: Sweet & Maxwell, regular new editions). Civil Court Practice (the Green Book) (London: Lexis Nexis, regular new editions).

General Books Andrews, Neil. English Civil Procedure. Oxford: Oxford University Press, 2003. Related works by Andrews: 1. 2. 3. 4. 5. 6.

Principles of Civil Procedure. London: Sweet & Maxwell, 1994. (on the pre-CPR system). English Civil Justice and Remedies: Progress and Challenges: Nagoya Lectures. Tokyo: Shinzan Sha Publishers, 2007. The Modern Civil Process. Tübingen, Germany: Mohr Siebeck, 2008. (Translation: O Moderno Processo Civil. Sao Paulo, 2009). Contracts and English Dispute Resolution. Tokyo: Jigakusha Publishing, 2010. Contract Law. Cambridge University Press, 2011. The Future of Transnational Civil Litigation. London: British Institute of International and Comparative Law, 2004. (Re-printed 2006) (with M. Andenas and R. Nazzini, eds).

N. Andrews, The Three Paths of Justice, Ius Gentium: Comparative Perspectives on Law and Justice 10, DOI 10.1007/978-94-007-2294-1, C Springer Science+Business Media B.V. 2012

275

276 7.

Bibliography Arbitragem e Poder Publico. Brazil: Editora Saraiva, 2010. (‘Arbitration and Public Power’) (with Cesar Augusto Guimaraes and Eduardo Talamini, and others).

Sir Jacob, Jack. The Fabric of English Civil Justice. London, 1987. (a classic distillation of the pre-CPR (1998) system, its traditions and values, presented as the Hamlyn Lectures for 1986). Jolowicz, J.A. On Civil Procedure. Cambridge University Press, 2000. (comparative themes). Loughlin, P., and S. Gerlis. Civil Procedure (2nd edn). London: Cavendish, 2004. Sime, S. A Practical Approach to Civil Procedure (13th edn). Oxford University Press, 2010. Zuckerman on Civil Procedure (2nd edn). London, 2006. Zuckerman, A.A.S., and Ross Cranston, eds. The Reform of Civil Procedure. Oxford University Press, 1995.

Other Works American Law Institute and UNIDROIT’s Principles of Transnational Civil Procedure. Cambridge University Press, 2006.1 Andenas, M., N. Andrews, and R. Nazzini, eds. The Future of Transnational Commercial Litigation: English Responses to the ALI-UNIDROIT Draft Principles and Rules of Transnational Civil Procedure. London: British Institute of International and Comparative Law, 2003. (Re-printed 2006) (observations by English lawyers on the CPR in the transnational perspective). Andrews, N. Principles of Civil Procedure. London, 1994. (On the pre-CPR system, before 1999). Bingham, T. (Lord Bingham), The Business of Judging. Oxford University Press, 2000. (Essays on various aspects of procedure and legal development). Cranston, R. How Law Works: The Machinery and Impact of Civil Justice. Oxford University Press, 2006. Genn, Hazel. Judging Civil Justice. Cambridge University Press, 2009. (Hamlyn Lectures for 2008). Zander, M. The State of Justice. London, 2000. (Hamlyn Lecture for 1999). Zuckerman, A.A.S., ed. Civil Justice in Crisis: Comparative Perspectives of Civil Procedure. Oxford University Press, 1999. Zuckerman, A.A.S., and Ross Cranston, eds. The Reform of Civil Procedure. Oxford University Press, 1995.

1

The members of the drafting group were: Neil Andrews, University of Cambridge, UK; Professor Frédérique Ferrand, Lyon, France; Professor Pierre Lalive, formerly University of Geneva, sometime Goodhart Professor Legal Science, Cambridge, in practice as an international commercial arbitrator, Switzerland; Professor Masanori Kawano, Nagoya University, Japan; Mme Justice Aida Kemelmajer de Carlucci, Supreme Court, Mendoza, Argentina; Professor Geoffrey Hazard Jr, now Hastings College of the Law, San Francisco, USA; Professor Ronald Nhlapo, formerly of the Law Commission, South Africa; Professor Dr iur Rolf Stürner, University of Freiburg, Germany, and Judge at the Court of Appeals of the German State Baden-Württemberg, Karlsruhe; the assistant to these discussions was Antonio Gidi (USA and Brazil).

Bibliography

277

Civil Law Systems: Discussion in English Asser, D., et al. ‘A Summary of the Interim Report on Fundamental Review of the Dutch Law of Civil Procedure.’ Zeitschrift für Zivilprozess International 8(2003): 329–87. Cappelletti, M., ed. International Encyclopaedia of Comparative Law. The Hague, and Tübingen, 1976, vol. XVI ‘Civil Procedure’. Cappelletti, M., and J. Perillo. Civil Procedure in Italy. The Hague, 1995. Cappelletti, M. The Judicial Process in Comparative Perspective. Oxford University Press, 1989. Chase, Oscar, Helen Hershkoff, Linda Silberman, Vincenzo Varano, Yasuhei Taniguchi, and Adrian Zuckerman. Civil Procedure in Comparative Context. St Paul, MN, USA: Thomson West, 2007. Damaska, M. The Faces of Justice and State Authority: A Comparative Approach to the Legal Process. New Haven, 1986. de Cristofaro, Marco, and Nicolo Trocker, eds. Civil Justice in Italy. Tokyo: Jigakusha Publishing, 2010. (Nagoya University Comparative Study of Civil Justice vol. 8). Deguchi, M., and M. Storme, eds. The Reception and Transmission of Civil Procedural Law in the Global Society. Antwerp: Maklu, 2008. Esplugues-Mota, C., and S. Barona-Vilar, eds. Civil Justice in Spain. Tokyo: Jigakusha Publishing, 2009. (Nagoya University Comparative Study of Civil Justice vol. 3). Ervo, L., ed. Civil Justice in Finland. Tokyo: Jigakusha Publishing, 2009. (Nagoya University Comparative Study of Civil Justice vol. 2). Gottwald, P., ed. Litigation in England and Germany: Legal Professional Services, Key Features and Funding. Biedefeld: Gieseking, 2010. Hodges, C., S. Vogenauer, and M. Tulibacka, eds. The Costs and Funding of Civil Litigation: A Comparative Perspective. Oxford: Hart Publishing, 2010. Jolowicz, J.A. On Civil Procedure. Cambridge: Cambridge University Press, 2000. Kengyel, Miklós, and Viktória Harsági. Civil Justice in Hungary. Tokyo: Jigakusha Publishing, 2010. (Nagoya University Comparative Study of Civil Justice vol. 4). Maniotis, Dimitris, and Spyros Tsantinis. Civil Justice in Greece. Tokyo: Jigakusha Publishing, 2010. Maxeiner, J., G. Lee, and A. Weber. Failures of American Civil Justice in International Perspective. England: Cambridge University Press, 2011. Murray, P.L., and R. Stürner. German Civil Justice. Durham, NC: Carolina Academic Press, 2004. Pellegrini Grinover, A., and R. Calmon, eds. Direito Processual Comparado: XIII World Congress of Procedural Law, 201–42. Rio de Janeiro: Editora Forense, 2007. Rechberger, W., and T. Klicka, eds. Procedural Law on the Threshold of a New Millennium, XI. World Congress of Procedural Law. Vienna: Centre for Legal Competence, 2002. Schmidt, Stephanie. Civil Justice in France. Tokyo: Jigakusha Publishing, 2010. (Nagoya University Comparative Study of Civil Justice vol. 7). van Rhee, C.H. European Traditions in Civil Procedure. Oxford: Intersentia and Hart, 2005. van Rhee, C.H., ed. The Law’s Delays: Essays on Undue Delay in Civil Litigation. Antwerp and Oxford, 2007. van Rhee, C.H., and A. Uselac, eds. Enforcement and Enforceability. Antwerp and Oxford: Intersentia, 2010. Schmidt, S. Civil Justice in France. Tokyo: Jigakusha Publishing, 2010. (Edited by Marco de Cristofaro and Nicolo Trocker, Civil Justice in Italy. Tokyo: Jigakusha Publishing, 2010). Storme, M., ed. Approximation of Judiciary Law in the EU. Dordrecht: Kluwer, 1994.

278

Bibliography

Storme, M., ed. Procedural Laws in Europe—Towards Harmonization. Antwerpen/ Apeldoorn: Maklu, 2003. Storme, M., and B. Hess, eds. Discretionary Power of the Judge: Limits and Control. Dordrecht: Kluwer, 2003. Stürner, R., and M. Kawano, eds. Current Topics of International Litigation. Tübingen: Mohr Siebeck, 2009. Stürner, R., and M. Kawano, eds. International Contract Litigation, Arbitration and Judicial Responsibility in Transnational Disputes. Tübingen, Germany: Mohr Siebeck, 2011. Stürner, R., and M. Kawano, eds. Comparative Studies on Business Tort Litigation. Tübingen, Germany; Mohr Siebeck, 2011. Trocker, N., and V. Varano, eds. The Reforms of Civil Procedure in Comparative Perspective. Torino: Giappichelli Editore, 2005. Uzelac, A., and C.H. van Rhee, eds. Public and Private Justice. Antwerp and Oxford, 2007. Verkerk, R. Fact-Finding in Civil Litigation: A Comparative Perspective. Amsterdam and Oxford: Intersentia, 2010. Wagner, G. ‘Collective Redress—Categories of Loss and Legislative Options.’ Law Quarterly Review 127(2011): 55–82. Walker, J., and Oscar G. Chase, eds. Common Law, Civil Law, and the Future of Categories. Ontario: Lexis Nexis, 2010. Zuckerman, A.A.S., ed. Civil Justice in Crisis: Comparative Perspectives of Civil Procedure. Oxford University Press, 1999.

Transnational Principles American Law Institute/UNIDROIT’s Principles of Transnational Civil Procedure. Cambridge University Press, 2006 on this project, Kronke, H., ed. special issue of the Uniform Law Review (2002) vol. VI; Andenas, M., N. Andrews, and R. Nazzini, eds. The Future of Transnational Commercial Litigation: English responses to the ALI/UNIDROIT Draft Principles and Rules of Transnational Civil Procedure. London: British Institute of International and Comparative Law, 2006; Stürner, R. ‘The Principles of Transnational Civil Procedure. . .’ Rabels Zeitschrift 69(2005): 201–54 Storme, M., ed. Approximation of Judiciary Law in the European Union. Dordrecht: Kluwer, 1994.

Arbitration (The Literature Is Too Large to Be Exhaustively Listed) Literature on International Commercial Arbitration: Born, G. International Commercial Arbitration, 2 vols. Dordrecht: Kluwer, 2009. Born, G. International Arbitration: Cases and Materials. Aspen, 2010. Buhring-Uhle, C., L. Kirchhoff, and G. Scherer. Arbitration and Mediation in International Business (2nd edn). The Hague: Kluwer, 2006.

Bibliography

279

Collier, J.G., and V. Lowe. The Settlement of Disputes in International Law. Oxford University Press, 1999. Craig, W.L., W.W. Park, and J. Paulsson. International Chamber of Commerce Arbitration (3rd edn). Oceana/ICC Publishing, 2000. Fouchard, P., E. Gaillard, and B. Goldman. On International Commercial Arbitration, edited by E. Gaillard and J. Savage. The Hague: Kluwer, 1999. Gaillard, E. Legal Theory of International Arbitration. Leiden and Boston: Martinus Nijhoff, 2010. Greenberg, S., C. Kee, and J.R. Weeramantry. International Commercial Arbitration: An Asia-Pacific Perspective. Cambridge University Press, 2011. Lew, J.D.M., ed. Contemporary Problems in International Arbitration. The Hague: Kluwer, 1987. Lew, J., L. Mistelis, and S. Kröll. Comparative International Commercial Arbitration. The Hague: Kluwer, 2003. Newman, L.W., and R.D. Hill, eds. The Leading Arbitrators’ Guide to International Arbitration. Bern, Switzerland: Juris Publishers, 2004. Park, W.W. Arbitration of International Business Disputes: Studies in Law and Practice. Oxford University Press, 2006. Poudret, J.-F., and S. Besson. Comparative Law of International Arbitration (2nd edn). London: Sweet & Maxwell, 2007. Redfern, A., and M. Hunter. On International Arbitration, edited by N. Blackaby and C. Partasides (5th edn). Oxford: Oxford University Press, 2009. Schreuer, C. The ICSID Convention: A Commentary (2nd edn). Cambridge University Press, 2009. Weigand, F.-B. Practitioner’s Handbook on International Commercial Arbitration. Oxford University Press, 2010. See also the Montreal 2006 conference papers in International Arbitration 2006: Back to Basics (Dordrecht: Kluwer, 2007) (International Council for Commercial Arbitration Congress No. 13). English arbitration: Chitty on Contracts (30th edn), London: Sweet & Maxwell, 2010, Chap. 32. Dicey, Morris, and Collins on the Conflict of Laws (14th edn) London: Sweet & Maxwell, 2006, Chap. 16 (and referring to other literature). Joseph, D. Jurisdiction and Arbitration Agreements and their Enforcement (2nd edn). London: Sweet & Maxwell, 2010. Russell on Arbitration (23rd edn), 2007. Mustill, M., and S. Boyd. Commercial Arbitration: 2001 Companion Volume. London: Lexis Nexis, 2001. Tackaberry, J., and A. Marriott, eds. Bernstein’s Handbook of Arbitration and Dispute Resolution Practice (4th edn). London: Sweet & Maxwell, 2003. Merkin, R. Arbitration Law. London: Informa Business Publishing, 2006. Tweeddale, A., and K. Tweeddale. Arbitration of Commercial Disputes: International and English Law and Practice. Oxford University Press, 2005. Dicey, Morris, and Collins on the Conflict of Laws (14th edn), London: Sweet & Maxwell, 2006, Chap. 16 (and referring to other literature); Chitty on Contracts (30th edn), 2010, Chap. 32. Theory and fundamental analysis: Gaillard, E. Legal Theory of International Arbitration. Leiden and Boston: Martinus Nijhoff, 2010. Paulson, J. The Idea of Arbitration. Clarendon Law Series; Oxford University Press, 2010.

280

Bibliography

French arbitration law: Delvolvé, J.-L., G. Pointon, and J. Rouche, French Arbitration Law and Practice (2nd edn), Leiden: Kluwer, 2009.

Mediation Blake, S., J. Browne, and S. Sime. A Practical Approach to Alternative Dispute Resolution. Oxford University Press, 2011. Brown, H., and A. Marriott. ADR Principles and Practice (3rd edn), London, 2011. Centre for Effective Dispute Resolution at: www.cedr.co.uk/library/documents/contract_ clauses.pdf. Mackie, K., D. Miles, W. Marsh, and T. Allen. The ADR Practice Guide. London: Tottel Publishing, 2007. Spencer, D., and M. Brogan. Mediation: Law and Practice. Cambridge University Press, 2006.

Settlement Foskett, D. The Law and Practice of Compromise (7th edn). London: Sweet & Maxwell, 2010.

Leading Contributors to English Civil Justice

1. Tony Allen: After reading English, and then Law, at Pembroke College, Cambridge, he qualified as a solicitor. He was for over twenty-five years a senior litigation partner of Bunkers, an eight-partner firm of solicitors in Brighton and Hove. Tony joined CEDR (the Centre for Effective Dispute Resolution) in 2000. He is a well-known speaker and writer on mediation, and is co-author of K. Mackie, D. Miles, W. Marsh, and T. Allen, The ADR Practice Guide (London, 2007). He has loyally supported the teaching of civil procedure in Cambridge for many years. 2. Professor Mads Andenas: has taught at King’s College, London, the University of Leicester, and in Oslo. He was also Director of the British Institute of International and Comparative Law. Amongst his many publications, he was a co-editor of M. Andenas, N. Andrews, and R. Nazzini, eds., The Future of Transnational Commercial Litigation: English Responses to the ALI-UNIDROIT Draft Principles and Rules of Transnational Civil Procedure (BIICL, London, 2003, re-printed 2006). 3. Neil Andrews: Professor, Faculty of Law, Cambridge University (teaching member since 1983). Fellow of Clare College, Cambridge. Called to the English Bar, 1981. Bencher of Middle Temple, 2007. Member of the American Law Institute. Council Member of the International Association of Procedural Law. Former member of the Civil Justice Council (England), enforcement committee. He also gave advice to the Jackson Report on costs (2009–10). Has taught civil procedure in Cambridge since 1985 (inheriting Tony Jolowicz’s course). Main teaching interests: civil justice and procedure (including court litigation, mediation, and arbitration); and contract law (English and transnational). Main works are: English Civil Procedure (Oxford University Press, 2003); Principles of Civil Procedure (London: Sweet & Maxwell, 1994) (on the pre-CPR system); English Civil Justice and Remedies: Progress and Challenges: Nagoya Lectures (Tokyo: Shinzan Sha Publishers, 2007); The Modern Civil Process (Tübingen, Germany: Mohr Siebeck, 2008): translation:

281

282

Leading Contributors to English Civil Justice

O Moderno Processo Civil (Sao Paulo, 2009); Contracts and English Dispute Resolution (Tokyo: Jigakusha Publishing, 2010); Contract Law (Cambridge University Press, 2011); The Future of Transnational Civil Litigation (London: British Institute of International and Comparative Law, 2004; re-printed 2006) (with M. Andenas and R. Nazzini, eds); Arbitragem e Poder Publico (Brazil: Editora Saraiva, 2010) (‘Arbitration and Public Power’) (with Cesar Augusto Guimaraes and Eduardo Talamini, and others). Andrews collaborated with leading procedural jurists1 in producing the American Law Institute and UNIDROIT’s Transnational Principles of Civil Procedure (Cambridge University Press, 2006) (project active 2000 to 2006). Has also collaborated in the Nagoya/Freiburg comparative programme on civil justice, spear-headed by Masanori Kawano,2 and supported by Rolf Stürner.3 Andrews is also collaborating with Shimon Shetreet4 (Israel) on the Mount Scopus Judicial Independence project.5 4. George Applebey: Read Law at the University of Glasgow, and Tulane Law School, New Orleans. Long-standing contributor to civil procedure and contract law teaching at the University of Birmingham, and widely known as an international expert on civil justice, notably in the fields of small claims. Former assistant editor of the Civil Justice Quarterly. Has held visiting positions in three USA law schools. A former Assistant 1

The members of the drafting group are listed in footnote 122. Nagoya/Freiburg project on ‘A New Framework for Transnational Business Litigation’, a project led by Professor Masanori Kawano; the published works in this series (so far) are: R. Stürner and M. Kawano, eds., Current Topics of International Litigation (Tübingen: Mohr Siebeck, 2009); R. Stürner and M. Kawano, eds., International Contract Litigation, Arbitration and Judicial Responsibility in Transnational Disputes (Tübingen, Germany: Mohr Siebeck, 2011); R. Stürner and M. Kawano, eds., Comparative Studies on Business Tort Litigation (Tübingen, Germany: Mohr Siebeck, 2011); national studies: Neil Andrews, English Civil Justice and Remedies: Progress and Challenges: Nagoya Lectures (Tokyo: Shinzan Sha Publishers, 2007); Laura Ervo, ed., Civil Justice in Finland (Tokyo: Jigakusha Publishing, 2009); Carlos EsluguesMota and Silvia Barona-Vilar, eds., Civil Justice in Spain (Tokyo: Jigakusha Publishing, 2009); Miklós Kengyel and Viktória Harsági, Civil Justice in Hungary (Tokyo: Jigakusha Publishing, 2010); Neil Andrews, Contracts and English Dispute Resolution (Tokyo: Jigakusha Publishing, 2010); Dimitris Maniotis and Spyros Tsantinis, Civil Justice in Greece (Tokyo: Jigakusha Publishing, 2010); Stephanie Schmidt, Civil Justice in France (Tokyo; Jigakusha Publishing, 2010); Marco de Cristofaro and Nicolo Trocker, eds., Civil Justice in Italy (Tokyo: Jigakusha Publishing, 2010). 3 Peter Murray and Rolf Stürner, German Civil Justice (Durham, NC: Carolina Academic Press, 2004); ALI/UNIDROIT’s Principles of Transnational Civil Procedure (Cambridge: Cambridge University Press, 2006). 4 Mount Scopus International Standards of Judicial Independence. 5 Mount Scopus International Standards of Judicial Independence; The Culture of Judicial Independence: Conceptual Foundations and Practical Challenges (Shetreet and Forsyth eds), to be published 2011 by Martinus Nijhoff-Brill Publishers: http://www.brill.nl/default.aspx?partid=210%26;pid=43075. 2

Leading Contributors to English Civil Justice

5.

6.

7.

8.

6

283

Editor of Civil Justice Quarterly and was formerly Executive General Secretary of the International Association of Procedural Law. Lord Bingham of Cornhill, KG: (Thomas Bingham: 1933–2010). He read History at Balliol College, Oxford. Called to the Bar, 1959; appointed to the High Court, 1980; to the Court of Appeal, 1986; Master of the Rolls, 1992–6 (senior judge in civil matters within the Court of Appeal); Lord Chief Justice, 1996–2000 (most senior English judge); Senior Law Lord, 2000–2008 (presiding over the House of Lords, appellate committee). Renowned as a magisterial and pellucid judgment writer and as one of the most distinguished judges of the modern age. He illuminated many branches of the law, including civil procedure, where his notable judgments include: in Brown v. Stott (2001) (2.04); Abbey National Mortgages plc v. Key Surveyors Ltd (1995) (3.58); Customs & Excise Commissioners v. Barclays Bank plc (2006) (7.12); Callery v. Gray (Nos 1 and 2) (2002) (5.12). He also wrote the official report (the Bingham Inquiry, 3.35) concerning the collapse of the BCCI bank: Work of homage: M. Andenas and D. Fairgrieve, eds., Tom Bingham and the Transformation of the Law: A Liber Amicorum (Oxford, 2009)6 (notably B Rix, ‘Lord Bingham’s Contributions to Commercial Law’, at 665 ff); Lord Phillips, ibid., p. xlvii, rated him one of the three best advocates of his generation, the other two being Robert MacCrindle and Robert Alexander; and for a detailed ‘biographical sketch’, R. Cranston, ibid., pp. li to lxxii. Bingham’s extra-judicial writing includes: The Business of Judging (Oxford, 2000); The Rule of Law (London: Penguin Books, 2010). Sir Henry Brooke: Educated at Balliol College, Oxford (Classics). A former Lord Justice of Appeal (1996–2006); now an accredited mediator. An important influence upon the implementation of the Woolf reforms and the CPR system (introduced in 1999). Lord Clarke of Stone-cum-Ebony: He read Economics and then Law at King’s College, Cambridge. Judge of the High Court of Justice, QBD, 1993–98; Admiralty Judge, 1993–98; a Lord Justice of Appeal, 1998–2005; Master of the Rolls, 2005–09; Head of Civil Justice, 2005–09. He has taken a keen interest in civil justice, both lecturing and through the Civil Justice Council. His address on the BCCI case (3.11; 3.21; 3.35; 3.44), where he had struck out the case at first instance (but the House of Lords later re-instated the action) is wholly convincing: Sir Anthony Clarke MR, ‘The Supercase-Problems and Solutions’, 2007 Annual KPMG Forensic Lecture: available at http:// www.judiciary.gov.uk/docs/speeches/kpmg_speech.pdf. Lord Collins of Mapesbury, LLD, FBA (‘Lawrence Collins’): educated at Downing College, Cambridge; Honorary Fellow, Wolfson College,

Reviewed CJS Knight (2010) 126 Law Quarterly Review 148.

284

9.

10.

11.

12.

Leading Contributors to English Civil Justice

Cambridge; Member of the Institut de Droit International; the first solicitor to hold the highest judicial office as a Lord of Appeal in Ordinary; later a Justice of the Supreme Court; general editor of Dicey, Morris, and Collins on the Conflict of Laws (the leading work on private international law in England); a celebrated jurist of unusual range; he has been a leading practitioner (before joining the High Court bench, he had been a partner with a leading City of London law practice, Herbert Smith), author, editor, lecturer, and as a judge (High Court, Court of Appeal, House of Lords, and Supreme Court, retiring from the latter in 2011); in these various capacities, he has analysed and nurtured private international law, and indeed the science of dispute resolution more generally. Sir Ross Cranston, LLD: educated University of Queensland, Harvard University, and University of Oxford; formerly a professor of law in the University of London; now a High Court judge; a member of the Woolf inquiry (1994–1996) into access to justice; besides his academic expertise in commercial law, notably banking, he has written substantially on civil justice; notable publications are: A.A.S. Zuckerman and R. Cranston, eds., The Reform of Civil Procedure: Essays on ‘Access to Justice’ (Oxford University Press, 1995); How Law Works: The Machinery and Impact of Civil Justice (Oxford University Press, 2006); R. Cranston, ‘Complex Litigation: the Commercial Court,’ Civil Justice Quarterly 26 (2007): 190. Dr Carla Crifò: teaching member of the Law Faculty, University of Leicester; after graduating from the University of Rome, La Sapienza, she spent time at the Centre for the Study of Foreign and Comparative Law at UNIDROIT, in Rome. Her doctorate was on default judgment in England and contumacia in Italy. She is Assistant Editor and book reviews editor for the Civil Justice Quarterly (Sweet & Maxwell) and a member of the International Association of Procedural Law. Cross-Border Enforcement of Debts in the EU (London: Kluwer Law International, 2009), and many leading contributions to the periodical literature, including, ‘La riforma del processo civile in Inghilterra’ in Riv Trim Dir Proc Civ 2/2000, 511. Lord Denning of Whitchurch: (Alfred Thompson, ‘Tom’, Denning; 1899–1999): educated at Magdalen College, Oxford (Mathematics; then Law). In the field of civil procedure, his most notable achievements are the invention of the freezing injunction and civil search orders in, respectively, the Mareva and Anton Piller cases (decisions of the Court of Appeal). On these see N. Andrews, ‘Development in English Civil Procedure: How Far Can the English Courts Reform their Own Procedure?’ Zeitschrift für Zivilprozess International 2 (1997): 3–29. Dr Déirdre Dwyer: Former research fellow, Pembroke College, Oxford. An expert on experts: The Judicial assessment of Expert Evidence

Leading Contributors to English Civil Justice

285

(Cambridge University Press, 2008), and editor of an anniversary retrospective set of essays on the CPR system: D. Dwyer, The Civil Procedure Rules Ten Years on (Oxford University Press, 2009). 13. Dame Professor Hazel Genn: Dean of Laws and Professor of SocioLegal Studies in the Faculty of Laws at University College, London, where she is an honorary Fellow. She is a leading authority on civil justice and dispute resolution and has published widely in the field. In 2008 she delivered the Hamlyn Lectures on the subject of civil justice (published by Cambridge University Press, 2009, entitled Judging Civil Justice). Her research focuses on the experiences of citizens and businesses caught up in legal problems and the responsiveness of the justice system to their needs. Her original studies have had a major influence on policy makers around the world. In recognition of her work on civil justice, she was appointed DBE (Dame of the British Empire) in the Queen’s Birthday Honours List in 2006. In 2006 she was also appointed QC (honoris causa) and in 2008 elected an Honorary Master of the Bench of Gray’s Inn. Among her leading publications are: Hard Bargaining: Out of Court Settlement in Personal Injury Actions (1987); The Effectiveness of Representation at Tribunals (1989); Tribunals and Informal Justice (1992); Personal Injury Compensation: How Much is Enough? (1994); Survey of Litigation Costs for the Woolf Inquiry into Access to Justice (1996); Understanding Civil Justice (1997); Central London County Court Mediation Scheme. Evaluation Report (1998); Mediation in Action (1999); Paths to Justice: What People Do and Think About Going to Law (1999); (with A Paterson), Paths to Justice Scotland: What Scottish People Do and Think About going to Law (2001); CourtBased ADR Initiatives for Non-Family Civil Disputes. The Commercial Court and the Court Appeal (2002); Tribunals for Diverse Users (2006); Twisting Arms: Court Linked and Court Referred Mediation Under Judicial Pressure (2007); The Attractiveness of Senior Judicial Appointment to Highly Qualified Practitioners, Report to the Judicial Executive Board (December 2008); Judging Civil Justice (Cambridge University Press, 2009). 14. Professor Cyril Glasser, LLD: A solicitor, and visiting professor, University College, London. He is renowned as a leading commentator on civil justice. He has contributed to the development of civil aid, teaching, scholarship, research projects, and is a former Governor of the London School of Economics (where he was educated). He has been consulted on numerous reforms in this field. 15. Professor Christopher Hodges: Educated at New College, Oxford. Head of the CMS Research Programme on Civil Justice Systems, University of Oxford; after many years in practice as a solicitor in the City of London, during the last deacde he has enjoyed a second career as an academic commentator, specializing in the fields of product

286

Leading Contributors to English Civil Justice

liability law and civil justice, notably multi-party litigation. His major publications include: Multi-Party Actions (Oxford University Press, 2001); The Reform of Class and Representative Actions in European Legal System (Oxford: Hart, 2008); C. Hodges, S. Vogenauer, and M. Tulibacka, eds., The Costs and Funding of Civil Litigation: A Comparative Perspective (Hart Publishing, 2010). 16. Lord Hoffmann of Chedworth: (Leonard Hoffmann: born South Africa, 1934): educated at University of Cape Town; Queen’s College, Oxford; Gray’s Inn. Called to the (English) Bar, 1964. He had partly overlapping careers (Oxford to London train) as an academic and as a barrister. He was an Oxford law don (University College, Oxford, 1961–73), becoming Reader in Evidence. And he was a barrister, specialising in Chancery work, QC, 1977 (earlier in South Africa, 1958–60). Appointed to the High Court, 1985, to the Court of Appeal, 1992, and to the House of Lords, 1995, from which he retired in 2009, having for several decades been widely respected as an unusually brilliant legal mind. Notable contributions to civil procedure include: Taylor v. Serious Fraud Office (1999, HL) (1.36); the Morgan Grenfell case (2002) (2.11); Mercantile Group (Europe) AG v. Aiyele (1994, CA) (3.21); Arthur JS Hall v. Simons (2002, HL) (3.75); Callery v. Gray (Nos 1 and 2) (2004) (4.05); Arab Monetary Fund v. Hashim (No 5) (1992) (Ch D) (7.07); Re First Express Ltd (1991, Ch D) (7.09); Fiona Trust and Holding Corporation v. Privalov (2007, HL) (10.13); and Hoffmann, ‘Changing Perspectives on Civil Litigation,’ Modern Law Review 56 (1993): 297. 17. Senior Master Peter Hurst: the Senior Costs judge. He has written a major work on Costs (4th edition, London, 2007, 865 pp). Peter has generously supported the teaching of civil procedure in Cambridge for many years. He is recognized as a leading authority on all facets of costs and funding in civil matters. 18. Sir Jack Jacob, QC: (1908–2000): educated at the London School of Economics; University College, London; called to the Bar, Gray’s Inn. In the Dictionary of National Biography Michael Zander contributes this interesting cameo of Jacob’s early life, and of his family: ‘born on 5 June 1908 in Timtang Road, Shanghai, the third of ten children of Jacob Isaiah Jacob (1863–1935) and his wife, Aziza, née Abraham (1887–1976). His father, a Sephardic Jew, had moved from Baghdad to Shanghai to work as an accountant for the wealthy merchant family the Sassoons. He was educated at Shanghai Public School for Boys (1920–25) and emigrated to England at eighteen. From 1927 to 1930 he read for a law degree at London University—initially at the London School of Economics (LSE) and then, on getting a scholarship, at University College (UCL). He obtained first-class honours, and in 1930 was called to the bar at Gray’s Inn, which awarded him the Cecil peace prize and an Arden scholarship. Jacob married Rose

Leading Contributors to English Civil Justice

287

Mary Jenkins, née Samwell (1904–1995), a secretary, in the summer of 1940; they had two sons, both of whom had legal careers [Sir Robin Jacob, now a retired Lord Justice of Appeal, and Professor of Intellectual Property Law, University College, London; and Joe Jacob, formerly of the London School of Economics]. [Sir Jack’s] legal practice at the bar was interrupted for five years by the war. He served in the ranks from 1940, then was commissioned in the Royal Army Ordnance Corps (1942); in the following year he was moved to the War Office, as a staff captain, and there was involved in planning for D-day.’ After practice at the Bar, Sir Jack became Senior Master of the Supreme Court, at the High Court, London, and contributed in Herculean fashion to the practice, remoulding, and glossing of the Rules of the Supreme Court (the pre-CPR rules in the High Court). Michael Zander in the Dictionary of National Biography concludes: ‘Civil procedure was unknown as a subject for university study in England until the early 1960s, when Jacob co-founded a course in the subject for the LLM programme at London University. He gave the lectures on Monday evenings at UCL for nearly thirty years. His seminars at LSE, accompanying the lectures, were famous for the leading judges, practitioners, and civil servants who participated. From the 1960s he also taught civil procedure at Birmingham University and was actively involved in the foundation and administration of the university’s Institute of Judicial Administration. In 1978 he became the first general editor of the Civil Justice Quarterly, published by Sweet and Maxwell from the institute at Birmingham, and he served on the institute’s committee of management. . . . After he had retired [from the High Court] in 1980, Jacob was appointed Director of the Institute of Advanced Legal Studies at London University (1986–8). . . .He was a much-loved figure in the law, with an enormous range of friends from many countries. He was appreciated for his engaging personality, for the vast scope of his knowledge of his subject, for his amazing industry, and for his passion for justice.’ Sir Jack Jacob became the doyen of English procedural lawyers, and he was also revered in the international community of civil proceduralists. His magisterial Hamlyn Lectures explain the rules and principles of the pre-CPR system: The Fabric of English Civil Justice (London, 1987). Work of Homage: I.R. Scott, ed., International Perspectives on Civil Justice (London, 1990). 19. Sir Rupert Jackson: (a Lord Justice of Appeal since 2008): Educated at Jesus College, Cambridge (President of the Cambridge Union 1971). Called to the Bar, Middle Temple, 1972. Appointed QC 1987, and Bencher of Middle Temple, 1995; appointed to the Queen’s Bench Division, 1999, becoming presiding judge in the Technology and Construction Court, 2004–7. Editor of Jackson and Powell on Professional Negligence 1982, and successive editions. His report on

288

20.

21.

22.

23.

24.

Leading Contributors to English Civil Justice

the Costs system in England, final report January 2010, seems destined to set the agenda of procedural change for several years. He has loyally supported the teaching of civil procedure in Cambridge for many years. Adam Johnson: Educated at Churchill College, Cambridge (Law, first class BA); rose swiftly to become partner of Herbert Smith, London (see also Lord Collins). Adam Johnson has contributed to the Cambridge course on Civil Procedure for the last decade, and he has published leading articles on aspects of commercial procedure. He is especially interested in the transnational aspects of commercial litigation and arbitration. Professor ‘Tony’ (JA) Jolowicz, QC: Emeritus Professor of Comparative Law, Trinity College, Cambridge. He is celebrated not just as a major author on tort law (Winfield & Jolowicz on Tort) but as a profound contributor to comparative civil procedure: notably, his magisterial On Civil Procedure (Cambridge University Press, 2000). He pioneered the teaching of civil procedure in Cambridge and contributed a great deal to the international study of this subject, notably through the International Association of Procedural Law. With Marcel Storme, he collaborated on a common law/civil law fusion of procedural principles: M. Storme, ed., Approximation of Judiciary Law in the European Union (Gent, 1994). Master John Leslie: Educated at Clare College, Cambridge. He has supported the teaching of civil procedure in Cambridge for many years. He is a full-time civil law judge in the Royal Courts of Justice. He has been an editor of The Green Book and was a member of both the Woolf Committee and the Rule Committee. Sir Anthony May: Educated at Worcester College, Oxford; President of the Queen’s Bench Division. The Right Honourable Lord Justice May (Anthony Tristram Kenneth May) was called to the Bar (Inner Temple) in 1967 and was made a Bencher in 1985. He took Silk in 1979, and was a Recorder from 1985 until 1991. He was appointed a Judge of the High Court (Queen’s Bench Division) in 1991 and promoted to the Court of Appeal in 1997. Lord Justice May was Deputy Head of Civil Justice from 2000 until 2003 and has been Vice-President of the Queen’s Bench Division of the High Court since 2002. Professor Rachael Mulheron: Professor at Queen Mary College, London; she is a prolific writer on the topic of multi-party litigation, for example, R. Mulheron, The Class Action in Common Law Systems: A Comparative Perspective (Oxford: Hart, 2004), and she has contributed massively to the recent debate in the UK concerning proposals for an ‘opt-out class action’, as the following list makes clear: ‘Some Difficulties with Group Litigation Orders—And Why a Class Action is Superior,’ Civil Justice Quarterly 24 (2005): 40; ‘From Representative Rule to Class Action: Steps Rather Than Leaps,’ Civil

Leading Contributors to English Civil Justice

25.

26.

27.

28.

29.

289

Justice Quarterly 24 (2005): 424; ‘Justice Enhanced: Framing an Optout Class Action for England,’ Modern Law Review 70 (2007): 550–80; Rachael Mulheron’s 2008 paper on ‘Reform of Collective Redress in England and Wales’ www.civiljusticecouncil.gov.uk/files/collective_ redress.pdf; ‘A Missed Gem of an Opportunity’ (2011) Euro Business LR (forthcoming); ‘Recent Milestones in Class Actions Reform in England: A Critique and a Proposal,’ Law Quarterly Review 27 (2011): 288–315. Lord Mustill, LLD, FBA: (Michael Mustill): Educated at St John’s College, Cambridge (Natural Sciences, and Law) (Hon Fellow, 1992); Gray’s Inn. Called to the Bar, 1955; practised in commercial law; QC, 1968; appointed to the High Court, 1978; to the Court of Appeal, 1975; to the House of Lords, 1992, retiring from appeals in 1997. Goodhart Professor of Legal Science, University of Cambridge, 2003–4. With Stewart Boyd, QC, Middle Temple, Trinity College, Cambridge, author of the leading English work on commercial arbitration: The Law and Practice of Commercial Arbitration in England (1982; 2nd edn, London, 1989; companion volume, 2001). Renowned as a leading expert on arbitration (for example, his judgment in the Channel Tunnel case, 11.14). Since judicial retirement, he has enjoyed a career as a commercial arbitrator. Lord Neuberger of Abbotsbury, MR: Educated at Christ Church, Oxford. Called to the Bar, Lincoln’s Inn, 1974. Judge of the High Court, Chancery Division, 1996–2004; Lord Justice of Appeal, 2004–06; Lord of Appeal in Ordinary, 2007–09. Now Master of the Rolls, sitting in the Court of Appeal, where he is Head of Civil Justice. He is interested in all aspects of civil justice, frequently giving lectures on the topic. Professor John Peysner: Educated at Queens’ College, Cambridge. Professor of Civil Justice, Lincoln Law School, University of Lincoln. An important commentator on (among other things) funding, legal aid, legal services, and costs. Member of the Civil Justice Council (2002–6) and chair of its Costs Committee. Member of the Civil Committee of the Judicial Studies Board (2000–8). Professor Ian Scott: Barber Professor of Law, 1978–2000, Professor of Law (personal chair), 2001–05, University of Birmingham, Emeritus Professor, since 2006; called to the Bar, Gray’s Inn, 1995. Director of the Institute of Judicial Administration, University of Birmingham, 1975–82. Member of the Lord Chancellor’s Civil Justice Review Body, 1985–88, and of the Alternative Dispute Resolution sub-committee, Civil Justice Council, 1998–2002; an editor, and since 2007 the general editor, of Civil Procedure (the White Book). I.R. Scott, ed., International Perspectives on Civil Justice (London, 1990) (Essays in Honour of Sir Jack Jacob). Lord Scott of Foscote (former Lord of Appeal in Ordinary): Educated at Trinity College, Cambridge. Recognised as a judge with a mastery of a remarkable range of legal areas. He was prominent in the Woolf inquiry

290

Leading Contributors to English Civil Justice

into access to justice (1994–1996). Lord Scott gave many important court decisions both before and after the new procedural code (since 1999). 30. Professor Shimon Shetreet: Greenblatt chair of public and international law, Hebrew University of Jerusalem, Israel. Awarded the 2010 International Jurists Award for maintaining the highest standards of legal education. Has been in recent years been Herbert Smith Visiting Professor at University of Cambridge, UK and Senior Academic Visitor at Clare College, Cambridge; and has been visiting professor of numerous USA law schools, and elsewhere. Called to the Israeli Bar, 1969, he has appeared before the Supreme Court of Israel in landmark cases. As a Minister he held high public offices: 1988 to 1996, and was a Member of the Knesset, the Israeli Parliament. Main works: Judges on Trial A Study of the Appointment and the Accountability of the English Judiciary (1976) (relied upon by the House of Lords in the Pinochet Case in January 1999; this and other works have also been relied upon as well in numerous highest court cases in Canada, Australia, New Zealand and India); Judicial Independence: The Contemporary Debate (1985); The Role of Courts in Society (1988); National Security and Free Speech (1991; Justice in Israel (1994), Women in Law (1998), The Good Land between Power and Religion (1998 Hebrew), Law and Social Pluralism (2002) and On Adjudication (2004) (Hebrew); forthcoming publications are: Uniform Civil Code: The Challenge of Implementing Uniform Civil Code for India, to be published 2011 by Oxford University Press (with Hiram Chodosh); The Culture of Judicial Independence: Conceptual Foundations and Practical Challenges (Shetreet and Forsyth eds), to be published 2011 by Martinus Nijhoff -Brill Publishers. See link http://www.brill.nl/default.aspx?partid=210%26;pid=43075; Judges on Trial, 2nd edition, with Dr Sophie Turenne (from Cambridge University), to be published 2012 by Cambridge University Press. He is responsible for the (continuing) project on judicial independence, Mt Scopus International Standards of Judicial independence.7 31. Dr John Sorabji: Educated at the Queen’s College, Oxford; Legal Secretary to the Master of the Rolls, having served under Sir Anthony Clarke (now Lord Clarke) and Lord Neuberger. In this role he frequently contributes to leading speeches on a range of topics. Sorabji gained an Oxford D Phil in 2009 entitled ‘Paradigms of Justice and the Overriding Objective: Woolf’s Copernican Revolution’. He is an assistant editor of Civil Justice Quarterly and has contributed regularly to the literature on civil justice.

7

http://law.huji.ac.il/upload/InternationalStandardsofJudicialInd2008.doc.

Leading Contributors to English Civil Justice

291

32. Professor Robert Turner: Educated at St Catherine’s College, Cambridge; formerly Senior Master and Queen’s Remembrancer, Queen’s Bench Division, Royal Courts of Justice, London. He participated in the Woolf inquiry into access to justice (1994 to 1996). He has generously supported the teaching of civil procedure in Cambridge for many years. He has been an editor of Civil Procedure (‘The White Book’) and Atkin’s Forms. He was a member of the Woolf Committee on access to justice (1995–6). 33. Professor Keith Uff: Read Law at Lincoln College, Oxford; called to the Bar by Gray’s Inn. He then practised at the English Bar; in 1972 became a Lecturer in the School of Law at the University of Birmingham where he is now a Professor. Uff has held visiting appointments at the University of Mauritius, the University of Stockholm, and the University of Bayreuth. He is a former Assistant Editor of Civil Justice Quarterly and was formerly Executive General Secretary of the International Association of Procedural Law. 34. Lord Woolf: Educated at University College, London; architect of the CPR system (effective since April 1999). His reports are Lord Woolf, Access to Justice: Interim Report (1995); and Access to Justice: Final Report (1996). Formerly, Treasury Counsel; High Court judge; Lord Justice of Appeal, Lord of Appeal in Ordinary, Master of the Rolls (senior judge in civil matters within the Court of Appeal), and Lord Chief Justice of England (most senior English judge). 35. Professor Michael Zander, QC, FBA; Emeritus Professor of Law, London School of Economics; a great expert on the administration of both criminal and civil justice; he took a Double First Honours Degree at Jesus College, Cambridge, obtained a First Class in the LLB (now the LLM) and was awarded the Whewell Scholarship in International Law. He took a LLM at Harvard and worked for a year with Sullivan and Cromwell on Wall Street. He then returned to Britain, qualified as a solicitor and practised for a period before joining the Law Department of the London School of Economics in 1963. He was appointed to a Chair in 1977. He was Convenor of the Law Department from 1984 to 1988 and 1997–98. He was made an Honorary QC in 1997 and was appointed a Senior Fellow of the British Academy in 2005. He retired from full-time teaching in 1998. In 1999 he gave the Hamlyn Lectures under the title The State of Justice (Sweet & Maxwell, 2000). He was a member of the Runciman Royal Commission on Criminal Justice (1991–1993), and conceived and conducted the Commission’s main research project—The Crown Court Study—the biggest study ever carried out in the English courts. For twenty-five years (1963–1988) he was also Legal Correspondent of The Guardian (newspaper) for whom he wrote over two thousand articles. He has been a frequent broadcaster on both radio and television. Of his many contributions to civil justice, perhaps his most notable are: The State of Civil Justice

292

Leading Contributors to English Civil Justice

(London, 2000) and his major contributions to the periodical literature concerning: (1) the merits of the Woolf reforms (for example, ‘The Government’s Plans on Civil Justice,’ Modern Law Review 61 (1998): 383 and ‘The Woolf Report: Forwards or Backwards for the New Lord Chancellor?’ Civil Justice Quarterly 16 (1997): 208) and (2) the conditional fee agreement system and the general topic of funding (‘Where Are We Heading with the Funding of Civil Litigation?’ Civil Justice Quarterly 22 (2003): 23–40; ‘Where Are We Now on Conditional Fees? Or why this Emperor is Wearing Few, If any, Clothes?’ Modern Law Review (2002): 919–30; ‘Will the Revolution in the Funding of Civil Litigation in England Eventually Lead to Contingency Fees?’ DePaul Law Review (2002): 259–97. 36. Professor Adrian Zuckerman: Professor of Civil Procedure, University of Oxford, and a long-standing Fellow at University College, Oxford. An outstandingly rigorous, fundamental, and versatile legal writer and thinker, and a pedagogic pioneer within Oxford (teaching civil procedure as an academic subject). He is a leading expert on both civil justice and on criminal evidence (having studied evidence under Sir Rupert Cross). Zuckerman on Civil Procedure (2nd edn, London, 2006) is his major study. Other works include: A.A.S. Zuckerman and R. Cranston, eds., The Reform of Civil Procedure: Essays on ‘Access to Justice’ (Oxford University Press, 1995); A.A.S. Zuckerman, ed., Civil Justice in Crisis: Comparative Perspectives of Civil Procedure (Oxford University Press, 1999); Oscar Chase, Helen Hershkoff, Linda Silberman, Vincenzo Varano, Yasuhei Taniguchi, Adrian Zuckerman, Civil Procedure in Comparative Context (Thomson West, 2007). He is also editor of Civil Justice Quarterly. He was an adviser to the Lord Woolf inquiry on access to justice (1994–1996) and to the Jackson Report on costs (2009–10). He teaches for the BCL/MJur degree, Oxford University, and runs the Civil and Public Litigation (Procedure) course for the LLM degree (University College, and Kings College, London).

Index

A Accelerated Relief, 50 Access to Justice, 27, 44–45 See also Conditional Fee Agreements, “CFAs”; Costs; Jackson, Sir Rupert: “Civil Litigation Cost Review” “ADR”, alternative dispute resolution, 5, 7, 12, 43, 64, 154, 188–195, 197, 199, 201, 203–206, 209, 211, 215, 217, 240, 247, 250, 264 varieties, 188–195 See also Arbitration; Expert Determination; Mediation; Settlement American Law, 2, 74, 131, 137 American Law Institute/UNIDROIT’s “Principles of Transnational Civil Procedure”, see UNIDROIT (Principles of Transnational Civil Procedure, 2006) Anti-Suit Injunctions, 228–231, 251–253 Appeals, 22, 107–115 factual issues, 112 permission to appeal, 107–115 Arbitration, 219–221, 249–251 annulment of award, 262–263 anti-suit injunctions, 228–231, 251–253 appointment of arbitrators, 251 arbitration clauses anti-suit injunctions, 228–231, 251–253 damages for breach of arbitration clauses, 236 conﬁdentiality, 221–225

damages for breach of an arbitration agreement, 235–236 enforcement and recognition of expert determination (clause combining this and arbitration), 261 evidence, 259–260 ﬁnality, 237–238 foreign awards, 241, 261 freezing relief, 240–241, 253–254 mediation before arbitration, 264 mediation role combined with arbitral role, 267 mediation role not combined with arbitral role, 265–267 mediation while arbitration pending, 265 protective relief, 240–241, 253–259 settlement facilitation combined with arbitral role, 271–273 West Tankers case (European Court of Justice, 2009), 231 Assessors, see Experts B Blair (“Tony”), 29 Burden and Standard of Proof, 16, 147 See also Evidence C Case Management, 12 Commercial Court, 14 sanctions and procedural discipline, 15 Civil Procedure Rules: “CPR (1998)”, 1, 5, 23, 81 case management, 12 See also Overriding Objective, Part 1, CPR; Woolf, Lord

293

294 Commercial Court, 14, 153, 204 “Admiralty and Commercial Courts Guide”, 14 “ADR orders”, 204 case management, 14 Conditional Fee Agreements, “CFAs”, 4, 130–135 contingency fees in the USA compared, 131, 137–138 See also Access to Justice Conﬁdentiality, 70, 221–225 arbitration, 221 disclosure of documents, 68–69 “implied undertaking” (disclosure process), 68–69 See also Privileges Consolidation of Litigation, 168 Contempt of Court, 145 freezing injunctions, 158 injunctions, 145–146, 151 search orders, 161 Costs, 121–140 costs capping, 126 costs sanctions (mediation), 193, 206–211 costs-shifting rule, 3, 122, 127 discretion, 127–128 high cost of English civil litigation, 122, 194 indemnity basis, 128, 207 non-parties, cost orders against, 128–129 protective cost orders, 126–127 security for costs, 123–124 settlement offers, 7, 128 standard basis, 128, 207 “wasted costs orders”, 129 See also Conditional Fee Agreements; Jackson, Sir Rupert: “Civil Litigation Cost Review” “CPR”, see Civil Procedure Rules: “CPR (1998)” D Disclosure, 19, 62 assets disclosure orders, 145, 154 expert reports, 79, 91–92 “implied undertaking”, 19–20, 69 main proceedings, during the, 68–69 non-parties, against, 65–67 pre-action disclosure, 64–65 “standard disclosure”, 68

Index witness statements, 79 See also Privileges E Enforcement, 22, 141–149, 241–246, 261–262 court judgments, 22, 141–142 enforcement of arbitration clauses anti-suit injunctions, 228–231, 251–253 damages for breach of arbitration clauses, 235–236 enforcement and recognition of foreign awards, 241–246, 261–262 See also Contempt of Court; Striking Out; Stay of Court Proceedings Evidence, 16–17, 103, 112 arbitration and court support, 259–260 burden of proof, 16–17 standard of proof, 16–17 See also Privileges; Witnesses Expert Determination, 190 combined with arbitration, 258 interaction with English court’s jurisdiction, 258 nature, 190 Experts, 18, 80–81 assessors, 18, 87 discussions between experts, 94–99 expert reports, 91–94 expert witness immunity abolished, 97–99 “joint statements”, 97 party-appointed experts, 18, 88 “single, joint experts”, 18, 84–87 “wasted costs orders”, 99, 129–130 See also Privileges F Finality, 107 appeal, 115 arbitration, 237–238 Henderson v. Henderson rule, 118–119 res judicata, 115–118 See also Res Judicata Freezing Injunctions, 152–161 arbitration, 160–161, 240–241, 253–254 contempt of court, 157 worldwide freezing injunctions, 158

Index G Group Litigation Orders (GLOs), 178 See also Multi-Party Litigation H House of Lords (abolition of), 29–30 Human Rights Act 1998, 4, 26–27, 110 freedom of expression, 53 preliminary injunctions, and, 57 I Injunctions, 52–55 enforcement, 145–146 See also Anti-Suit Injunctions; Search Orders; Freezing Injunctions; Interim Injunctions Interim Injunctions, 52–55 cross-undertaking, 52 Interim Payments, 50–52 Interim Relief, 50 See also Interim Payments; Interim Injunctions Irvine, LC, Lord, 29–30 J Jackson, Sir Rupert: “Civil Litigation Cost Review”, 3, 27, 43, 45, 64, 122, 136, 138–140, 195 Joinder, 169 Judgment, 55–59, 141–149 default judgment, 55–57 reasoned, 27–29 Jury, 20–21, 100–102 See also Trial L Lawyer, 72–73 See also Legal Advice Privilege Legal Advice Privilege, see Privileges Limitation of Actions, 57–58 Litigation, see Phases of Litigation Litigation Privilege, see Privileges M Mediation, 187–217, 265 ADR: varieties, 187–191 connections with arbitration: mediation before arbitration, 264 mediation while arbitration pending, 265 mediation role combined with arbitral role, 267–271

295 mediation role not combined with arbitral role, 265 settlement facilitation combined with arbitral role, 271–273 costs sanctions, 193, 206–211 EU directive, 190, 214–215 judicial encouragement, 204 mediation agreements, 201 mediation privilege, 211–214 “stays” of court proceedings, 202, 205–206 See also “ADR”, alternative dispute resolution; Settlement Multi-Party Litigation, 168–169 “opt out” system, 169–178, 184 “opt in” system, 169, 178–184 See also Consolidation of Litigation; Group Litigation Orders (GLOs); Representative Proceedings N “Norwich Pharmacal” Orders, 65–66 O Overriding Objective, Part 1, CPR, 5, 12 P Passports, civil order for custody of, 165 Phases of Litigation, 8–23 Pleadings, 11–12 See also Statements of Case Pre-action Phase, see Phases of Litigation; Pre-action Protocols Pre-action Protocols, 8–9, 64–65 Preliminary Issues, 57 Pre-trial phase, see Phases of Litigation Principles of Civil Procedure, 25–48 Privileges, 70–71, 164 conﬁdentiality, 70 experts’ discussions, 95–99 in-house counsel, 33–36 legal advice (attorney-client) privilege, 71 litigation privilege, 75–80, 93 mediation privilege, 211–214 self-incrimination, privilege against and European Human Rights law, 37 main exposition, 163 “without privilege” communications, 211–214 Protective Relief, 151–165

296 R Representative Proceedings, 169–178 See also Multi-Party Litigation Res Judicata, 115–118 issue estoppel and arbitration, 233–236 See also Finality S Search Orders, 161–164 Security for Costs, 123–126 Settlement, 197–200, 271–273 judicial encouragement of mediation, 204 mediated settlements and connections with arbitration mediation before arbitration, 264 mediation while arbitration pending, 265 mediation role not combined with arbitral role, 265–267 mediation role combined with arbitral role, 267 settlement facilitation combined with arbitral role, 271–273 mediation, 11, 24, 187–1888 pre-action protocols, 8, 64–65 settlement offers, 7, 128 See also “ADR”, alternative dispute resolution; Mediation Small Claims, 9–10, 196 Statements of Case, 12, 59–60 See also Pleadings; Striking Out Stay of Court Proceedings, 201, 205–206 Striking Out, 59–62 “BCCI” case, 62, 73 compatibility with Human Rights law, 32–33

Index summary judgments, overlap with, 60–61 Summary Judgments, 58–59 striking out, overlap with, 60–61 T Tracks, 9–11 Trial, 20–21, 100–103 civil jury’s virtual disappearance (England), 20–21, 103 sequence of stages of trial, 21, 102–103 “trial bundle”, 101 See also Jury U UNIDROIT (Principles of Transnational Civil Procedure, 2006), 18–19, 21, 26, 40–43, 67, 88, 105, 154 United Kingdom Supreme Court, 108–109 W Witnesses, 21, 65 expert witnesses, see Experts factual witnesses, 16–18, 103 perjury, 104 “statement of truth”, 103 witness immunity, 95–100 witness statement, 17–18, 103 witness summons, 103 Woolf, Lord, 1, 3–4, 12–13, 19, 58, 63, 86, 89, 106, 237 Woolf reforms (1998), 1 Woolf reports (1995, 1996), 1, 4, 12 See also Civil Procedure Rules: “CPR (1998)”; Overriding Objective, Part 1, CPR