Courting the world
18 December 2000
At the beginning of November, the Lord Chancellor's Department announced that it had hired big-gun consultants Ernst & Young and Cap Gemini to look into the business case for creating a new Commercial Court in London. The stated objective underpinning the proposal is "to increase the use of the UK as a global centre for dispute resolution", which will be achieved by creating "modern and responsive facilities focused on the needs of commercial users and separate from the competing demands of non-commercial users".
While many applaud the idea of bringing the famously Dickensian Commercial Court, situated in St Dunstans House, into the 21st century, the proposal has nevertheless sent up flurries of concern, particularly over its controversial idea that the new court should be, according to the consultation document, "self-funding, with no cross subsidy from other parts of the civil court system". In effect, the Lord Chancellor is considering a privatised court service.
"It's astonishing to look at the new court from this angle," says Barbara Dohmann QC, chairman of the Commercial Bar Association and a tenant of Blackstone Chambers. "The commercial legal sector in London contributes around £8bn in invisible earnings to the Inland Revenue [every year]. This is a great capital city with clean streets, a fantastic opera house and so on; why can't we have a commensurate standard of facilities for the legal community rather than the third-class, banana republic, sub-standard slum that we have now?"
Most practitioners share the view that, while a new court with decent facilities and modern technology would in principle be a "good thing", to make litigants pay for the privilege would not. Robin Preston-Jones, litigation professional support lawyer at SJ Berwin, speaks for most of the solicitors based in the City. "From a practitioner's point of view, the current location is pretty useless and the facilities are not what you'd expect from a premier Commercial Court in one of the top three jurisdictions in the world," he says. "But the idea of making courts self-financing is very difficult to contemplate because the costs would be so significant."
Commercial litigation partner at SJ Berwin Craig Pollack is concerned that, as with so many reforming ideas, the new Commercial Court might yet again hit a brick wall. "If it's done on the basis that we're trying to enhance London as the centre for resolving international disputes, and that we use it to bring in more work, it seems a very attractive idea. But can they do it?" he asks. "If you take Woolf as an example, that will give you a good idea of the resistance this will face."
But as one senior clerk points out: "London's arbitration services charge for their service, and are indeed a 'good little business'. The parties pay for that and London is a great centre for arbitration."
Indeed, the London Court of International Arbitration and its ilk may get busier still, as managing partner and head of litigation at McDermott Will & Emery John Reynolds suggests. "If the new court was self-financing, I'd advise more clients to arbitrate, because it could be too expensive to go to trial," he says. Reynolds, though, warns that if one of the aims behind enforcing large payments for trials was to encourage arbitration, this would be "a pretty blunt instrument". He says: "It would be like charging a hundred quid for driving into the centre of London - you'd get rid of a few people but you wouldn't solve the problem. Court fees in London are not a big issue, but if they rise to a certain level, people will think twice about choosing London to resolve their disputes."
The court service's circular does in fact solicit opinion on the concept of a new Commercial Court, "with scope also to embrace alternative methods of dispute resolution". As Pollack points out: "The Commercial Court judges were the first to embrace arbitration." The growing popularity of alternative met
hods of dispute resolution is obvious, and it may well prove a necessity for any new Commercial Court to embrace them (during 1999 total claims and originating summonses issued fell by 37 per cent to 72,161 (see bar chart, page 25)). Pollack, however, says: "The problem with having judiciary dealing with arbitration is that you're moving into a framework which is supposed to run parallel to, and outside of, the scope of the courts. The beauty of arbitration is that it is appeal free, but if you put it under the same umbrella and say we'll keep an eye on it, you could start having appeals against awards made."
While Reynolds says he has "never had a client express surprise or disgust" at the state of the courts as they stand, he concedes: "From an infrastructure point of view, it's potentially embarrassing for the nation's blue-chip legal fora to be housed in different courts, none of which are particularly auspicious. We need to make English law more saleable."
A keen advocate of a new Commercial Court for many years, Dohmann's reservations about funding do not prevent her from being "100 per cent behind it". She says: "We've seriously needed this for years - we have extraordinarily poor facilities in St Dunstans House. I've been in huge commercial cases in there where people are practically hanging from the ceiling. In the summer it's boiling hot, and if people want to use the restrooms they go to a slum. It's outrageous!"
Referring to the very high standard of judges as the main draw for commercial litigation to the UK, she adds: "We need to offer them better facilities," and is of the opinion that a new Commercial Court should include the business work of the Chancery Division. "Commercial, business, Chancery, call it what you like - it would be good to put all this work together. Judges can sit in both courts and do comparable work," she says.
The debate around the UK's historical legal divisions has of course been raging for years. Michael Briggs QC of Serle Court Chambers says that, rather than spend huge amounts of cash on a new court and all that goes with it, a better course of action would be to address the divide between the Queen's Bench Division (QBD) and the Chancery divisions. "Rather than concentrate solely on making the business litigation service provided by the High Court more user-friendly and attractive, what's really needed is a readiness to grapple with the antiquated structure of the different divisions," he asserts.
Briggs recalls the Heilbronn-Hodge report of 1993, a joint committee of the Bar Council and Law Society, of which he was a member. It recommended the merger of all the business work of the QBD - in other words the work of the Commercial Court, which sits within the QBD - and the Chancery Division, with "off-shoot" courts to hear specialised cases such as shipping, patent, technology and insolvency. "Hiving off somewhat arbitrarily chosen business litigation out of the High Court structure and setting up a new court is in my view going off in the wrong direction," he says. "Courts tend to have their own esprit de corps, and develop their own sets of rules." Briggs adds that it would not be helpful to have yet another entity joining the current big three, all of which already have their own differing sets of rules, cultures and procedures.
It is perhaps ironic then, as Pollack pointed out earlier, that Lord Woolf rejected the committee's proposal on the grounds that the Chancery Division's specialist judges and their close working relationships with specialist barristers would be diluted if they were plunged into the QBD melee. This seems to give weight to the idea that a new court would indeed become a whole new creature that would evolve its own customs and culture, thus further obscuring the already confusing interface between the public and whatever justice its members may be seeking.
Taking into account the years of historical, constitutional and practical argument surrounding the way different cases should be listed, Harry Anderson, head of litigation at Herbert Smith, doubts that the Lord Chancellor's research can be carried out by mid-January as announced, and that the consultants charged with it are the best men for the job. Dohmann agrees. "What do they know of the work of commercial lawyers and judges?" she asks.
Anderson says it is at the contract-drafting stage, where parties choose their preferred jurisdiction for dispute resolution, that the UK courts need to prove themselves attractive to commercial parties. Looking at the evidence around the world, where other countries such as Singapore seem to be gaining the upper hand in the popularity stakes, he says: "There's a worry that we're falling behind the game." However, Anderson points to procedural and legal issues as possible culprits for keeping litigants away from our shores. "The automatic right to appeal was abolished last year, so now you have to seek leave to appeal on everything," he explains. "The question is, are people going to say, 'I don't fancy going there any more because it's one hit and you're out.'? It may be just a question of perception as opposed to a point of reality, because presumably if you have a good case you should get leave to appeal."
With large international cases often taking more than a year to get a trial date, there is no doubt that there is serious need for reform if the UK is to keep its gilt-edged international reputation. Whether a new Commercial Court will take over all the business work from the QBD and Chancery, and even from the mercantile courts now enjoying so much popularity around the country, remains to be seen. But whatever the consultants come up with, as Dohmann points out: "What this thing needs is the political will behind it to give this country what it deserves, and what the legal services and users deserve too."