Commercial breakthrough

The CommerciaL Court is regarded by most commercial lawyers throughout the world as the pre-eminent forum for commercial litigation. That is quite simply because it has the most efficient procedure, capable of producing the speediest judgments, as well as the most skilful, and above all the most experienced judges. It is for these reasons that international trading contracts so frequently include English jurisdiction clauses, and that most of the parties to the work handled by the court are foreign corporations. “The jewel in the crown of the English judicial system,” was the way Lord Wilberforce once described the Commercial Court.

The court stands at the centre of a vast network of extremely successful providers of legal and ancillary services. Not only are there the litigation departments of the likes of Clifford Chance, Clyde & Co, Freshfields, Ince & Co, Herbert Smith, Linklaters & Alliance and the rest, as well as the immensely highly-remunerated members of commercial chambers such as Brick Court, Essex Court, One Essex Court, Fountain Court, Blackstone Chambers and 7 King’s Bench Walk, but also very substantial ancillary professionals such as the litigation support services of the biggest international accountants, and expert witnesses such as oil and gas consultants and marine surveyors and architects.

All these providers of legal and ancillary services are earning vast profits, which are running into many millions of pounds annually because they are able to provide their clients with not only their expertise, but also the benefit of a superb state-provided court.

Thus the immensely impressive combination of a highly expert commercial litigation profession and an internationally renowned court engenders invisible exports worth millions of pounds annually. It is against this background that the issues raised in the “Courting the World” article (The Lawyer, 18 December 2000) ought to be considered.

It is first necessary to disentangle two quite distinct issues. First, does the existing Commercial Court need a new venue so badly that the Treasury ought to pay for it, and/or the Lord Chancellor’s Department ought to raise money for it from the private sector? Second, should other parts of the judicial system such as the Patent Court, that part of the Chancery Division which currently exercises jurisdiction coextensive with that of the Commercial Court, the Companies Court, the Technology and Construction Court and perhaps the six Mercantile Courts, be merged with the Commercial Court to form what would in effect be a new commercial and business division of the High Court?

The only point of intersection between these two separate issues is the question of whether the combination in a new building with the Commercial Court of other parts of the judicial system would enhance the justification for the capital expenditure on new premises. Obviously, if there is a strong case for a merger of different parts of the judicial system with that court, it stands to reason that there is a strong case for rehousing the new court as a whole.

Does the existing Commercial Court need new premises? To this question there can be only one answer. St Dunstan’s House is a public disgrace. No Lord Chancellor and no Chancellor of the Exchequer should be anything but seriously concerned that a court of such immense international reputation remains housed in such disgusting premises. The Lord Chancellor’s personal initiative in driving forward the latest Cap Gemini Ernst & Young investigation is good evidence that he shares this view.

I describe the premises as disgusting as most of the courts are not large enough for heavy litigation because there are completely inadequate consultation facilities for the parties; because there are no permanent video-conferencing facilities in court; because the entrance lobby is an extremely constricted area, almost totally occupied by security screens, tables and a Pepsi vending machine; because the robing facilities for counsel are completely inadequate; because in 25 years, nobody has ever been able to provide the first three floors with a heating and air-conditioning system that functions properly; because several of the judges’ rooms are far too small; and because eight judges share one toilet and wash basin.

That, however, is not the end of it. Only half of the Commercial Court judges have rooms in St Dunstan’s House. The remainder are based in the main Royal Courts of Justice building and so are the Admiralty and Commercial Registry and the Listing Office. This introduces immense inefficiencies. In St Dunstan’s House, the Court Service allots for the use of the commercial judges and an admiralty judge fewer courts than there are judges who need them. It is quite normal for a commercial judge whose room is in St Dunstan’s House, to have to hear a commercial case in the Royal Courts of Justice main building. Worst of all, however, is the need to transport every week vast quantities of documents from the Listing Office and Registry in the main building to St Dunstan’s House and back again. A judge’s clerk might have to make several journeys to carry the files for one hearing.

Furthermore, a crucial part of the success of the Commercial Court is the constant discussions of points of law and procedure that take place between the judges behind the scenes. In order to maximise the consistency of approach, the judges need to be able to exchange views regularly. If they are housed in two separate buildings this is hardly conducive to regular discussion.

The present situation has arisen because, during the last six years, the Lord Chancellor’s Department has been unable to engender sufficient funds to provide proper premises, either by persuading the Treasury to put up the money or by devising a way of providing funds from other sources.

Whereas a conclusion from the Cap Gemini Ernst & Young investigation saying that if the Commercial Court were not adequately housed then future invisible exports would be detrimentally affected would add strongly to the case for rehousing the Commercial Court, that case in my view remains quite unanswerable, whatever the results of the investigation. For the leading financial and commercial centre of Europe to house its world leader Commercial Court in its present premises represents an unacceptable annual balance sheet mentality on the part of central government. Surely the conclusion should not be solely dependent on producing a business plan, any more that one could produce a meaningful business plan to justify the provision of more accommodation for MPs in their new building at Westminster or for the maintenance of Big Ben.

Then comes the question of whether there should be a new mega-Commercial Court exercising a wider jurisdiction?

If one were starting with a clean slate, one would never have created separate courts for commercial cases, company affairs, intellectual property disputes, financial services disputes and most technology and construction court cases. That these jurisdictions are exercised in separate courts is largely the result of the historical development of the courts since before the judicature acts. On the face of it, there would now seem to be, at the lowest, an impressive case for merger. Not only would the judges be able to handle interchangeably much of the work of the different jurisdictions, which would make for more efficient deployment, but the different jurisdictions ought to be able to share facilities such as video-conferencing, consultation rooms and advanced IT, both in court and for clients outside court. It is in this sphere, where the advantages of merger are likely to be broadly justifiable, that a so-called business plan could make a major contribution to decision-taking.

If there is to be a new court of significantly wider jurisdiction to be housed in new premises, or if the Commercial Court alone is to be housed in new premises, how ought it to be funded?

There are four distinct interests involved in this development: the national interest in maximising invisible exports and in maintaining national self-esteem in respect of a valuable public and international facility; the interest of the legal profession in maximising its fee income; the interest of the City of London in drawing yet further ahead as a world financial centre on the basis of the excellence of the court system; and finally the litigants themselves.

Each of these interests would stand, even if not quantifiably, to benefit from either a newly-housed Commercial Court or a newly-merged and rehoused commercial/business court. Why then, in principle, should not each interest contribute to the capital cost? There is no more justification for the Treasury being excepted to foot the whole of the bill than for the top magic circle law firms and the top commercial chambers in the commercial bar association (Combar) to expect it to do so while they maximise their own profits by using the new court. Why shouldn’t they also be involved in the funding exercise? It cannot be impossible to devise a structure of sufficient insulation between them and the courts so that they could be a source of loan capital without any question of judicial conflict of interest or perceived bias. As for the City, it is high time that lord mayors of London did more than pay generous compliments to the qualities of the Commercial Court, as they habitually do at their annual dinner for the judges. The City ought to put its money where its mouth is.

As for the litigants, there is much to be said for introducing a system of charging modest daily rates for the use of the Commercial Court. This is the practice in the Singapore High Court, and should not be regarded by international corporations as indigestible, particularly in view of the daily charging which is experienced widely in international arbitration.

Above all, the solution to these problems needs very determined leadership that is both innovative and far-sighted. The years of inertia have simply got to come to an end. This is leadership that at the end of the day only the Lord Chancellor can provide, but he can obtain results only if he has the united support of the Treasury, the judges, the legal profession and the City of London. With sufficient motivation from all the interests involved, an environment fit for the commercial users of the court, for the members of Combar, for the commercial solicitors of national and international reputation, as well as for the commercial judges and the City of London, ought to be achievable.

Mr Justice Colman is a senior judge of the Commercial Court.