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28 July 2014
The good judges, low waiting times and hands-on approach of the Mercantile Courts have kept many commercial cases in the regions. But are the courts now becoming victims of their own success?
Mercantile Courts have been credited with halting, or at least slowing, the inexorable flow of commercial litigation away from the regions to London. But the pressure is increasing simply to keep pace with the demand caused by their own popularity.
Some regional lawyers claim the courts are now struggling to keep waiting times down. Short waiting lists were until now one of the Mercantile Courts' biggest selling points. Traditionally, the waiting time to have a case heard in the High Court could, at the very least, be cut in half when listing in any of the Mercantile Courts. But their growing popularity means that in some areas, the differential in listing times has shrunk dramatically.
There are other anecdotal criticisms that are tarnishing an otherwise excellent record. Some lawyers suggest that in certain courts there is a worrying trend of inconsistent judgments that could seriously damage the credibility of any court. The administrative support function has also been criticised. But it would be unfair to concentrate on these criticisms because, on the whole, the problems are simply a by-product of the courts' success.
Mercantile claims and the courts they are heard in are concerned with commerce. Most commercial or company related claims can be heard in a Mercantile Court, including fraud, professional negligence, shareholder disputes, contract disputes and banking litigation. The court can hear all interlocutory applications as well as full trials, and the quality of the cases listed in them depends on the reputation of the judge who presides over the court. This judge will always be supported by one or two other judges, be they the technology and construction court or district line judge.
So far, there are five main Mercantile Courts in the UK: Birmingham, Manchester (together with Liverpool), Leeds (together with Newcastle), Bristol and, most recently, Cardiff.
The obvious advantages of listing hearings in local courts are time and cost, but there are other equally important considerations. A locally-based commercial judge is not subject to the diversions of circuit judges, who historically must allow criminal and family matters to take precedence. Furthermore, a mercantile judge takes hold of a case from the start and is more likely to have read all the papers and be thoroughly on top of the case. One effect of this is to impose far stricter time limits on the parties involved - those who are not prepared to conform to these strictures, or who actively want to delay their claim, will find that the Mercantile Court is not a suitable arena for their action. According to the Lord Chancellor's Department, this "hands-on approach defines and narrows the issues genuinely in dispute between the parties".
But there are other, more subtle aspects. A thriving local commercial court will keep good quality work local. A good relationship between a locally-based judge and those who stand before them adds to the area's reputation for dealing effectively with local commercial disputes. One example of the spin-off effects of these courts is the new Wales Commercial Law Association, which started up last year.
The parochial flavour of Mercantile Courts in no way means that the more interesting cases, or those involving huge sums of money, are automatically sent to London. In terms of where the line is drawn between cases that stay and those that go to London, Bevan Ashford commercial litigation partner Kane Kirkbride says: "We don't draw that line any more. The speed, accessibility and quality of judgment locally means we would send commercial cases to the Mercantile Court. This is unless it was going to go to chancery, or we could get on sooner in London than here, which would be very unusual."
Ian Brown, partner in the litigation department of Hull-based Gosschalks, is a little more reticent. "You need the right sort of case - something worth the effort of dealing with a bespoke court. Parties need to be prepared to deal with the directions issued within the times given," he says. As far as clients are concerned, Brown holds the widespread opinion: "Clients will go wherever they are told!"
It would be a shame if regional lawyers were denied the chance to capitalise fully on the opportunities presented by the Mercantile Courts. The recent launch of one in Cardiff shows that there is continued commitment to encouraging the development of regional commercial centres. It is now dependant on provincial law firms and the regional bar to improve the quality of its service and bring itself into line with good London practice. Only then can provincial centres be sure to keep quality business in the regions and out of the grasping hands of their London rivals.